US Economy: Global Opinions on GM’s Bankruptcy

Bloomington, Indiana, US, 9 June . As GM goes under, pundits around the world speculate the reasons, and what it means to them today. Everybody seems to be an expert on GM’s downfall, but nobody has the solution to saving this dying Behemoth. [br]

Bloomington, Indiana, US, 9 June . As GM goes under, pundits around the world speculate the reasons, and what it means to them today. Everybody seems to be an expert on GM’s downfall, but nobody has the solution to saving this dying Behemoth. [br]

Jim Lambert leans back in his leather chair behind a cluttered desk at the Ford dealership, as he takes a drag on a cheap cigar. It’s Obama. He doesn’t understand business,he insists.

A two-way mirror separates him from the showroom, allowing him to see potential car buyers from his side of the glass but obscures his office, though there are no shoppers today.[br]

I’ve been doing this for 40 years. I know how the auto industry should be run. His grandfather started the Indiana dealership before the Great Depression, and even once sold horse carriages.

Obama thinks he can make them build cars that run on French fry oil or something and all their problems will be solved. That won’t work. People don’t want that,Lambert explains. They want good old Detroit steel. Now all they get is Government Motors. Before they were building for the people, now they’re building for Obama.

Lambert has a point the increased government interest in GM puts more focus on meeting Obama’s demands than it does on products and profits. And in his part of the country, old ways die hard. You won’t find hybrids on Lambert’s main street.

Half a world away, in Mumbai, India, MBA students in an organizational behavior course debate the root of the problem within GM. It’s because they had a very rigid corporate culture that could never change, even if it wanted to, said R. Kumar, an outspoken student in the first row.

They just couldn’t keep up with the Japanese and now not even India look at the Nano,asserted Priyanka, seated next to Kumar. Part of it is also protectionism, and that’s only going to get worse now that the government has its hands on it. Protectionism made them uncompetitive and outdated,she continued.

There is truth to that, too. G strong lobby has had success in the past keeping the competition out to a degree and now that they are government-owned it will be even easier.

I’d say you have the unions to blame. UAW could get any of the plants to agree to the best benefits packages and wages. On average, they earned something like US $63 an hour,added Mutu, seated in the back.

Indeed, UAW was powerful and kept wages sky-high. Strikes, walkouts, and lawsuits crippled the Big Three into doing whatever the unions wanted.

I believe much can be attributed to the fact that most American automakers GM in particular – built big hunks of gas-guzzling junk that couldn’t compete on a global market,opined Tom Parsonage, a political science teacher in Seattle, Washington.

And when oil hit something like $147 per barrel a year ago people freaked. Then the housing market tanked and credit disappeared. This was the coup de grace for the US auto market.

While many, like Parsonage, may see a kind of morose delectation in the downfall of GM, others like the 29,000 workers who are going to lose their jobs can only feel pain.

But one thing almost all will agree with, from the Midwest to Mumbai, is that if the Obama Administration would have let GM go under, the repercussions would have been far more severe, and we would be reading more about tragedy and terror than debates about organizational structure and Obama’s plans.

Vladimir Gonzalez, EconomyWatch.com, with contributions from Alfonso DeJoria in Mumbai