Economies of scale work to a point. If you produce more of some part, you run the machine closer to capacity, you can get better rates on material because you're buying larger quantities, and the workers are productive because they actually have things to do when they're at work.
I think the actual manufacture of goods is the only place where economies of scale make sense, though. And even there, it's very specific in how it works. Most of the other places where people start talking about economies of scale, they really seem to be more interested in creating monopolies and just call them "markets of scale" because it's a more palatable term (and too few people were willing to call bullshit on, since corporate capitalism is the official religion of the US).
GM is a horrible example of markets of scale, because they ran a hundred different businesses that duplicated efforts. Instead of paring down to their core business years ago when they first started having trouble and trying to do that well, like Toyota does, they attempted to buy market share by buying out other manufacturers.