Tag Archives: GM

GM destroys the American Middle Class

Well. I am as amazed as you are to actually find this stated out loud, I am rather leery of it in fact, it seems something that is far too good (well, good only in terms of my research) to be possibly true. And I can’t be the only one to have found this buried deep in a rather bad book called Why GM Matters, but here is the exact quote from Rick Wagoner, (ex) CEO of General Motors:

The toughest question I ever asked Wagoner was, Did you have to destroy the American middle class to save the company? “If you look at the circumstances we’re facing today, if we hadn’t done that, it would have been very dire for all three of the U.S.-based auto businesses,” he responded. “So, unfortunately, the answer is yes.”

So I was originally quite struck with a bit of anger…but what in the book didn’t make me angry? And then of course, a friend pointed out that as a quote it is really quite absurd, though typical of some good old-fashioned GM megalomania. And as an attitude it is stunning. So what is the greater good of such a business really, if not the jobs it provides? Apart from retaining American industrial capacity? Because surely there must be a cheaper way to do that than giving such a company billions of worker’s dollars…

Nicholas Dreystadt, Cadillacs & African-Americans

So. I have always vaguely wondered about the rather unique love-affair between African-Americans and the Cadillac. I stumbled across this story of Nicholas Dreystadt in a book called The Chrome Colossus by Ed Cray, while doing some research for my dissertation…

It is 1932, and GM is actually at the point of abandoning the Cadillac forever…what was on the cutting board? This beauty of an automobile:

Nicholas Dreystadt, head of the Cadillac division, breaks into the meeting

As Cadillac service manager, Dreystadt had earlier discovered that the car was very popular with the small black bourgeoisie of successful entertainers, doctors and ghetto businessmen. A surprising number brought Cadillacs in for service–surprising because corporate policy was not to sell Cadillacs to blacks at all; the Cadillac was reserved for the white prestige market. “But the wealthy Negro,” business critic Peter F. Drucker recalled, “wanted a Cadillac so badly that he paid a substantial premium to a white man to front for him in buying one. Dreystadt had investigated this unexpected phenomenon and found that a Cadillac was the only success symbol the affluent black could buy; he had no access to good housing, to luxury resorts, or to any other of the outward signs of worldly success.”

Overwhelmed by Dreystadt’s audacity and bemused by his proposal, the committee gave him eighteen months in which to develop the Negro market. By the end of 1934, Derystadt had the Cadillac division breaking even, and by 1940 had multplied sales tenfold… (Cray 279)

It is one side of the story to be sure, a comfortable retelling of an atrocious racism prevalent in this most American of institutions. And all of America. There must be so much more to it of course, but what a fascinating glimpse from a very corporate angle. Turned around, in spite of the fury it inspires, it seems to say that African-Americans saved the Cadillac from extinction. What did they save again?

God damn. I know it’s conspicuous consumption, but I continue utterly smitten with the craftsmanship and beauty of something such as this.

But there is more. I continue reading and 50 pages later I find this story from the WWII years:

Dreystadt had accepted a contract to produce delicate aircraft gyroscopes. despite mutterings on the fourteenth floor that the job was a killer and needed skilled hands unavailable. The dissent turned to outrage when Dreystadt and his personnel manager, Jim Roche, hired 2,000 overage black prostitutes from Paradise Valley–uneducated, untrained, but willing workers. Dreystadt hired the madams too, blithely explaining, “They know how to manage the women.”

Dreystadt himself machined a dozen gyroscopes, then produced a training film detailing the step-by-step assembly process. Within weeks the women were surpassing quotas, and the outrage turned to chagrin on West Grand Boulevard. Jokes about Cadillac’s “red-light district” angered Dreystadt. “These women are my fellow workers, and yours,” he insisted. “They do a good job and respect their work. Whatever their past, they are entitled to the same respect as any one of our associates.”

Dreystadt knew he would have to replace these women at war’s end–returning veterans had job preference, and the United Auto Workers, heavily white male with a southern-states orientation, wanted the women out of the plant. “Nigger-lover” and “whore-monger” Dreystadt fought to keep some, pleading, “For the first time in their lives, these poor wretches are paid decently, work in decent conditions, and have some rights. And for the first time they have some dignity and self-respect. It’s our duty to save them from being again rejected and despised.” The union stood adamant.

When the women were laid off, a number committed suicideĀ  rather than return to the streets. Nick Dreystadt grieved, “God forgive me. I have failed these poor souls.” (Cray 318-319)

Again, only one side and a highly problematic retelling of what is truly a remarkable story by any measure. And again, racism in bucketfuls. But who was this Nick Dreystadt really? And where are the other sides of this story to be found? I shall be looking, no fear…

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Ford, and confusion in right wing rhetoric

Even among the many books on economics and transnational corporations that I do not agree with, there are some among them that are at least rationally argued and relatively factual. But I rather enjoy when they are not, it allows me to stay awake through the boredom, mumbling angrily at the page and marking exclamation points and question marks in the margins. And their own contradictions and prejudices always come to the fore…a few choice quotes from my recent favourite:

Ford also expanded mechanical parts manufacturing in the United Kingdom (such activities are less sensitive to labor disruptions) and body and assembly in Germany, where the work force was more efficient.

Ah, racial…er…national profiling? Grand generalizations? You have to love them, especially when they’re tossed into the argument like olives of unknown provenance into a greek salad.

Increasingly, these disagreements within the US Big Three made it difficult for the US government to intervene effectively in their bargaining with the Mexican government.

Long live free trade! I wonder who was more vexed, the big three or the US government?

The UAW’s failure to negotiate better with the auto makers that had recently established in the United States also accounted for the disadvantage that the US Big Three face vis-a-vis their foreign rivals…

Is this the present or the past, who can tell? One thing I know is that it’s those damn unions again, always letting the home country’s corporations down…but I suppose if you can’t blame the workers for not kicking some Japanese ass, who can you blame for the American corporation’s failure?

The maquiladoras became the most visible symbols of the threats that low-wage countries could pose to jobs…

Again, if you can’t blame those greedy low-wage countries for the threats against jobs, who can you blame? Oh wait…

US government policies that fostered automotive production in maquiladora plants also altered the negotiating dynamic between the Mexican government and the US vehicle producers. The US auto makers learned about the low costs and the high quality of automotive production in Mexico, and the Mexican government learned about the benefits of rationalizing Mexican automotive production on a North American basis.

This is an extraordinary thing to say by any standard (unless you’re a patriotic elementary school teacher reading directly from a company brochure). It is especially extraordinary if you’re aware of the fact, as the author states earlier in the book, that Ford opened its first Mexican factory in 1925 and GM and Chrysler in 1935. And all of them had been operating there continuously for decades.

Sadly enough, the ongoing silliness of this right-wing hodgepodge of contradictory imperialist and free-trade theoriesĀ  kept me entranced until the very end! So I have now read a book in its entirety that I can never use as a source in good conscience, though I shall certainly find some of the original sources useful. I could have just read the bibliography…I suppose I know who has had the last laugh.