OMB: Owner-Managed Business

United Breaks Guitars -- Public Protest Of Abusive Treatment

Sun, 12 Jul 2009 17:40:52 +0000

United's Fan Club

As someone whose job forces me to fly, I strongly sympathize with someone who is publicly airing his grievances with an airline. About a year ago, I had a minor delay while NorthWest switched to a smaller plane and bumped most passengers to a later flight. It was okay, other than spending several extra hours in the airport. Then a NorthWest employee very snottily told me that it was my fault I had to wait. At this point, I had been sitting in airports or airplanes 10 hours and still had more sitting ahead. It would have been hours faster to drive from Columbus to Lincoln [Yahoo! Maps], and I wouldn't have to be told it was my fault.

Personally, the government and the airlines have made flying an unpleasant enough experience that I never fly when I have a choice. Being in the plane during the flight itself is usually quite enjoyable. It is airports that make it not worth it. Anyway, I hope you enjoy the video below. Contact United Airlines and let them know that you disagree with damaging passengers' items and refusing to pay for the damage.

UAL Corporation
World Headquarters
P.O. Box 66100
Chicago, IL 60666

This is an important lesson for those of us starting our own businesses. Up to now, United Airlines and other airlines were pretty much immune to consumer reaction. They dished out treatment as they saw fit, and your only alternative was to drive to the destination instead. The Internet is enabling ordinary people, the formerly helpless "little guys", to alert the whole world to mistreatment by uncaring corporations. If you cross someone and refuse to make things right, you could be the next company featured on YouTube and Twitter.

IceRocket tags: customer service

Blogged with the Flock Browser

Tags: customerservice

We Lose Because Our Leaders Lack Guts

Sat, 11 Jul 2009 23:24:43 +0000

Report: Too few officials knew of surveillance - Yahoo! News

Not enough relevant officials were aware of the size and depth of an unprecedented surveillance program started under President George W. Bush, let alone signed off on it, a team of federal inspectors general found.

The Bush White House pulled in a great quantity of information far beyond the warrantless wiretapping previously acknowledged, the IGs reported. They questioned the legal basis for the effort but shielded almost all details on grounds they're still too secret to reveal.

Hey, listen, guys. I know you, like most Americans, were terrified about another terrorist attack. What you did not get then, and apparently, no one gets even now, is that our best defense against successful terrorism is to strictly adhere to the dictates of the Constitution.

I would call 9/11 the most successful terrorist attack in history, not because they took 3,000 lives, but because of the way our government reacted to it. Every person who has to remove shoes at the airport, every person who finds a "love note" from the TSA in his luggage, everyone who drives through an intersection where DHS has funded cameras is a witness to just how effective those attacks were at changing our society in deep, structural ways.

Those who ignored or intentionally violated our Constitution in reaction to the acts of violence and fanaticism are unwitting allies of the bad guys. The extremists hate, for example, freedom to believe and to express what you choose. And thanks to pervasive surveilance, we have lost that.

But for anyone to say that the problem was that "not enough relevant officials" knew enough is fantasy. Congress was writing blank checks to the give-up-your-freedoms-for-safety crowd. The administration was filled to the rafters with members of that crowd, and it seemed like the Supreme Court was studiously avoiding involvement in related cases. If you want to accurately describe it, no one in positions of power stood up and fought for the Constitution they were sworn to preserve, protect, and defend. It was this lack of guts that allowed our government to gather information that they should not have gathered.

As you know, we talk a lot about politics here, but our focus is on smaller businesses, not politics. Therefore, I want to add a comment that a smaller, less-centralized government would have been much less able to spy on us. As in business, smaller and less centralized is probably better in the long run. Remember that the Constitution says that all powers that are not expressly granted to the federal government are reserved to the states and to the people. It is a pity that our government leaders (including judges) cannot read.

Economy: The Numbers Lie

Sat, 11 Jul 2009 19:54:35 +0000

The true measure of a nation's economy is in the workplaces, homes, and lives of average, ordinary people, those in the middle of the economic scale. It is not in aggregates that pack multi-millionaires and billion-dollar corporations into the numbers.

