“Ray Young, GM’s chief financial officer, said the company burned through $3.6 billion in cash during the second quarter, which he attributed largely to reducing the company’s inventory by nearly 90,000 vehicles . . .” [AP] Did GM really spend $40,000 in cash for each excess vehicle it took out of its inventory between April and June? Yes, it did. I know, because I was there.
I had had easier jobs. The Shamanic Economist can help out any company in any crisis, but even so, I was starting to have second thoughts about my stint at The World’s Second Biggest Automaker. Times were tough, consumers were more skeptical than ever, and the factories kept churning out pickup trucks and SUVs faster than I could pass them off to the dealers.
I sighed and called up the next dealer on my list — number 9957 on the speed dial. He couldn’t take any more trucks either.
“Sorry,” he told me. “These customers are wack. Just yesterday, this family comes in, they want a car but it can’t burn any fuel at all and they can only pay six hundred dollars. I finally get them into one of them old Caddys but they talk me down to two fifty. I’m telling you, if we didn’t have that car wash I’d be out on the street by now.”
It was the same story I had been hearing all day. I thanked him and hung up the phone, shaking my head. I was supposed to get five excess trucks moved out of the company’s inventory, but I had been on the phone since Monday, and the trucks were still sitting in the lot out back.
Just then the door burst open, and my boss rushed in. “Rick!” he exclaimed. “I’m so glad you’re here. They just sent over more trucks for you — ninety thousand more.”
“What?!” I exclaimed. I looked out the window, and sure enough, there were 90,000 brand new trucks in the lot, gleaming in the morning sunshine. “Jimmy, I don’t know. No one wants more trucks these days. Even if I could pay people fifty thousand dollars per truck I don’t know if they would take them.”
“Fifty thousand per truck!” Jimmy said. “That would be four point five billion. You know the company doesn’t have that kind of money.”
“Well, of course I know that. So why do they keep making so many trucks? Why don’t they close a couple more of those fac—”
Jimmy cut me off. “Look. We know you can get it done with just forty thousand per. You’ll find three point six billion in unmarked bills in the gray nylon bags in the back of that first gray SUV.” He pointed to the beginning of the line of SUVs that seemed to stretch from the back of the building all the way to the horizon.
“Look, I know you can do it. I don’t have time to hear your excuses. Give me a call when you’ve got all these trucks out of here.”
“But —” I said again. But Jimmy had already walked out the door. I sighed and went out to the lot, got the bags of money out of the gray SUV, carried them back inside, and threw them under my desk. Wiping the sweat off my forehead, I got back on the phone. The next dealer on my list was speed dial number 22780.
It was the same old story. “Sorry,” he said. “Just forty thousand? Couldn’t do it. Haven’t had a real buying customer in the showroom all week. Say, how are those electric cars coming along?”