Taking into consideration that General Motors has for years and years been a sign of American economic authority and innovation, it’s hardly astonishing then that the current announcement of bankruptcy sent shock waves all the way through the country. The depressing truth though is; times without doubt change as do market demands. Regrettably, current years have seen General Motors encountering several problems, including some significant mismanagement with regards to its executives.
GM Fritz Henderson is the current CEO of General Motors. He assumed his place in March of 2009 after previous CEO Rick Wagoner went down in American business infamy when the President of the Unites States ordered he be fired from his position after GM filed for bankruptcy.
Wagoner had attempted to restructure the company in the aftermath of receiving several bailouts and loans. It didn’t work and the task moved to GM Fritz Henderson. Henderson, however, could not reverse the downward spiral and this should come as no surprise. The management of the company had been questionable for years.
GM Fritz Henderson previous worked for the company as Vice President so it is curious why someone so linked to the GM bankruptcy would be tapped to run the company.
Why Did General Motors End Up Going Bankrupt? To a big degree, one can say that “planned obsolescence” played a most important role in General Motors losing a large amount of money throughout the past ten years. In an effort to stimulate the market for new you vehicles, General Motors came up with a concept known as, “planned obsolescence”.
In essence, this was a model concept to insure that a vehicle would only last for a limited amount of time or miles before needing to be replaced. Bearing in mind that most vehicles were known to last beyond 200,000 miles, building a car not to last was by all accounts a bad concept.
Failure to identify market trends concerning fuel consumption was another leading issue with regards to GM’s bankruptcy. Nearly all GM’s cars were heavy on gas , basically because General Motors produced mainly big cars or SUV’s, and despite the fact that many people favored these cars in the past, the ever increasing price of oil almost immediately resulted in a different trend where people were opting for cars which use less gas. Shortly, General Motors found themselves in a place when they simply couldn’t move a sufficient amount cars.
There were added problems GM faced and GM Fritz Henderson, Wagoner, and other executives were simply ineffectual in terms of their ability to handle these troubles. The corporation was losing money from collapsing sales. Losses started to rise into the double digit billions. The company was rapidly heading to insolvency.
Bad managerial decisions regarding union contracts which they couldn’t afford, and a devastating joint venture with Renault and Nissan, only served to make matters worse than they already were.Actually, some of these decisions put such a strain on the company’s resources, that it was nearly impossible for a turnaround.
How did GM Fritz Henderson, Wagoner, and others handle the problems? The answer to this is shrouded in mystery. A clear plan to reverse the problems with General Motors was never truly instituted. Attempts to sell the European wing of the company proved fruitless and further losses piled up.
Eventually, the strategy arrived at was to accept a bailout loan from the federal government to avoid heading into bankruptcy court. The plan didn’t work and GM could not avoid bankruptcy filing. This essentially ended General Motors as far as it had previously existed and, ironically, it was also the start of GM Fritz Henderson as CEO.
The end of General Motors proved bittersweet. The GM bankruptcy allows the company to exist albeit in a radically different form. It has now been dubbed Government Motors and the name change truly is an end of an era. Or is it? I hope not.
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