There are many experts who think that the whole restructuring strategy is misbegotten. These experts think that costs are not the real problem. The real problem is the product. The cars are not good enough. The management is insular. The reputation is fatally damaged.
It is pretty clear that GM’s (and Chrysler’s) product sucks. It has sucked for 25 years or more, and (particularly in the case of Chrysler) shows no signs of not sucking anytime in the near future. They have taken their sucky product model and applied to once-venerable marques such as Saab (Volvo and Jaguar have fared better with Ford, proof, perhaps that there some hope for at least one of the big three). Rather than invest in designing decent-looking, efficient and functional cars (viz., Toyota, Honda) or reinventing themselves by adding excitement to the above (viz. Audi, Nissan), GM and Chrysler have just continued to repackage cheap, ugly and inefficient cars and trucks. Their “design” program seems to be based on an elaborate inside joke. In the case of Chrysler, that joke seems to have begun with a Batman comic book from the 1940s and then allowing someone to free associate from there. In the case of GM, the task of designing cars seems to have been handed over to the same people who have spent the past 15 years foisting McMansions on us (if GM could figure out how to put a cathedral ceiling in an Escalade, they would). As for quality, a race to the middle should not be touted as success.
GM’s and Chrysler’s (and Ford’s) business model also sucks. For the past 15+ years, that business model has relied on cheap gas and lenient regulations on “trucks” to sell bloated SUVs and pickups to people who really only needed station wagons and minivans. The fact that these companies were able to profit for so long on the huge margins they got on “trucks” only proves that Mencken was right.
At least Ford recognized that they had a bad product and an untenable business plan. Five years ago, Bill Ford tried to revamp the company on his own, and three years ago he brought in outside help to do it. At the time, Ford was criticized for trying to move the company away from a over-reliance on trucks and SUVs and towards a greener future. It remains to be seen if he acted in time.
Its not clear to me that the administration is really punting the ball another few months down the field, or that it is taking bankruptcy off the table (I hope its very much on the table), but Brooks is right (hey, it happens) – these companies should be allowed to fail. After all, they’ve earned it.