Gm Problems

One main problem that is hindering General Motor's (GM) ability to be

successful is the poorly designing of several vehicles over recent

years by GM, and there inability to cut certain lines of vehicles from

production that are outdated. Journalists say that GM makes ugly car's

period, but this is definitely false considering that the GM corporation

owns Corvette, Saab, Hummer, and Cadillac, all of which are top of the

line brands with top of the line vehicles in style and performance. Yes

of course GM has some bad seeds which is tarnishing its name like the

radical designed Pontiac Aztec and Buick Rendezvous, and the outdated

production lines of some of Pontiac and Buick. Outdated production lines

in brands such as Pontiac and Buick are to be expected when GM's

long-held philosophy is that nearly every brand should offer a full array of

cars, trucks and minivans, but this philosophy is outdated as well. GM

has many plans to fix and update there current vehicle design problems

but, many of them will not take effect until after September of 2007,

when Gm's contract with the United Auto Workers (UAW) expires. Until

that date GM can not afford to cut back production of it's problem brands

Pontiac and Buick or it would mean the layoff of thousands of UAW

employees. The contract between UAW and GM is one of the main reasons for

GM's production of outdated and poor quality vehicles in certain brands

of GM.

General Motors in its current slump needs to trim its problem brands

vehicle line-ups but, the contract with the UAW would make Gm liable to

pay employees laid off there wages, for not working at all. Gm feels

it is a lesser of the two evils at this point just to make the cars and

sell them at an all time low, but this strategy is giving would be

customers of GM a feeling that Gm is outdated in technology and design in

all brands. In December of 2000 when GM killed Oldsmobile in an effort

to shorten GM's brand base it cost the corporation about $1 billion,

after restructuring and dealer buyout's. Not only is it bad that GM has

to wait till 2007 to sever a line up of vehicles in its problem brands,

Gm has to also pay health care and pension plans to UAW employee's and

retires, draining GM's wallet further. "In 2005 GM will incur health

care spending of $5.6bn (Ð'Ј2.95bn). It covers 1.1m Americans, and has

become the largest medical provider in the country." (Worstall, line 5)

Health care expenses account for about $1,600 of the cost to build a

typical GM vehicle, giving smaller competitors an big advantage in pricing

there vehicles. Along with health care cost GM must also pay pensions

and the hourly wages of employee's. The average U.S. Auto worker makes

about