SUVs to be given away, but gas costs rise to $5 a gallon
Sometimes it seems like General Motors’ strategy of continuing to build enormous high power gas guzzlers must be based on a secret merger that has already taken place with Exxon/Mobil. The Big OilyCar company’s future will be based on the same business model successfully pioneered by Gillette and Schick: a free razor with every package of blades. Or in the case of GM/Exxon, a free SUV with every fill-up.
But, amazingly, since 2002 GM has built the most successful new vehicle in China, the fastest growing vehicle market in the world. Their Wuling Sunshine minivan costs only $5,000 and gets 43 miles per gallon in city driving. Although the minivans have just a quarter the horsepower of American minivans, and a top speed of “only” 81 miles per hour, their popularity helped GM to surpass Volkswagen in Chinese sales last year, a market that VW had dominated for two decades. The main buyers of the Sunshine are small-business owners in towns and small cities who drive their minivan both to carry supplies for their businesses and to transport their children to soccer practice.
The man responsible for GM’s success in China is Philip Murtagh, a 49-year-old maverick executive from Ohio. While the rest of his company was doing market research to see if customers would rather have their new Hummer with or without racing stripes and full body armor next year, Murtagh was coming up with an entirely new vehicle design catering to the needs of the Chinese market. For nine years he led GM’s Chinese division, which made hundreds of millions of dollars in profits last year, even while the rest of the company was losing billions.
Murtagh was thinking outside the box by adapting to the Chinese market. Of course, his phenomenal success was eventually noticed by the front office in Detroit. They brought him back to headquarters, and fired him. “I’m looking for work,” he said recently from his home in rural Kentucky. “Do you have a deck that needs painting?”
It turns out Phil Murtagh made a huge mistake in China. His success at creating an innovative factory with affordable, sensible, low-tech designs made the rest of his fellow executives look like the idiots they probably are. The assembly line that he built after gutting an old tractor factory now runs day and night, six days a week. “When the employees stop for lunch, the maintenance people run in,” said Yao Zuo Ping, chief of manufacturing there. Meanwhile the boys in Detroit are throwing darts at the map to see which of their American plants to shut down next.
Instead of emulating Mr. Murtagh’s ideas in other parts of the company, senior company executives have reorganized management to give more power to Detroit executives to oversee design, engineering, and manufacturing operations in China, as well as every other overseas division. Don’t be surprised if there are a lot more GM workers with plenty of free time to look for painting jobs soon.
Speaking of free time, when I was growing up we all imagined a utopian future where machines would increasingly do our work, mass producing all the widgets and bric-a-brac needed to survive. We’d be left at a tropical beach holding an umbrella drink, partying and playing games. The latest evidence that things haven’t worked out that way comes from some other factories in China, where over 100,000 young people are toiling away is dismal conditions, playing online computer games to earn a meager living.
“For 12 hours a day, 7 days a week, my colleagues and I are killing monsters,” said a 23-year-old gamer who works in the basement of an old warehouse. “I make about $250 a month, which is pretty good compared with the other jobs I’ve had. And I can play games all day.”
The people working in these clandestine factories are known as “gold farmers,” because they spend their lives harvesting onscreen gold coins and other virtual treasures, which can then be sold to affluent online gamers on eBay and other Internet exchange sites. American gamers with plenty of money, but not much time, find it appealing to buy into a World of Warcraft game as a Level 60 Shaman with a sack full of game gold, rather than tediously working their way up from scratch.
Meanwhile, most of the Chinese players make less than 25 cents an hour, but often get room and board in the “virtual sweatshops,” where workers alternate time on the rows of computers, and the rows of spartan dormitory bunk beds.
“We recruit through newspaper ads,” said one factory owner, whose workers range from 18 to 25 years old. “They all know how to play online games, but they’re not willing to do hard labor.”
Ironically GM’s Chinese assembly line relies on hard-laboring factory workers who only earn about $60 a month, $15 a month less than the average “gold farmer.” When GM first built a Chinese factory it installed four dozen robots, only to find them much more expensive and less flexible than people. There is only one robot in the Wuling Sunshine plant.
So instead of the future we had once imagined, we have a world where we are getting rid of machines, and replacing them with cheap human labor. Meanwhile, Americans who are affluent don’t want to spare the time to play games and have fun, they’re too busy going out and making more money, some of which they use to pay cheap Chinese labor to play their games for them.
What’s next? Will we also pay cheap labor to lay on the beach with umbrella drinks for us? Read cartoons for us? Have sex for us?
And if all our factory workers get laid off, who’s going to sit for hours in rush hour traffic jams burning up the fossil fuel that keeps Exxon so profitable?
Maybe someday the Chinese will build cars that even “gold farmers” can afford.