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updated: 6/16/2014 10:14 AM

GM's example has lost its luster

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General Motors Corp., as put together by its legendary CEO, Alfred P. Sloan, was once the fabulously successful model of a U.S. industrial corporation. Its practices were studied and emulated.

Now, with publication of Anton Valukas' report about the lethal flaws in the ignition switches of the Chevy Cobalt, we learn that things have changed. GM is characterized as a dysfunctional, bloated bureaucracy, too focused on cost cutting, with employees who operate within silos and don't talk much with one another, and where leaders regularly obscure their role in decision-making so as to ensure they cannot be blamed for failures.

Ironically, that description also applies to GM's parent company -- the U.S. government. Recall that during the Great Recession, our government took over GM, poured in (and lost) billions, ramped up its involvement in telling GM what cars to make, what labor force to use in making them, and where cars should be manufactured. With all of that federal government expertise it is a wonder that ignition switch problems should crop up and not have been immediately and properly addressed.

There are a couple of important differences, though, between GM and its parent. Notice that GM is concerned about containing its costs. That can never be said about its parent. And notice that 15 GM senior executives deemed to have been involved with the ignition switch problem have been fired. GM's parent, with its scandals at the IRS, NSA, VA, Benghazi, and with the fraud of Obamacare doesn't ever fire anyone. Sure, maybe a few have been allowed to resign or retire, but that's about it.

It was once said that "What's good for GM is good for the nation." The lesson? Bad, bloated bureaucracies at both GM and its parent now aren't good for any of us.

Charles F. Falk


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