Even though I disagree with him more often than not, I like Terry Box's writing. If such a thing is rhetorically possible, The Dallas News car correspondent thinks outside-the-box. He's also a true champion of blue collar consumers. So when I caught a link to his coverage of GM CEO Rick Wagoner's appearance at a Dallas luncheon– where Rabid Rick's dropped his infamous and ineffective "inaccurate" bankruptcy rumor remarks— I knew we'd get some additional insight into Wagoner's thinking, or lack thereof. Box flags the fact that Wagoner reckons GM's Arlington will be GM's sole SUV supplier. "We think the segment will be big enough to support a plant," Mr. Wagoner assured his Lone Star State admirers. Think? But here's the real money shot: ""We used to do cars and everything else – with everything else being trucks. Now, we are moving toward three channels: cars, trucks and crossovers." Parsing that, it seems Wagoner still doesn't get it: America's future is predominantly car-shaped. Or does he? "Our job now is to get our cars more profitable," Wagoner announced. And how, pray tell, is he going to do that? Oh sorry. The answer would require a coherent turnaround plan with publicly stated goals. Why start now?
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It’s really astounding to me that the continuing statements by Red Ink Rick and his cohorts that GM has enough money for the rest of 2008 is in any way reassuring to Wall Street, stockholders, employees and fans of GM. The idea that once mighty GM is living check-to-check is truly the end of days.
Well, I don’t think they REALLY need to publicly state their turnaround plan or goals. (besides the only goal is survival at the moment) There have been plenty of companies that have came back from the brink without ever stating their plans in advance. Apple Computer comes to mind as a recent example.
What GM needs is to ACTUALLY HAVE A PLAN. Wagoner’s statements seem to indicate that they haven’t got a frikking CLUE much less an actual plan. Rick Wagoner is by no stretch of the imagination the equal of Steve Jobs (though you wouldn’t know it by their compensation plans) and he doesn’t have the ability to come up with a plan, and then display the cajones to execute it. That requires the ability and willingness to have a vision and fire anyone who tries to prevent it from coming to reality. GM is too full of shiftless bean-counters and obstructive Unions to have any hope of success.
–chuck
“It’s really astounding to me that the continuing statements by Red Ink Rick and his cohorts that GM has enough money for the rest of 2008 is in any way reassuring to Wall Street, stockholders, employees and fans of GM.”
I can’t imagine that it is reassuring to them. What’s astounding to me is that Wagoner THINKS it might be; maybe this is what you meant. He just can’t be that stupid, can he? I keep wondering what he might have up his sleeve, but experience indicates he has nothing. I’m wondering if he’ll change this statement as we get into December.
yada yada yada.
Stockholders should propose a boardroom coup. We need radical and visionary leadership at America’s automaker right now. Seriously, GM is important enough to our economy that stockholders should take action ASAP. There are too many great people working there, too much heritage and too many great products to let the status quo continue.
For cripe’s sake they need a revolution NOW!
we don’t need a Volt, we need a Revolt!
Buickman Says: we don’t need a Volt, we need a Revolt!
At some point the stockholders might do that, right? There’s only so much of Rick and the Board’s misbehavior that the people can take.
chuckgoolsbee Says:
July 12th, 2008 at 11:20 am
Well, I don’t think they REALLY need to publicly state their turnaround plan or goals. (besides the only goal is survival at the moment) There have been plenty of companies that have came back from the brink without ever stating their plans in advance. Apple Computer comes to mind as a recent example.
As a publicly traded company, they do have an obligation to communicate the ongoing viability of their business. Chrysler, as a privately held company, does not.
Sajeev Mehta Says: At some point the stockholders might do that, right? There’s only so much of Rick and the Board’s misbehavior that the people can take.
It may be too late at that point. If it’s not in the next half year, GM might have burned up too much of its cash.
Besides, if the stockholders aren’t able to get GM execs’ pay to be linked to performance, I don’t think they have the sway to oust Rick entirely. It’s sad, really.
Buickman Says: we don’t need a Volt, we need a Revolt!
Sajaav says: At some point the stockholders might do that, right? There’s only so much of Rick and the Board’s misbehavior that the people can take.