Why do I mention this? Because the government and the mainstream media act as though only large businesses and their managers truly matter. When large banks like Citibank got into trouble because of bad real estate loans, no one really tried to help those who'd been suckered in by the "refinance your home to pay off your bills" and similar come-ons--at least not for their own benefit--instead the focus was squarely on saving the banking system's largest and most poorly-run institutions.

Now the crisis is over. Individuals and families are still suffering, and will continue to suffer for the next year or two, but the biggest banks are profitable again and investors are no longer panicking. The MSM, acting as the propaganda voice of the political and corporate elite, is telling us that the whole thing is over. But is it?

Are individuals and families benefiting from more wide-spread employment yet? Remember that consumer spending is about 68% - 70% of our GDP. This is the same GDP that, according to ShadowStats.com's chart below, has fallen about 5% in the first half of 2009. Consumer spending is severely limited without increased employment, so a quick turn-around is not likely. Another way to look at it is to compare inflation-adjusted per capita income for the middle class over time. However, it is perhaps easier, if less accurate, to use the aggregate per capita income numbers. [XLS file]

I submit to you that the depression-recession is both worse and better than what you have heard on television. It is worse, because the government's figures were altered to make things look better than they really are (the most recent time this happened was during the Clinton administration, but they were hardly the first). So when government figures say that 15% of the workforce is unemployed once you include "discouraged workers", the true number could top 20%. When government figures say that the inflation rate is -2% annualized, it could actually be 6% annualized When government figures say that GDP is on track to drop by 2% this year, it could actually be working toward a 5% drop this year.

I honestly think more people are jobless, homeless, and hopeless than the published reports let on. I think the hype about the failing banks scared a lot of people, especially employers and managers, who reacted by cutting a lot of staffers loose. Creditors reacted by becoming hyper-aggressive in their collections activities, canceling accounts, raising interest rates, and changing their terms to be even more onerous and oppressive than they already were. And this knocked a lot of people who were in borderline financial situations into the seriously distressed camp.

On the other hand, the reason the government and the media are panicking isn't because Mr and Ms Average American are hurting. It is the financially above-average that own most stocks and bonds and which support most political organizations, including both major parties and pressure groups like Greenpeace and the US Chamber of Commerce. When those contributors are hurting, they can generate a lot of interest from the broadcasters and from various political pressure groups. When someone said the banks were about to melt down, the whole elitist apparatus freaked out, and that's what the government reacted to. This means that things very likely did not change that much for those of us in the average and below-average income groups.

Sadly, it seems that the economy isn't declining as precipitously as it was. Not that I want it to decline, but such a decline is necessary to erase the accumulated destructive effects of the past twenty or thirty years, effects such as the still-inflated real estate pricing and the low savings rate, the import-over-domestic orientation in purchasing, and the exaggerated influence with our government that large corporations have relative to that of individuals and smaller businesses. Unless these things are fixed, this little recession is just a foretaste of what lies ahead for us. I do not want us to go through a similar time. I would rather see the economic and political deadwood cleaned out and both our economy and our political system rebalanced with a stronger emphasis on individuals, small groups, and small businesses, and a much-reduced role for bigger organizations and corporations, whether call themselves AARP or Xerox.

The one thing that is certain (all the rest is speculation) is that large corporate organizations (e.g., National Educators Assn or GM) have too much influence in our country, far in excess of their contributions. That is true whether we rely upon the pre-digested numbers that we get from the mainstream media or we use someone else's measurements.

IceRocket tag: econolypse

econolypse

Foundation of Business Failure: Finance Games

Sat, 11 Jul 2009 19:25:28 +0000

Foundation of Business Failure: Finance Games

Restaurants on the Ropes - Rick Newman (usnews.com)

Other eateries are in a pickle. Fancy restaurants that had long waits a few years ago are now begging for customers and offering sales. Midpriced casual dining outlets are losing customers to cheaper fast-food joints. Even some dollar-menu franchises are suffering if they?re overdependent on mall traffic or clustered in regions where the economy is weakest. A key factor is debt: With sales down everywhere, many companies that borrowed heavily to remodel, expand, or buy other franchises now find that interest payments gobble up a nerve-wracking amount of cash flow.

