Renaissance Center: Waiting for Renaissance

Once upon a time there was a company called GM…and story goes on.

Above line may seems like a line from a Science Fiction book where a character is chatting with another about the automotive industries of past. The question is… how far is that future?

Not surprisingly GM has created the most reputed name in the Automotive world ever which belongs to several brands and their world class models. Ruled the planet for more than three quarter of the century, it is the Blue Whale of Automotive Ocean. And if someone is saying less than a couple of year before that GM is going to die in a year…everyone who has having even the slightest idea of this industry on wheels would have think that person is the most crazy and foolish person in this world. But observing the current situation of the market, if someone is saying GM will survive beyond six months (here I am becoming optimistic) without government support, again he/she must be considered now in the same category as above.

After loosing its share value more than 95% in almost a year, once one of the biggest company in the world is on its knees in front of the government asking for a bailout. After the report of third quarter loss of $2.5 billion company market value dropped to a record low of $2.67 billion (per share value $3.36, Nov11, 2008). Cash reserve of the company came to an alarming value of $16.6 billion after the end of third quarter. As per company it needs between $11 to $14 billion to remain operative. Seeing this data and looking at the current market trend end of GM seems inevitable. Even after the assurance by President elect Obama, survival of GM is not guaranteed. As per Deutsche bank analyst, GM has not enough cash to continue operation beyond December and without government assistance collapse of GM is certain. Every other day GM share is touching new low which is not only giving blow to already injured company but also shaking the trust of people in the company’s future.

Such bad shape of the company didn’t happen in a single day, month or quarter. But GM along with Ford and Chrysler were loosing money for several past years. Even after seeing the down trend, these companies were too stubborn to acknowledge the loss and its future impact. Result, in 1960’s when GM has half the market share came to the first decade of 21^st century when it has merely around 20% of market share. They are loosing on their home ground by the outsider. Seems outsider has a better idea of their home customers. Fall of GM will not only risk the millions of job losses but it will be the epicenter for the radical crises which will include tier1-tier2 suppliers, dealers, financial market. Even US government understands that GM is too big to loose but at the same time GM is so huge that it may not be easy to protect it as a whole. Initially request was of $25billion for bailout for the Big three was modified to $50billion in just a month. But even the medicine of this much amount doesn’t guarantee the cure of this illness.

If management truly wants to come out of this trauma they need to reform the whole organization and redefine the way it operates. Rules set in the last century may need not be correct in the current scenario. If you are loosing at your home pitch where you have ruled for a century then certainly it’s a high time to recall your basics. Not just rely on the help which may or may not come in the way but act accordingly with all your guts.

When whole world is moving towards fuel efficiency, is it smart to bank on your previous successful fuel thirsty models. Change with the time and adapt fast with the new technology. The technology which has been developed by GM is being used by other company to capture its home market. This is surly the lack of vision. Otherwise, electric vehicle which was the concept of GM motors would not come from other company’s stable. Also, GM is a cluster of several brands like Cadillac, Chevrolet, Pontiac, GMC, Saab, Saturn, Buick, Hummer which acts like hindrance in many cases for upcoming brilliant design. To reform the company whole company need to be restructured. Even USA government is not going to provide a big blank check unless GM assures that it is going to restructure the company for the future.

GM is not just a company which will end if it fall, but it will be the end of the dreams, efforts and believes of millions of people who had and who are working together to help the civilization to move fast for more than a century. Even in this crisis of the lifetime GM is keeping its head up for the future. Brilliant designs and breakthrough futuristic cars are in the pipeline which are committed to change the way we used to travel. Volt, Eflex are just few names who are going to redefine the future of automotive industry but their own existence is dependent on the future of the company. To redesign the future it is needed to redesign the whole structure of the whole organization. Its good to have big ambition and dream of bright future but don’t forget the shaking present which is the foundation for the coming next 100 years of GM and Automotives. Lets hope the story of GM doesn’t shape as the story of dinosaurs but it turned to be the story of the evolution. We may not have the leadership of legendry Lee Iaccoca this time but we do have the learning of the episode of Chrysler revival. Seriously in this high time we are missing his kind of leadership.

Nevertheless its not time for expecting a hero to come and save but to execute as a team. Lets hope and work together for a bigger, brighter and stronger future and bring a brand new Renaissance at Renaissance Center.