God bless GM...

The era of procrastination, of half measures, of soothing and baffling expedients, of delays is coming to its close. In its place we are entering a period of consequences.
…Winston Churchill

It may not be said in Automotive industry context, but it completely suits today’s scenario of Auto market.

So it is now pretty evident that now GM will follow the footsteps of its younger brother Chrysler. June 1st seems to be the date when the king of Automobile will come in the court to file chapter 11 bankruptcy and will try to protect its remaining reputation in the global market.
Last quarter result seemed to be the final nail in its coffin, when GM had reported net loss of $6 billion (Loss of $9.66 per share), though it was less than expected as per Reuters, who has estimated loss of $11.05 per share. I could only manage to stop my laugh after reading those line “less than expected” even after posting $6 b loss. May be they wanted more from the former world no1. But this time honor goes to new world champion Toyota after posting quarter loss of $6.9 billion with annual loss of $8.9 billion. Now the lean company Toyota president Mr Watanabe must be feeling the heat after reporting consecutive bad report cards. OK, I am not going to comment over Toyota.

Showing consistency in negative growth GM has reported significant drop in its market share. Only hope came from GM Asia Pacific reason where in spite of overall market sell was down GM was able to post some single digit growth rate. Thanks to China and India where GM is reporting positive growth rate. Buick is trying to makeup of GM loss, which has reported around 60% growth in China. India also is trying to give it share in GM growth by giving positive result in the highly competitive and crowded small car segment with Chevy Spark. Captiva is also proving to be right choice but it deals in a highly low volume market segment in India. So, after this quarter result now GM CEO Mr Fritz Henderson is now accepting that bankruptcy is now the most feasible option. Well, I don’t see whether they have any other option.

This week only I was attending All Employee Meeting with Ron Yuile, Executive Director and CEO GMPT-AP, Where he was addressing curious GM India employee and was trying to answer the question. Not surprisingly the talk of bankruptcy was in the core of talk. Well, he has said that now GM bankruptcy is almost inevitable and we might be filling for chapter 11 on 1st June, deadline given by Obama government. What I could not understand him saying that in August GM will be out of bankruptcy and New lean mean GM will take off from there. I wish the same. But will it be possible? If you have such a futuristic vision, how could you let this situation come? I know filling for bankruptcy is your choice but at the same time coming out of it is not yours and its not so easy. You have to make tougher and quick decision then and after seeing the past report of GM decision taking capacity, it doesn’t give a bright hope. But yes, Current CEO Mr Henderson seems a bit quick and clear while taking decision. Here GM has started relying on the positive starting of Chrysler bankruptcy and hoping that Chrysler will come out of it within two months. Hence to go for a quick bankruptcy should be a good and feasible way for GM too. Sounds good. But is it for real?

Chrysler major operation stays in North America and Fiat alone was capable of taking control of the troubled automaker not to mention at a fire sell price. Even after all these now it seems tough for Chrysler to come out of chapter11 in 2 months, as per Reuters analysts it may take up to 2 years. Now here is GM, Operating almost all over world. I am not going to discuss about GM-AP and GM-LAAM operation as their financial results are not as bad if not good. But North America and Europe operations really needs a complete face lift. Where GM NA is facing the burden of seven big brands (Chevrolet, Cadillac, Buick, Pontiac, Buick, Saturn, Hummer), Europe also is in a deep mesh. Now its pretty clear that GM will be almost done with Europe market and drastically reduced in its home market too after either selling or phasing out its legendry brands. I really feel sorry about Pontiac, one of my favorite car with more than eighty years of glorious history and models (GTO, Bonneville, Sunfire,G6, Grand Prix, Grand Am, Solstice, etc)behind him.