One of the things they teach you in business school is that well-run companies try to balance their WACC to create the most efficient capital structure for the business. At least, they taught this at Cal State San Bernardino. This is probably true in big businesses, such as the LOOACs that got into money troubles and caused this recession. It is definitely not true for smaller businesses. By this, I mean that the most efficient financial structure for a smaller business is one that is composed mostly of equity investment, with a limited amount of debt financing in the mixture. Then again, watching the shipwreck of the economy caused by risky financing policies in major corporations and banks, one must consider that maybe this is also the best financial structure for larger corporations, too.

All content copyright � 2009, WebConnect Consulting, a division of Open Technology Pros, LLC. Licensed under Creative Commons Non-commercial license. Specifically, if your site has paid subscribers or is ad-supported, you need permission to republish four paragraphs or more of our content.

Well-run smaller businesses try to minimize and avoid debt. Certainly, they do not expect to completely avoid the use of debt-financing, but they do recognize that even small amounts of debt dramatically increase the riskiness of their profit streams and endanger their ability to pay their bills and their employees.

US News and World Report tells us about some large restaurant chains that owe money and may have trouble repaying it unless the economy changes in the next few months. The lesson we should learn is that one borrows based on his present expectations, but no one knows what the future will bring. I conclude that there is some benefit from borrowing for expansion or remodeling, but that we have to also watch for the impact if our expectations turn out to be overly optimistic.

There are trends in the general environment that you and I cannot see until they splash upon the beach of public perception. This is what happened to the companies on this list. They borrowed funds for expansion, remodeling, or whatever. Then, the world changed around them, affecting their ability to remain profitable and to generate the cash-flow necessary to service their debts. If these companies, with hundreds or even thousands of outlets and paid expert forecasters, could fail to accurately predict the economic environment of today, it is very likely that you will also fail in that. A wise business-person will seek to reduce borrowing, sometimes even if it means slower expansion or reducing the near-term return to stockholders. (Of course, this also means that well-run businesses should seek to attract more long-term oriented investment instead of short-term "up the stock price" investment, but any sensible person knew that years ago.)

IceRocket tags: small business management, econolypse

small business management, econolypse

City Intrudes Upon Applicants' Privacy

Thu, 25 Jun 2009 02:42:56 +0000

Bozeman, MT Goes Phishing--Applicants Seeking City Jobs Must Disclose Usernames and Passwords : Los Angeles Business Litigation Blog

It's no secret that more and more employers are doing a quick Google search for a job applicant?s name as part of their background checks, but the City of Bozeman is taking it one step further.

In an article published yesterday afternoon, Montana's News Station reports that applying for a city job now requires turning over some fairly sensitive information. Specifically, the background check form for city jobs requires applicants to

list any and all, current personal or business websites, web pages or memberships on any Internet-based chat rooms, social clubs or forums, to include, but not limited to: Facebook, Google, Yahoo, YouTube.com, MySpace, etc.,...There are then three lines where applicants can list the Web sites, their user names and log-in information and their passwords.

So let me get this straight: in the pursuit of honest employees (see the link for more on that), the city wants applicants to break the agreements that govern their participation in sites like Yahoo, Google, MySpace, and Facebook? In most sites, the legalese contains something to the effect that your account is not yours, but the site's, including the username, and may be used by you only as long as you conform to their current terms of service. The terms usually include something along the lines of "keep your password secret", "do not share your password with anyone", and "change your password anytime you suspect someone else may know it". It seems mighty fishy to me that the city wants to hire people who cannot be trusted to keep their word.

