The Business of America Is to Stay in Business
General Motors, once the symbol of corporate giantism, both admired and reviled, is now a shriveled husk of its former corporate self. And thereby hangs a tale of post-industrial America and a warning for America itself.
At one time, GM seemed synonymous with a nation whose business was big business. In 1955, Time named GM President Harlow Curtice as its "man of the year"; the magazine credited Curtice with steering the United States into a "new age of wide-open affluence." Because the company sold more than half the nation's cars, it could afford to pay high wages, offer generous pensions -- and be grossly inefficient.
Today, amid ever-intensifying world competition, those happy days have gone the way of tail fins; GM's share of the automobile market has fallen nearly by half.
And although the company is still profitable, Wall Street looks at its debt load, about $360 billion, and judges the future burden of cash outflow to be unsustainable.
So the automaker's stock has tumbled 70% in five years, its bonds have been downgraded to junk status, and the b-word -- bankruptcy -- is heard on Wall Street.
Yet as GM flounders, another domestic motor maker is doing well. Surging Harley-Davidson now boasts a market capitalization -- that is, the total value of all its stock market shares -- of about $17 billion, $1 billion more than once-huge General Motors.
Yet even as manufacturing has declined in importance over the last half a century -- as services and information-rich industries have flourished -- the Harley story proves that smart manufacturers can survive and thrive in Information Age America.
Whereas General Motors attempted to be all things to all consumers -- Chevy to Cadillac -- Harley embraced the opposite strategy. The motorcycle maker concentrated on becoming the marketing master of a riding-cult domain.
As a result, Harley's profit margins are fattened by the premium prices it can extract from its super-loyal circle of "hog" buyers -- plus, of course, the revenue the company gains from the many millions more who share, vicariously, in the open-road mystique by purchasing Harley paraphernalia.
There's nothing wrong with this Madison Avenue-ized approach, because money is money. However, there would be nothing easy about all of this nation's old-line companies trying to pursue a niche-based strategy of focusing on high value-added functions, such as research, development and brand positioning.