After Saab, now its other strong unit Opel is under the hammer. Fiat, Magna and many others are waiting to grasp this golden opportunity to take control over this brand. Recently launched Opel Insignia is doing pretty well but now its late for GM to keep maker of Roadster. They have to say now bye (buy) Opel.Since last June GM is trying to sell its Hummer brand which is just proving as keeping and feeding an elephant in recent years. But even after one year GM is unable to close a good deal for its iconic brand. Now it’s clear that it may not get the desired price for this Off-road 4X4 monster. Same way Saturn is also not in the good book of GM. So here is the situation, Once after acquiring several brands to create a global common name GM, which has kept all the brands under one umbrella for almost a century now they are removing them one by one.

With four brands Chevy, Cadillac, GMC and Buick, GM will be a relatively small company but will it become a lean and profitable organization…lets see. With reduced brands and reduced market share GM will not reclaim the top spot in the Auto industry in near future. But I wish at least it mark its presence in the future, as it was my dream to work in GM after visiting Renaissance Center.

In case (most likely) GM files for bankruptcy, end of Detroit reign will almost come to an end. As only ford out of Big3 will remain out of court but again even Ford is now much smaller than its glorious days and now struggling to get rid of its quarterly report in red ink.Coming Back to GM now it’s a critical time or can say last chance to survive. Whatever mistakes you have done in your golden time will always hunt you back in your turmoil period. Its like there is no escape from mistakes. But yes, learn from it, don’t repeat it and grow over it are our only obligations. Prosperity and poverty may show two extreme faces. Its prosperity which defines your strength, guts and wisdom but its poverty which tests them.

Even after shutting down many plants and laying off thousands of employee if GM survives and emerge stronger then it would be a real life time accomplishment of Mr Fritz Henderson. I wish him luck...God bless GM.

Now or Never…

For last couple of months I was closely following the bailout news for the Big 3 in USA. GM and other two of the Big3 group was desperate for this support…I know they were anxious far more than me but like many other employee of GM, I was curious too. It was a must needed fuel for the cash starving US Auto Industry.
After the initial jolt from the Senate this loan of $17.4 billion came as a relief, at least for now. Out of this $9.4 billion will be provided to GM instantly and remaining amount on later stage. Chrysler too will get $4 billion right now. As a GM employee I welcome this step of the President Mr. Bush. But considering the way the big boys of these companies have performed in recent years, its totally unforgiving. Even as per the statement from White House, filling for bankruptcy would be the most eligible option for these automakers but considering already crumbling economy, loosing another sector entirely would be a knock out blow for the country.


Currently around 2,39,000 employees are working for the biggest manufacturer of Automobile. Combining all the suppliers, vendors, dealers and other related industries almost 2.5 million workforce is related directly or indirectly to GM. Considering the overall strength of the total workforce in automotive industry which is close to 3.5 million, this is a major portion. White House major concern was loosing these millions of job resulting from the collapse of Big3. How can you take this job loss of millions of people in the case of this economy slowdown? Even after paying billions of dollars of these guys to other financial companies in bailout and in a result you are laying off these poor taxpayers.

Its not a story of single night. For last several years all these American companies are loosing their money and market share quarter by quarter. How can these guys be so immature not to take a notice of this? Out of three Chrysler is the worst performer by loosing market share by 28%. GM and Ford are not far behind either.


Lets talk a bit about GM...
Since 2004, GM has lost more than $75 billion. Is it ringing some bell?
Still sounds not very appealing data, lets talk about another one… In a year company has lost more than 90% of the company share value. For decades, GM has provided several examples of their products, methods, and management processes, reviewed as case study in Ivy League colleges, which has kept this company at no.1 position for most of the part of the century. Now here goes another example from GM to be reviewed as a case study… how they lost their market share and everything so rapidly?
...Interesting?
You bet.


On September 30 GM had the reserve of $16 billion, not enough to continue operation past December. With this government loan, now GM can at least think to continue its operations for next few coming months. But at the same time again this loan is not assured one on which GM can blindly rely. If by March 31st GM doesn’t come up with a viable plan for restructuring the company, this loan will be called back and this will guarantee the bankruptcy of the organization. Pretty surprising, till this date GM and other companies could not come up with a plan which could satisfy White House. Just hope they have any such viable plan.


