Making sense of the GM mantra

DISCLAIMER: Geez, do I have to declare a potential conflict of interest here? I am a member of a consortium that owns 11.8 per cent of the company I am writing about.

The company is the so-called "new" General Motors. The consortium consists of, well, every citizen of Canada ...

WARREN, Mich.

Either the top management of the new General Motors are all terrific actors, or they really do believe they have what it takes to succeed under their new ownership and organization.

Because to a, um, man, they seem very upbeat and positive about their prospects for the future – immediate, and longer term.

During his presentation to the media this week, new president and CEO Fritz Henderson introduced his new executive committee, which replaces two separate committees previously responsible for setting strategy.

Not downplaying the importance of the media in getting the company's story out, Henderson noted that "three Cs" will be the new corporate mantra:

"Customers, cars and culture. And customers come first."

Henderson believes – I have said the same thing many times – that GM's product line isn't really the problem. Vehicles like the GMC Acadia/Buick Enclave/Chevrolet Traverse three-row crossovers, the Chevrolet Malibu, the Cadillac CTS, the new Chevrolet Equinox/GMC Terrain compact crossovers, and even the Chevrolet Silverado/GMC Sierra full-size pickups have earned GM several Car and Truck of the Year awards.

All have been, relatively speaking, hits in the marketplace.

The product salons conducted as part of this dog and pony show indicated that more Good Stuff is in the short-term pipeline.

The main issue is to get those ex-customers, and millions more, to once again give GM a shot.

To do so, the company has culled the dealer body, eliminating smaller and, for the most part, less customer-friendly stores.

More important, it has culled brands.

Pontiac and Saturn have been axed altogether. Hummer and Saab are being sold off.

 

I asked Henderson if there was any indication that although the U.S. government is forcing the automobile industry to build more fuel-efficient cars, was it doing anything to stimulate demand?

After all, in July 2008, gasoline was $4 (U.S.) per American gallon – about what it is in Canada all the time, and up to half what the rest of the world pays.

It made the Honda Civic the best-selling car in the country. For about two months.

By December, gas was back to being essentially free, and the market reversed itself again.

Surely a floor price for gasoline (three, four bucks would do it) would be just what the economy – and the environment – needs?

Henderson said he was busy enough running General Motors without telling President Barack Obama how to do his job (the converse is not necessarily true).

Henderson did allow that the Cash for Clunkers program, which offers federal grants of up to $4,500 to customers who trade guzzlers for fuel-sippers, has been very successful, especially for General Motors, which has more eligible vehicles than any other manufacturer.

"Even if the customer does not buy an eligible car," he added, "it does bring them into showrooms."

Bums in seats – exactly what the entire industry needs.

But further taxes on fuel appear to be political suicide in the U.S.

GM's vice-chairman for product development, Tom Stephens, outlined the chemistry, physics and economics that will drive the car business over the next 20 years.

The global recession has depressed the price of petroleum; this recession, and those prices, won't last forever. Probably not even for long. Once the developing-nation economies (specifically, China and India) start to strengthen again, demand for petroleum will return.

All projections indicate it will far outstrip the oil industry's ability to supply; prices can only go one way.

Combined with the general migration to urban areas, this will help enable the "electrification" of the automobile, because electricity is cheap (at least in off-peak hours) and electrics work best in urban environments.

There will be a progression: starting with improvements in internal combustion engines and transmissions; mild hybrids; full hybrids; plug-in hybrids; extended-range hybrids (like the Chevrolet Volt); to the current Holy Grail: hydrogen-powered fuel cell vehicles, the true commercial implementation of which appears to still be 15 to 30 years away.

General Motors has or soon will have entries in all of these categories, and most were available to us for test drives after the speechifying was done.

But clearly, the halo car for GM at this stage is the Volt, the pure electric car with the on-board gasoline-powered recharging system that eliminates the limited-range concern about electric cars.

A visit to the nearby pre-production facility showed us real United Auto Workers building real Volts, out of real parts, using real production tools and assembly procedures.

This is done for any new GM product; when the design is verified and the build processes debugged as thoroughly as possible, the whole gubbins is transferred to the real production facility – in Volt's case, the Hamtramck plant in Detroit.

Eighty Volts are being built here, 10 per week, with an additional 30 "mules" using Volt hardware in other bodies; these will be used for durability and crash testing.

Volt's vehicle chief engineer, Frank Weber, even pulled one of these off the line to give rides to me and a host of others at GM's Milford Proving Grounds.

Capsule shot: Volt is quick, quiet and very refined, given that it's still more than a year away.

The purpose of this exercise was to show skeptics that Volt is real, and that GM is sticking to its November 2010 production launch.

A couple of things bothered me during this day.

First, the executive committee is exclusively male.

Second, I have heard similar statements about GM's "new direction" after just about every one of their seemingly annual reorganizations over the past 20 years.

All or most of the members are long-term GMers; the only thing greyer than the hair on those committee members was that of most of the media covering this event.

Is this group really going to be able to turn the culture around as Henderson has promised?

There is one thing GM has not tried before: bankruptcy. The old regime under Rick Wagoner tried hard – maybe too hard – to avoid it.

But maybe it was the catharsis the company needed to free itself from various legacies of debt, union contracts and old, outmoded brands. Just too much history to overcome.

For the sake of these genuinely nice people, not to mention the tens of thousands of jobs worldwide, let's hope it works.

Because General Motors won't get another chance.

jim@jimkenzie.com

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