In today's news is the item that the Obama Administration is telling GM to prepare for bankruptcy. 

Ironically, over the weekend, I had the opportunity to sit down with a GM engineer from Detroit.  He offered incredible insight into the challenges and frustrations of GM.  Some highlights of the conversation:

    - He feels the likelihood of bankruptcy is 80%
    - The blame is equally attributable to both the unions and management.  The unions demanded wages and benefits that inexorably led to today's situation.  Management, and their multiple layers of bureaucracy were also wasteful (and still are!).  The engineer had come from another business before his 9 year tenure at GM.  What his previous employer handled with one layer of management, GM required four!
    - GM Management approached union negotiations woefully unprepared, for decades.  Where management would prepare for negotiations with 1-2 weeks of memos and reports, unions worked year round on their approach.  They would engage in role-playing, strategizing and other preparatory work 12 months before the start of meetings.  As a result, they had a distinct advantage when it came time to sit down at the bargaining table.

And now the most shocking part of our conversation:

    The GM engineer relayed his first few months on the job.  He had designed a new replacement part for a product line.  And ten sample parts were to be installed on the assembly line at a GM plant.  He sent the items to the "shipping/receiving department" of the plant because parts were directed to come in via this "union controlled" department.  The day before, he called to the plant and was told the part never arrived.  (He later found out that the shipping department would always lose parts for the new engineers, as a "practical joke" on the new guy.  It also sent a message to the newbies as to who was really in charge.)
    So the engineer chased down a resupply of the prototype parts and hand carried them to the plant.  The bulky parts could only be carried into the plant one-at-a-time, as the union forbade any non-union member from using two hands for carrying anything into the facility.  The engineer, forced to make many extra (wasteful) trips, complied.  

    The part was installed by the line worker, but incorrectly.  But rather than tell the line worker, the young engineer was first required to call over the supervisor and the union head.  The union head said, "You have permission to tell him how to install it."  So the engineer approached the worker and had just started talking to him, when the line worker yelled, "F#%@ You!"

    The engineer had previously been informed that he was not permitted to respond in kind, as the union had the power to permanently prohibit him from ever entering the plant (not a real career builder for an aspiring company man).  So the engineer again huddled with the supervisor and union head, and asked, "What's the most that can happen to the line worker?"  He was informed that, if everything was documented, he could have the line worker sent home for three days WITH FULL PAY!"  

    The engineer approached the line worker one more time on the correct installation of the part.  The line worker immediately yelled, "ERGO!"  

    "Ergo", short for "ergonomics" was the union worker informing his supervisor that the installation was causing his wrist to hurt, even though he hadn't yet completed a full installation.  The worker's utterance could result in the entire line being shut down until a solution was found.  

    The engineer, realizing the cards were stacked against him, chose to walk away.  He returned to his office and spent the next six months redesigning the part so that it could only be installed one way.  

    The experience provided a clear roadmap for the young executive and gave him a taste of his future.  Remarkably, the union didn't break his spirit.  He is energetic and enthusiastic regarding the quality of his GM product.   It's the environment of wastefulness, in both management and the unions, that he hopes can change.