GM (GM): One Hundred Years And No Experience

GM (GM) is celebrating its 100th anniversary this year. Cake and candles. It has even introduced its new Volt electric car, which it says is the future of the company.

In the midst of the party, it appears that GM and its US peers will get their $25 billion in loan guarantees from Congress. That buys them time to retool their plants to make more fuel-efficient cars. That may not matter since the Japanese already dominate that niche and car sales around the world are falling.

GM says it can make up another $15 billion by selling core assets and cutting expenses. It has decided to go outside the company for help. According to The Wall Street Journal, "GM has hired a company to assist it in identifying ways to save money. GM didn’t name the company." General Motors did not name the firm because bringing in outsiders to help cut costs is too humiliating and defiles the image of management as operators with any substantial skill.

After a hundred years of experience GM should not need hired guns to tell it how to run its business. GM’s CEO Rick Wagoner has a Harvard MBA. He became the company”s CFO in 1992. He should know his way around the place.

The idea of bringing in consultants to help solve GM’s cost problems is a sign of how far the management of the firm has gone astray. The company should have ample ability to cut its own costs. If that is not true, GM is in even more troubled than most on Wall St. could imagine.

Douglas A. McIntyre