Not gonna happen. Stockholders are like the proverbial frog being boiled alive on a stove. Ever so slightly, the temp is turned-up…
well the next move is to send Return to Greatness to the 20 largest institutional investors. everyone except Red Ink Rick seems to agree it’s full of good ideas. maybe there will be some large shareholders willing to consider a plan they can actually see. remember also that the announced details only contain the first twenty steps, there are many more and some are definitely capable of tremendous impact to the bottom line.
for those who are unfamilar, visit http://www.GeneralWatch.com as the plan is temporarily posted.
seoultrain Says: It may be too late at that point. If it’s not in the next half year, GM might have burned up too much of its cash.
Besides, if the stockholders aren’t able to get GM execs’ pay to be linked to performance, I don’t think they have the sway to oust Rick entirely. It’s sad, really.
Unaccountability at its finest.
That’s probably a fair assessment. The only winners in this deal are the Board and the C-level Execs.
Let see, the bad news is that GM continues to run in the red and the good news is they have enough cash to get through 2008.
What happens in 2009, which is only six months away?
^ ^ Chapter 11. ^ ^
I don’t think a mere marketing plan (such as what Buickman’s Return to Greatness apparently is, for the most part) will fix things.
The Detroit 3 painted themselves into this corner. They ignored their car lines for so long that the general public now considers them to be truck/SUV companies only and not car companies. This was fine when they could make oversized profits on said truck and SUVs, not so fine when nobody wants the things any more. So, the few cars they do sell they sell at prices that make little if any profit for them, plus they now lose a bundle making unwanted pickups and SUVs.
Now, if they had started a car based marketing (and engineering) push a decade or so ago, they might have survived now. But they didn’t; anything starting now will probably be too little, too late.
The only saving grace for GM is that Chrysler is in much worse shape than they are. If three guys are being chased by a bear, two of the guys don’t have to out run the bear; they just have to out run the third guy. GM (and Ford) can’t out run the bear; but they probably can out run Chrysler.
I don’t think that many stockholders will revolt. Frankly, GM is small potatoes now for stockholders. GM is pretty much now considered a ‘mid-cap’ stock, meaning that for wall street, it is only an accident of history that it is listed in the Dow Jones, S&P and other indexes. Bondholders may revolt, but they don’t have the power yet. (in a few months, they may have all the power).
GM stock- all of it- is worth about 5.5bn. I’m guessing that the majority of this is owned by institutions such as index funds and pension funds. This is peanuts compared with other american industrial companies like Caterpillar (40bn value) Boeing (47bn value)or United Technologies (60bn). Heck, even the truck company PACCAR is worth about 3x as much as GM. Those are worth fighting over. GM doesn’t have any investors big enough or with enough percentage invested enough to care.
I still think GM could be saved, but they won’t do it. They are treading water until they run out of cash, at which time they will go under. I think they will get more money, but the terms will be absolutely brutal. I think rates over 10%, probably over 12%.
If GM truly had a plan, we would have seen evidence of it. GM would have chopped models and dealers, and plants,lawsuits be damned. You would see massive chopping in the ranks, a sense of urgency. Instead, we have 10000 volts in 2010. To put this in perspective, if each customer just gave them $40k in a suitcase for nothing, and GM spent zero producing the car, the total sales of Volt would cut the cash burn by about a third.
But there is another big problem. Residuals on GM trucks out on lease. Billions of dollars evaporating without a trace. GM makes leases based on a prediction of what the trucks will sell for at the end of the lease. These end of lease prices on Silverados are cratering.
GM will be forced to cut off-lease truck prices to the absolute bone to sell them. And when a 3 year old Silverado sells for next to nothing, why would anyone buy a new one?
Geotpf:
ey ignored their car lines for so long that the general public now considers them to be truck/SUV companies only and not car companies.
“Considers”… there is no consideration here at all. GM is a Truck/SUV company. Period. The only cars they build are Corvettes and Rental Fleets. Been that way for over 20 years now.
Now, if they had started a car based marketing (and engineering) push a decade or so ago, they might have survived now.
Hell, even if they started the week after Katrina hit, which was only three years ago, they’d have a chance. But no, they sat on their hands! Morons.