In fact, it seems "phishy", too. Think about all those bad guys sending spam to try and trick you into revealing your usernames and passwords. Now all they have to do is get hired in the HR department of city hall and they can have their pick of account information. Why, I wouldn't be surprised if Bozeman, Montana, gets buried in resumes sent in by Eastern European hacker-type bad guys wanting the mother lode of phishing information. Sites like Monster are already overfilled with spammy multilevel scams

And finally (and most importantly), this is an egregious privacy violation. For even applying at work, one could be subjected to an unprecedented level of monitoring and spying, could have unscrupulous city employees using login information to masquerade as the applicant in various online communities and forums, and could have one's private (not work-related) e-mails and instant messages violated by a potential employer.

The update that says they've stopped doing this gives little comfort. It shows a profound lack of sense, decency, and commitment to the well-being of the city's workforce. It shows that no one thought about the dangers inherent in data-collection, and especially the collection of sensitive personally identifying information (PII). It was wrong from the beginning, yet no one in the city hierarchy stopped it from happening. Now that there has been a furor, they have shelved it for the time being.

If the people running the city cannot understand why the policy was wrong, if not illegal, they should be removed from office. First of all, for someone to propose such privacy-invading measures requires a complete lack of respect for the privacy of employees and prospective employees. It shows a willingness to trod into gray areas, too, which is quite a risky strategy when you report to the local voters. Secondly, for this to be approved shows a complete lack of integrity within the managers and politicians who reviewed this. Finally, for the policy to be implemented shows a complete lack of managerial controls, the kind of controls that prevent idiotic policies like this from chasing away prospective employees and generating lawsuits from current employees.

Know this: no small, locally-owned business (SLOB) could get away with something like this. Even if the owner-manager is integrity-challenged, he knows that this would hurt his business. Once the economy bounces back (from what I expect will be a double-dip recession) and the supply of labor tightens a little, anyone with options will speedily flee from such an employer, leaving only the least desirable employees.

employment, stupidity

Why You May Want To Keep That Boring Job For Now

Thu, 25 Jun 2009 02:28:32 +0000

Should You Stay At Your Cushy Job? | MyWifeQuitHerJob.com

So I asked him why he changed jobs. After all, he has a wife and child at home whom he loves spending time with. His former job was a 9-5 type job that lent him plenty of time at night to hang out with his family. In addition, he never had to work weekends and the job itself was pretty low stress. Why did he give all of that up for a new job where he?ll have to work many more hours and re-establish himself? Why did he sacrifice the additional family time for a new job that is more demanding?

Here, Steve from MyWifeQuitHerJob.com tells why the best thing to do may be to stick with your boring job that pays your bills and gives you sufficient non-work time to work on your own business venture. Why? Go read the article.

In the end, though, it is your time. You are free to use it to build up someone else's business. You are free to use it to launch and hopefully build up your own business. You are free to use it to help out at one of the many non-profit groups in your area. You are free to use it playing the newest first-person shooter. Just don't complain when you are still working for someone else's company when you are 75.

small business startup

Plastic Subject To Fraud Because Banks Profit

Mon, 15 Jun 2009 00:42:21 +0000

AP IMPACT: Weak security enables credit card hacks - Yahoo! News

Security experts say there are several steps the payment industry could take to make sure customer information doesn't leak out of networks.

Banks could scramble the data that travels over payment networks, so it would be meaningless to anyone not authorized to see it.

For example, TJX Cos., the chain that owns T.J. Maxx and Marshalls and was victimized by a breach that exposed as many as 100 million accounts, the most on record, has tightened its security but says many banks won't accept data in encrypted form.

This highlights the problem with the current security process. If someone steals your information, you can be on the hook for a portion of the costs unless you can prove that one of the companies along the chain made an error.

The article has one glaring error: it claims that most data loss occurs during transmission. The truth is, online vandals routinely penetrate supposedly secure systems such as those used by banks and even the military. The number one way to prevent the loss of information is to not store that information in the first place. If the info is out there, it will eventually be compromised.

