At a recent meeting, the talk turned to the news coming from General Motors (GM) about Chairman Richard Wagoner's decision to cut 25,000 jobs by 2008. With some GM employees at the meeting, there was concern about how Wagoner's decision would play out. There is good cause for such worry, because any strategy for long-term GM success that rests solely on plant closings is short-sighted.

Wagoner claims that the health benefits he must pay-he has often quoted $1,500 per car-is the reason GM is losing market share and has suffered $1.1 billion in loss during the first quarter of 2005. If Wagoner wants GM to remain competitive, he needs to look beyond cutting jobs, closing plants and moving jobs to Brazil. Giving "employee discounts" to every customer to spur auto sales is not a sound strategy either. That is a short-term marketing gimmick that also contributes to losses on a per car sales basis.