The Oracle at Delphi

So Delphi is in Chapter 11, and predictions are that GM will go with it.

The bankruptcy of GM would be a terrible blow to the economy, but I think GM needs to do something drastic to survive. While I'm a big supporter of workers and worker rights, the fact is that GM has allowed themselves to enter into contracts that they can't possibly support and stay a viable company. Having cut costs in all the wrong ways (cheaper materials in the cars, cannibalized designs among several product lines, lackluster designs), they now have to get rid of the albatross around their neck, the ridiculous amount they pay the people who make the cars and the people who used to make the cars.

Yes, these people worked hard, and yes they should have something to retire on, but the fact is, they helped dig this hole, and trying to play hardball with GM won't fill the hole back in. GM cannot compete. Their only profitable vehicles are ones that nobody buys when energy prices are high and the economy is in the tank.

If I were GM, I'd start talking to the union now, and advise them that the situation is dire. I'd start looking at Chapter 11 sooner rather than later. Then I'd start some drastic cost cutting. Kill off a few of your brand lines. Get rid of cars that nobody is buying. Start looking for niche markets you can fill. Start designing cars that are reasonably priced without incentives AND get good mileage. Look to the Japanese (or even Hyundai, who pulled themselves out of a huge hole) and see what they do well and why. Plan for the next 20 years with thoughts that gas will be expensive.