One of my favorite writers in Barrons is Jack Hough. While I don’t always agree with his picks, I usually do. His recommendations are always supported with clear analysis presented in a thoughtful manor.
This week in the Streetwise column he addresses the “comments” out of Washington regarding GM. GM was pilloried for their plant and personnel reduction plans.
Unlike previous leadership at GM (and other auto makers at that) Barra is making some tough and timely calls. Reducing production at certain plants and laying off workers is a difficult call for Barra, but until someone can come up with a “solution” for the automotive industry cycle, it is the right call to make. And, it is timely. Prior CEO’s kept building their “empires” even as the walls protecting them crumbled. Barra is making a great effort to stay ahead of the curve (cycle).
Barra was raised by a father would was in the union at GM, so she understands both sides of the coin. I’m sure when she was growing up, she experienced some tough times as her own family went through the effects of layoffs and closings. For that reason, you can bet she is not taking these actions lightly. Those tough moments you learn when you are growing up are seldom forgotten.
The brunt of the personnel reductions are not only falling on the union, but management as well. This is very different from prior managements.
The world is changing very fast versus 10, 20 or more years ago and Barra knows it. She is working hard against the clock. She has seen what happens in both in childhood and in her career what happens when decisions are delayed – the pain is even more severe. Hiding your head in the sand like an ostrich will not make challenges go away. Delaying those decisions will only result in a weaker GM which will cause much deeper pain for all. If GM doesn’t keep healthy, they can’t help their own employees. These are the tough decisions that high quality management just has to make.
Given the quickly changing auto industry, GM needs to keep pace ahead of the crowd. Electric vehicles, self-driving vehicles and ride-sharing are unquestionably going to be the future. With the competition coming not only from the automobile manufacturing industry, but from a variety of other industries, the competition is much more intense than the past which means it is even more important to get out of the gate early.
Washington’s budget is loaded with red ink and weighted down by huge levels of debt. What is it that they say? People in glass houses shouldn’t throw rocks. Instead of grandstanding, Washington should get their own house in order because the boom time is when to do it, not when the economy turns South!
