-GM is closing plants and laying off people because consumers don’t want small cars.
-The tax cut came without strings so corporations will do what is in their best interests to reward shareholders.
-Strategic intelligence and planning may have helped GM to avoid these drastic measures.
Wall Street applauded the news that GM was closing plants and discontinuing some some small cars. [inlinetweet prefix=”” tweeter=”” suffix=””] GM’s decision was a rational response to many worrisome factors.[/inlinetweet]
According to The Times “GM’s sales have begun to soften. Consumers have shown little interest in small cars, and G.M. lacks a strong line of crossover vehicles. Like many of its competitors, the company continues to increase production in less costly Mexican plants. Moves toward electric vehicles, in particular, will vastly change the types of factories and workers that G.M. needs. What’s more, the whole industry faces disruption by the sudden rise of ride-sharing apps and other innovations that will discourage vehicle sales.”
GM received more than $500 million in tax cuts, but like most corporations used the money to improve the balance sheet rather than thin about the future. The trend of consumers moving away from small cars has been coming for a long time. One has only to look at the type of vehicles at any shopping plaza to see that consumers don’t want small cars. So why didn’t GM see this coming years ago and adjust their product mix?
[inlinetweet prefix=”” tweeter=”” suffix=””]Corporations don’t feel they owe anything to employees.[/inlinetweet] To keep a plant open when there is waning demand is a form of socialism that the current party in power has warned us about. It’s estimated the steel tariffs will cost GM over $1 billion, which surely played a factor in their decision to close some plants and discontinue cars.
[inlinetweet prefix=”” tweeter=”” suffix=””]Even the best, award winning, marketing can’t save products that are not wanted by consumers.[/inlinetweet]
The lesson in all this is twofold:
1ne: Strategic planning is an essential part of your company/brand.
2wo: Brand have to act faster and be more responsive to shifting consumer trends.
GM, it seems failed in these lessons and now its employees are going to pay the price.