GM stood atop the Fortune 500 nine years ago; it now stands on the brink of bankruptcy court as sales decline and cash becomes scarce.
On Wednesday, GM announced that its unsecured bondholders had rejected the company's offer for a debt-for-stock exchange, so even though the United Auto Workers struck a deal with management last Thursday, bankruptcy still looms as the probable course.
How did such a once great company become so desperate? Perhaps the better question is, how did GM's well-paid management fritter away a treasure chest of brand loyalty and corporate wealth? There's not a single bad decision or one misguided executive that we can point to and say, "but for that GM would still rein supreme." GM's is a long-term management failure with a litany of losing moves over the decades, from the Chevy Corvair to the acquisition of Hummer — a rolling insult to the environment — that have collectively destroyed GM's balance sheet and sent its customers wandering.
GM didn't just under-serve customers; it over-served its workforce, lavishing lush pay, perks and future benefits on its management and employees even as its franchise began to fray. No doubt, the recent economic turmoil has exacerbated GM's descent. But long before the subprime mortgage crisis or the recession GM had failings — in leadership, in design, in strategy, and in the self discipline required to keep labor contracts affordable.