Globalization Isn’t Killing GM

In recent years, large job layoffs and short-term cost cutting have become a commonplace in many American corporations. The managers of these businesses defend these changes as necessary in the face of globalization and competition from lower-cost operators abroad. But as business journalist Jim Jubak writes, budget cuts made in the name of improving global competitiveness are doing nothing to create real growth and innovation, and instead are serving to cover up poor management decisions and subsidize fat executive paychecks. The example of General Motors shows that closing factories and cutting wages will not help to make a company more profitable if its market share is shrinking. Furthermore, the argument that cutting costs in "unskilled" labor operations will result in a general upscaling of work and job security for "skilled" and service workers, Jumak argues, does not hold water in the face of the profitability of the Asian operations of companies like auto parts manufacturer Delphi. The examples of Apple, Google and Cisco show that with good management US companies can effectively compete in the age of globalization. But the practices of short-term bottom-line enhancement employed by GM and others, according to Jumak, will hurt their workers and their future ability to grow and innovate, as well as shake the confidence of their shareholders. – YaleGlobal