Survival, Not Success

The national economy had a close call this week as the United Auto Workers union stage a two-day strike against General Motors. The union and GM managed to avoid a situation that could have had ripple effects throughout the economy - one in five jobs in the United States is believed to be related to the automobile industry in some fashion - by negotiating a new contract.

The major disputes were over keeping more jobs in the United States and establishing health benefits security. GM and the UAW agreed to a trust fund for health benefits for GM's workers, and at least sixteen plants in North America should remain open for the foreseeable future.

General Motors may have bought themselves some time as they reorganize the way they do business in the United States, but not much. Health benefits and other legacy costs keep GM from being more competitive against foreign-based car companies, and GM still has to figure out a way to compete with the right products for the U.S. market. GM, like the rest of Detroit, is at the mercy of the federal government with regard to the need for health care reform, but they have more control over product development. And on that issue they'd best improve fast.

GM has spent the past decade pushing large sport utility vehicles, but rising gasoline prices have caught the General off guard as it tries to find its way in a market they no longer control 48 percent of, which was the case as recently as 1980. Ditching Oldsmobile and consolidating the Pontiac, Buick, and GMC Truck brands into one dealer network may have helped a bit, but GM still continues to give car buyers many bland, pedestrian products even as its more exciting models - Pontiac's G6, for example - look rather lackluster in comparison to German and Japanese competition. It's gotten so bad that Chevrolet and Pontiac are planning to add Australian-built models supplied by GM's Holden division Down Under, and Saturn - the division created to prove that Americans can build a good small car - is set to introduce a Belgian-built Opel (Opel being GM's European division) this fall.

The UAW says it hopes to expand job opportunities in the U.S. to keep the middle class strong and productive. They don't get it. The American auto industry a humbled shadow of its former self. GM, along with Ford and Chrysler, are looking to do something even more important than succeed. They're trying to survive.