Yesterday, Automotive News reported that octogenarian GM investor Kirk Kerkorian is "frustrated with CEO Rick Wagoner's lack of enthusiasm for an alliance with Nissan-Renault." That's like the DEA saying it's frustrated with Bolivia's inability to curtail its cocaine exports. Kirk knows that Rick would sooner pull the ripcord on his [bankruptcy proof] golden parachute than green light a hook-up with the French. Which is why the Lion of Las Vegas responded to Wagoner’s “no deal” comments to the Parisian press by threatening to buy up even more shares in the ailing automaker: to force Wagoner into a corner.
We now know that the Nissan negotiations began after GM Board Member and Captain Kirk crony Jerry York held a secret meeting with Nissan boss Carlos The Jackal Ghosn. Forget strategic alliances and supplier synergies; York simply offered Ghosn Wagoner’s job. Setting aside the outrageous not-to-say-criminal impropriety of a GM Board Member launching a clandestine plot against his company’s Chief Executive Office on behalf of an outside investor, the play finally reveals the intent behind the whole lawyer-enriching GM-Nissan mishegos: to remove Wagoner from the helm of the world’s largest automaker. Period.
If you recall, Wagoner fended-off the initial attack by convincing his boardlings to put him in charge of analyzing the potential of the proposed GM-Nissan-Renault alliance (much like a Bolivian drug lord electing himself president to police drug traffic). At the Paris auto show, Rabid Rick did the pro forma meeting thing with Carlos, announced (again) that GM’s turnaround is on track thank you very much, and then, outrageously and ominously (considering GM’s cash position), suggested Nissan should put a couple of bil on the table. Kirk immediately threatened to buy 12 million more GM shares. Message to Wagoner: don’t fuck with me.
Captain Kirk holds 56 million shares or 9.9 percent of GM’s common stock. He bought the shares at an average price of $31.50. At Thursday’s $33.06 per share closing price, Mr. Kerkorian’s paper profit currently stands at $84m. Upping his stake by 12m shares would cost The Lion of Las Vegas a relatively paltry $400m. The purchase would put his total GM investment at well over 10% or roughly $2.25b. Should he make the move, the additional shares would give Kirk more clout to demand an “independent financial review” of the GM-Nissan-Renault deal. To that end, he’s informed the Securities and Exchange Commission that he wants to change his official status from a passive (!) to an “active” investor.
Obviously, there’s no good reason for Kirk (or anyone else) to buy a chunk of GM based on its long-term future. Despite Red Ink Rick’s steadfast claims that his turnaround plan is kicking in now… no wait… now… oh hang on… NOW, GM’s death spiral continues. Kirk’s inside man Jerry York knows that GM’s new pickups aren’t going to pickup enough business to save the company’s bacon. He knows that GM’s summer of deadbeat love, the company’s increased incentives on products both old and new, their aggressive “book the deal when it leaves the factory” accounting and the negative effect of this fall’s heavily curtailed future production all spell disaster.
York and Kerkorian are also aware that the domestic automobile market is only getting more competitive. The so-called imports make stacks of money in the US because their domestic counterparts are high cost producers who set a floor on pricing. It’s an open secret that Toyota, Honda, Nissan, Hyundai et al. could bury GM/Ford/DCX simply by lowering the prices on their vehicles. Toyota’s new Tundra is a step in that direction that’s bound to show that none of The Big Two Point Five’s products are safe from non-union competition.
All of which tell/reminds us that Kirk’s in it for the money. Hence Kirk’s decision to put Wagoner in a classic you’re fired if you do (hello Carlos!) and you’re fired if you don’t (where’s Carlos?) position. Once Captain Kirk replaces Wagoner, especially if it’s with The Jackal, GM’s stock price will rise. Kirk will cash out and that’ll be that– for Kirk. The General will still be in chaos. Whether or not the Jackal could then recreate The General as a profitable car company– without taking it into Chapter 11– is an open question we may yet see answered.
