GM and Ford’s problems are certainly NOT that the world doesn’t want U.S. automobiles (their foreign sales are huge – reference Opel/Ford market share in Europe and China for example). The fundamental (ironic) problem is that AMERICANS don’t want American automobiles. Their only real problem is the North American market. And ignorant comments like yours…egging on, even cheering their demise…proves my point.

You both make valid points, but I do not think I have done a good job of communicating what I am talking about. My point really is not about how well GM or Toyota (or any company) is run. The point is that the U.S. government (an entity we always seem to personify, so I will personify it in the pejorative and monolithic sense) will never allow GM to fail. The government will certainly not let a company like GM fail when it is still true that about 1 in 10 U.S. jobs is directly related to the auto industry. I extended that point to ponder what would happen if someday Toyota fell into dire straights. Would the U.S. government similarly adjudge them too large to fail? The overarching point is that we have trod down a dangerous path with the bailout. Ironically the government has admitted not all companies can be saved and yet has not defined the parameters of what companies “must” be saved. Personally, I would like to get this ugly episode behind us and rework the system to avoid the same pitfalls in the future. That means we have to prevent companies from becoming too large to fail. It may mean breaking up GM (the way DuPont was split up . . . hmm . . . something about GM in there, eh?) and coming up with a plan to insulate our economy from the downturns that may someday befall a Toyota or some other globetrotting economy. i am sorry if that seems depressing, but as the saying goes: When did Noah build the Ark? Before the rain. Before the rain.

Lionwithoutpride, there are a lot of large companies in GM league. Most of them are better managed. GM, ford and Chrysler always had halo around them. Management always looked for excuse and likened themselves to “Americana”. Nothing is further from the truth, of course. How many of us on this blog own helicopters like Lutz (and Mrs. Lutz)? Garages full of exotic cars, some with very appealing serial numbers? Bastards stole and lied and drove company into the crapper.

I want, and expect, GM to go on indefinitely, as they are the best-run of the Big 3, even though that is faint praise.
They are FINALLY building the vehicles we knew they could 20-30 years ago. It may be too little too late, doh.
GM’s problem is they are hemorraging cash, and they can fall to their minimum operating capital of $14Billiion within a year. They need working capital, and they definitely didn’t save for a rainy day, back in the SUV boom, or when they had 40-50% market share, not all that long ago.

Chrysler has some cash on hand, so GM sees a quick fix. But in the end, it might be GM’s last quick fix. They don’t think more than 5 feet ahead.

GM has ALWAYS BEEN HUGE! That isn’t the problem.

They are competing in a global economy with companies that can do what they do, but more efficiently, and at lower costs. The US worker is too expensive, globally, and that is a domestic disadvantage, but the domestics are poorly-managed, and when they do something well, they milk it, and don’t think about the next level of innovation. In a word, we get lazy and complacent, and we burn the profits as fast as we make them.

Now it is rainiing, and the dam is ready to break, because we didn’t plan ahead.

GM will just downsize, and consolidate every expense that doesn’t help it sell cars here and in China. GM has done A GREAT JOB IN CHINA. If they can hold a 15-25% market share there, they will be golden.

You are looking at size as the problem. GM was always huge. When they built cars in a vacuum, they’re flaws were easy to ignore.

Now that GM has to compete with other big boys, they have to be smart.

Their wake-up call came late, and now they are chasing faster, smarter foreign companies, that know what US buyers want/need more than you do. That’s a sad commentary. That’s the real problem.

DrFill

Of course Toyota is a well run company. That is part of the problem. As GM is now, Toyota is simply getting too big. GM was once a very well run company. Toyota is not infallible and your boosterism of them is the same sentimentality that has created bubbles out of other companies like GM. And, besides, you are just making my own point for me. You are saying that Toyota is creating jobs at a time when the American companies are not. All that indicates to me is that Toyota has become the lumbering giant that will contribute to future economic debacles.

One can hide one’s head in the sand and say, “it is not fair that Toyota and other responsible manufacturers should be punished for the faults of GM, Ford and Chrysler!” That approach is scary because history has shown again and again that no one stays on top forever. At some point, Toyota will falter. As they increase their stake in the American economy, do you really want to take the chance that someday your children will be taking out loans to support Toyota, which “is too big to fail?” Or, do you want to learn from history and begin asking questions about how we can avert future economic troubles whose genesis looks remarkably similar to GM’s ascent?

There will come a time when America is no longer the dominant superpower of the world; but, if we are clever enough, we can ease the fall from power and plateau at a point from which a rebound is far more likely. Again, this is nothing against Toyota. I only chose them as my example of a future problem because they are so well run and dominant. Again, the point to take away is: NO COMPANY SHOULD BE SO BIG THAT IT CANNOT BE ALLOWED TO FAIL. Antitrust laws exist to promote healthy competition and to avoid the necessity of things like bailouts. It seems blind will to believe that Toyota will never be in GM’s shoes. That is exactly the type of hubris that has led to GM’s current woes.

One final note. I am not against Toyota. Looking ten years ahead, as Dr. Fill suggests, is always a good thing. And anything that is good for Japan’s economy is good for U.S. hegemony in Asia. Japan is a stalwart ally. Moreover, I have read accounts of Toyota execs talking about how the failure of any of the big 3 American manufacturers is bad for Toyota as it simply increases the costs of parts suppliers that supply all of the auto manufacturers and that hurts Toyota’s bottom line. That said, however, I am more than willing to retract my argument if someone can tell me how Toyota is not just as dangerous as GM since it is now just as big. If anything bad did happen to Toyota, it would hurt the U.S. economy. Toyota’s leadership will change and, unless one buys into ethnocentric concepts of racial superiority, there is no guarantee that Toyota will not, at some point, have a bad set of leaders (even if those leaders are looking ten years into the future).

BTW, Ford is in the worse shape.

I wish I could say that about Ford.
DrFill

We need more than two American car companies. And thanks to globalization, we may someday see a situation in which we have to look at how much we allow foreign companies like Toyota to become integrated into our economy. I would argue that, thanks to the number of plants Toyota is running in the U.S. and the number of people who own Toyotas and thus need service, Toyota has too much influence on the American economy to be allowed to fail. Foreign manufacturers are availing themselves of U.S. law by entering our stream of commerce, so it is utterly conceivable that our government could looking to limit the impact of foreign companies. Anyway, diatribe aside, it is time for the U.S. government to look again at some of our biggest companies and decide how much of their size is necessary to compete globally and what is the appropriate balance to keep those companies from becoming financial liabilities to taxpayers.