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Originally Posted by devilsadvocate
That was my suggestion a decade ago, when only the rabid GM fans had already seen the writing on the wall. GM started as a collection of independents, and if they'd retained that model instead of going off the cliff in Roger Smith's '82 Citation in pursuit of market share, they wouldn't be in the situation they're in now.
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It goes back much farther than that. Read _My "Years with General Motors_, by Alfred Pritchard Sloan_ sometime. Slaon was CEO during GM's formative years when it was in the process of becoming the largest automaker in the world. He tells one story about touring the dealerships during the Depression and seeing the number of unsold cars on dealer's lots, returning to HQ, and giving one of the few direct orders he issued as CEO: the the divisions would cut production. The divisions recorded it as a sale when a car was shipped to a dealer. Sloan recognized the vital role of the dealer, and the long term harm to GM if dealers failed due to GM stuoidity.
The process that had created GM by aggregation began earlier than Sloan, and had it's roots in need for economies of scale. Automaking is capital intensive, and you need to produce and sell a large number of vehicles to survive. I was in a discussion elsewhere a while back about the viability of cars purpose built to be taxicabs. One of the participants was an engineer at GM (these days, he works for an offshore equipment company in TX). He laughed aloud at the numbers required for say, New York City, which has about 12,000 "medallion" cans on the streets. GM would need a potential market at least ten times that to make the concept worth pursuing.
(The last dedicated cab maker was Checker Motors, but they were essentially a custom coach builder. They made the bodies. They bought chassis, engines, and running gear from Chevrolet.)
There are smaller, nimbler companies making cars for smaller markets, but they tend to be luxury and specialty vehicles with price tags to match. They have to charge a lot per vehicle to cover the costs.
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Adapt or die, just like the company they were foolish enough to think was "too big to fail" must now adapt or die. Community college and online school enrollment has swelled tremendously over the last few years for a reason. A displaced worker can either learn something new (often on the state's dime) or spend the next 2 years dialing-for-dollars and blaming all their problems on Obama/the unions/corporate America/the Cubs/global warming.
"It's not that simple", you might say...I can say from firsthand experience that it beats the hell out of the alternative.
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It's not that simple. When a guy has spent the past 30 years doing rote assembly work on a production line, getting good money and great benefits as a result of UAW contracts, his flexibility tends to be, um, limited. Some of these folks will be candidates for retraining. Others simply won't be capable of the change. Their company goes belly up, and their jobs no longer exist. What happens to them? Let them die? I can't think of many governments, and especially not ours, that would consider that an acceptable option.
The underlying political question is what the government's responsibility
should be in such cases. There's a German economist getting interest at the moment, because he's been exploring the underlying issues. Germany faces problems similar to the US - a manufacturing economy trying to survive when foreign competitors have far lower labor costs. They have heavy layoffs, and he's concluded that a lot of the displaced workers just won't
get new jobs. New jobs may be created, but they won't be jobs the displaced worker can do, and may not be jobs the displaced worker can be taught to do.
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Dennis