What's happening to GM was inevitable and was foreseen way back in the 1950s.
Back in the 1950s Peter Drucker - the guy responsible for inventing management as a science - said that GM should be broken up. I think he said five companies. In response to GMs size, a wave of consolidation hit the industry. Names like Studebaker, Packard, Nash, Hudson slowly went out of business. The lack of independent competition made American industry vulnerable to foriegn competition. In Japan there are over 8 independent car companies for a market half our size and with less than one tenth the amount of roads - we have 2 and a half, and declining, rapidly. Any wonder why they are more competitive?
But Eisenhower and the Republicans were in charge in the 1950s and they brought GM executives into their cabinet. There would be no busting up of the Auto Industry during the Eisenhower years. During the 50s GM subsequently reorganized itself, on purpose, into a giant hair ball so that it would be impossible to bust it up. The five divisions were nothing but marketing brand names. The assembly plants got re-organized into two divisions: Fisher Body and GMAD (GM Assembly Division) that fed the five divisions cars. By the 70s this organization was producing nothing but look alike cars: the Cutless, was a malibu, was century, etc...
Finally the American Labor movement adopted a deeply flawed organizational model: Industrial Unions. In Japan the labor model is organized around company unions: One company has one union, and one union has only one company. The result of this model exagerated the competitiveness in Japan, creating a sort of compression effect intensgying competitiveness all the way around and making Japanese the premier auto industry in the world. This from an auto industry that only came into existence in the mid 1950s.
Japanese companies were penetrating the U.S. even as European companies were leaving or scalling back. Volkswagen - the last volume European manufacturer came within a wisker of leaving the U.S. (about the time that it closed its one plant that it had opened here).
The effectiveness of the Japanese industrial labor model should have triggered a reorganization movement here. And one wonders, if Walter Reuther had not died in a plane crash in the early 1970s if that might not have happened.
"Rommel, I read you're book! You magnificent bastard!." - Patton at the battle of El Gtar.
When someone is beating you in sport or in war, or in business, you adopt there tactics, and you create counter measures to their tactics. The Germans invented Blitz Krieg. The allies wouldn't have beaten the Germans if they hadn't both adopted much of their offensive model and thoroughly immersed themselves in it to find weakness. Why didn't this happen in American Industry the mid 1970s and it was evident that Japan had a superior model?
The Japanese began penetrating American industries in the 1960s: Cameras, Consumer Electronics, Steel and Autos. In some industries Japan completely gutted the United States.
The proper response to the Japanese onslought should have been, begining about 1980 with the auto industry, and then penetrating other industries: Breaking up GM into five separate companies, Ford into three, Chrysler into two and leave AMC as it was. Each company would then have it' own Union. A huge % of Employees would be allowed to get tennure - basically lay-off proof, and employee representation on the boards of directors.
The effect of this kind of organization is to make the company more oriented towards employee interests. But the Japanese model demonstrates that the Employees are a better proxy for shareholders interest then the American style board of directors (who in both countries are supposed to look out after shareholders, in Japan they look out for employees, in the US they look out for CEOs). Employee primacy means the country focus on market share and long term growth to ensure employee security - these are the same goals that long term investors have.
The one area where employees aren't a good proxy for shareholders, turns out they are a good proxy for corporations - that is the area of consolidation and mergers, aka buyouts. Shareholders love mergers because they get a control premium. But society is better off without mergers, more companies mean more competition.
The 1980s then should have been an area where tarrif barriers were put up to protect the industry during the period of massive reorganization, but also there would be goverment loan guarantees to capital invesments in the auto industry during the reorganziation.
This is precisely the formula that Japan used for launching new industries. The combination of these policies creates a compression effect. You suddenly have an artificially exagerated number of companies with an artificially exagerated amount of capital investment competing in a confined market. The result is a compression effect - spawning increases in competitiveness that is magnitude of order greater than what existed before.
