By Colin Campbell - Thursday, November 20, 2008 - 36 Comments
As GM files bankruptcy, a look at who’s to blame and what’s next for the U.S. auto industry
UPDATE (June 1, 2009): General Motors, the once proud icon of U.S. capitalism, filed for bankruptcy Monday. In the following piece, published last November in Maclean’s, Colin Campbell navigates through the rise and fall of the U.S. auto industry. In doing so, he identifies what went wrong at GM and explains whether the car company is even worth saving.
In hall No. 5, tucked far away from the main action at the high-profile Paris Motor Show last month, visitors who looked hard enough would have found the booth belonging to General Motors Corp. Those who went to the trouble—and not many did—were disappointed with what they found.
Paris was the place GM had decided to raise the curtain on a critical piece of its future in a world increasingly focused on efficiency and economy—the Chevy Cruze. The Detroit company is pinning its hopes on the lightweight Cruze to lure car buyers in Asia, Europe and North America away from bestsellers like the Honda Civic. Yet there were none of the usual showbiz trappings at its unveiling: no models leaning against the hood, no rock-concert special effects to usher in the age of the Cruze. Just a plain white stage and the car itself: a conventional, even understated, four-door family sedan. It “had all the pomp and circumstance of a Tuesday,” noted one auto critic. Perhaps it was just as well then that few journalists bothered to show up.
Most automakers look to the Paris show to highlight their next small, fuel-efficient wonders. It’s a science fair disguised as a car show. Mercedes-Benz and BMW were unveiling their first hybrids. Nissan snagged attention with its tiny Nuvu. Hyundai brought along its new mini-car, the i20. But at GM’s second-floor exhibit, visitors were confronted by a collection of massive Hummers and a hulking Cadillac Escalade. “This was emblematic of GM,” says Maryann Keller, an independent auto analyst who has covered the industry since the 1970s. “Here’s this show dedicated to small cars, new technologies, electric vehicles. Why, to Paris, would you bring Hummers, the Escalade and a Camaro? What planet are you on?” Continue…
By Andrew Coyne - Thursday, November 20, 2008 at 8:00 AM - 133 Comments
The hope is that billions of dollars will succeed where hundreds of millions failed
Everyone has his own favourite story of Big Auto’s stupidity. Mine is the Great Invisible Japanese Trade Wall of the 1980s. At the time, Detroit was bellowing to the skies that Japan was keeping American cars out of its market, the better to support its case for restricting sales of Japanese cars in the U.S. If it was unclear how the Japanese were supposed to be doing this—Japan’s trade barriers were if anything rather lower than America’s—that only seemed to provoke Detroit to further heights of indignation: those inscrutable Orientals, with their mysterious, subtle ways. Of course you couldn’t see how they did it! That’s why it was so effective!
Until someone pointed out that the cars the Big Three were pressing upon the Japanese consumer were left-hand drive, suitable for driving on the right side of the road. It seems Japan drives on the left. Who knew? Continue…
By Aaron Wherry - Friday, November 14, 2008 at 5:30 PM - 9 Comments
January 16: Ottawa turns down auto aid
January 17: No bailout for Ford, Flaherty says
February 29: Canada won’t bail out auto industry: minister
April 1: Ford calls on Ottawa for funding
September 3: Tories pledge $80 million for Ford plant
September 26: McGuinty, Prentice at odds on funding
October 28: Prentice says no to auto parts bailout
November 8: Canada cautiously considers assistance to auto industry
November 10: Auto sector of particular concern, Flaherty says
November 10: Harper hints at auto bailout
November 12: Clement examining options for aid to auto sector
November 12: Flaherty, CAW spar over bailout for automakers
November 13: Don’t expect bailout: Flaherty to auto industry
November 13: Canada, U.S. talking about carmaker aid: Flaherty
November 13: Flaherty says any auto industry aid can’t be wasted
November 14: Ottawa ponders Canada-U.S. auto bailout plan
By Jason Kirby - Friday, October 24, 2008 at 5:45 PM - 2 Comments
Consumers are clearly developing a taste for frugality, as we discovered while researching our…
Consumers are clearly developing a taste for frugality, as we discovered while researching our story in this week’s issue of Maclean’s. That much is known. What companies and marketers have yet to figure is how to navigate the new era of thrift.
As the economy continues to sour, marketers are rethinking the best offers and incentives to dangle in front of a newly budget-conscious public. But figuring out what offers will resonate is a tough task, with the media landscape already littered with companies crowing about discounts and good values.