Things will get ugly if Kerkorian doesn’t get his way. For one thing, GM will have to show good financial results– even if they’re less credible than last quarter’s. GM’s accounting department has been sailing close to the wind for well over a year now. Federal regulators may flex their muscles post-November elections, perhaps aided by Jerry York (providing yet another way to axe Wagoner). In fact, this whole Kirk – Rick thing has become a Detroit death match. Anyone betting on Wagoner better hope that GM’s octogenarian investor forgets to take his medicine, or dies in the arms of Anna Nicole Smith.
It would be really nice if this penis measuring contest didn’t involve several hundred thousand people and a (quite a) few billion in pension fund assets. Unfortunately it does, and one of the the contestants really doesn’t care about anything other than money, the other one, um, doesn’t have to. What this accomplishes is to keep everybody’s mind off the real task at hand, which is building good cars at a profit. Incidently, that is a marvelous WTCC car Chevy introduced in Paris, too bad no one in America will ever see one.
Good Morning America!!!
Lovin’ it…having my late morning coffee and reading yet Another(!) GM Death Watch :D
I can apreciate CliffG’s comment “What this accomplishes is to keep everybody’s mind off the real task at hand, which is building good cars at a profit.” But the “truth” is this:
GM does NOT want to build good/great cars!! This is backed up with 30 years of history. If you deny that, then I have a WONDERFUL GM X-Car waiting for your’s truely. Either that or a Cimmaron.
So..with this in mind (that GM absolutely does NOT want to build great cars)…then I say “Let the GAMES BEGIN”!!! GM obviously doesn’t give a lick about their employees well-being, so in the spirit of “sport”, I think this “penis contest” is WONDERFUL! :)
Why, it will ONLY SPEED UP THE INEVITABLE…that is, the destruction of a once-mighty-and-great car company!! Don’t blame Kirk, he is only riding the coat tails of what was already set in motion.
To speed up the destruction is probably all for the best anyway. As soon as GMs employees learn that “Uncle GM” will NOT be there for them, will NOT look out for them, the better. Maybe they will stop breeding and raising their children to believe in an “entitlement”-type of future.
Besides, those nasty, stinking, plants do nothing but spew forth tons of pollutants into the atmosphere, only to spit out cars and trucks which in turn spit out tons of pollutants into the atmosphere….
Why, I say Kirk is doing what’s most prudent not only for himself, but for America as a whole!!!
Godspeed, Kirk!!! Godspeed, my friend.
Why does nobody take GM to task over the creative accounting that is going on for a while now and makes them appear look very different from the real GM? There is nooooooooo way that they are selling anywhere near enough vehicles to justify their “profit”.
Why do I keep hearing that Detroit sells better cars in Europe than they do here? Why don’t they sell them here?
Well their new strategerie seems to be working by pissing half of all Americans off. If Hannity says I’m a great American to buy these cars and trucks, then dammit i’m gonna do it!
Setting aside the outrageous not-to-say-criminal impropriety of a GM Board Member launching a clandestine plot against his company’s Chief Executive Office on behalf of an outside investor
What is criminal about it?
the intent behind the whole lawyer-enriching GM-Nissan mishegos: to remove Wagoner from the helm of the world’s largest automaker.
I thought you thought that was a good idea.
Kirk immediately threatened to buy 12 million more GM shares. Message to Wagoner: don’t fuck with me.
I cannot see Kirk doubling down on this hand. If I were Rick, I would call this bluff.
Whether or not the Jackal could then recreate The General as a profitable car company– without taking it into Chapter 11– is an open question we may yet see answered.
It is not a question. GM is dead, they just do not know it yet.
Well at least Kerkorian’s not placing tracking bugs in journalists’ emails. Better check your spyware Farago!