If we want to turn the tide of "identity theft" and other criminal misuses of another person's information, there are two simple changes in the law that would make it happen. The first is that an individual's personal information is their sole personal property and may not be stored or utilized by any company any longer than is necessary. Make that enforceable with prison time, and suddenly a lot of the information that is accumulated will be wiped clean. The second is even more important: Make the bank responsible for 100% of costs related to consumer data losses (except where it is proven that the consumer was at fault)--including the costs of re-establishing one's credit after suffering identity theft. Believe me, they would become a lot more stringent about securing individuals' data.

In other words, the present situation with data losses increasing exponentially each year (surely you don't believe that the ones we hear about are the only ones that happen), is solely caused by having the wrong incentives. Banks have an incentive to look like they are combating data losses and theft, but they choose minimal-cost, minimal-protection solutions because there is no penalty for doing less than they can do to protect consumers.

This, of course, is partly a consequence of allowing LOOACs and big financial companies to have inordinate influence in the legislative process. It can take a decade or more for a consumer to recover from the effects of a single data loss (or even a stolen wallet or purse). That pain is not borne by the banks, so of course they don't care to expend any extra energy to prevent it. If our government ever changes the incentives, it won't take six months to bring fraud down to unheard of levels.

As always, our focus is on small, locally-owned businesses (SLOBs). It goes without saying that there will be costs for SLOBs to comply with such standards. But the upside is that there will be a big reduction in charge-backs. And, once consumers know that their financial information is safe, they will be willing to use their plastic at John's Local Market just as they do at Bigg's Nationwide Supermarket.

The current system benefits only the large financial companies who take a fraction of every payment that is transferred through the system. Neither individuals nor small businesses benefit as much as they could, simply because of the risk of fraud and data loss that is built into the system. No, it is not possible to prevent all risks or to reduce them to zero. What is possible is to motivate those with the power to reduce those risks to actually do so.

IceRocket:credit card fraud

Insurers Protect Themselves First

Sun, 14 Jun 2009 23:14:35 +0000

AIG Balks at Claims From Jet Ditching In Hudson

When a homeowner has a burglary or a driver has a crash, all it normally takes is a call to the insurance company and a description of the loss to activate the policy. But aviation liability insurance is different. It is activated by a finding of negligence on the part of an airline. If there is no negligence, then arguably there is no liability, and no obligation to pay claims.

That poses a problem for the passengers of US Airways Flight 1549. They suffered real losses and injuries, but they are widely perceived as having been saved from sudden, violent death by their heroic and quick-thinking flight crew, led by Capt. Chesley B. Sullenberger.

"Insurance companies try to protect their assets, obviously," said Bruce D. Chadbourne, a co-author of the book, "Introduction to Aviation Insurance and Risk Management," and a professor in the business school at Embry Riddle Aeronautical University in Daytona Beach, Fla. With the airline wearing a halo, A.I.G. "is going to play hardball."

This is not being shared to accuse AIG or other insurance companies of some nefarious agenda. There are plenty of other incidents to support that view. It is here merely to support an observation: As one should expect, insurance companies are not your "friends". Instead, they are self-focused businesses that strive to make as much money as they can.

In all your dealings with them, keep that in mind and you should be okay.

Here's A Clue: This Isn't Just Another Recession

Sun, 14 Jun 2009 05:07:50 +0000

Employed see tough times, too - USATODAY.com

People who still have jobs are faring worse than at any time since the Great Depression, a USA TODAY analysis of employment data found. Furloughs, pay cuts and reduced hours are taking a toll on workers who so far have escaped job cuts.

The employed worked fewer hours in May ? an average of just 33.1 hours a week ? than at any time since the Bureau of Labor Statistics began counting in 1964. Part-time work is at a record high. Overtime is at a record low.

The magnitude of job losses ? 6 million jobs gone, a 9.4% unemployment rate ? has overshadowed the groundbreaking nature of the nation's employment troubles, especially the financial decline of those still working.