As the WSJ story points out, companies that opt for price-based promotions run the risk of training customers to expect more for less. That’s exactly what happened to General Motors. With Japanese competitors stealing market share a few years ago, the company responded by offering rebates and huge discounts, until customers refused to pay full price for a Pontiac. GM has tried to ween customers off the deals, but it’s been a tough slog, and the looming recession is only making that task harder.
Still, don’t be surprised to see plenty of sales geared to belt-tighteners.
By Steve Maich - Tuesday, August 26, 2008 at 6:08 PM - 0 Comments
Al Strachan has written what will henceforth be known as “The Definitive Hatchet Job…
Al Strachan has written what will henceforth be known as “The Definitive Hatchet Job on Brian Burke.”
Ol’ Al doesn’t think Ol’ Brian is such a hot general manager and he dredges up a few of Burkie’s less-stellar moment as GM of the Canucks. He also makes the totally legitimate point that Burke gets a lot of credit for an anaheim cup winner that was largely built by his predecessor.
I went back and took a closer look at Burke’s major trades with the Canucks and it’s true, on the big splashy ones, he was only fair-to-middling at best. Continue…
By Colin Campbell - Monday, August 11, 2008 at 11:52 AM - 0 Comments
Here’s a sneak peak at the GM Volt… you know, that electric car that…
Here’s a sneak peak at the GM Volt… you know, that electric car that is definitely coming (maybe) in late 2010 and will end (kind of) our reliance on expensive gas?
By Jason Kirby - Tuesday, July 22, 2008 at 3:47 PM - 0 Comments
In the money:… The plug in electric car is fast moving from pie-in-the-sky concept
In the money: The plug in electric car is fast moving from pie-in-the-sky concept to on the ground reality as evidence mounts that high fuel prices are forcing drivers to hang up their car keys. BMW plans to have an electric version of its Mini on U.S. roads by next year. Nissan aims to offer an electric car to commercial fleet customers by 2010, with consumer models to follow two years later. Meanwhile GM is sticking to its goal of getting the Chevy Volt into dealer showrooms by 2010. The company is working with 30 U.S. utility companies to make sure the electrical grid can handle the extra power demand. Until the cars are actually available, and people prove they’re willing to shell out for them, there will be questions about the viability of plug ins. But things have definitely come a long way from when the electric car was written off for dead.
Trading down: I suppose we shouldn’t be too surprised that Malcolm Bricklin is suing Chinese car maker Chery for fraud. In a lawsuit Bricklin accuses the company of reneging on a joint venture that would have seen Bricklin’s Visionary Vehicles sell Chery cars in the U.S. Instead Chery ditched him and signed on with Chrysler. What is surprising is the language and alleged losses thrown around in the suit. Continue…
By Jason Kirby - Tuesday, July 8, 2008 at 1:25 PM - 0 Comments
In the money:… Airline crisis? What airline crisis? WestJet inked a deal today with
In the money: Airline crisis? What airline crisis? WestJet inked a deal today with Southwest Airlines to share passengers on cross border flights. So at a time when Air Canada and other legacy carriers are dramatically scaling back their flights, Westjet will shortly be able to sell tickets to any of Southwest’s 64 U.S. destinations, and vice versa. (Like old faithful, the Dallas-based airline announced the agreement by trucking out that most Canadian of clichés: “Want to Get Away – Eh?) This is a huge deal for the Calgary carrier, which modeled itself on Southwest’s low fare structure. It’s kind of like getting a call from your mentor to come and be his partner.
Trading down: BC’s beleaguered forestry sector gets far, far, far (I could go on) less attention than Ontario’s struggling auto industry, but the two have a lot in common, namely they are both bathed in layoff notices. In some northern communities, like Mackenzie, every single mill has gone under. Today another mill near Campbell River closed and another 440 people lost their jobs, bringing the total number for the province’s forestry sector to 10,000.
Number cruncher: We’re a glum lot in Canada. Almost as glum as the Americans, if the latest consumer confidence data is any indication. According to the Conference Board of Canada, consumer confidence has Continue…
By Jason Kirby - Wednesday, June 25, 2008 at 2:08 PM - 0 Comments
Presidential candidate John McCain is offering $300 million to whoever can develop a better…
Presidential candidate John McCain is offering $300 million to whoever can develop a better car battery “that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.” His rival Barack Obama calls it a “gimmick.” I’m inclined to agree.
