Business Insight Zone

Just when you think you’re gonna have a long, juicy union strike . . . labor and management negotiate sensibly and approve a new contract. Bad for me and the rest of the journos who love to have juicy stories like that to carve into — but good for GM and the UAW.

Anyway, today’s Company of the Day is General Motors. More context for their new union contract here.

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There was a time when General Motors bestrode not just its own industry but all industry like a Colossus. GM took the automotive crown from the long-dominant Ford in the 1930s, after legendary CEO Alfred Sloan created the GM brand portfolio that we know today. The company’s dominance continued for decades, but GM became set in its ways and often competed using its bulk and brute marketing force rather than quality or innovation. For example, it responded to the oil shocks of the early 1970s by building the largest cars in its history. While the boatlike El Dorados and Impalas from the period are classics of design, they didn’t respond so well to the needs of US consumers, who turned increasingly to fuel-efficient models from foreign upstarts like Toyota and Honda.

Fast-forward 30 years, and today GM faces a starkly different market. Toyota has eclipsed it as the world’s top car maker, and Detroit’s Big Three must all cope with their recent record of underperformance. That malaise stems in part from Detroit’s long history of insularity: until last year, every Big Three CEO ever had come from within the American automotive business. Ford and Chrysler broke that streak by hiring top executives from Boeing and Home Depot. Meanwhile, GM is led by company veteran Rick Wagoner, who faces the challenge of remaking his company to compete with the apparently superior manufacturing and management techniques of Toyota and other foreign competitors.

Wagoner’s task is [was] complicated by the [then-]current negotiations — and strike — over its contract with the United Auto Workers. No one knows how long the UAW strike will last, but many industry watchers are estimating weeks at least. Yet any resolution to the union’s complaints may turn out to be hollow. Yes, GM is playing hardball in this negotiation — but it is doing so in response to deep structural issues in the American auto market as a whole. The long travail of the Big Three is far from done.

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Category: Company of the Day, Transportation