Sometimes, we have to wonder what planet our elite economists and politicians live on. The tone of this USA Today article reflects the complete surprise that these leaders are experiencing. Yes, that is correct--these people are surprised that this is hurting those who haven't lost their jobs almost as much as it hurts those who did lose their jobs. In some cases, employers are reclaiming hard-won benefits and pay scales, all without trimming their bizarrely bloated executive compensation.

If you have ever had a job anywhere, you know that there is no single person in any organization whose output is worth more than twenty times as much as any other organizational member. There is plenty of room to debate multiples, but hardly anyone would say that a multiple in excess of 20 is accurate.

All content copyright � 2009, WebConnect Consulting, a division of Open Technology Pros, LLC. Licensed under Creative Commons Non-commercial license. If your site has paid subscribers or is ad-supported, you need permission to republish four paragraphs or more of our content.

I think that employees understand that there is pain throughout the economy, just as employers do. If lower-level employees feel that they are made to bear a disproportionate share of this pain, they will be harder to work with in the future. It always surprises me when LOOAC management believes that their employees will not remember. This is what doomed Circuit City, I believe. The company fired their best, highest-paid employees, telling them they could re-apply for their jobs, but the pay would be lower than before.

When this passes, which may be a while, corporate America (LOOACs) will not want to restore pay and benefits that were cut during the recession, except where those cuts affected top management. I believe that more people that are (or were) employees need to be taking the reins of their own lives and finances by establishing and building their own small, locally-owned businesses (SLOBs), owner-managed businesses (OMBs), and family-owned businesses (FOBs).

But this also requires some changes in the way Americans spend their money. If you work fairly near where you live, you need to start seeking out businesses that are local to your area, companies that employ local residents, pay local taxes, support the local Little League and Junior All-American teams, and actively contribute to the local area's well-being. If you travel, you need the generic national brand stores, because at least you know what you're getting.

Also look for products and services that are produced in your area. If not in your area, at least look for in-country production, rather than out-of-country. Decide on a figure, such as 50%, and make an effort to place that much of your purchase dollars with locally-owned businesses. On top of that, try to spend that much of your money on products that are made in-country, rather than outside of the country.

I'm trying to reach 75% local purchases and 75% in-nation production. It is a hard target to reach, because much of what is available is foreign-made, carried in chain stores that don't even have local purchasing operations. But if most Americans made similar efforts, it would launch an economic and social transformation even more far-reaching than the current recession. For one thing, Main Street would gain the upper hand over Wall Street: a small business-driven Main Street is a decentralized Main Street, while Wall Street is all about centralization. With SLOBs seeking to build relationships with locally-owned banks, the era of corporate dinosaurs will end without a catastrophic meteorite strike.

Remember this: big corporations (that is, LOOACs) equals concentration of wealth, mass disenfranchisement, and large-scale corruption on the federal level and possibly state and local levels. Smaller businesses (that is, SLOBs, OMBs, and FOBs) equals wide dispersion of wealth, active participation by large segments of the population, and locally-controlled resources (unable to bribe federal and state officials). Choose current comfort (that is, LOOACs) or long-term benefit (SLOBs). I'm firmly on the side of SLOBs.

Unfortunately, the economic rescue efforts to date have mostly focused on saving the LOOACs that caused the crisis in the first place. Even the new energy plan is expected to promote large and centralized "alternative energy" production, which is both expensive and unreliable, instead of focusing on equipping every home with its own energy-production and energy-storage facilities. Overall, home-focused energy is more expensive. But its advantage is that there probably isn't going to be a region-wide or state-wide blackout due to clouds or lack of winds. Taking a drive through certain areas of California, one regularly sees windmill farms where the windmills aren't turning because the wind speed is too high or too low to be useful.

Rather than bailing out corrupt and incompetent bankers, we could have used those trillions to help smaller businesses invest in equipment, buildings, and inventory necessary to soak up many of the workers that are being spilled by corporate America. It would still have been painful, but it would also have resulted in much faster absorption of stimulus money into the economy. And best of all, we would not be fighting the natural trend of the economy to rid itself of uncompetitive enterprises such as the large financial companies.

