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Big Doesn’t Mean Forever
General Motors, and in fact all US automakers, are in trouble. Brought to a head by the zooming price of oil and gasoline, there is talk in financial circles of even the failure of GM. This is pretty frightening stuff since it was not that long ago the old saying was, “So goes GM so goes the country”.
Well, first of all, get rid of that if it is in your mind. GM has long ago stopped being the harbinger of things to come in the US economy. As our heavy manufacturing has been taken offshore, the argument could be made the Toyota, Nissan, and BMW are as much domestic manufacturers of cars as GM or Ford. And lost in all of the tirade regarding the outsourcing of American manufacturing jobs has been that as a percentage of GDP this sector of the economy is bigger than it has ever been. It is just that instead of making cars and steel we now make software which if you think about it is a healthy thing for lots of reasons including higher pay and cleaner air and water.
Facing near certain destruction if something is not done fast, GM is doing what any small business would do in similar circumstances. They are looking at their entire company and are preparing to lay off employees, shut down plants, and sell off non-profitable divisions. Heck, in my view this is long overdue when you consider than most of their cars are duplicated by most of their brands. I mean, what exactly is the difference between a GMC Tahoe, Chevy Suburban, and Cadillac Escalade? Not much but the price and small styling differences. And now with things as they are, the buying public is a lot more discerning and won’t be fooled.
Now, for us who are trying to save our small businesses in this recessionary environment, we should be doing the same things. We should be looking at the entire company, getting rid of non-productive parts and employees, and building cash to survive until better times. This is the ONLY strategy that makes any sense in times like these.
The beauty is that for small businesses we do not need to consult with Boards of Directors, negotiate labor contracts with Unions, and deal with layers of management. The buck stops at the desk of the founder. And if that person is responsive, a small business can be turned around with alacrity and not only survive but prosper even with things as they are.
Posted by Herb Kay on Thursday, July 17, 2008
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