Howes: Detroit bids farewell to 'Generous Motors'
Generous Motors is officially gone.
Its successor is led by an executive team determined to avoid the mistakes of the past, to make an unsentimental assessment of the present so they can place smart bets on the future. Otherwise, the thinking goes, the automaker’s second chance coming out of its historic bankruptcy will be its last.
GM began a planned wave of involuntary salaried layoffs Monday expected to affect more than 4,000 salaried employees. The cold-eyed reality driving that restructuring, including the idling of five North American plants, can be hard to accept in a culture accustomed to seeing hard decisions made only in bad times. Now is not one of those times: GM is booking roughly $1 billion a month in pre-tax profit in the United States amid strong U.S. sales and a national economy regularly producing jobs.
It's harder still for folks who assume that a $49.5 billion taxpayer bailout of GM obligates the automaker to preserve jobs it says it doesn't need for products that don't sell coming from plants it can't fully utilize anytime soon. Wrong: GM's brass has moved on, even if the rest of America hasn't.
"Just a decade ago, the American people and the federal government stepped up to save General Motors in its time of need," U.S. Rep. Dan Kildee, D-Flint, said in a statement. "Now it is incumbent on General Motors to have the back of American workers and invest in American manufacturing. We didn’t rescue the American auto industry to save jobs in Mexico. The American taxpayer rescued General Motors to support American workers.”
GM doesn't see it quite that way, regularly emphasizing that it has invested $22 billion in its U.S. manufacturing since emerging from Chapter 11 in 2009. And, second, that responsible stewardship of that taxpayer investment means reckoning with reality and managing for the future, not nursing nostalgia for the ol' Motor City.
Welcome to the new GM paradigm: cut, restructure and redeploy in good times because waiting until hard times arrive is too late. Understand the new cohort of competitors is not in Volkswagen AG's Wolfsburg or Toyota Motor Corp.'s Aichi prefecture, it's in Silicon Valley. Remember daily that the likes of Apple Inc. and Google parent Alphabet Inc., husbanding cash hordes measured in hundreds of billions, can afford to make mistakes.
Detroit can't. It can't afford to keep making traditional sedans in Detroit-Hamtramck, Lordstown, Ohio, and Oshawa, Ontario, the market isn't buying. It can't risk sinking scarce investment dollars in proven, if unprofitable, Auto 1.0 products at the expense of the Auto 2.0 spaces of autonomy, mobility and electrification. It can't deny that smart capital is eyeing what some call "automobility," and that the ability to field driverless cars with fewer parts and longer life cycles could start arriving in five years or less.
The implications of that transformation are profound for traditional automotive stakeholders, arguably the industry's biggest change since Henry Ford's Model T rolled off the moving assembly line. Unions could face lower production schedules of vehicles requiring fewer parts; software geeks could drive engineering more than gearheads; dealers could face less demand as ride-sharing fleets reduce demand for private ownership, starting in major cities on the coasts.
It's a years-long process shaped by technological advancements, setbacks and regulatory oversight. But it's coming, powered by policymakers in the world's two largest markets — China and the European Union — and their growing antipathy to internal combustion engines, especially in their most crowded cities.
None of this is comfort to the people losing their jobs this week and in the coming ones. Not to the assembly line folks in Detroit and Warren, Ohio, Maryland and Ontario facing the wrenching decision to uproot and move to a surviving GM plant in another state or leave GM altogether. Not to politicians like Kildee and others in the Michigan and Ohio delegations who are smart enough (most of them, anyway) to recognize the fundamental change these moves by GM portend.
And not to the state that helped put America on wheels. GM's restructuring decisions are coming in the same year as national contract talks with the United Auto Workers, inviting the kind of pushback usually reserved for extraordinary times — the kind this town hasn't seen in living memory.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.