General Motors Death Watch 71: The Butterfly Effect

Robert Farago
by Robert Farago

Now that General Motors is poised on the brink of disaster, the smallest setback could send the The General sliding into bankruptcy. What will be the straw that breaks The General's back? Most of the world has focused their attention on New York federal bankruptcy court. They're waiting to see if Judge Robert Drain voids bankrupt parts supplier Delphi's union contracts, and what effect that will have on GM. After all, there's so much to think about…

Will the United Auto Workers (UAW) react to the judge's ruling with an immediate strike at Delphi, starving GM of vital parts and driving The General into Chapter 11? Or is UAW boss Big Ron Gettelfinger secretly scheming to use the judge's decision to scare his members into accepting an otherwise unpalatable 15th hour compromise? Does Big Ron still have enough juice to make it so, given that he's up for reelection in June? Will a more radical union leader emerge and convince members of the rank and file to stage wildcat strikes? Will the larger number of Delphi retirees overrule their hotheaded "active" brothers and sisters to save their health care and pension payments?

Will GM CEO Rabid Rick Wagoner buy back Delphi's US operations at the 14th hour to assure a supply of mission critical parts until GM's foreign outsourcing is complete– and then jettison the whole shebang before the UAW contract negotiations in '07? Does GM even have the cash to pull it off? Will the judge's ruling plunge The General's credit rating below the minimum needed for the sale of their GMAC mortgage unit to Cerberus, killing the deal and removing the cash needed to buy-out Delphi? Or is Rabid Rick simply hoarding Delphi parts and outsourcing as fast as possible in the hope that he can withstand a late summer strike at Delphi? Have Rick and Ron secretly agreed to a worst case scenario short strike? Could Ron deliver?

Yes, well, the Delphi situation is only one of the storms gathering above GM's head. Lest we forget, the company's suppliers are none-too-happy with their terms of business; GM could not afford a 'run on the bank' scenario. And if the banks smell trouble and refuse to guarantee fleet sales… Meanwhile, management bet all its chips on the gas-guzzling GMT900 SUV's. Although early sales have been strong, the canary in the coal mine– pickup truck sales– is looking decidedly punk. April sales of the four-wheeled flat-bedded cash cows fell 5.9% compared to last year. Not to put too fine a point on it, every day that gasoline prices stay at or hovers around $3 a gallon is another bad day for GM– and we haven't hit the so-called "summer driving season" yet. If gas prices head northwards from here, if America starts downsizing its fleet in a big hurry, the company's market share will go into free fall. Again. Still.

And then, today, I received an email titled "Quick Question." The correspondent asked "Can you offer your opinion on how GM troubles/possible strike would affect a new Chevy owner? I am strongly considering buying a Suburban next month, but don't know if this would be a good idea." It would be easy to blame me for this communication, dismissing it as the inevitable result of TTAC's ongoing "attack" on GM. I wouldn't recommend it. This is the first time I've been asked that question. It represents the "third front" in GM's fight for survival: consumer confidence. If the Delphi situation is allowed to fester, it could be the tipping point that spills GM into oblivion– even without a strike.

Analysts constantly underestimate the importance of all the bad will GM and its dealers have amassed over the years. I've got hundreds of THOSE emails– from a stricken motorist who was assured by an OnStar representative that there wasn't a Chevy dealer in Dearborn Michigan, to a lifelong Cadillac owner whose dealer experience was so awful he promises never to buy another GM product as long as he lives. In fact, "should I buy a vehicle from a wounded company" is more like "why the Hell should I buy a vehicle from a wounded company?" I reckon the media buzz about GM's bankruptcy is already taking its toll on a company that can not afford to lose a single sale. The smallest bit of bad news could be the sound of butterfly wings beating, drumming up the chaos that spells GM's doom.

While The General's flackmeisters will scream bloody murder about self-fulfilling prophesies, current events are the fulfillment of a prophesy made over thirty-five years ago, when GM and its fellow domestics responded to higher quality foreign imports with arrogance, derision and scorn. They had their chance to change by their own free will. Now change will be thrust upon them. The Death Watch continues.

Robert Farago
Robert Farago

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  • ToolGuy First picture: I realize that opinions vary on the height of modern trucks, but that entry door on the building is 80 inches tall and hits just below the headlights. Does anyone really believe this is reasonable?Second picture: I do not believe that is a good parking spot to be able to access the bed storage. More specifically, how do you plan to unload topsoil with the truck parked like that? Maybe you kids are taller than me.
  • ToolGuy The other day I attempted to check the engine oil in one of my old embarrassing vehicles and I guess the red shop towel I used wasn't genuine Snap-on (lots of counterfeits floating around) plus my driveway isn't completely level and long story short, the engine seized 3 minutes later.No more used cars for me, and nothing but dealer service from here on in (the journalists were right).
  • Doughboy Wow, Merc knocks it out of the park with their naming convention… again. /s
  • Doughboy I’ve seen car bras before, but never car beards. ZZ Top would be proud.
  • Bkojote Allright, actual person who knows trucks here, the article gets it a bit wrong.First off, the Maverick is not at all comparable to a Tacoma just because they're both Hybrids. Or lemme be blunt, the butch-est non-hybrid Maverick Tremor is suitable for 2/10 difficulty trails, a Trailhunter is for about 5/10 or maybe 6/10, just about the upper end of any stock vehicle you're buying from the factory. Aside from a Sasquatch Bronco or Rubicon Jeep Wrangler you're looking at something you're towing back if you want more capability (or perhaps something you /wish/ you were towing back.)Now, where the real world difference should play out is on the trail, where a lot of low speed crawling usually saps efficiency, especially when loaded to the gills. Real world MPG from a 4Runner is about 12-13mpg, So if this loaded-with-overlander-catalog Trailhunter is still pulling in the 20's - or even 18-19, that's a massive improvement.
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