General Motors Death Watch 71: The Butterfly Effect

Robert Farago
by Robert Farago
general motors death watch 71 the butterfly effect

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.

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  • Ajla $100k is walking around money but this is almost certainly the last Dodge V8 vehicle and it's likely to be the most powerful factory-installed and warrantied pushrod engine ever. So there is some historical applicability to things even if you have an otherwise low opinion of the Challenger.And, like I said up thread, if you still hate it will be gone soon anyway.
  • Carlson Fan GM completely blew the marketing of the Volt. The commercials were terrible. You'd swear they told the advertising company to come up with an ad that would make sure no one went out and shopped a Volt after seeing it!...........LOL My buddy asked why I bought a car that only goes 40 miles on a charge? That pretty much sums up how confusing and uninformative the advertising was.
  • HunterS This thing has had more farewell tours than Cher.
  • ToolGuy "the transmission may also end up getting stuck in Park"• Which helps fuel economy *tremendously*
  • ToolGuy "I HAVE A BAD LEFT FOOT. FROM RUNNING WAY TO0 MANY MARATHONS/FAST RACES BACK IN THE DAY"• Youngsters, take heed. (Bicycle is what you want)