My advice for the day is that this monster ought to be broken up. Split it back up into Pontiac, Buick, Cadillac, Chevrolet, and all the 57 other varieties. Let the offspring go head to head against each other. Most will happily disappear, but maybe some will grow balls and survive. And transport that big glass building from downtown Detroit to Tennessee or Texas or some such place where the economy knows how to employ assets to satisfy consumers.
Just ran spybot. Found CasaleMedia, eUniverse.Powersearch and MyWay.MySearch. The black helicopters are warming up.
having personally witnessed a Renault tour through a Die,tooling and stamping plant of G.M. almost 2 years ago,I’m of the belief Renault had merger on the mind then.Factor in Nissan where you wish,its not hard to do…
One thing that really impressed the Renault folks was the technology incorporated into these massive presses that allow part/model change-overs to stamp new parts in less than 8 minutes with all tooling in place.
Insiders( such as Harbour himself) agree this is Industry leading as far as changeovers are concerned.Seeing this,I was not surprised to hear Renault invested heavily in automated die changing/ transfer press capability in Europe.
I personally like the comment from Ghosh– excuse if misspelled– that this merger between G.M.-Nissan/Renault would save 5 billion in global expenditures spread between the 3 corporations.Was this not the idea G.M. had when they shed the Parts divisons plants ( ala Delphi) This in theory would have given G.M. the ability to seek out lower priced suppliers yadayadayada…
Now that G.M. has a viable alternative to the aforementioned faisco,they demand a few billion upfront.Its a surprise Nissan/Renault didnt tell Wagoner to pound it.This comming from a Corporation in which their main Global purchaser ,Bo Andersson said,One of G.M.”s main priorities is to save on parts supplied and shave the cost of raw materials not only in North America but Globally by exploring different avenues.Some my not have heard this or read this in the press but take my word,I sat less than 6 feet away from Bo and agreed for the sake of G.M”s future.
To not look more aggressively into this merger without Nissan/Renault putting money down on the “deal,” would be assinine. Is this really the mindset of Wagoner and Andersson considering they at heart bean counters?
The current car mags have pics and descriptions of the Holden/Zeta platform cars that apparently GM has the ability to develop and import. They’re rear drive, nice looking sleds that could set GM in the right direction so maybe there’s hope.
And btw, croaking in Anna Nicole’s arms would not be the worst way to go :o)
Another btw, the November Car/Driver reviews the 335i and has a cargasm; one second opinion describes it as the best car in the world.
To those who think GM doesn’t want to build a car that is viagra on wheels: Poppycock! (I always wanted to use that word).
Like the other domestics, GM’s vast bureaucracy stifles any true progress toward fielding a competitive line. The customer is so far removed from the food chain that might put weight on GM’s bottom line, it’s no surprise we read a serial called “Death Watch.”
I say to Rick: pull the strings to your golden parachute, because you’re not up against a cowardly lion here. And your tin man act ain’t working. Captain Kirk can then rent out Apple’s design team and fast-track some style back into the sheet metal.
Several times through the death watch series, comments have been posted about so and so would be saved if it ‘built great cars’. Building great cars becomes less likely every day the so and so is in chaos.
New platforms cost hundreds of millions of dollars and years to create from scratch. This assumes so and so has the available talent to design a new platform. Experienced engineers are critical in a highly complex consumer product.
If all of the experienced and talented engineers left so and so in a buyout or retired or got pushed into another job, who is going to design the chasis, engine, NVH, safety, and electronic systems? Someone right out of college does not have the techniques and experience to know the best paths and no one is around to show them.
What was Kirk’s last big auto play? messing with Eaton & Co. to the point of their running into Schrempp’s open arms, getting Chrysler taken over by Daimler.
Now that Kirk’s going for >10% of GM’s shares, the real pressure begins. Unintended consequences? Kirk doesn’t care, does he?
“Why do I keep hearing that Detroit sells better cars in Europe than they do here? Why don’t they sell them here?”
Their ego would never allow them to admit that they can’t hack it over here!
GM SURVEY
Thanks for expressing your interest in assisting us in taking the pulse of the American consumer.