The big question is why didn't America adopt this model? Big Industry Executives didn't want to surrender their power - they control the boards, and that control makes them not only rich, but powerful. They didn't want their companies busted up because their empires would get smaller and so would their security. And above all they didn't want to do anything for American labor or the laborer - they want to defeat and rid America of the Union movement for ever. Even today executives in the Automobile industry could save themselves and many of their employees jobs if they advocated vigerously for a healthcare arrangement that they didn't have to pay for, like they get for their workers in Canada. But they don't because they don't want their industry to survive in the U.S. with organized labor. They'd rather it die. Secretly GM executives see their future as a giant holding companie that imports cars from all over the world, the way Reebox and Nike import shoes, from the cheapest labor market. They see GM as a marketing and logistic supply company - it should live so long.
Meanwhile Labor leaders at Big Unions didn't want to give up power. They control insurance companies and make all kinds of money and have incredible power. No leader of an Industry Union would surrender their power to allow the creation of a bunch of smaller company unions.
The result. Executives and CEOs, through their Republican movement, blamed Unions for the dawnfall of American industry. Never mind that the foreign companies that are beating them all have unions - both in Asia and in Europe. And the public, has by and large, all gone along with this tripe. What those other countries don't have is almight CEOs.
In late 1970s and early 80s GM controled nearly 50% of the market. Effectively GM, in the prior 25 years, had managed to avoid being busted up, largely because of political influence and largely because of making their company less efficient by turning its organization into a giant hair ball. But they couldn't compete against the Japanese. It was like dinosaurs losing out to rodent mammals. The result was, though they avoided being shrunk in the 1950s by being broken up into five companies, GM has consistently lost ground year after year to the point that its as big as only one of those five companies would have been back in the 1950s when Drucker proposed busting it up. The down side of all this is that market share has all gone to foreign companies - German, Japanese, and now Korean, and soon Chinese, and over the horizon, Indian, no doubt and perhaps Brazilian.
By being so large, and intrinsically inefficiently organized GM could never respond to the competition. They had organized themselves to please themselves, the customer got what GM gave them, and sometimes gave them with contempt.
In response to the Japanese competition, GM and other American companies adopted Japanese tactics, like statistical quality control, but those tactics don't work outside the overall strategic arrangement. So quality improved, sometimes significantly but the product was still basically crap.
In response to the Japanese competition GM produced: the vega, the Chevette, the Citation, the Barretta, the Corsica, the cavalier. All crap.
Ford did no better, and sometimes worse - they spent over 10 years and $6billion redesigning the Taurus, in that period of time toyota came out with three model changes to the camry. They did even worse with the Ford Contour. A friend of mine told me it was the most engineered car in the world, especially for the money. I owned one and it was a piece a junk.
Occassionaly Chrysler made strategic moves that approached the Japanese, especially in the early 90s when they build a tech center and facilitated concurrent engineering. The Dodge Stratus came out about the same size and time as the Taurus, it took only 4 years and $1.5 billion to bring to market. The styling also got better, the Stratus had brillain styling, but somehow the quality, fit and finish was never up to the Japanese.
The American auto Industry is going the way of the British auto industry. There are no domestic volume manufactures. This from the country that invented the paradigm of the front wheel drive car - the mini, and so many storied cars. It is, perhaps a function of the Anglo-Saxon economic model. There is a disrespect for labor, and exagerated respect for management that plants the seed for hubris and the fall. Like England, we still will make plenty of Cars. But they companies and the cars will all be foriegn. We've outsourced the ownership of companies.
If you had a talent for management, and a passion for cars and so wanted to be the head of a car company in England, you had to go overseas. And so Alex Trotman became the head of Ford Motor company for a while. He also had to obtain American Citizenship.
What will it be for future American's with such characteristics? Will they have to leave their homeland, take on Indian citizenship, just to do the job they were born to do. In the long run, it seems to me like we aren't providing opportunities for our people at any level.
Collectively - with American industry in the toilet, and the Republicans busy deconstructing the country everywhere else, can it not be that this nation is in a decline of near staggering proportions?
Note: I worked at GM in the mid 1980s, I also worked with and for other Auto Companies and suppliers as an Information Systems consultant - I worked on some just in time applications during this time when it was first appearing. Some of these Ideas can be found in the seminal work "the Machine that Changed the World".