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The rise and fall of General Motors
The Blue Collar Bohemian
19 April 2006

With the corporate giant seemingly on its knees we may be seeing the demise of the company that set the stage for the transport related social, environmental and energy problems we have today.

Although it has a thin veneer of prosperity in Australia, where Holden vehicles continue to be popular, back in the United States the General Motors Corporation isn’t doing well.

Few entities have had such a profound effect on their time as GM, but its era now appears to be coming to an end. As with all empires, military and commercial, when the costs of maintenance exceed the spoils of profit, doom waits in the wings.

Beset with the huge cost of retirement income and health insurance obligations to past and present employees – due to the lack of universal provision of such things in the US – and a big decline in car sales due to surging oil price, GM has been cutting jobs and closing plants. It is also selling off prime parts of the business that made it such a dominant force in shaping the transportation industry we have today.

Last year the sale of the Electro-Motive Division to the rail-oriented investment company Greenbrier Corporation was finalised, and it now trades as Electro-Motive Diesel Inc. Started in 1922 as the Electro-Motive Corporation by H. L. Hamilton to make self-propelled railcars powered by petrol, butane, natural gas and later diesel fuelled engines with electric transmissions, it soon became affiliated with carmaker General Motors as its railcars successfully replaced costly steam trains on branchline and lightly used passenger services. In the thirties it built the engines for modern diesel-powered streamlined trains such as the Burlington Route ‘Zephyrs’.

In 1940, the year EMC was absorbed into GM as the Electro-Motive Division, the railway world changed forever when the first 5,400 hp ‘FT’ diesel-electric freight locomotive was produced and demonstrated to a sceptical and conservative industry. The FT removed any doubt that the era of steam power had passed, and the descendents of this locomotive led the way in sweeping steam traction from the Western world's non-electrified railways.

Even electrification succumbed to the diesel onslaught in North and South America, Australia and New Zealand as the universality of diesel-electric traction – "electrification without wires" – overrode the efficiencies of straight electric traction where it was restricted to relatively short sections of track that equalled the operating range of steam power, or where a worn-out installation was not considered worth overhauling and retaining, as with the Gippsland line in Victoria.

GM’s Electro-Motive Division licenced the building of locomotives to Clyde Engineering in Australia and NOHAB in Sweden where locomotives were manufactured to suit local conditions. As well as rail, EMD diesel-electric equipment is widely used for marine power and electricity generation.

GM’s other significant selloff is the finance division, which provides hire purchase to GM customers ranging from private car buyers to transit operators and railway companies, on terms that allowed even the most cash-strapped to buy the products they needed.

When the US Supreme Court forced electricity companies to divest their electric railway properties under the anti-trust legislation due to conflict of interest (owning both an electricity producer and a consumer), the only purchaser interested in many of these low earning and often bankrupt properties was National City Lines Inc (NCL), a property of GM, Standard Oil and Goodyear Rubber.

The various NCL subsidiaries then sought to abandon rail operation while buying GM buses through GM Finance. Post World War II, faced with falling revenues and the cost of track and rolling stock renewal many non-NCL operations also couldn't resist the deal offered by NCL. And many US cities were applying political pressure to replace "old fashioned" streetcars with "modern" buses, In 1945, nearly every major city in North America had a tramway and/or a suburban light rail system, but by 1970 this was reduced to about a dozen, including Toronto and Mexico City.

The "conspiracy" to abandon Los Angeles' Pacific Electric Railway's passenger service in favour of freeways and buses provided the storyline for the live-animated movie Who Framed Roger Rabbit . In reality what happened was this: Pacific Electric had been owned by Southern Pacific Company since 1911. It provided suburban and interurban electric railway passenger service all over southern California surrounding Los Angeles, and promoted itself as the "World's Largest Electric Railway". It also hauled a lot of freight behind electric locomotives, which was the reason Southern Pacific bought it. After WWII the shine had long gone from the passenger trade and a proposal to sell the passenger operation to the City for upgrading to rapid transit fell through in 1949 over many conflicting interests. In 1953 PE passenger service (already much of it bus-operated) was sold to one Jesse L. Haugh, owner of Metropolitan Coach Lines. Haugh was fresh from closing down the San Diego tram system, where, in 1949, he had sold its modern PCC cars to El Paso, Texas. To great public outrage, he immediately, with the connivance of the California Public Utilities Commission, closed the Hollywood, Beverly Hills and Glendale/Burbank lines out of the LA subway, PE's best performing routes. The remaining lines to San Pedro and Long Beach, via Watts and Compton, were taken over by the City buying out Haugh in 1958, but the services was too far gone to be salvaged and they were closed in 1961.

Until 1965, when it lost its separate corporate identity into the SP conglomerate, PE continued to operate diesel-powered freight trains over the lines previously shared with passenger trains. The Los Angeles Railway Co., a separate entity that operated the LA tramway system, was bought by NCL in 1947, renamed LA Transit Lines and began closing down its rail services. In 1958 it too was bought by the City, but tram and trolleybus operation ended in 1963. Many of the modern Los Angeles Railway PCC trams were sold to Cairo.

The Norman Bel Geddes designed "Futurama" exhibit at the New York World's Fair in 1939-40 launched the General Motors' vision of a future of high speed motorways and endless urban sprawl. In the 50s it became reality with the Interstate Highway System started by the Eisenhower administration, when former GM president Francis V. du Pont, was the Transportation Secretary. This vision, based on endless growth, profligate land use, and apparently inexhaustible supplies of oil (and ignoring air pollution) created the automotive dystopia we are saddled with today.

With the GM corporate giant seemingly on its knees we may be seeing the decline of the company that, along with Boeing and its 707 jet airliner, set the stage for the transported related social, environmental and energy use problems we have today. Boeing is still making money, but with the stark realities of environmental degradation and fuel shortages sure to change the face of aviation sooner rather than later, how much longer can the current paradigms of energy-intensive transportation and commerce survive?

Given the know-nothingism regarding these issues displayed by policymakers in the US and Australia, Benjamin Franklin’s proverb that "experience is a hard school, but fools insist on it" is appropriate. Looking at General Motors foundering, the writing may well be on the wall, but the politicians only want to complain about graffiti.