This is not just another business cycle. This is a deep restructuring. If we ignore the needed changes (or if the government's continuing effort to oppose them succeeds), we will face a much larger calamity down the road, only it will be condensed into a much shorter, much deeper downswing and a long pause before any upswing begins. Like most Americans, I've grown fat. I don't want to face the potential of starvation when our interconnected economy breaks down. I'd much rather fix it now and avoid hunger.

econolypse

Detroit News: Hummer, Saab, and Saturn May Continue Under Other Ownership

Thu, 4 Jun 2009 03:19:23 +0000

GM to sell Hummer to Chinese company - Yahoo! News

General Motors Corp. took a key step toward its downsizing on Tuesday, striking a tentative deal to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.

I am actually surprised by this. Unlike the rest of GM, where the financial collapse is the immediate problem, Hummer's biggest problem is its ultra-size vehicles. Just before the financial crisis, there was an oil price spike that really squeezed the large-vehicles market. Then came the financial crisis, and soon will come tough limits on fuel consumption, pollution, and plant nutrient emissions (otherwise known as CO₂).

"GM is close to a sale of its Hummer brand, which is good news for the 3,000 Americans who will be able to keep their jobs, the two American plants that will remain open and the more than 100 Hummer dealers that should be able to stay in business all around the country," White House spokesman Bill Burton said earlier in the day.

A buyer for Hummer is buying all the disadvantages that GM itself had, including potential labor unrest should GM renounce its pension plans during bankruptcy. What is the buyer getting in return? A demoralized workforce that is still expensive in comparison to its competitors. A product emphasis that may well be in a deceased segment of the market. A name that is the butt of late night comedians' jokes. Impending pressure from the EPA and the state of California to make Hummer become something it is not.

For about a year, Hummer's products will continue to be made by GM and other contractors. This, of course, is a necessary transition period. But it also exposes a weakness. In chipmaking parlance, Hummer will be nearly "fabless" for a while, and thus will be dependent upon its manufacturing partners and their stability. If this bankruptcy proves unsuccessful and GM closes later this year, Hummer's supplies dry up and they close shortly afterward.

Saturn Corp., on the other hand, was moderately successful, until they came out with some vehicles that were said to be siblings of other GM brands' products. They have their no-haggle policy, which I think is really a great idea. How many times have you bought a vehicle over the weekend, then came to work on Monday and found that a co-worker got a better deal? I think Saturn needed to advertise and emphasize their "no regrets" purchasing. What's more, I think that Saturn needed full control of its design and production processes, without any thought of comingling with GM's other brands.

Take a look at history. GM closed its plant in Fremont, California, then reopened it in a partnership with Toyota (New United Motor Mfg, Inc.--NUMMI). Eventually, Toyota took full control of the successful NUMMI plant, but GM believed they had learned some things that made a Toyota-run plant successful when a GM-run plant was not. Those lessons were put into practice in a new company, Saturn, that was going to lead GM forward into the future.

So where did the wheels come off? Well, the original Saturn SL-1 was visibly different from other vehicles of its vintage. It wasn't quite DeLorean cool, but it stood out. Saturn advertising focused on telling potential car-buyers why a Saturn was different. But then, GM decided that Saturn needed a minivan, so they cloned one for it.

One of the big issues with GM over the years has been the way that most of its vehicles were clones of one another, with slightly different sheet metal or trim. This may have partly been a reaction to government antitrust efforts. Instead of allowing Chevrolet to completely run its design and production operations, Chevy and other "nameplates" were turned into marketing labels, sharing a common production and distribution apparatus. This meant that DOJ could not simply pry Chevy out of GM, without having to unmix the eggs at the assembly and subassembly levels and tear apart the design group in order to have a viable company.

Once that practice was carried over to Saturn, much of that brand's distinctiveness was lost. In fact, the desire to sell doesn't seem to include the Saturn plant in Tennessee. So it seems that GM is also leaving Saturn "fabless".

