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GM a Winner, But Dangers Still Lurk

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As TV's Craig Ferguson often says, "It's a great day for America, everybody!" It was also quite a day for General Motors.

The company raised more than $18 billion in the largest and most successful Initial Public Stock Offering in history, has now paid the federal government back more than half of the $50 billion in bailout funds it received after going into bankruptcy some 17 months ago. The Chevrolet Volt extended-range hybrid sedan was named Motor Trend magazine's 2011 Car of the Year.

In the meantime, analysts estimate GM, in the course of all these accomplishments, has managed to save about 1.4 million American jobs. Naturally, and rightly so, President Obama and the White House have come out looking pretty good, too.

I got into the auto journalism business in the early 1970s, during the first days of the "Asian invasion," which set the U.S. auto industry on a 30-year course which resulted in its near demise. The first oil shortages of the '70s allowed lower-priced, higher-mileage cars, mostly Japanese, to challenge the then-Big Three, a challenge which some say those companies have still yet to fully answer.

And due to my history following the worldwide auto industry, I can see where GM could fairly easily fall into many of the same bad habits which resulted in their first, recent bankruptcy. They need to be careful and e-mail this column to every employee in the company.

While today is surely a time to celebrate GM, it's also critical to take a quick look at the 11 ways GM could find itself in the same BK boat which nearly destroyed forever the American auto business as we'd known it for 100 years.

Arrogance
The good ol' boy network which built itself inside and around GM (and Ford and Chrysler) was the result of too many top executives of those companies coming from the same cultural backgrounds (and often same families), going to the same schools and sharing the same Wall Street and boardroom values. If the current and near-future crop of Big Three execs allow the same old arrogrance which dominated the industry for decades to crop up again, GM, especially, will be putting its neck on the line.

Focusing on Quantity, not Quality
GM sales are not great, but are starting to grow and look solid. Certainly the possibility exists for GM to not become as dominant as it once was, but to be an important powerhouse in the American and world economy. But through the '50s, '60s and '70s, GM's biggest problem was building enough cars for their dealers to sell (and dealing with an ongoing threat from Washington to label the company a "monopoly" and break it up). Akio Toyoda, head of the Japanese giant, now the biggest car company in the world, recently testified in front of Congress that his company concentrating on growth and not ongoing quality set the stage for Toyota's worldwide safety and quality problems. It happened to GM before and could easily happen again. Stay lean and mean, GM.

Complacency
Failure to grow and thrive is an enemy of almost every grand undertaking. Sitting back on its laurels (GM can boast about the Volt for years to come without necessarily moving forward) is a real danger to GM. The company needs to make sure the people who worked on Volt and similar projects the past decade remain and grow into real positions of power within GM. Bean-counters in the executive suite are important (I guess), but forward-thinking engineers and stylists, among other futurists, are key to the company's survival and growth.

A Quarterly-Only Focus
The record-setting $18 billion IPO has created new standards for every industry worldwide. But it also reminds us that while public ownership is the very spirit of American industry, it can also set the stage for a corporate focus on the next quarter, forcing the company to hit the accelerator and then the brakes without regard to anything beyond the next three month's of the company's growth. We've seen all too clearly what dangers lie for a giant corporation when the next quarter becomes all-powerful.

NIH
"Not Invented Here" has been a too-dominant philosophy in the auto industry worldwide for as long as the business has been in existence. Too often, only ideas and inventions developed "in-house" are acceptable to a corporate board, and NIH almost guarantees those are the only ones which are developed into future products. NIH forces a company to ignore the vast majority of developments and inventions and concepts from competitors and others around the world, forcing an arrogant (there's that word again) and often wasteful viewpoint throughout a company. Again, GM, has done this before and can easily find itself in this same dangerous predicament again.

