"That was not happily received," Whitman recalls. "There was enormous denial. There were some notable exceptions, but most of the top management really did think that sooner or later the world would get back to normal-and normal was [GM having] somewhere between forty and fifty percent market share."
She couldn't see it. When new competitors enter a market, she points out, "and you've had the dominant share, there's really no place to go but down."
GM was particularly vulnerable because of its high labor costs. "Way back, to right after World War II, GM was known for making expensive [labor] agreements rather than taking a strike," she explains. "And as long as they were sharing in an oligopoly, because there was no real competition from outside the U.S., that was fine. The union was getting its share of the high profit. But once the oligopoly disappeared and the industry became worldwide competitive, the contracts were still there-but the profits to support them weren't."
In the years since she left, Whitman notes, GM made progress on its labor costs-most dramatically by shifting responsibility for its retirees' health care coverage to a fund managed by the United Auto Workers. But then came the "perfect storm."