Saturday, January 23, 2021

Bright Sun Films and Business Insider on the General Motors bankruptcy, a story I tell my students

I wrote about one of the examples I use to illustrate a point to my students yesterday in I recommended 'Spaceship Earth,' a documentary about Biosphere 2, to my students. Today, I'm writing about another, General Motors. Watch Bankrupt - General Motors, which includes the points I make about what was once the largest company and the largest private employer in the U.S. as well as the largest auto company on the planet.

After over a hundred years in business, General Motors was the worlds largest corporation producing some of the most iconic cars in history. However in the early 2000's, the company made some bad decisions and quickly brought the worlds most powerful company into turmoil, on the brink of shutting down, and eventually.. bankruptcy.
As my readers might gather, I use pre-bankruptcy GM as an example of how not to conduct business sustainably. First, I tell students about how I figured out that GM was headed for bankruptcy in 2006 based on its pension obligations and the business model it used to sustain them, selling trucks, SUVs, and luxury cars, which were profitable but very fuel-inefficient. The price of oil was already rising then and when it got high enough, it would make sales of those product lines collapse, tanking GM's revenue and sending it into bankruptcy. As the video shows, that happened, although Jake Williams concentrated on the effects of the Great Recession more than the energy costs that, along with the collapse of housing and finance, helped cause it. Jake at least pointed out that abandoning the EV-1 turned out to be a mistake, with GM losing its lead in a technology that other auto makers made profitable.

Second, even during good times, GM was not caring about how its business decisions affected its employees and the communities in which they lived. That's ignoring the people part of the triple bottom line, people, planet, profit, and creating inequitable outcomes, the opposite of what the image below shows as the result of balancing people and profit. That led to all the problems the city of Flint had even before the Flint Water Crisis.

As the diagram also shows, the anticipated results of balancing planet and profit are viable outcomes. GM did not do that with its product line, concentrating on profit to serve its retirees, sacrificing planet for people. That led to a nonviable outcome, the company going bankrupt.

Jake did not include the environmental and energy cost of my lectures in his history, but Business Insider did in its history of one of the brands that supported GM before the bankruptcy but which the company discontinued afterwards, The Rise And Fall Of Hummer.

In the 1990s, the militaristic off-road machine known as the Hummer was a major part of American pop culture. But in fewer than 20 years, Hummer went from being one of General Motors' most recognizable brands to a relic of the past. We explored what led to its rise and fall.
The Hummer was a poster child of gas guzzling SUVs and was the one I would call a "suburban assault vehicle" because of its military origins. However, as Business Insider suggested, it could stage a comeback, particularly if GM revives it as an electric vehicle.

Finally, one of the reasons why I was able to predict the crash in GM's sales more than a decade ago was because I'd seen it before during the 1970s and 1980s, when gas prices rose and American auto sales, particularly of larger vehicles, collapsed. Business Insider told that story as part of The Rise And Fall Of Cadillac.

For half a century, Cadillac was America's top-selling luxury car brand. However, recent decades have seen it struggle to stay afloat in the US.
The more things change, the more they stay the same.

That's it for today's edition of stories I tell my students. Stay tuned for the series nominees for the 26th annual Critics Choice Awards in tomorrow's Sunday entertainment feature as I promised in the footnote to 'Watchmen' leads diversity in 2019-2020 Emmy winners for MLK Day.

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