Thursday, November 20, 2008

If I were CEO of General Motors

Let's play pretend, shall we? Let's pretend that someone who actually understands economics is running General Motors. I choose me. So how would I fix GM?

1) Shrink. GM has too many employees and too many car models for its actual size in terms of revenue. GM has the following car lines in its portfolio:


That's too many. I'd sell off Hummer and Saab, even if it's a fire sale, to generate revenue and eliminate all those employees retiree benefits from my future financial obligations. I'd eliminate GMC and Buick, and close the factories that make them. GM would be left with Chevy, Pontiac, Cadillac, and Saturn. All in all, I'd get GM down from 300,000 or so employees to 200,000 or so.

2) Fire the UAW. Sorry, no re-negotiations. I won't negotiate with the UAW or any other union. You can be a member of whatever union you want, but I will negotiate with you for the salary/benefits package, not a union. If you strike, you're fired. I'll pay a salary commensurate with the actual productivity you provide to the company, which means it will be a fair salary. Health insurance will be comparable to the competition's packages as well. I'm sure that even at reduced salary/benefits, these aren't "jobs that Americans won't do."

3) End the GM Pension Plan. GM has made promises that it can't keep, much like our Social Security system. But unlike our dear federal government, GM can't just print the money it needs, it has to earn it. Generally speaking, retirees' pensions are already paid for, but current employees must realize they need to start putting money into a 401k like everyone else. Retirees may have to accept less money for GM to continue to pay them anything at all going forward.

Some or all of these steps may not even be legal, given the current UAW contract. If that's true, then GM will have to file Chapter 11 reorganization, then fire the UAW, restructure salary/benefits packages, and end the pension plan.

Where do the 100,000 laid-off workers go if GM actually implemented my plan? The better question is 'Where do the 300,000 unemployed workers go if GM doesn't?'