Michael Moore's 1989 film "Roger & Me" took General Motors' management -- specifically its chief executive at the time, Roger Smith -- to task for not seeming to care about the ramifications of its operations and actions on people, namely its Flint, Mich., employees.
Moore may now be getting his due as GM and other U.S. automakers slip on the increasing price of oil. The gas-guzzling cars and SUVs that U.S. automakers rode to profits a decade ago are shackling them to consumer consternation of high-energy prices.
There may be a moment of schadenfreude in the current environment of gas prices piercing automakers' profits. But there is a grander lesson for businesses: Listen to your critics; they may just have a point.
As I remember Roger and Me, Moore's intent was to get GM to stop closing unprofitable plants and laying off excess workers. So why would Moore be feeling a sense of schadenfreude at the demise of GM? Wouldn't that mean even more union workers laid off? Does Kostigen think it is good for GM workers that GM is having finacial difficulty? What point did Moore have? If GM had followed Moore's advice they would be in even worse shape than they are now. How would that serve the goal of preserving auto industry jobs?
Kostigen then quotes something called Ethical Magazine:
Ethical Corp magazine this month opines, "With last week's announcement, the interfaith investor coalition which wants GM to make a vapid climate change commitment comparable to the one it recently wrung from Ford may have had its job done for it by consumers, who have seen red at the petrol pump, if not green. Investment managers should be at least as worried by the scale of GM's $3.3 billion first-quarter '08 loss, and at the prospect of GM losing market leadership in its home market as well as globally to Toyota. Hope that GM can supply more rational products would be bolstered by a better climate for profit."
The rationale for more fuel-efficient products has been in place for decades; automakers just chose to ignore it. The big automakers have highly educated and skilled economists on their staffs. There is no way they didn't see the current oil price surge coming and figure that into production and products. So it would be interesting to see and read these predictions now and have management explain its ignorance.
The quote from Ethical Magazine would seem to indicate they have some kind of green agenda. I have no idea what kind of agreement was reached with Ford about the environment but it would seem to have something to do with building more fuel efficient or "green" cars since they intimate that the rise in gas prices is forcing a change in auto purchasing trends. Kostigen also seems to think that GM has some pretty special economists on staff with crystal balls that tell them future energy prices. And there is an apparent conspiracy to keep the evidence of their predictions secret. If GM had these special economists with the ability to predict future gas prices why does Kostigen think they didn't act on that information? Was there an evil cabal at GM seeking bankruptcy so they could punish more union workers?
I did a little investigation and analysis myself and found that the world will need to increase its oil supply by 70% by 2050 just to meet demand, according to the International Energy Agency. Yet, as any one who reads the daily newspaper can tell you there are no new major supplies of oil. Basic supply-demand theory shows then that with less or the same supply and increased demand prices will rise. And that's just back-of-the-napkin figuring. Imagine the sophisticated modeling and scenarios the car companies utilize.
Where did Kostigen get that 70% increase in demand? He didn't provide a link and I'm not going to chase it down this late at night, but the ability to predict oil demand that far out is fanciful. As for their being no new supplies of oil, well that is just plain ignorance. There have been major discoveries just this year off the coast of Brazil and there are ample supplies in the US that are kept off limits by politicians. Kostigen should have found one of those special GM economists to write the economic portion of his article.
Make no mistake: Automakers have failed us. They sold us products they knew or must have known would be financial monkeys on our backs. If your entire business raison d'etre relies on gas prices, don't you think you'd take dire oil supply information like this and do something with it? Or better to turn a blind eye and keep on selling in the face of it?
People, mostly middle- and lower-income Americans are feeling the prices at the pumps the most. It eats into our wallets at a much higher percentage of income than for wealthier people. The average income of an SUV owner is between $50,000 and $75,000 per year, according to an ABC News poll. And that doesn't include the mass of lower-income people who own trucks and cars with poor miles-per-gallon ratings.
Automakers should be ashamed. They've given Moore et al something to celebrate, but at our, the consumer, cost. And when those causes of celebration manifest in people driving less, doing without, and causing financial hardship, something in the system has fallen down.
Automakers had their chances to give us what would be good for us now. But they chose to give us what was good for them then. Sadly this is the making for yet another documentary for Michael Moore.
It's always somebody else's fault isn't it? It's GM's fault that consumers wanted trucks and SUVs. All those poor people now saddled with the vehicle of their choice. Damn that GM. And again why would Moore celebrate the downfall of GM when his goal was to preserve jobs for union members? The system has failed if people have to drive less and when there is financial hardship? Isn't it just possible that people with financial problems are to blame for their own failures? And talk about a general misunderstanding of business - GM should have sold us only cars that were "good for us"? What the hell does that mean? Can Kostigen actually believe that companies can profit by selling products that consumers don't want? How does that work?
Health-care industry take note.
What does that mean? Take note of what? Does he mean that the healthcare industry should make us do what's good for us? I have no idea. Is this entire article written in some kind of code? Was this written by Jack Handey?