Our own Sword of Damocles...

The ancient Greeks created the legend of the Sword of Damocles to illustrate the constant pressure and danger under which Dionysius the ruler of that story lived. The sword hung above his head by a single horsehair, threatening at any moment to fall, if that hair broke. In our little world here in Michigan, the sword that has been looming over our heads has been the bankruptcy of General Motors and the expected carnage that will cause to our economy directly and as the ripple effect races through the supplier base. Well, the hair is scheduled to break on Monday.

To a certain extent there is almost a sense of “get it over already” in the air. We have been hearing about and reading about this impending failure of our state’s largest employer for well over a year now. We have also been enduring the torture of a thousand cuts (oh, don’t tell Dick Chaney about that one) as the local automakers went through lay-off after lay-off and the suppliers followed suit. The world did not end when Chrysler went into bankruptcy, but it was painful and certainly an indicator of hings to come. But General Motors going bankrupt, now that’s a really big deal. GM has always been the grand potentate of the “Big-3”. After all there was even a saying, “What’s good for GM is good for America.”

But, let’s be honest here, General Motors has been a bloated, slow-moving bureaucracy for decades, ruled by accountants and burdened by years and years of bad decisions on products, on union contracts, on the number of manufacturing plants and on the proliferation of dealerships. There have been glimmers of hope – the Bob Lutz impact on product design was one – but, for the most part, this is a train wreck that almost everyone could see coming. The world’s non-U.S. automakers could see clearly how incompetent GM is, as they lined up to eat GM’s lunch – first the Japanese, then the Europeans and now the Koreans. The Chinese are already in line, too.

So, now bankruptcy is the only way out for what remains of GM. It is the only way that GM can get the right contracts with its unions. It is the only way that GM can put right its bloated dealer network. It’s the only way that GM can downsize its capacity to match its market share. It’s the only way that GM can get out from under its under-funded retirement obligations. Well, maybe I shouldn’t say the only way; just the only way out of the mess that the current management team at GM can see.

The sad part is that GM finally was getting the product issue figured out and now has some very competitive cars on the market and more in the queue. They still had not figured out the rest, though, and that sunk them. Unfortunately, they will likely take down hundreds of small suppliers with them and the disruption to our state’s economy will leave major, permanent scars. We have a saying in Michigan, “If you seek a pleasant peninsula, look about you”, to which we may now have to add, “If you seek a good job, leave”.

So, the company that for decades has been referred to as “Generous Motors” will now become “Government Motors” and all of us as taxpayers will become owners. I wonder if they’ll let us all in on the friends and family discount programs then? Fiat seems poised to take over Chrysler; maybe the government can find a buyer for GM. Maybe a Chinese or Japanese company. Hmmmm. Then, it could become “Gaijin Motors.”

Was that the sound of a horsehair breaking?