Timid management and coddled workers, according to this great article in the WSJ. If you are interested in this topic, read the whole thing!
The union was defending production
quotas that workers could fill in five or six hours, after which they
would get overtime pay or just, you know, go home.
But the company signed generous labor deals during the 1970s,
including the right to retire after 30 years with full pension and
benefits, partly because it believed the contracts would cripple its
smaller competitors, Ford and Chrysler. Then along came Honda, Nissan
and Toyota, which didn't have to deal with labor contracts at all. That
was the beginning of the agonizing decline.
I am sad to see Pontiac go - I owed a great car call a Grand Prix in the 1990s. It's going to be interesting to see if GM can recover from this. For Chrysler, it must be very embarassing for ex-ecutives on the Grand Blanc golf course admitting they were bought for a song by a bunch of Italians...