Prizes are all the rage these days, whether they’re for commercial space travel, decoding the human genome, or visiting the moon. People love the idea of these prizes because they imply the democratization of innovation, that some unsung inventor tinkering away in his garage somewhere holds the key to a problem that has befuddled government and the markets. In some cases, where the problems are very specific, that can be true. Netflix, the mail-order movie company, is offering $1 million to whoever can devise a better algorithm for predicting what movies customers might want to see. One of the top contenders is a retired English management consultant and amateur psychologist going by the handle “Just a guy in a garage.” Continue…
By Steve Maich - Thursday, June 12, 2008 at 11:04 AM - 0 Comments
The Toronto Maple Leafs, in their infinite institutional wisdom, have decided that uncertainty is…
The Toronto Maple Leafs, in their infinite institutional wisdom, have decided that uncertainty is a bad thing. So, they have made a bold statement by keeping Cliff fletcher on for one more full season as “interim general manager.” The statement is this: we don’t want any more uncertainty…so we have decided to let everyone know, definitively, that the uncertainty will last for another 12 months. Now that we have that all cleared up, we can get on with losing a lot of hockey games, and getting ourselves a nice high draft pick to present to our new GM next summer as a welcoming gift.
Mind you, it is also a bad thing to do the exact opposite of what you said you were going to do. Continue…
By Steve Maich - Wednesday, June 11, 2008 at 11:49 AM - 0 Comments
The Toronto media is, thus far, giving the thumbs-up to the Leafs new coach…
The Toronto media is, thus far, giving the thumbs-up to the Leafs new coach Ron Wilson. That, in itself, is no surprise. The Leafs always hire good coaches, or at least, coaches that seem competent and well-qualified until they get behind the bench. Paul Maurice, Pat Quinn, Pat Burns – all came with pretty strong professional credentials, and so does Wilson. I will spare you the obligatory skepticism – I’ll refrain from mentioning that he’s never won a cup, and that the San Jose Sharks massively underperformed under his leadership the past two seasons. Fair to say that Wilson is a good hockey guy, is respected around the league, and should have no problem establishing authority in the dressing room.
The bigger concern remains that lack of a GM. Continue…
By Colin Campbell - Wednesday, June 11, 2008 at 11:17 AM - 0 Comments
Toyota Motor Corp. said it will start selling a plug-in electric hybrid in 2010……
Toyota Motor Corp. said it will start selling a plug-in electric hybrid in 2010… The same year that General Motors promises to start selling its electric car, the Volt. Excited? I wouldn’t hold my breath. GM has been talking about making an electric car for years now, and it’s not much closer today than it was in the beginning. All the major car makers have the know-how to start building electric cars. They’ve just been incredibly reluctant to take the leap. But supposing the big auto makers have indeed found electric car religion (with a little help from $135 a barrel oil), then a real transportation revolution could be underway–and it could happen much sooner than anyone might have guessed. With affordable, mass market cars on the horizon, we could be headed for the kind of change not seen since the Model T replaced the horse and buggy.
By selley - Wednesday, June 4, 2008 at 1:27 PM - 0 Comments
Must-reads: …David Olive and Don Martin on the auto industry; Dan Gardner on oil
Must-reads: David Olive and Don Martin on the auto industry; Dan Gardner on oil addiction; John Ivison on losing confidence in the Tories; Chantal Hébert on Jean Charest and Dalton McGuinty; Christie Blatchford on the Toronto 18.
The death of the truck
Things aren’t as bad as they look for the internal combustion industry… yet.
Auto industry consultant Dennis DesRosiers has last month as “the second best in the history of Canadian auto manufacturing,” Don Martin notes in the Calgary Herald, and even as GM slashes jobs in Oshawa, Ford is adding 500 in Oakville to make the “new Flex crossover vehicle, complete with what sounds like a beer cooler in the console.” This is what happens when gasoline crests $1.30, he argues, and Buzz Hargrove “is clearly off his meds if he truly believes this truck sales skid is preventable or reversible.” Far more sensible than propping up production of gas-guzzlers, as McGuinty seems determined to continue to do, would be to invest in “advanced efficiency or environmental technologies for the auto industry.”
“This is the great reckoning,” David Olive writes in the Toronto Star. This is what Detroit gets for betting the farm on “gas-guzzling but high-margin SUVs and heavy trucks” when $1.30 gasoline was “foreseeable,” while mulishly refusing to invest in their own hybrid vehicles. And this is what Dalton McGuinty gets for not tying “auto-sector subsidies to a Detroit commitment to small, fuel-efficient vehicles.” “The new Motown bosses reject the … tradition of satisfaction with intermittent profits,” Olive concludes, “and will be dispensing still more bitter medicine” in hopes of stable profits and stable employment for its workers. There isn’t a thing Hargrove can do about it but “fulminate.” And away he goes…