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What's Wrong with General Motors?

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Charlie Wilson, Secretary of Defense under President Eisenhower, famously said, "I thought what was good for the country was good for General Motors and vice versa."  Well, General Motors is not very good for the United States at the moment. 

General Motors just doesn't get it. We (the American taxpayers) bailed them out, losing $11 billion in the process, yet GM continues to make excuses about its mishandling of life-threatening safety defects.  When the United States government helped GM out of bankruptcy, the bankruptcy court left many injured victims of GM's negligence out of luck.  Claims for negligence that existed before GM filed for bankruptcy were voided. 

GM Should Be More Like Tesla

General Motors needs to be more like Tesla Motors.  When three of Tesla's new cars burst into flames, Tesla immediately addressed the issue.  Within a matter of months Tesla had designed a new battery shield to protect the car and its occupants from fire hazards.  When faced with a more severe safety issue of defective ignition switches that caused at least 13 deaths, GM put its head in the sand.  Now, a decade later, GM is suffering from bad press and consumers will be very cautious about buying a new GM car.  

How does GM repay the United States for saving it?  By continuing to move production out of the United States.  The new Chevy SS is an example.  The 2014 Chevy SS is made in Australia with a Mexican engine and transmission. On top of this abomination, USA Today reported that the vehicle gulps gasoline at the rate of 14 miles to the gallon.  There is also a $1,300 gas-guzzler tax on this vehicle. In stark contrast, Tesla's Model S is all-electric can that does not use gasoline.  

While General Motors was being bailed out, it moved production of the $50,000 Cadillac SRX from Michigan to Mexico, and moved production of the Buick Regal from the United States to Germany, and then to Canada. 

GM Execs Believe GM is Not an American Company

I have had many conversations with GM's top brass, and the general consensus there is that GM is an international company, not an American company.  That may be true, but without the support of the U.S. government there would be no General Motors.  In a bankruptcy without government assistance, GM's factories would now be owned by Toyota or Honda, or Mercedes or Volkswagen. 

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Part of the problem was caused by the federal takeover of GM.  While the feds owned the majority of General Motors, it had the power to take over the board of directors, but failed to do so.  The new board of General Motors, with former officials from Conoco Phillips Oil Company, Wal-Mart, Cummins Diesel and others does not think outside the box of internal combustion engines.  The new GM is like the new Russia:  it dreams of the old GM empire like Vladimir Putin dreams of the old Soviet Union. GM will never be the automotive superpower that it once was with 54% of the U.S. market in 1954. 

What GM Must Do

First of all, General Motors needs to admit its mistakes and agree to compensate all victims of its ignition switch safety defect.  Even if the bankruptcy laws shield GM, it should put down the shield and do the right thing.  

Secondly, GM needs to thank the United States for saving its hide by bringing back production to the United States.  Concerning Mexico, GM should move Cadillac production to Michigan where it belongs, and build cars and trucks in Mexico for the Mexican market.  Mexico did not help to bail out General Motors. 

The new General Motors needs a good knock on the head to wake it up.  Mary Barra, GM's new CEO, needs to shake things up, chop some heads off and become an American company once again.

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Chairman, Made in the USA Foundation, economist and lawyer, author of ten books and hundreds of articles.

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