No Tears for Anti-Consumer General Motors
June 8, 2009 - 11:47am ET
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I feel bad for the auto workers and the dealers who are losing their livelihoods in the bankruptcy of General Motors. Yes, the workers had a sweet deal, but why should only bosses enjoy a plush life style when profits are good? And when the company saw itself losing market share, it was up to the management to control labor costs. So spare me the union bashing.
The loss of so many dealers is also deplorable. It will leave big holes in towns and cities across the country. Shutting them means more job losses and also the disappearance of stalwart community leaders who could usually be counted on as generous supporters of local causes. Frankly, I really can't understand the economic necessity of closing so many.
But I'm not shedding any tears over the demise of General Motors the Corporation as we've known it..
In the late 60s and early 70s, when I was cutting my teeth as a consumer reporter, GM already had become notorious as the company that sent detectives out to investigate Ralph Nader. The young Nader had exposed the propensity of GM's Corvair to flip over and kill its drivers. The Corvair was GM's response to the popularity of the Volkswagen Beetle. The Corvair's defect, Nader documented, was designed in, and instead of fixing the problem, GM covered up and tried to discredit him. You can read all about this in Nader's book about the Corvair, Unsafe at Any Speed. Publicity about GM's attempt to smear Nader did have one good effect: it made Nader a hero.
But management's move against Nader typified its strategy for dealing with safety and quality issues: cover-up and denial.
These were the years when if you had a crash, you could be impaled by the steering column (now the columns collapse into themselves) or thrown around inside the car to smash your face or limbs on metal dashboards and protruding, sharp handles (everything is now padded and smooth), or get thrown through the windshield because there was no belt to hold you. GM (and the other American manufacturers) fought safety improvements including seat belt and air bag laws, protesting over and over that each change would unjustifiably and unnecessarily raise the price of their autos.
As for quality, improvements came only under pressure from foreign manufacturers who won over American consumers with better-built cars. GM might have been able to keep its mammoth market share if it had listened to consumer complaints. Instead, deaf and dumb, it kept pushing its cars as sexy, powerful, fantasy vehicles with chrome and fins--and recently, cup holders.
Years ago in the days when my family went skiing nearly every weekend in winter, we owned a GM Blazer. We liked its size, but the interior very quickly came apart. Knobs and handles fell off--it looked like we had battered it! Mechanically, it wasn't much better. Today, we have cars with bumper-to-bumper warranties, and they almost never break down. GM was a reluctant follower of that trend, forced into responding by foreign competitors.
But fall-apart interiors were nothing compared to the defective anti-lock brakes in our 1996 Chevrolet Tahoe. When the SUV was just two months old, the brakes failed when my husband tried to slow down for a car in front of him that was waiting to make a left turn. An excellent and experienced driver, he repeatedly pressed the brake pedal, only to have it repeatedly fall to the floor without slowing the car at all. My husband and son walked away from the slow-speed collision, but the driver of the other car was seriously injured and her car was totaled.
When I raced to the scene after getting a phone call from my husband, my years of consumer reporting told me there had to be a defect in the Tahoe's brakes. Sure enough, when I researched complaints filed with the National Highway Transportation Safety Administration, I found more than 7,000 describing the exact same failure. I wrote an expose of the situation, but it ran only on my fledgling and now defunct Internet website, SIS, and on TV's Inside Edition, which picked up the story from me.
Of course, GM denied that anything was wrong with the brakes. It wasn't until 1999 that the dissemblers in Detroit admitted that all these accidents were not the fault of drivers who just didn't know how anti-lock brakes worked. The company announced one of the largest recalls ever, calling in 3.5 million vehicles to correct the brake problems. By that time, there were more than 10,000 complaints on record, and there had been thousands of crashes and hundreds of injuries, although no deaths. The recall barely made a ripple of news because GM timed the announcement so well: it released the news on the day before the funeral for JFK, Jr., whose death in a small-plane accident had swamped all other news. (Yes, car companies get to choose when they will release notice of a recall.)
We got the message after that. I vowed never again to buy another GM vehicle. I'd guess, from the fall in their market share, that lots of Americans quietly came to the same conclusion.
But there's more in GM's ugly history. Strike 1 was safety. Strike 2 was quality. Strike 3 was GM management's failure to respond to the energy crisis and global warming. In this, of course, they once again used their powerful friends in Congress to fight federal support for mass transit and to ensure that mileage standards would not be raised. Even more egregious was their success in giving tax breaks to buyers of the most notorious gas guzzlers, the humongous Hummers and Cadillac Escalades.
Yes, folks, our memories are short. It was only in 2007 that Congress decided there might be something wrong with giving a $25,000 tax credit to any business owner who bought a vehicle heavier than 6,000 pounds. The credit was intended for people like farmers who really need heavy vehicles, but the law had left a loophole, and GM happily walked through as the globe continued to warm. So anyone who owned any kind of business--an insurance agency, a mortgage company, an accountancy practice--could claim the credit. That's why the streets of our cities and suburbs became over-populated with these urban assault vehicles which were, and are, a danger to people in smaller, normal cars, and which suck down fuel like Kool-Aid. Naturally, GM lobbied against ending the tax credit.
More recently, they successfully fought giving California a waiver to impose its own standards for controlling greenhouse gases. The Bush Administration refused to give the waiver, but the Obama Administration is in the process, thankfully, of making the California standards the standards for the whole country.
So, a frank look back at the history of General Motors makes it clear that this company was a bad citizen that disregarded the dangers of its vehicles and worked always to maximize profit no matter what the consequences to the public. It survived for so long only because of its success in lobbying Congress and its decades as a monopoly that dominated the market.
Drivers today are safer than they would have been, cars are better made, and the air is clearer, because of consumer advocates like Ralph Nader and because of global competition that eventually made American consumers realize that better cars came from across the ocean.
So, no tears for the management, stock and bond holders of General Motors. They deserved bankruptcy long ago for their callous disregard of our safety and our planet.
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Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future