Had General Motors Corp. said last week that it was cutting 60,000 U.S. jobs by 2008, Wall Street would have thrown a party.
Instead, GM said it was eliminating 30,000 jobs, only 5,000 more than it announced last June at its 97th annual shareholders meeting in Wilmington, Del.
Wall Street greeted GM's latest job cuts announcement, made to the company's employees and investors last Monday, with a slap to its corporate face. GM's shares on the New York Stock Exchange closed one day later at $23.27, near the company's 52-week low of $20.60. It is not so much that Wall Street enjoys misery as it is that the money managers there have no affection for job security that is not their own.
The investment community has lots of company in that selfishness, including many ordinary consumers who decried GM's growing contributions to the nation's unemployment lines.
Ours is a strange country. We extol the virtue of hard work, but most of us don't want to pay for it -- especially if it means paying a higher price for a comparable product or service that can be had more cheaply from somewhere or someone else. A business dictum explains the problem: "Overhead walks in on two feet."
Conversely: Reduce the number of feet, reduce the amount of overhead, and increase the potential for corporate earnings, shareholder dividends -- and retail cost savings for consumers.
If you understand that, you'll understand why GM, Ford Motor Co., DaimlerChrysler AG, Volkswagen AG, Isuzu Motors Ltd. and a number of other automobile companies and their suppliers have been struggling lately to make ends meet. They are all competing in a brutal global market in which most of the top players -- corporate executives and their boards, shareholders and consumers -- want as much as possible for the lowest possible price.
That puts the squeeze on workers. But as long as the workers aren't us, who cares?
There is a tendency in these matters to point to the burdened soul's defects; and, certainly, anyone vaguely familiar with the modern history of GM knows that the company has flaws aplenty.
For too long, intoxicated by its success in the 1950s, when it controlled an astounding 50 percent of the U.S. market, GM behaved not as if it were just the biggest car company in the world -- which it remains to this day, despite its troubles. It acted as if it were the only car company that mattered.
GM made money, and nearly everyone connected with GM, including the members of the United Auto Workers union, shared in that largess. As long as the cash flowed, everyone was happy, unless you were a consumer who happened to spend money on a GM product that did not work. A similar circumstance characterized Ford and, to lesser extents, what had been American Motors Corp. and Chrysler Corp.
It is easy to share when there is much to be shared, easy to boast of things such as union solidarity when you have a solid hold on the only companies producing and selling cars in the United States. It is substantially more difficult to do those things in an era of intense competition, especially when your competitors have entered the market without the cost of organized labor.
Today's GM is losing money, nearly $4 billion so far this year, primarily because its costs are way out of line with those of its competitors. But today's GM is not the stagnant GM of 1992, when the company all but forgot that it was a car company. Nor is it the arrogant, U.S.-centric behemoth of the 1950s that believed the American flag should be red, white, blue and chrome.
Today's GM is a truly global company that can get along quite well with a 30 percent reduction in the annual number of cars and trucks it produces in the United States, because it can develop, engineer, manufacture and source high-quality, highly competitive vehicles from almost any place in the developed and developing worlds. The same is true for DaimlerChrysler, Ford, Toyota Motor Corp., VW and Honda Motor Co. Ltd., among others.
The evidence is that as long as those cars and trucks are attractive, efficient and affordable, consumers appreciate that kind of global business. People may publicly moan the loss of GM jobs at home; but if they feel better about the quality and the pricing of the non-union Toyota Camry than they do about GM's union-made Chevrolet Malibu Maxx, they will buy the Camry. If they are attracted to the pricing of the Hyundai Sonata -- which is being made with fewer costs at a sprawling new nonunion Hyundai plant in Montgomery, Ala., than it is at Hyundai's unionized facilities in South Korea -- they will buy the Sonata.
It's simple. It's about the money. CEOs, board members and investors want it. Consumers want it, too. Few people shop to benefit someone else's job security. But nearly everyone shops for quality and price.