This case analysis focuses on the organizational changes GM implemented in the North American market since the announcement of their bankruptcy in 2009.
As you may know, General Motors Corporation is a United States based automobile manufacturer and has dominated the American Automobile industry for the past 77 years as measured by global industry sales. As of today, GM operates in approximately 120 countries, providing remarkable innovations, and they employs around 234,000 people on a worldwide basis (G.M., 2013). GM manufactures cars and trucks through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall, Hummer, Wuling Pontiac, and SAAB (G.M, 2013). Thus, GM has served for decades as an automaker role model to many other ...view middle of the document...
In addition, GM discontinued several brands such as Hummer, and now focuses on the four core brands which include Chevrolet, GMC, Buick, and Cadillac (G.M, 2013). Furthermore, competition is emerging persistently year after year. For this reason, GM really needs to restructure its strategy in order to survive in this slow economy and competitive industry.
One the main internal issue for GM’s bankruptcy crisis is highly due to the imposing high wage costs on employers. According to an article by People's Daily, “Poor management resulted with higher and higher labor costs in the auto plants that spawned the beginning of the end of the American car” (Xinhua, 2009). Thus, GM’s poor management technique was mainly one of the reasons that they had persistent high labor cost that lead to their critical shortage of cash flow. For instance, the total of cash compensation and benefits provided to GM labor hourly wage was approximately $73.25 per hour in 2006 (Xinhua, 2009). In contrast, Toyota’s total labor hourly wage was only $48 dollars per hour. Moreover, health care takes the largest portion of labor cost. GM needs $1,625 dollars on healthcare for workers to make a vehicle while Toyota only pays $215 for their workers (Xinhua, 2009). Furthermore, GM by far utilizes much more cost for workers when compared to their toughest competitor, Toyota.
Thus, GM’s huge wage cost had not only eroded their earnings, but also made their vehicles less competitive to other automobile manufacturers. As of 2012, GM’s hourly wage has dropped to a respectable $56 per hour. However, GM still has the highest labor costs in the automobile industry (Carty, 2009). GM should improve their cost cutting plans to increase sales and profits.