Our Economic Winter: The Continued Challenges
Monday saw the Bankrupcy of GM. A once iconic symbol of America is now going to get a "lifeline" from the Government to emerge from Bankrupcy. Over 20,000 people are going to lose their jobs in the "rustbelt".
What is certain is that the Auto industry will continue to consolidate. Cars are not being sold and large dealerships seem to be virtual ghost towns. I was at one dealership on Monday and noticed how sales reps were either surfing the internet or just somehow "sitting" around. At a meeting I was at earlier on Monday, one of the participants in the roundtable noted that he was laid off from his job at the local Infiniti dealership because there was no need for him anymore because no one was buying cars.
As I have seen the demise of GM, I was amazed as to how Ford seemed to understand the trends. Fortune's recent article on Ford's CEO again reminded me about what is possible when there is a management team that anticipates rather than reacts. But, I also think that Rob Cox and Antony Currie of breakingnews.com are right when they note that Ford will be at a competitive disadvantage because of the role the Government has played in the bailout of GM and Chrysler. It appears that Chrysler will be emerging from bankrupcy soon under new ownership.
My only concern here is for all who are in the midst of going through a transition process to assess where they go from here. I am of the view that with every crisis, an opportunity can indeed arise. The excess capacity available to factories can indeed be put to good use if it is managed properly. But, if this transition is not managed right, the political price paid by the Obama Adminstration will be horrendous. Europe is trying to save what it can from GM Europe with what it did by providing bridge financing as discussions with Magna continues. Europe has to do what it can to save jobs because the Eurozone unemployment rate just hit a 10-year high of 9.2%
Will a new GM emerge? Will it be smarter? Can it continue to navigate through the continues stormy waters?
What is certain is that the Auto industry will continue to consolidate. Cars are not being sold and large dealerships seem to be virtual ghost towns. I was at one dealership on Monday and noticed how sales reps were either surfing the internet or just somehow "sitting" around. At a meeting I was at earlier on Monday, one of the participants in the roundtable noted that he was laid off from his job at the local Infiniti dealership because there was no need for him anymore because no one was buying cars.
As I have seen the demise of GM, I was amazed as to how Ford seemed to understand the trends. Fortune's recent article on Ford's CEO again reminded me about what is possible when there is a management team that anticipates rather than reacts. But, I also think that Rob Cox and Antony Currie of breakingnews.com are right when they note that Ford will be at a competitive disadvantage because of the role the Government has played in the bailout of GM and Chrysler. It appears that Chrysler will be emerging from bankrupcy soon under new ownership.
My only concern here is for all who are in the midst of going through a transition process to assess where they go from here. I am of the view that with every crisis, an opportunity can indeed arise. The excess capacity available to factories can indeed be put to good use if it is managed properly. But, if this transition is not managed right, the political price paid by the Obama Adminstration will be horrendous. Europe is trying to save what it can from GM Europe with what it did by providing bridge financing as discussions with Magna continues. Europe has to do what it can to save jobs because the Eurozone unemployment rate just hit a 10-year high of 9.2%
Will a new GM emerge? Will it be smarter? Can it continue to navigate through the continues stormy waters?
Mike Pouraryan
