Save Your Way to Prosperity?

GM announced a plan to cut retiree and employee healthcare costs by $18B per year today.  It also plans to cut another 8% of its workforce (25,000 jobs) on top of the 30% cut in employment it’s taken over the last 5 years. Oh, and by the way, the company is investigating selling it’s most profitable (and practically only) profitable business – GMAC.

Analysts cheered the actions, and the stock climbed on the news (despite reporting big losses.)  What do they expect?  Is GM going to save its way to prosperity?

GM is hopelessly mired in the Swamp.  With losses mounting, and a corporate raider on their doorstep (Kirk Kerkorian now owns 10% of GM) you’d think leadership would recognize that the Challenges warrant some serious Disruption of their Success Formula (and not these ineffective disturbances).  But no, not this leadership.  They appear willing to take any action to Defend & Extend their failing Success Formula.  Even if it means cutting off their supply of resources (GMAC) and cutting rations to their own troops.

Maybe Kerkorian can bring in a management team capable of really changing GM (he did team with Lee Iacocca on his takeover of MGM Grand).  It’s certainly clear that the current leadership has no clue how to overcome existing Lock-In.

‍