Re “Let Detroit Go Bankrupt” (Op-Ed, Nov. 19):
I noticed the Boston dateline on Mitt Romney’s article advocating bankruptcy for Detroit’s auto industry. From his New England home, Mr. Romney may not realize how much the industry has changed since 1969, when his father, George W. Romney, left Michigan to become housing and urban development secretary.
Nearly every recommendation Mitt Romney makes for United States automakers has already been undertaken by current management in Detroit. Automakers have been investing in the future on the order of $12 billion a year in research and development — second only to the semiconductor industry.
In addition, General Motors has cut $9 billion in structural costs since 2005 and last year reached a landmark agreement to transfer the delivery of health care to the United Auto Workers union.
Finally, it is inappropriate of Mr. Romney to invoke Walter Reuther’s name while advocating using bankruptcy to break union contracts. That reference may be overlooked in Boston but surely not in Detroit.
Steve Harris
Vice President
Global Communications
General Motors
Detroit, Nov. 20, 2008
Romneys comments did not help Detroit’s public position. I wonder if the bailout goes through if the angry taxpayers will support Detroit or will they feel they have already given Detroit enough money.
This is the same Romney who in the Republican primaries criticized McCain for saying that some of the lost jobs in Michigan are never coming back.
“He said, you know, some jobs have left Michigan that are never coming back. I disagree,” Romney said.”
http://www.boston.com/news/nation/articles/2008/01/14/same_state_different_message_for_michigans_economy/
Does anyone really care what Mitt Romney has to say on this or any other matter? Romney’s reign at Bain Capital was notable for the consistent use of the outsource to India/China business model.
http://www.boston.com/news/nation/articles/2008/01/27/as_bain_slashed_jobs_romney_stayed_to_side/
Now we have come to the inevitable end of the “cheaper is all that matters” business mindset. There aren’t enough people making decent wages to buy all of the imported crap. For a time the debt boom propped up spending even as incomes fell … but that has come to a crashing halt as well.
Steve Harris is a real asset for General Motors. the guy is an effective communicator and capable of making logical arguments even from a weak position. in this particular case, he makes a lot of sense.
Whether you agree with Romney or not, it’s important to realize that the industry’s problems have been a long time coming. The 1990s and early 2000s are looking more and more like a replay of the decade preceding the 1929 crash and the subsequent Great Depression.
The other day I ran across an interesting article called “The Gospel of Consumption” at http://www.orionmagazine.org/index.php/articles/article/2962. Most interesting is the reference to Charles Kettering’s 1929 Magazine article, “Keep the Consumer Dissatisfied:”
“Charles Kettering, director of General Motors Research, to write a 1929 magazine article called “Keep the Consumer Dissatisfied.” He wasn’t suggesting that manufacturers produce shoddy products. Along with many of his corporate cohorts, he was defining a strategic shift for American industry—from fulfilling basic human needs to creating new ones.”
Open your favorite search engine and type in the name of the article along with the name Kettering. It’s easy to find the article on the web. The article is Charles F. Kettering, “Keep the Consumer Dissatisfied,” Nation’s Business, 17, no. 1 (January 1929), 30–31, 79.
To me, Kettering’s view explains both GM’s success in the subsequent 60 years as well as their demise today.
Whatever personal issues or failings Romney might have, the key is his message, not the man. Ad hominem and reductio ad absurdum arguments do not negate the cold hard facts found in Romney’s piece.
For example, if every recommendation Romney made had already been implemented, as Steve Harris claims, than what hope does Detroit have?
Look where they stand today. They’re losing billions and market share daily, and have been for a very long time now. An E for effort has not translated into even stabilized market share. Profits, when they were made, were squandered. Huge mistakes were made, and the consequence of those still hangs around their neck like a boat anchor. Quality has improved, but really it had no where to go but up after years, nay, decades of abysmal levels, and there are still major hurdles to overcome (as others have noted).
Mr. Harris says GM has cut costs, but clearly that has not returned profitability nor market share.
The same management team that ran the company into the iceberg is still at the helm.
Hence, any temporary respite that a one-time infusion of tax dollars would provide will still not address these issues, and 12 months (or significantly less) from now GM will be right back to where it is today.
A couple of comments on Harris’ comments on Romney’s comments:
1) As a PR exercise, I doubt that at this point in time it would be wise to invoke something like “that’s how you do things in Boston, but not how we do it in Detroit”. Part of the issue now is that Detroit’s culture is not exactly popular with the rest of the country these days. If somebody wants to invoke Reuther, just let it go!! Who are you after all, UAW???
2) The last thing people want to hear is about GM and Red Ink Rick’s achievements in the past few years. Just say you screw up, you’re broke and you need money. That’s it. Succesful companies don’t line up in Congress for money, only losers do. So pack up your pride and be humble, at least until you have the money.
3) Bankruptcy is not Romney’s wish or pipedream: it’s your reality, GM! Now you need help, and that help will come from politicians. Criticizing politicians now will not make you any favour. So again, shut up and let it go, the last thing you need right now is another enemy in the GOP.
Clever responses to politicians’ criticism may look good on paper, but right now they are the ones having the strings of the pourse. It would be better for GM to be less proud and more clever at this time.
The world has turned on its end when some marketing douche bag at GM is attempting to use the “East Coast” slur to say that someone isn’t socialist enough.
Chapter 11 is not to break unions, although the UAW contracts are oppressive. Chapter 11 is what happens to companies when they are managed so poorly that they become insolvent. You are there GM, and only bitchy whining and unsubstantiated terrorist threats to Congress have a chance of delaying the bad for management, dealers, lenders and UAW but necessary for GM in the long run Chapter 11 restructuring that you need.
they might spend 12 billion a year on research but how much of that was for the volt. im willing to beat that they were not spending that much until the volt. and if they were it was to catch up for all the years when they did nothing but watch the competition run away with better products. then even if you spend that much on research you then have to allow a decent budget for good materials to go into the car. they can spend 100 billion on research and then fill the car with the cheapest plastics and a the money that went into research meant nothing. or if the money on research went to something that was not going to really help the car in the first place like the color of the glue used on the back of door panels. Spending money on research does nothing unless you do good development that why it is R&D. they seem to have left out the d. it also does nothing when they do not spend the money on cars to put the good stuff being researched or allow the talent to create good products.
The comments myself and others have made about the insular culture at Detroit continue to play themselves out, now by Steve Harris – another man-child in the ranks of GM.
Seriously, this is humble pie/eating crow time, and they’re acting like four year olds throwing a tantrum because they didn’t get to go to the zoo.
The see in plain view this profound groupthink and mental inbreeding demonstrates how dysfunctional these companies really are.
Finally, it is inappropriate of Mr. Romney to invoke Walter Reuther’s name while advocating using bankruptcy to break union contracts. That reference may be overlooked in Boston but surely not in Detroit.
“That reference” will be overlooked in most of America, not just Boston and the East/Left coasts. The fact that Detroit actually still gives a sh** about Reuther’s name shows how out of touch they are.
There is a difference between wasting and spending money. GM was wasting 12 billions on R&D and Honda could not match that amount. Today Honda is doing fine and GM is near bankruptcy.
BTW Honda is the leader in many scientific and engineering fields, while GM is leader in mismanagement.