We are at a moment in history when some of the most venerable names in American business -- AT&T Corp. and UAL Corp.'s United Airlines, among them -- may well be on the verge of disappearing.
But at least one corporation that some have placed on the could-soon-be-extinct list -- General Motors Corp. -- should be scratched right off it.
Yes, credit rating firms have spoken openly in recent weeks of downgrading GM's bonds to less-than-investment-grade, or junk, status. And Fiat has threatened, under terms of a 5-year-old agreement, to force GM to buy the Italian company's heavily indebted auto business, a move that could further imperil GM's financial standing.
It's also true that the world's largest automotive company last year made less than 2 cents of profit for every dollar of its $193 billion in revenue. And those scant earnings came principally from the company's finance division, GMAC. Overall, GM's automotive operations posted a slim profit last year.
What's more, as it tries to move forward, GM faces formidable headwinds.
GM once set the pace for all of American industry, pioneering pension and healthcare coverage for its employees. But now, what was a model program has come back to haunt GM. The company faces an estimated $50 billion in future healthcare liabilities for its 425,000 retired workers and their spouses.
GM's annual medical bill for active and retired employees tops $5 billion. That amounts to $1,500 more per vehicle than its rivals in the U.S. market have to pay, a considerable disadvantage against Japanese rivals Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.
So is the onetime flagship of U.S. industry headed for the corporate graveyard, like some of the major airlines and old "Ma Bell" may be?
The surprising answer is no. Far from it.
"The largely unrecognized fact is that GM has been in a remarkable turnaround since 1992, when the board of directors took charge," says Vincent Barabba, who was general manager of strategic planning for GM until his retirement two years ago.
Barabba is referring to a dramatic episode when directors, watching GM lose money year after year and seeing it crushed by debt, made bold changes at the top.
They brought in Jack Smith, then head of GM's European operations, to run the whole shebang. And the bleeding quickly stopped.
The next dozen years saw GM raise productivity steadily, according to Harbour Consulting Inc., a Troy, Mich., firm that keeps track of efficiency statistics for the industry.