Talking about another one, Ford is currently in a better shape. Irrespective of their other bailout mate, Ford may need the cash after couple of quarter. Thanks to Mr. Mullaly who showed at least some vision and started restructuring his organization from 2006 itself. Selling out its loss making units, optimizing the production lines and reducing their workforces have put Ford today in a far better health than GM and Chrysler. They acted and acted aggressively. Other two should have at least taken some lessons from this company.
But at the same time Ford is not immune of the market and if GM and Chrysler collapse, it will shake the foundation of Ford too.

Next in the row is Chrysler, worst performer among three. Now seems even Cerberus is not willing to feed this elephant. According to their board of directors, Cerberus has already put more than allowed cash in this cash starving company. Looks like now they are just looking for a buyer who can buy this company. While buying Chrysler they looked very happy as thought they got a very cheap deal and after some time they will either sell this company for higher margin or they can turn around this company in a profitable one. Now it’s a well known fact that Cerberus has burnt their hands in this deal.

Cerberus is no longer in a mood to retain Chrysler and currently GM is not in a good health, so that it can go with this merger deal. It may be critical decision for both of them. It may not be good for Chrysler employee, as it will result in heavy lay off in that organization. Also, GM will have to invest billions in this cash strapped situation. If GM could not get it right, it will sink the ships of both the company together. But GM can get enough liquidity from Chrysler with this deal. Also, they can work together on the overlapping technology between two companies as well as they can have common dealers. Looks like this deal would be lucrative for GM, but again to go for it, GM should look for all the aspect as this could be their last mistakes…in case.

GMAC is among another loosing sector of the organization, which was once a major source of GM marketing and selling of its cars. But currently its share in the GM sell has reduced drastically. Currently GM has 49% stake in GMAC and Cerberus owns 51%. One deal GM can check to exchange the GMAC stake to Cerberus for the stake of Chrysler.

GM current situation is the reward of the inefficient management of the inefficient management for a long time. Even GM is making big promises and swearing for a revival, how much these top guys can be trusted, is a concern.
Gone are the time when you had the luxury of sitting and thinking. Its time to act, react and perform. Much needed restructuring of the organization is the most vital decision right now, which management has to do it with priority.
The most ambitious plan of GM is getting delayed. Looks like they were waiting for the bailout. Its beyond understanding why the most hyped and ambitious project is taking the back sit.

What should be the decision on Hummer? It’s an ancient question in GM. Surprisingly, in this critical situation, such critical questions are not getting answered for more than a year. How can a company be so lethargic in such adverse scenario?
Its not about what you lost, but its about what you could save from the house in fire. While in storm, to make your ship light you have to through the heavy stuffs out of the ship, no matter how much dear they are. Hummer is currently one of the heaviest loads on the company, which is supposed to be removed in spite it is the image of GM in off road vehicle segment.

Even after getting loans and big promises by Big three to make their company more competitive, leaner and efficient, questions remain unanswered. Considering their lethargic approach in reacting to this tragedy of lifetime, they are not looking very aggressive. If not now…when? Didn’t they have enough lessons from their past?
Its never too late…is this statement holds true for these companies right now? Do they still have chance of revival? Even their own country and President has lost their faith in these companies. While giving loan Mr. President has told, to go bankrupt would be the best option for these companies but considering already collapsed market, this is not a good option to loose another millions of job, considering this month only more than half a million got laid off. It clearly shows getting loan was not the very choice of White House. They got loan considering the adverse effect that it may cause with collapse. But clearly those guys were not pretty happy with the management and the way they are working.

This is another, may be the last opportunity provided to these companies. Its their last chance to prove. Its nothing less than do or die situation.
Also, to counter Japanese all three have to act together and with force. Together they may consider a joint venture to share technology and facility at least for coming few years. It may reduce the unwanted models from the market and will be beneficial for all 3 at the same time. It may cause initial job loss, but it will help to regain the reputation of US in the automotive industry. It will be a win-win situation for all 3 and also for employees eventually.

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.