GM will sell or get rid of Saab, Hummer, Saturn and Pontiac as it tries to shrink into a leaner, stronger company through its bankruptcy protection filing.

The struggling automaker, which has received $19.4 billion in U.S. government loans and will get a total of $50 billion in aid, hopes to emerge from Chapter 11 in 60-90 days.

GM would like to sell the money-losing Saturn brand's dealership network, contracting with the new buyer to make some of its cars while the buyer gets other vehicles from different manufacturers.

Why not include the original Saturn plant in the deal? Is it because that is probably one of the most productive plants GM has? Because it seems to me that GM has a lot better chance of coming out alive if each of its current brands own their design and production processes completely, with no more "GM look" vehicles with minor trim and metal-bending changes for each brand. Divesting brands would be a lot more effective if the buyers of those brands took a share of the labor-relations headaches, pension obligations, and supply-chain pain along with the name and dealer network. It would also free the buyers from the after-effects should GM collapse anyway.

More to the point, GM isn't losing money because of its dealer networks. GM is losing money because it is a massive monolithic organization, run using Theory X management techniques. As is normal in such an organization, there is a lot of tension between labor and management. Management tends to richly reward themselves whenever the company's revenue or profit increases, which tends to encourage unionized employees to likewise seek rewards that are not tied to the reality in which the company operates.

GM (and to some lesser degree, its competitors Ford and Chrysler) takes a very Tayloristic approach, one which minimizes worker skillsets and maximizes task specificity. This, then, made it into their union contracts, so that the company found it very difficult to simplify workflows by reorganizing job tasks. I've been saying for a decade that the automakers could make a big move toward solving their problems by getting capping management compensation at 10 times the lowest-paid full-time equivalent employee's compensation and getting rid of such perks as executive dining rooms and the free use of vehicles. This would have showed the UAW and its Canadian equivalent that it wasn't about fattening the executives' paychecks.

A friend and co-worker recently said that Ford appears to be going in the right direction and has a bright future. I would really like to see Ford dealing with the Theory X garbage and embracing a much-less top-down and much-more employee-influenced design and production environment. I'd like to see the kind of open-book and employee-involved management pioneered by companies like Springfield Remanufacturing Company taking root in Ford, but otherwise, I agree fully: Ford is on an upswing.

Unfortunately for GM, I sincerely doubt that it can make these kinds of changes while it is undergoing a wrenching bankruptcy restructuring, especially now that the government is its chief stockholder. The feds may keep the money spigot going for a couple of years, but it looks like GM is doomed. I just hope that they turn off the spigot before Ford needs to raise cash again. With GM's new federalized-entity status, their cost of capital should be down near that of such government-sponsored entities as Fannie Mae, Freddie Mac, and Sallie Mae. This could easily enable them to underprice Ford, maybe even enough to bring Ford down into the same mudhole as GM and Chrysler. (My opinion of Chrysler: I do not believe that Fiat is financially-strong enough, nor does it have the management sophistication, to manage the empire it is building. I expect to see a severely-shrunken Dodge-Jeep entity limping out of this collision, with the rest of Chrysler becoming mere wreckage to be towed off for recycling. Look to the AMC-Renault pairing of the 1980s for a script. Only this time, there won't be an American-owned company to buy the wreckage and keep it going.)

I do think that the days of manufacturer-controlled dealer networks are likely to go away. Simply by getting out of the business of financing dealer inventories, a big chunk of the automakers' capital requirements will go away, and they'll also be able to get rid of some of their dealer-oversight staff. This should result in elimination of separate "sales floors" for each brand a dealer carries. This can also eliminate the cost of dealer-based sales incentives. Suddenly, it won't be about who is a Chevy dealer or who is a Ford dealer. It will be about which dealers have open space and access to credit and to customers that will enable them to take vehicles. Dealers will benefit, once they establish independent lines of credit, because they will no longer need to maintain separate sales areas for each brand they carry, and because automakers' captive finance units can then assist more car buyers.

All in all, it looks like two years from now, the only American-owned car company will be Ford.

GM, Hummer, Saturn