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Recent leadership changes at GM could ultimately boost Detroit’s local economy and stimulate the job and housing markets.
GM chairman Edward E. Whitacre, the former AT&T CEO will take over as CEO of GM, replacing Fritz Henderson who resigned after 10 months at the helm. The company is now in a position to make some power moves and regain its status as being an industry leader.
If GM increases productivity, jobs should follow. UAW healthcare and wage concessions could give GM the incentives needed to keep jobs in Detroit. This will help retain and create jobs at auto suppliers, local restaurants, and other small businesses in the area.
It can also help to revitalize the Detroit Real Estate market. A fresh crop of newly employed people will look for affordable housing in and around their job location. Real estate investors will be an important factor in this equation. Because of the lower wage scale, most workers will only be able to afford homes in moderate income neighborhoods. Also, if gas prices stay at the current levels, many people will prefer to live closer to the workplace. With this in mind investors can target designated investment areas.
In order for GM to turnaround their fortune, 2 things need to happen.
1. Get a Younger and Stronger Management Team
GM has traditionally been a large, slow company that used its size to maintain market share. Younger leadership is needed to bring in new ideas and continue to create products that appeal to a younger demographic. The best companies are the ones that can identify market and technological shifts and quickly make changes.
2. Use New Cost Structures to Make Big Bucks
GM recently exited bankruptcy which is greatly reduced its debt and healthcare cost. There have also been UAW wage concessions which will further allow GM to be more competitive. If sales can increase steadily, GM is poised to be a cash cow in the near future.
The How GM Leadership Can Stimulate Detroit Job & Housing Markets by Array Management Group, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Lighter weight vehicles, Higher power densities in the powertrain areas, greater vendor involvement such as pre-cracked connecting rods shipped to engine assembly plants, pre-assemble instrument panels shipped to vehicle assembly. Making the assembly of vehicle into a shorter final assembly line not a longer assembly line.
Russell you are correct. Build better quality and more fuel efficient vehicles but also keep the jobs here (in the U.S.) or there will be no car buyers for the domestic market.