–chuck
Residuals on GM trucks out on lease. Billions of dollars evaporating without a trace.
No kidding. Besides Silverados, Tahoes and Suburbans ….. how many Escalades and Hummers do you suppose went out the door on two to four year leases? Luxury nameplates usually rely far more on leases than do pedestrian nameplates. Residuals are likely to be 25%-50% lower than planned for. Cerberus is going to get hit very hard by this effect thanks to their ownership of Chrsyler Finance AND half of GMAC. Since these captive finance operations do not take deposits, we are not likely to see the feds step in to take them over like they just did with IndyMac.
I look forward to the day when we can start having happy conversations about automotive topics, but it feels like those days are a very long way off.
I’m currently vacationing in Colorado, and I’ve gotta tell you… I’m seeing a LOT of new GM cars driving around. I get the feeling they’ll be alright for the near future.
Now, if you want to talk more than a year out from now…
Campisi: What you are prolly seeing is rental cars. Here in LA LA Land, aka ToyotaHondaville, one rarely sees any new GM cars, period.
I’ve seen exactly ONE Lucerne on the road since it was introduced, no Lacrosses or Pontiac anythings. I haven’t even seen a new Impala recently. I live in the San Gabriel Valley…3 miles north of one Buick-Pontiac-GMC dealer, 5 miles south of another. There are 3 Chevrolet dealers within 10 miles of where I live. All those dealers…no new cars do I see.
To BKW,
I know how to spot a rental car, man; none of these cars had any of the telltale signs. They all either had paper temporary plates in the back windows or license plates with recent tabs on them. I understand that the West Coast doesn’t buy GM products in large numbers (I live in Seattle most of the year), but that doesn’t mean that nobody buys The General’s offerings.
Your last hope before going into pushing up daisies business would be a Hitler type of executive. Someone who hates beancounters as passionately Hitler or Stalin hated jews. Someone who would stack bad engineers in cattle wagons and shoot them to another galaxy. Someone who would be spotted rebadging, would deserve a front row in power lumbar adjustable electrical chair. A CEO , who , if had been confronted with a question of global platform sharing, would make a colander of the asker with lead all over.Then elegantly whistling in the pistol barrel to scatter the smoke as board of executives swoon in tremors of horror.Who would walk around with a joker play card and checking the fit and finish, would slot it wherever his mind wishes to. if card passed the gaps, heads would roll.We don`t fire you, we fire at you.
‘THE GM SYSTEM IS LIKE A BLANKET OF FOG’
http://money.cnn.com/magazines/fortune/fortune_archive/1988/02/15/70199/index.htm
Ross Perot had it nailed 20 years ago. When Mr. Perot was run off, I stopped considering GM as a viable alternative.
I thought Deming’s philosophy cautioned against management by fear (presumably this means within management ranks as well) and performance bonuses. That suggests to me that calls for exec pay to be linked to performance and calls for Rick’s head on a platter are more of the wrongheaded failed management philosophy that got GM in trouble in the first place.
It’s the culture at GM that is deeply flawed. In a company that promoted teamwork and good team decision making, Wagoner would have remained at mid-level in the finance dept., leading a relatively quiet existence. Wagoner isn’t up to the task in front of him, but it’s not his fault he became the head Honcho. GM’s culture is at fault.
Wagoner needs to be encouraged to retire soon, but let’s not pretend that it’s a lack of a dynamic hard charging dominanting ego who’s pay is linked to GM’s performance that will make all the difference. There is something deeply flawed in the decision making process at GM and it isn’t going to get fixed by placing a new king on the throne.
GM apparently learned absolutely nothing when the had Deming in to advise them.
GM apparently learned absolutely nothing when the had Deming in to advise them.…
I remember when my father showed me a color insert that was part of a package that was sent to GM stockholders. This must have been 15 years ago. Two Cadillacs were proudly displayed with a statement about the quality award Cadillac had just won. I believe the award was the “Malcom-Baldridge” award but I may be mistaken. Anyway, he showed me the picture and said what is wrong here? Three seconds later, I said ” the left headlight is so far out of aim that it would illuminate the ceiling.” Hey, nobody sweats the details like GM…
Interesting article about Perot’s views. Even with a little self-promotion on his part, it’s no doubt largely accurate. Another interesting view can be had from “On a Clear Day You Can See General Motors”; DeLorean’s book. Too many execs and board members don’t understand that many managers are not leaders. There’s a hell of a difference.
