GM Apology Ignores Suppliers

Did you read GM’s “Commitment to the American People” ad in Automotive News? Pretty strong stuff. “… we acknowledge we have disappointed you… violated your trust… lost adequate focus on our core U.S. market.” And so on. In pre-trial sentencing, I believe this is what’s called “demonstrating contrition.” And it certainly feels like GM is on trial… for its life! In fact, the company is by its own admission “frighteningly close to running out of cash.”

What struck me in this recitation of mea culpa was a total lack of recognition for GM’s suppliers – the guys who cut their margins to the bone and then some… and then put up with payment terms that are insulting. (I’ve heard unconfirmed rumors of 180 days. Anyone care to comment?)

The other glaring omission in GM’s hat-in-hand pitch was any sense of openness to cooperation with anybody. There was no mention of reaching out for new ideas to the people who actually build the cars. The us-and-them mentality is one of the root causes of GM’s failure – not too strong a word in my opinion – and that mentality is alive and well. This is truly unfortunate.

The good news is, in your role as a supplier, there’s a reasonable chance you’ll eventually get paid. But for this to happen, in your role as a taxpayer you’re going to have to lend GM and friends the money to pay you. It’s aggravating, but any other course of action would be just plain stupid. The economic effects of a GM bankruptcy would be disastrous. GM is too big to fail.

Unfortunately, if you run or work at one of the companies we target here at AllBusiness, you’re not too big to fail. You are subject to Darwin’s law in a way that GM isn’t – at least not in the short term.

So… as we enter the Holiday Season, if you’re part of the automotive supply chain, please take a little time off to reflect about where your business is, and where it’s going. GM isn’t going to die, and neither will Ford. (Chrysler is a question mark at this point.) But none of the Detroit 3 are going to grow. They’re going to shrink. And if you’re a supplier, that shrinkage is going to affect your business.

In our small way, we’re trying to help. Between now and Christmas we’ll be publishing half a dozen articles about what you can do, ranging from ideas about how to cut costs to ideas about new markets.

I my view, there are three core mandates for surviving the next two to three years, not to mention the long term:

<!--[if !supportLists]-->?         <!--[endif]-->Get green. The incoming administration, which will be in power for a minimum of four years, will look favorably on environmentally friendly operations and products.

<!--[if !supportLists]-->?         <!--[endif]-->Get smart. Beef up your engineering capabilities. If you can’t afford to hire engineers, look into college internship programs and benefit from the training and youthful enthusiasm of a smart engineer-to-be.

<!--[if !supportLists]-->?         <!--[endif]-->Get some new customers! It is not easy, but there’s plenty of help out there. In fact, almost every state has programs to help manufacturing companies find new customers.

Being small has its disadvantages, but being small also means being flexible enough to survive.