Archive for June, 2009

What happened at GM

June 3, 2009

The real problem at GM is the “big company” mythology which some have said GM created. This big company image conveyed the idea they could do anything, and everything.  Unions wanted more. Retiree’s wanted more. Investors wanted more.  Customers wanted more.  Everyone wanted more. Many years ago a ten percent ROI was good, then good grew to twenty percent, then thirty, and somewhere after that consumers of cars, oil, and real estate, ran out of money.

In the early days GM built cars like the Pontiac version of a Chevrolet Nova a friend bought in 1974. The transmission died after 3000 miles. He was out of luck. So what if you rip off a few baby boomer’s on their first car? So what? So there are a lot of them, and they chose to not be ripped off twice – buying GM cars only when the quality was guaranteed. I have bought GM cars and since the government mandated quality and mileage they have in general gotten to be good cars. Having worked occasionally in the car business, I doubt there is better quality vs price available. Years ago a friend bought an import, which had to be at the dealer every few weeks – yet he insisted that it was a great car! Why? Because their TV and radio ads said so. The imports have quality of advertising. Another friend told me about taking her import for the 30,000 mile service, which cost hundreds of bucks in the early 1980’s – I was shocked – an American car would still be under warranty! It’s not a problem she said – they replace all the parts, electric motors, and stuff, that wear out, every 30,000 miles. Wow. We buy their car because it has better quality, then pay them to replace all the parts that might wear out to make sure it survives the warranty. Wow. Lol. Whatever happened to the consumers brain? Lol, some more. Consumers were told by import marketing departments their cars were of better quality, implying American cars were not. Consumers did not miss the implication. TV ads got the consumers brain.

Once I took my Delta 88 to Columbia Olds in Cincinnati for service. When I got there to pick it up I was told it would be a half hour before it was ready. I ask why. I was told they were replacing a transmission part per a factory service bulletin or some such – and it would not cost me – even though the car had many miles on it. That is quality. Charging a customer to replace every electric motor in a vehicle every thirty thousand miles is not. Incidentally, we drove that car 272,000 miles, and out on the interstate it got 29 miles to the gallon. By the way I only use Mr Goodwrench dealers for service – there is a reason.

It is my opinion that GM may have inadvertently helped kill itself with patents and design mods. On a Buick 3800 engine from some years ago there is a small coolant hose which attaches to a plastic fitting on the intake manifold behind the alternator, and then attaches to the engine block. When this plastic fitting disintegrates because of age and heat, it automatically kills the alternator as well. Why use this plastic fitting? To reduce weight a few ounces. Same engine has a plastic plenum on the intake which perhaps saves a couple pounds. The gaskets and coolant seals have to be replaced every few months. Why this design? To save weight? Probably has a lot to do with keeping patents current as well. In any case the net effect is to drive the perception of quality down. Why not just use a tried and true system for these parts, or over engineer them just a bit so they are not so failure prone? Tried and true patents have run out. If you are familiar with American cars from the 1970’s you will recognize a lot of technology in certain modern imports, yet you will not recognize anything under the hood of a modern American car, except maybe the basic engine.  Constant changing to keep patents has led to higher part prices, higher maintenance, lower reliability, and less economy of scale.

Oh, by the way if you think your new import is so technologically advanced – go physically compare it to a new GM vehicle.  I think you will be shocked.