We are conducting an online survey today and we are selecting consumers like yourself to participate in it.
The topic for this survey is:
WHAT IS YOUR OVERALL IMPRESSION OF GM AUTOMOBILES?
It is very funny that they are advertising on your website.
If GM is having trouble dying, someone should call Jack Kevorkian!
As for rich old men dying in the arms of young women, Nelson Rockefeller did it. But he didn’t live to tell about it.
An intersesting ad I just noticed on the top right: “GM Lawsuits: http://www.gmclassaction.ca, Canadian Class Action”
These google ads aren’t so bad… they can be quite interesting in fact!
It’s a fact that GM is in financial trouble.
It is a fact that GM faces tough competition.
But is GM really so poorly positioned in the global and North American automotive/light-truck market?
Are there really that many auto companies that are better positioned for the long haul?
Toyota? Yes. They will be the #1 auto manufacturer for the forseeable future in terms of quality and quantitiy and breadth of products.
But who’s #2 or can even make a run at #2?
Nissan/Renault? Nope.
Honda? They’re essentially a motorcycle company and they’re making more headway into microjets than full-size trucks.
Ford? Not unless they merge/align with Honda. Also, I would bash the vehicles coming out of Ford’s development pipeline, but it’s empty.
DMX? ehhh…
Hyundai? Maybe. But they’ve got their work cut out for them. As much as GM needs to cut one or two brands, Hyundai’s got to create one or two additional brands from scratch to compete in these modern niche-happy times…
Fiat? even GM didn’t want them.
VW? Geez. Their relationship with labor makes GM-UAW look like a happy (frugal) couple sometimes. And how about VWs product-development cycle?
BMW? They’re the drivers’ car and no one else’s. More Chevy Cobalts will be sold this year than BMW’s entire lineup. (in the U.S.)
I’m not saying it’s smooth sailing for GM. They’ve got dire short-term challenges and tough clawing in the medium-term.
But they actually still have the global scale to compete and through smart use of parts-sharing and platform sharing (as opposed to dumb badge-engineering and re-badging) can:
a) have a breadth of products that smaller companies can only wish they had the scale to produce.
b) simultaneously help to offset their disadvantageous labor costs.
I agree with Farago, Kekorian is no friend of GM, he will take his profits and move on to the next company in a microsecond when the time is right. He will not be there for the long haul (physically and financially) and none of gm’s problems will be solved by his tinkering. Releasing pent up cash in a company and distributing it to the stockholders is not a formula that an auto company needs for the future. By the way, the same argument was made for chrysler 10 years ago when Kekorian tried to raid them.
I personally side with the man who spent his career with the company he currently runs (Wagoner) than for the financier who steps in at the 11th hour and wants to wreck it all for pure greed (Kirk).
If Rick was in it for the money, he’d have left years ago (because his job sucks and he already has enough to retire).
If Ghosn was the best man for the job, he’d already have it. But he isn’t, and he ain’t.
I enjoyed watching Kirk in the Clooney movie “Syrriana”. Oh, wait, was that real? Or fiction? Can’t tell any more.
To those who think GM doesn’t want to build a car that is viagra on wheels: Poppycock! (I always wanted to use that word). -Dr. No
Of course GM wants another one hit wonder. What they are unwilling to do is to put nose to gridstone day in and day out for decade after decade in the pursuit of perfection in what ever market space they deam profitable. That’s the problem.
If Rick was in it for the money, he’d have left years ago (because his job sucks and he already has enough to retire). -mdanda
You completely misunderstand the symptoms of the affliction of Egomania. It does not allow one’s self to do what is easy, expeditious, or righteous if doing so means admitting one’s own shortcomings. Ricky is still CEO cause he thinks he’s right and thinks he the best guy for the job. His blinders are the bestest!
Yikes. Those September GM sales numbers look pretty bad.
Toyota’s are great. Moving Forward indeed.