BPW Foundation's Women Misbehavin' Blog

Well behaved women never make history

The Collapse of a Titan

Posted by jpflaste on June 3, 2009

This Monday General Motors filed for bankruptcy marking the official collapse of the company into 60% government control (12% to Canada, 10% to stake holders, and around 18% to UAW). Stocks closed on Friday at $0.75.  It was announced that 2,000 dealerships would be closed and the headquarters shut down. It is being forced to sell its European, Opel arm and trade restrictions are being placed on importing the smaller more fuel efficient cars they manufacture in Europe and Asia.  So far none of this looks like the government will be able to bring GM out in tact and if so it will be organized so far from where it needs to be self-sustaining in a global market, the government is in for the long haul.

detroitAs a person who spent the better-part of her childhood living in Michigan, it’s not hard to fathom the effect this will have on the economy of a state that already has a 13% unemployment rate. The lower and middle classes hit the hardest as factories have closed, putting many workers into a job pool where they will not be able to even make half of the hourly wage they were previously earning.  The list of individuals affected by this closure is far-reaching and expansive including: dealer mechanics, salesman, line workers, executives, supplier company employees, and engineers to name a few.

The question on everyone’s mind seems to be; how did this happen? How did a company that once epitomized the American dream fall so far? While I am glad that the brand is being saved, I’m a little discouraged at the control and involvement of the government in what was previously a private industry.  With a discount to consumers who purchase of a Chevy Volt described in TARP, what happens to other US automobile manufacturers? There are extensive trade restrictions being placed on the global operations. What are the long-term effects to not only the industry, but the taxpayers?

There are so many places where fingers can be pointed. One can say that they didn’t adapt when consumers were looking for better, more fuel efficient cars. In a company that hasn’t made a profit since 2004 and has seen declines for at least the past 15 years, you wonder why something wasn’t done earlier?

complete-book-gm-muscle-carsThe companies that survive in the long run are those that adapt to the market as a whole and have the flexibility to adjust to a global market. While the UAW facilitated great pay and benefits for its employees,  it also limited the changes companies could make and in the end it is the workers that suffered and are out of a job.

It is important that other corporations look at this and be proactive in adapting their workplace, services and products to the future. Additionally, it is important employers don’t use the collapse of companies to scare workers into accepting harsher work conditions and less benefits.  A happy worker is a productive worker that stays and saves in training costs.  As Michigan and other states struggle to rebuild the economy through new technology, new manufacturing processes, and the creation jobs, it is important that employers and employees work together to create a workforce that is sustainable in the long term.

So as you are faced with less benefits and pay, just remember as of today 90% of the labor force is still considered employed.

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