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GM Must Cut Buick, GMC Now

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General Motors must drop their Buick and GMC divisions. And do it now.

The number of people already put out of work by the Amazingly-Shrinking General is sickening, outrageous; these workers didn't bring this on themselves, it's been forced on them and their families and the businesses where they trade by GM's own shortcomings and the collapse of the credit market precipitated by the sub-prime mortgage crisis through the banks and Wall Street.

Yet the real horror of unemployment, no health insurance and in too many cases homelessness is going to continue to fall on the backs of America's working men and women.

Lay-offs at GM and its suppliers and the numbers of those put out of work by the thousands due to planned dealership closings will continue for at least another two years. The closing of Pontiac alone has resulted in 20,000 workers put on the street from GM and its suppliers; the sales of Hummer and Saturn will result in more people gone as will the bankruptcy and ultimate disposition of Saab.
2009-06-08-2009Chevrolet_Malibu_Hybrid.jpg 2009 Chevrolet Malibu gas/electric hybrid

Estimates of "displaced workers" from GM's announced dealership closings range to well over 100,000, spread throughout the nation.

No one wants to see this trend continue or grow.

(In one humorous aside, GM and the Sichuan, China-based industrial firm which has agreed to buy Hummer stated in their joint press release that Hummer executives are part of the deal between the two companies; hope those GM and AM General folks in Detroit and Mishawaka and South Bend, IN, enjoy spicy Asian food; well, a job's a job these days).

Yet if the Obama Administration really feels that this ritual death and resurrection of GM is so crucial to the economic and psychic health of America, this part of their plan leaves a lot to be desired.
2009-06-08-robbygordonchevy2009baja500win.jpg Orange, CA's Robby Gordon driving his Chevy off-road race truck to victory this past weekend in the 41st SCORE-Tecate Baja 500; Chevy's long-time racing activities give it a high profile

Even with "four core divisions," as GM likes to call their new quad of Chevrolet, Cadillac, Buick and GMC, the company's failed recipe for overcapacity, overproduction and waste could continue unabated within what was for almost 100 years the world's largest manufacturing concern.

For the past three decades, GM has developed an inferiority complex which saw the corporation go so far as to keep its own name and logo off their Saturn and Oldsmobile Aurora products, among others, yet now they're hanging onto Buick and GMC for no good reason other than, it would appear, corporate ego.

"Never fail to take advantage of a crisis," is a mantra of this White House, but what has the president's Automotive Task Force learned during this exercise? Not much, it would seem, as Buick and GMC will now continue to market "their own" versions of existing Chevrolet and Cadillac products, exactly what all involved claim they're trying to avoid.

There are few "single-point" Buick dealers, that is, stores which sell Buicks only and no other GM products. According to Automotive News' 2008 dealer census figures, out of 2,587 stores, only 63 of them are Buick-only. Out of 2,133 GMC dealerships, just 120 are single-point. All the rest sell other GM products.
2009-06-08-buickyjobharleyearl1938.jpg The world's first "concept car" was this 1938 Buick "Y-job" designed and driven daily by Harley Earl, the legendary first chief of GM's styling studio, the world's first full-time, dedicated automotive styling operation

Conversely, Chevrolet in 2008 still had 3,812 dealers of which 1,965 were singles, while 201 of Cadillac's 1,422 dealers were Caddy-only.

GM (and the White House) must honestly answer this question: Even without considering the manufacturing costs for Buick and GMC, are the marketing, advertising, public relations, executive salaries, transportation, supplier and other ancillary costs worth it when the two divisions have only 183 single-point dealerships between them?

In 2008, Buick dealers sold an average of just 52 vehicles per year; GMC dealers moved 167 pieces of iron annually.

GM in 2008 claimed 13,132 dealers in the US (with its 7 divisions, including Saab) selling about 163 cars and trucks per store.

Toyota and Scion combined had 1,235 stores moving 1,589 cars and trucks a year with (Toyota luxury division) Lexus' 226 dealers pushing 1,158 vehicles out the door.

Get the picture? GM makes too many cars ... has too many factories and stores ... too many employees ... and too many executives ... and too much of everything else.
2009-06-08-NYCScionHakoCoupeConcept13.jpg Scion's Hako concept shown at a recent NY Auto Show

The company has been burning through $1 billion a week in recent months, the costs of shutting-down almost as incapacitating to the corporation as the past 100 years of growing "too large to fail" (and isn't it strange that while "financial services" firms are dubbed by the government as being "too large to fail," we've yet to hear of a company which actually makes tangible products which has that same quality?).

Any continued overcapacity on GM's part is disastrous for the future of the company; Buick and GMC have no involvement in racing, either, which at least allows Chevrolet some modicum of extra promotional activity (especially if my man Tony Stewart keeps working his magic in NASCAR this year).

Rather than searching for reasons and justifications to keep divisions (and, yes, employees), General Motors must be cut to the very barest of its bones and then rebuilt from there, if possible.

That is, if the White House is indeed serious about getting the "heavy lifting" done now so GM can rise again. Perhaps "saving" the company through Chapter 7 bankruptcy wasn't the best idea; maybe Chapter 11, with the various divisions sold-off to the highest bidder, would have ultimately made more sense.