Peak Oil Crisis: The Blackouts Spread by Tom Whipple
[thanks for the feedback on the Huffington Post Link]
Working Hard on Tomorrow, Today
By Bob Lutz
GM Vice Chairman
As you’ve no doubt heard me say before, we’ve made a lot of progress in the past few years at General Motors. And we’ve delivered on what we said we would do. We’ve tackled the legacy costs. We’ve improved our quality. We went from having, at least in North America, some mediocre products to having acclaimed products that are selling extremely well, especially on the passenger car side. In June, for example, in a slow market, our retail car sales were up 8 percent.
We continue to reinvigorate our product portfolio. We’re pursuing advanced propulsion technologies that will greatly reduce dependence on petroleum. And, we’re reacting to the swiftly changing market conditions here in the U.S.
But even with all the changes we’ve made and the actions we’ve taken, our business results aren’t yet what we want them to be. Why not? What went wrong?
Well, we got hit with a triple whammy: we face a generalized economic weakness due to the mortgage meltdown, which is creating a borderline financial crisis in the United States and other parts of the world; we have seen a big decline in the dollar; and we have, of course, experienced an unpredictable and very rapid rise in fuel prices.
Now, it’s easy for everyone to say about oil prices, “They should have seen it coming.” My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world — no one saw it coming, not this kind of rise.
And to say that we recklessly and stupidly kept producing trucks in the face of it is just wrong. In fact, if we hadn’t kept producing trucks before the fuel prices rose, we would’ve been in a lot worse shape, and a lot more quickly. And if everyone is so smart except us, how come most of our import competition was rapidly rushing into the full-size truck market, just as the party was almost over?
I’m not going to sit here and say we have done everything right and made nothing but good decisions. But I will say that in recent years, particularly since Rick Wagoner announced our North American turnaround plan in 2005, we’ve had a firm, sound plan and have delivered on it.
As economic conditions here in the U.S. continue to decline, further adjustments and actions are necessary, many of which we outlined at this morning’s press conference. If you didn’t get the chance to see it live, you can read the press release here.
These actions — the corresponding business decisions we announced this morning, including employment reductions and elimination of post-65 retiree health care, as well as some cuts in capital spending — were hard calls to make. They weren’t made lightly, they weren’t pleasant decisions to reach, and we’re fully aware of the challenging impact they’ll have on our employees.
I know a lot of people are going to look at the cuts in capital spending and say, “Here they go, cutting their bread and butter.” Well, they’d be wrong.
We did make some cuts — like those that we confirmed a few weeks ago regarding the next generation full-size pickups and SUVs, which by the way are still best-in-class in terms of ride, handling and fuel efficiency. But we are conserving our capital for those things that we know will move the mark… and no strategic programs are being impacted; it’s full speed ahead on E-Flex technology and the production program of the Chevrolet Volt. And we will continue to cut costs and adjust to changing market demands. In fact, 18 of the next 19 GM vehicle introductions are cars or crossovers. We will adjust our portfolio to meet the market where it is headed — and still keep the integrity of that portfolio intact, while maintaining and enhancing the improvements we’ve made in product design and technology.
Being a leader means doing what must be done. Let it not be said that we won’t make the calls and take the actions that are necessary to keep GM viable and ensure that we remain the best automaker in the world — which I fully believe we are and will remain.
We’re doing exactly what you need to do in these situations, you cut back on anything that isn’t necessary, you limit your cash outlays to only those things that are truly going to move the company forward, and most importantly you continue the ethic of producing the world’s best cars and trucks because that is the only thing that long-term is going to get you through it. We have a complete and total commitment to a massive onslaught of outstanding new global products over the next 24 months as our top corporate priority. No compromise there!
So while some may choose to see the glass half-empty, I couldn’t disagree more, or more loudly. As the saying goes, “Those who say something is impossible should refrain from interrupting those who are doing it.”