[This article contains a complex chart -- Please see hardcopy of magazine or PDF.] Standing under a fading blue sign that says BIRTHPLACE OF THE AMERICAN V6, Allan Taylor gestures at the factory behind him and grimaces. "Everything in there is obsolete," he says of the Buick engine plant. Taylor has spent 30 years there, and at 59 he's nearing retirement. It's a good thing too, since the plant won't be running much longer. General Motors plans to shut it down in 2008, one of nine factories the company aims to close, eliminating 30,000 jobs. Taylor is surprised the plant has lasted this long. "We have to put buckets under the machines to catch the leaking oil," he says. Buick City, where he works, was once a vast manufacturing complex more than a mile in length. It's now mostly a desolate field of crushed stone surrounded by parking lots too big for GM's shrinking workforce. If you didn't know you were in Flint, Mich., you might think you were at an old Soviet factory that made nameless products no one really wanted.
GM CEO Rick Wagoner is acutely aware of his company's decaying state. He may have the toughest job in corporate America--preventing the world's largest automaker from going under. Wagoner outlined his plan last week, announcing a restructuring that will result in GM's producing 1 million fewer vehicles a year and, he hopes, saving $7 billion annually (GM's sales last year: $193.5 billion). Wagoner has been vigorously trying to crush rumors that GM will seek a bailout in bankruptcy court, following the path of troubled airlines and steel companies. "I'd like to just set the record straight here and now," he wrote in a letter to GM employees. "There is absolutely no plan, strategy or intention for GM to file for bankruptcy."
It's a testament to how bad GM's problems are that Wagoner had to write such a letter. GM is a shell of the company that a half-century ago controlled nearly half the U.S. car market and was such a powerhouse that company executives told Congress they didn't want to cut the price of a Chevy because it might drive the competition out of business. With some 324,000 employees worldwide, GM remains a giant, influencing everything from the price of plastics and steel to the market for mortgages, through its GMAC finance division (part of which may soon be sold). Yet GM can't seem to make money in its core business, manufacturing automobiles at home. In the first nine months of this year, GM's North American operations lost $4.8 billion. Its market share has sunk from 40% in 1984 to a low of 26.1% this year.
GM's decline, which goes back to the energy crisis of the 1970s, has been accelerating lately, compounded by competition from Japanese and Korean brands, another burst of high gasoline prices, the bankruptcy of its largest parts supplier, Delphi, in Troy, Mich., and perhaps most critically, a glut of SUVs and sedans. For all those reasons, Wall Street is discounting GM's chances of survival. Bearish analysts say there's a 40% chance the company will go bust in a couple of years. "The forces working on the auto industry--not just on GM--are gigantic," says Gerald Meyers, a former chairman of American Motors Corp. "GM's future is undoubtedly going to be one of shrinking."