General Motors Essay

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One of the oldest automobile manufacturers, General Motors is also the world’s second-largest, and employees over 266,000 workers, with global headquarters in Detroit and European headquarters in Zurich. Its subsidiaries are some of the best-known vehicle brands: Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling.

General Motors was founded in 1908 in Flint, Michigan, as a holding company for the Buick Motor Company, which had been founded five years earlier by auto designer David Dunbar Buick and had been struggling financially since. The first Buicks had rolled out in 1904–37 Model Bs, the basic design of which was not changed until 1909. William Durant was brought in to manage Buick Motors, with Buick himself selling off his stock in the company. Durant turned the company around gradually and founded GM with the intent of acquiring other small manufacturers and governing them from under a common umbrella. Between 1908 and 1910, Durant acquired Cadillac, Cartercar, Elmore, Ewing, Oakland (which became Pontiac), Rainier, Rapid, Reliance, and Welch. The acquisitions were so large and rapid that the company built up too much debt, and bankers temporarily took over the company while Durant co-founded the Chevrolet Motor Company with Louis and Gaston Chevrolet, gradually buying back enough GM stock to resume control of the company in 1916, folding Chevrolet into it in the following year. In yet another twist, industrialist Pierre Du Pont, who had backed Durant’s stock purchases, demoted Durant in 1920, and for the next 30 years the company was controlled by Du Pont’s companies in one form or another.

In the meantime, though, GM was a success. The Buick subsidiary introduced the first closed-body car in 1911, four years before Ford, and GM beat Ford in sales at the end of the 1920s, in part because of the management of Alfred Sloan and his willingness to finance automobile purchases, which Ford did not implement for its entire consumer product line for a full 40 years after GM introduced the General Motors Acceptance Corporation in 1919. GM was also involved in bus manufacture, buying up streetcar companies around the country and replacing them with bus services, while participating in the launch of the Greyhound bus line. From 1930 to 1948, it had various interests in aircraft design, but never seriously pursued an involvement in the industry after spinning its North American Aviation division off as a public company. By then, the automobile industry had evolved: two-car families were not long off, and the teenage and Hollywood romanticization of hot rods was only a few years away. Style and class had always been GM hallmarks more than Ford’s, thanks in part to the Buick, Cadillac, and Chevrolet brands.

Since World War II, GM has (with Ford and Chrysler) been one of the Big Three, the three major automobile manufacturers that account for most American made automobiles. In the early 1950s, after a WWII boom thanks to defense contracts (company president Charles Wilson was named as Secretary of Defense in 1953), General Motors was the largest employer in the world outside of the Soviet Union, and the largest corporation in terms of revenue. It was inevitable that success of this size would lead to some highly visible failures and vocal criticism. GM was the target of scorn, used as an example of wrongdoing to illustrate widespread cultural wrong, first for Ralph Nader (arguing for safety reforms in the auto industry in the 1960s) and later for Michael Moore (criticizing the growing tendency in the 1980s and 1990s of American corporations closing domestic plants and opening foreign ones with cheaper labor and less restrictive regulations), who saw their respective careers launched by playing David to the company’s Goliath.

Recent Economic Crisis

The recent economic crisis severely and negatively impacted General Motors, as it also threatened the vitality of the American automobile industry as a whole. SUVs, GM’s most profitable vehicle class, lost almost a third of sales in 2008 as a result of erratic gas prices, cutbacks in consumer spending, and other factors. Sales of larger trucks fell as well, and sales across the board fell by nearly half. The situation was worsened by the fact that the reduction in sales disproportionately affected the company’s more profitable models. The Big Three sought a controversial bailout from the federal government at the end of 2008, supported by President Bush and President-elect Obama but opposed by the Senate. GM and Chrysler were given $13.4 billion combined directly from the executive branch, drawing from the Troubled Assets Relief Program. The final resolution to the auto industry’s troubles has not yet been reached, nor are the ramifications yet clear of the effect on auto related industries.

Bibliography:

  1. Bruce Berghoff, George Ferris, and Donald Herbert Bratt, General Motors Parade of Progress & A Futurliner Returns (Futurliner Restoration Team, 2007);
  2. GM 100 Years: How General Motors Changed the World (Automotive News, 2008);
  3. Ben Hamper, Rivethead: Tales from the Assembly Line (Grand Central Publishing, 1992);
  4. Richard M. Langworth, GM: 100 Years (Publications International, 2008);
  5. Roger Lowenstein, While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis (Penguin Press, 2008);
  6. William Pelfrey, Billy, Alfred, and General Motors: The Story of Two Unique Men, a Legendary Company, and a Remarkable Time in American History (AMACOM, 2006);
  7. Alfred Sloan, My Years With General Motors (Broadway Books, 1990).

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