EVENT
You can check out the good news here.
I’ve been hoping for something along these lines for a long time. It’s only half of the equation, (the other half being to design a diverse array of marketable vehicles) and GM will have to solve the whole thing in order to get back on track.
Let’s take a look at some transparent advantages.
1. This gives negotiating capital to GM with respect to the UAW, an important resource they will need in the months and years ahead.
2. It’s good for PR; if GM can suggest greater austerity on the executive level, it may win back some of the customer loyalty lost over the last several decades. In terms of actual sales figures short-term, this factor may be negligible; however, employees are historically loyal in their own purchases, and many of those alienated from the corporation in recent years. This is not a negligible percentage of overall GM sales, and could be a significant long-term advantage.
3. The move frees up resources that GM will have to reallocate in the near future, most specifically in addressing demands of design and technology and shoreing up spin-offs, such as Delphi. Some will point out that the cuts essentially cover UAW pensions, et al., but the bottom line is one figure; they are moving towards greater freedom in asking for worker sacrifices.
Assuming that the second part of the equation (a greater variety of marketable vehicles) is addressed, there’s a fourth advantage, which is huge.
4. If GM emphatically turns a corner toward greater profit, their stock will fly, because investors must realize at that point that $23.24 a share would be a temporary steal.
Let you think that this move is altruistic, and the Rick Wagoner is smiling as broadly on the inside as the outside, bear in mind that executives tend to be sacked in times like these; a drastic pay-cut not only plays upon GM executives’ practical need to work with the UAW, but also is a symbolic gesture to the board of directors, who are losing buckets right now in share declines. It suggests that the company will “suffer through hard times together,” which I think is an overplayed sentiment, but not without opportunity.
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My anti-capitalist self does think it’s unreasonable to ask a corporation to not behave as a corporation will. What General Motors has taken a step toward with this move, hopefully one of many combined with top-down divisional restructing, is the behavior the best corporations: behaving as an organic whole, all invested in the preservation and growth of the company, as opposed to isolated levels of individuals vying against each other.
Congratulations, General Motors, on your new start today.
I hope it truly is that: a new start.
END OF POST.