In a partially-related note, I saw a burnt sienna-colored Pontiac G8 GT driving up I-75 yesterday. Wow, what a car. Other drivers were literally attempting to drive near it to check it out.
I know that everyone’s instinct is to be down on the home team. However, GM’s product renaissance is really only half over. Eventually, we will all adjust to $4 gas, and make economic decisions accordingly (fewer designer clothes, less eating out, etc.). There will still be room for trucks and performance sedans — where GM has been and is king.
The magic model year 2010 is going to tell all. Almost all of GM’s products are due for a makeover. The products to watch are the Chevy Cruze, the new Saturn Astra, the new Aveo, maybe a Saturn Corsa, new Buick Lacrosse, the new STS/DTS replacement, a slimmer and leaner Saturn Vue, perhaps a new G6, and a few others. GM can perhaps ride out the next year in giving cars away at great financing (which does seem to work somewhat for the short-term). In the meantime, GM got its two-tier wage system through and will benefit at existing US plants with the weak dollar.
Another aspect of all of this seems very underreported. To what extent are Japanese, German, and Korean manufacturers subsidizing the costs of their foreign-built vehicles given the weak dollar? There is no way that the dollar can sink 20% against the Euro (really 60% since 2001), and have VW/Audi’s prices, for example, stay the same. If GM is losing money on every Astra, then VW has to be losing money on the Rabbit.
They all either had paper temporary plates in the back windows or license plates with recent tabs on them.
Could these purchases be because of the recent, ridiculous, finance offerings the General had? Looking at the sales figures for the last few months, it is likely that a lot of those new cars are from the 0% for 72 months spree.
Didn’t GM say that they weren’t going to do this sort of thing anymore? Perhaps Betty Ford has a program for them.
There will still be room for trucks and performance sedans — where GM has been and is king.
Yes, there will always be a market for these. But increasingly, it will be a smaller and smaller market. The day may not be far off when the only people who drive trucks are the people who actually need them. Running a performance sedan will require a foregoing other purchases – some will do this, some won’t. GM can perhaps continue to be king in these markets (but it’s not like no one else can enter or compete) but not with it’s present infastructure/overhead.
There will still be room for trucks and performance sedans — where GM has been and is king.
…
GM does do some vehicles very well, but they just don’t have a balanced portfolio of vehicles. If each class of vehicle was the equivalent to the Vette or CTS or Silverado, there most certainly would not be a deathwatch going on…but you have a point that there is a vocal group of posters that seem to enjoy kicking Detroit. Why being a Toyota fanboy is any better than being a Blue Oval guy is somehow lost on me.
Return to Greatness would immediately reduce marketing expenses by ONE Billion and would regain FIVE points of market share within SIX months. tell me anyone else who has developed something similar. the plan has been years in the making and is ready to roll. Red Ink Rick isn’t interested. what does that tell you? it tells me the man is planning the BK! he belongs in prison.
Aren’t crossovers, like, big tall CARS?
My guess would be that GM’s turnaround plan is something along the lines of- “Grab a bottle, hunker down and pray for daylight!”
Aren’t crossovers, like, big tall CARS?
No they are trucks without frames, returns the same fuel efficiency too.
I’m just kinda confused. The big investors in Yahoo (Carl (strip and flip)Icahn, et al) will get a new board, do whatever to get that company to wring the very last vestiges of it’s soul out for money. But they won’t touch GM?? Just the real estate alone would be worth a mint! Sell off some factories to the Chinese, or the Indians and make some coin, then let the rest go to the highest bidder.
So, tell me when and how much you’re putting in your bank account?
Tell G’Dub that he’s got to tell us when he’s going to nuke Iran.
You guys get the point. Some things don’t need to be public.
Besides, do any of us really know when and where this current economy is going?
GM is hot building small cars in Mex. Texas doesn’t need to know thses things. Besides, it’s already public knowledge.
Their turnaround plan should be privvy to investors and owners only.
Period.