Globalization Isn't Killing GM
The number is shocking: "GM axe is to fall on 30,000," read the Financial Times banner headline.
But it's even more shocking to me that the chief executives who run some of our biggest manufacturing companies now seem to have only one solution to any corporate problem: Cut costs. These CEOs are cost-cutting the U.S. out of a middle class. They've forgotten how to compete and grow.
U.S. companies such as Google (GOOG) and Apple (AAPL) still know how to innovate. Technology giants such as Cisco Systems (CSCO) and Dell (DELL) still want to conquer the world. U.S. companies such as Nucor (NUE) and Starbucks (SBUX) can still revolutionize mature industries such as steelmaking and coffee-dripping.
But too many of the biggest -- and once the best -- U.S. companies have abandoned growth.I know that the conventional wisdom is to blame the problems at General Motors (GM) and Delphi and other U.S. manufacturers on globalization. But I think globalization is just a comfortable excuse that lets management off the hook for its own failures of vision, strategy and execution. Some managements seem genuinely afraid of trying to compete in a globalizing world. It's just too hard. Baloney. If Nucor can succeed against foreign competitors that have cheap, government-subsidized capital and cheaper labor, so can U.S. automakers or U.S. airlines.
The Globalization Cop-OutAnd other managements seem happy to use the very real fears that the threats and turmoil of a globalizing world present to divert attention from their own failures and their own focuses on the short term. These CEOs are only too eager to use the threat of globalization as an excuse to ram through short-term cost-cutting fixes. These fixes fatten CEO reputations and paychecks -- and temporarily make some investors happy -- but I think it's very clear they aren't a solution in the long run.
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