June 05, 2008

Is General Motors Dishonest, Incompetent or Both?

The recent decision by GM to close the Oshawa truck plant is a devastating blow the local area and employees. Living within the area, I am seeing and hearing the effects of this announcement everywhere I go. The fallout is going to be felt by so many. I completely support the efforts by CAW and the employees are trying to make to get GM to abide by their recently signed contract. What type of company and its leadership pulls such a stunt? Who signs a brand new, concession-laden, unprecedented agreement than turns around and takes full advantage of the situation?

Obviously there are problems with the GM leadership.

A company such as GM doesn't decide to close a truck plant and ultimately restructure their entire company overnight. In fact, this type of planning (restructuring, etc.) takes months - Tim Horton's doesn't release a new food product without months of planning. What this means is that when GM negotiated their recent contract with CAW (less than three weeks ago), they negotiated in poor faith. That may be a strong accusation but the pieces are there to support such a theory.

With rising fuel prices, less demand for trucks, the growing environment focus and so forth, the writing has been on the wall for sometime and the GM brass would have seen it. Market trends aren't some elusive creature that appear out of nowhere and then suddenly disappears like Polkaroo. There are reasons why investors are making so much money these days on speculation. The information is available and with some knowledge and common sense they can be put together to form a future outlook. The warning signs and signals would have been in place months, if not years, ago and GM would have begun their restructuring plans long before they signed their current agreement. Therefore, it's easy for me to accuse GM of bargaining in poor faith. It's easy to accuse them of hiding relevant and important information, and making empty promises just so they could take advantage of CAW and its willingness to make concessions on wages and benefits.

On the flip side, I'm sure there are skeptics that may question whether or not GM had full intentions to dupe CAW. One could make the case that they signed their recent agreement to extend the life of the Oshawa truck plant to 2011 and only decided to renege based on more recent information. However, if that's the case then that would mean the decision to restructure, including closing the truck plant is a hasty and reactionary decision. Therefore, one could question the wisdom of their decision and the entire decision-making process of the brass. This would mean that GM is being run by fools and the entire company is likely doomed.

Maybe that is the problem. GM is run by damned fools. After all, part of the reason the Japanese manufacturers have been able to penetrate the North American market as well as they have and stem the economic downturn is because of their ability to foresee consumer trends and develop efficient manufacturing methods. They did this long before the domestics and it's forced the domestics to play catch up. This was a mistake made by the domestic companies years ago, however. And for them to still be ignorant of the situation would mean they exist in a strange time warp or are not fit to be running the company.

That may also explain why GM wants to shutdown the most efficient truck plant they own, which is another real head-scratcher. If GM isn't completely stable financially, and so it needs to find ways to cut costs, produce better products, etc. is it the wisest step to shutdown your most efficient and reliable plant, and move production to a factory that costs you more? There's something missing in this equation and that is competence. Whoever made that decision likely did so rashly and is likely the same person(s) that possibly missed the whole change in the trends and economy. And if that is the case then the whole recent restructuring decision deserves to be questioned and the decision-making process and reliability of management needs to be reviewed.

When it comes down to it this recent issue with GM is either one of dishonesty or one of incompetence. Either GM intentionally hid information from CAW during the bargaining session and had no intention of honouring their side of the agreement or GM is being run by fools who have missed changes in trends and the economy and are making poor reactionary decisions. Which is it? I'm leaning towards dishonesty since one would think that GM, like the other big North American car companies, had learned from their earlier mistakes and lack of foresight. I don't believe a company makes rash decisions when it comes to a major restructuring. A company cannot have the detailed outline of such a move in only a matter of days. Though who really knows? Because even if this is a case of dishonesty, that would still reflect poorly on the ability of the management to do their jobs effectively. But in the end, it's still the workers and the Durham region that suffer. And ultimately that is what we should be focusing on.

3 comments:

The View from Steeltown said...

GM is both dishonest AND incompetent. They broke the letter and the spirit of the collective agreement with the CAW and should negociate an honourable way out. A commitment to bring in a new car at the plant would be a good start.

Frank said...

I am hoping that the dust will settle soon, and it all turns out to be a big misunderstanding. Perhaps GMs intent is to close it temporary to retool for a new model? We can only hope for the best.

Kyle said...

Steeltown,

I actually worry that may have been the plan all along. They negotiated many concessions with CAW that involved freezes and cuts to salaries, benefits, etc. In return GM promised to keep the plant open and whatever. I worry that now they are going to use the news to get even more concessions out of the employees. It's going to turn into a "give us even more or else" type of situation.

Frank,
That would be ideal. It would be nice if the lines of communication only got crossed somewhere and this will turn out for the better. Unfortunately, from what I'm hearing from people within GM, both on the floor and in the offices, is that the information is accurate. However, you never know really. I'm going over to a CAW rally later today and I'll get the full details then, I hope, since the GM brass and CAW would have talked by then.

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