Old Habits Die Hard

It has recently been reported that GM is considering upgrading their tech center in Warren, Michigan. They want to renovate this property in order to offer nicer office spaces for their engineers and provide new technology to keep up with the increasing changes to the technology of automobiles. They claim that this is necessary to stay competitive in the market place. This all sounds great, doesn’t it? GM is concerned with remaining in the industry and appears focused on taking steps to make that happen. However, when you consider what they are spending, you might think differently. (I know that I did.)

According to an article published by Automotive News, GM is considering putting $1 billion into this project. This coming after they have already spent a large amount on new Cadillacs and $5 billion on a share buyback. After reading the Bill Vlasic book, I have looked at GM a little differently. Their arrogant culture and need to spend their way out of their problems during the mid to late 2000s definitely changed my views of them. They refused to see the direness of their issues and thought because they were so big and powerful, needless spending wouldn’t catch up to them. As we all know, this couldn’t have been farther from the truth. I had thought that they were doing better since the bailout but this makes me question that. The article seems skeptical of this amount as well. The author makes the statement, “If that sounds like a lot of money, it is — in line with what it costs to build a factory or develop a line of autos.” It just seems that GM is forking over a lot of cash on this project. Of course it is great that they want to keep up with technology so they are able to provide automobiles that people want. However, do they need to spend $1 billion, especially on office space? While all of the money isn’t just for the office space, this behavior does make me wonder if their old habit of overspending is coming back.  I would like to give them the benefit of the doubt like the article does. They say even though it is quite a large amount, “it’s not out of the realm of what carmakers have to spend to build the product-development works and research centers they need to compete.” I guess we will just have to wait and see what the future brings to determine if GM is being smart and staying competitive, or wasting money and slipping back into their old habits.

Learn More: http://www.autonews.com/article/20150410/OEM06/304109959/gm-may-spend-1-billion-to-retool-landmark-michigan-tech-center

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