Disrespecting Other Countries, Companies and Technologies
As "the good ol' boy network" developed within the auto industry, so did a powerful and often frightening jingoism. I've had top Detroit executives tell me, to paraphrase, "Someday, Steve, Americans will come to their senses and stop buying all these foreign cars." And they meant it. Lee Iacocca, when running Chrysler, once told me during a radio interview that he thought the Jeep would sell well in Japan, "because they saw a lot of them right after World War Two." Considering the backgrounds of many of Detroit's executives, it's no huge surprise that disrespect for ideas, people and beliefs "different from ours" could run rampant through the auto boardrooms. Detroit has, admittedly, gone a long way towards cleaning-up these problems (including sexism), and now it's GM's turn to try and do so in a stronger, more public way than ever before and to outshine their competitors in this arena, as well.

Falling Back into Old Habits
GM has cut back, the company says, to the bone. My own belief is that they could still probably kill-off their Buick division (though maybe not in China, where it's a best-seller) and survive with just Cadillac, Chevy and GMC Truck in America as their main sales channels. This won't happen soon, but GM must not follow GM's original "step-up" sales method. That ethos was to first sell a family a Chevy, then a Pontiac, Oldsmobile, Buick and Cadillac -- in that order. This was GM's "cradle-to-grave" sales method and it worked quite well -- until there was real competition in the world marketplace. The worst old habit GM could find itself in would be to again depend on a sales system based on step-up marketing rather than concentrating on building the best vehicles within each division as they seem to be trying to do now.

Ignoring on Safety
For all their innovation, the Big Three (and it's fun to use that term again, true or not) often seem to lack a focus on pure safety in their advertising. OnStar, for instance, is a great service, but many of its features seem to benefit the folks inside a car after an accident. What about before? Imports, especially, have for too many years developed reputations for high quality and a determination to protect their customers above all else. Keeping in mind that all cars have to meet the same basic safety standards, and marketing is just that -- marketing. It's time for not only GM, but Ford and Chrysler too, to tell their safety stories loud and clear, and not let that part of their marketing fall prey to the inferiority complex which has been too big a part of the Big Three for too many decades ("We can't complete with imports when it comes to that...").

No Style
Is there any car better-looking than a 1963 Buick Riviera? Come on, now. GM had the very first styling studio in the entire industry; Harley Earl's 1939 Buick "Y-Job" was the first concept car ever made and is still in existence. In the coming days of heavy sales of hybrids and EVs, which can't help but look alike due to the aerodynamics necessary to achieve high mileage (which means they're usually ugly), this is a great time for GM to take the lead in styling once again and stake their claim as the company making the best -- and best-looking -- cars and trucks in the world. It's been awhile since that's happened, but if GM doesn't do it, they're missing a huge opportunity to stand apart from the crowd and capture the public's imagination worldwide. After some 40 years covering auto shows and the industry, I can tell you that people still love the auto show concept cars most of all, and GM invented them in the first place. Let them re-invent them now.

A Lack of Honesty
Where do we start? Even with the Volt, GM spent the past two years trying to spin this "extended-range hybrid" (which uses a gasoline battery to recharge the car's on-board electric battery) into being seen as an electric vehicle, an EV. To give myself a pat on the back, I was one of the few journalists to consistently call Volt what it is -- an extended-range hybrid -- rather than fall into GM's trap. GM's early claim of well over 200 miles per gallon for the Volt will also go down in auto history as another untruthful blunder on the corporation's part. The biggest problem with both these incidents is that they were absolutely unnecessary. The Volt is a high-tech powerhouse of an innovative platform equal to or more advanced than anything else in the world, and 200mpg or not, it gets great mileage. Watch it, boys. You're under more scrutiny than ever, as well you should be.

Technology
Thanks in no small part to retired GM executive Bob Lutz, the company grabbed onto the idea of the Volt and stuck with it through thick and thin, even through a devastating bankruptcy. Now, with its $18 billion one-day IPO, its Volt leading the way and being named Motor Trend's 2011 Car of the Year (the only auto award which matters, which is another column altogether), there's an obvious lesson for GM (and the entire industry) here. The company will be sorely remiss if they lose sight of what they've accomplished just this week by keeping their sights on the future, not simply recycling "proven" (GM-speak for "old") technologies.

Here's a company which is on top of the world right now, and it's a company with a chance to remain in that position for many years to come. I, for one,hope they do.