Glenn writes about GM’s problems.
This is an issue of personal resonance with me, and one that I write about with heart heavy, because I almost certainly wouldn’t be here blogging, or blogging about the topics that I do, if it weren’t for GM. I grew up in Flint, Michigan (unlike Michael Moore, despite his claims), the home town of GM. It was part of the proud history of my town, and much of my third grade education was devoted to learning about it. I remember the tales my grandparents told of the proud stand of the union in the 1937 strike, how through the long weeks wives and mothers brought their husbands and sons sandwiches to pass through the factory windows during the lockdown on south Saginaw Street at the Fisher One plant, now closed, around the corner from which my brother owned a house in the 1980s, when it was still operating.
My father was a GM executive. GM put food on our table, paid our mortgage, paid for the public schools that I attended (however abysmal, but at the time, they were probably as good as any in the nation as a result of GM-provided property-tax payments, and the Charles Stewart Mott Foundation–C.S. Mott was one of GM’s founders), and helped fund Mott Community College, which I attended prior to going to engineering school at the University of Michigan in Ann Arbor. And of course, it put many cars in our garage and driveway over the years (most of them GM products).
But the movie October Sky resonated strongly with me, because I saw in some ways GM as the coal mine that kept me from the stars (despite the fact that GM actually played a key role in Apollo–AC Spark Plug Division, for whom my dad worked at the time, built the inertial platform for the Command Module and Saturn), and my father as someone who couldn’t understand how anyone wouldn’t want to work for the company that had treated him, a kid from Brooklyn who moved out of the big city to marry his midwest sweetheart after the war, so well. I remember his shock as I spurned his company cars (almost invariably Caddies, or Caddie wannabes, like Buick Electra 225s, which handled like ocean liners with flooded bilges) for my own MGB-GT when I went out on dates.
Of course, it wasn’t nearly as bad as the movie–my father even tolerated, if he didn’t understand, the fact that I preferred MGs to GM as a youth (and truth be told, to the degree that MGs or their like are still being produced, still do).
Part of the parallel was that I worked summers for the company to help with college bills (getting the jobs through the influence of my dad, of course), and it helped motivate me to study harder so that I wouldn’t have to spend the rest of my life there. One of the things that these summer job experiences taught me was that in addition to the fact that they made lousy cars (even then, in my humble sports-car-loving opinion), they were dramatically mismanaged, and that ultimately (though I didn’t imagine that it would take so long) they had no future.
Now this has all caught up with them.
General Motors is a powerhouse company of the early twentieth century, in a slow-motion collision with the twenty-first. By some estimates, several thousand dollars of the cost of each car they sell goes to pay health care and retirement benefits of their employees. As more people retire, this can only get worse as the burden grows.
Much worse, like the Catholic Church, which I wrote about earlier today, they’re not prepared for the health-care breakthroughs about to come about. One would think that improvements in health care would be a boon to a corporation with many billions of dollars in annual health care costs, and from that narrow standpoint it may. But what happens to that same company when it also has a liability in the form of a guaranteed annuity to its retired employees (and future retirees) as long as they live, when as a result of that improved health care, they stubbornly refuse to die? Virginia Postrel points to a recent article by Holman Jenkins (subscription only, sorry) in the WSJ about GM’s troubles which alludes to this:
Mr. Wagoner has decided that GM will go the final laps in its race with the mortality tables without the possibility of any hits that Zeta might have spawned. This may be entirely rational, but the grim reaper had better hold up his end of the bargain.
Given current advances in medicine, it’s looking like a sucker’s bet that he will.
I’m grateful to GM for what it gave me and my family growing up, but it’s looking (as in fact it has for a long time) like a sinking ship to me, and the current pathetic efforts (scroll down–I’ve never been able to break the code on Mickey’s permalinks) in terms of new models are just rearranging the deck chairs. The only hope I see, ultimately, is a bankruptcy that will require a renegotiation of the insane contract with the UAW.
Does anyone else see any parallels between GM’s current situation and that of another outdated child of the early twentieth century–Social Security?
[Update on Friday night]
For any of those who found their way here due to an intrinsic interest in and knowledge of GM and Flint history (particularly recent Flint history), I have a request for information here.