Yes, it’s a palindrome. No, it’s not my favorite. (Do geese see God?) But as a history buff—as in that’ll buff right out—I’ve always considered this palindrome something of a prose poem. The Panama Canal was certainly not the vision of one man. In 1534, Charles V of Spain contemplated a man-made waterway between the Atlantic and Pacific oceans. In 1880, after completing the Suez Canal, French Vicomte Ferdinand de Lessepss rose to the challenge. Nine years later, disease (amongst other things) put paid to the entire engineering endeavor. American President Theodore Roosevelt picked-up the cudgel. Crucially, the plan in question eventually changed from a sea level passage to a system of dams and locks. The Canal opened on August 15, 1914. As for Panama, it received control of the Canal in 1977. So what does this tell us about the U.S. car industry? The simplest ideas may be the greatest, but all great ideas take time; and time is money. What’s so great about rebuilding GM, and do we really have the time to do it?
http://www.historic-uk.com/HistoryUK/Scotland-History/DarienScheme.htm
The Scots also tried to start a colony to build a connection between the Pacific and Atlantic in 1693.
Pretty much everyone died, but they were the first to try. Bankrupted the country and helped push them into Union with England.
This is a very excellent rant. It should be posted as an editorial, as well, for the people who get creeped out hearing someone talk. This really shows why RF seems so upset, even though it looks like bankruptcy is emminent. Like he said, it’s really too late. Too much of the company has been screwed up. Yes, there are good parts, but structures and stuff set up inside are just too burdensome and cannot be fixed, even with bankruptcy. Imagine, a new auto company, with the excellent engineers, but a new structure, new (better) rules, new management and no past history of failure. I myself wonder if creating a new automaker without the stigma and corporate culture of the old is the best solution. To me, that solves a very big problem of convincing people who have sworn off GM products due to past experience or the current bailout situation. Imagine buying a Malibu, CTS, Enclave or Corvette, not as a GM car, but as a car from this new American automaker. I might even get one of those.
Go hang a salami, I’m a lasagna hog!
I agree with you on many of your points, though I don’t quite share your faith in the free market. The free market only works perfectly if people do not actively work against the public good, and there are too many bad actors for me to put my faith in their decisionmaking. Regulation FTW. I think the goal of this government intervention is to achieve the “creative destruction” type of revolution without having the companies go into bankruptcy, but you’re right that you can’t skip the tradeoff.
The bother to me is that yes, GM is presently borked, but just as I have faith that the engineers can put together wonderful cars in the face of mpg and safety requirements, I have faith that the right leader can turn things around despite the difficult conditions of our economy and company liabilities. These are desperate times for GM, and it’s sad to think that there is no man or woman anywhere in our vast industry great enough to take the helm and right the ship. People are generally both horribly stupid and startlingly brilliant, and if we can just tap into that latter aspect of our character we can do anything, including save a the behemoth GM from itself. It’s all very pie-in-the-sky, and in any other economic condition I think the consensus would have been to let them go bankrupt and restructure and I would have agreed with it, but I understand the present inclination to try to save jobs in this climate.
Chrysler, in the hands of private-equity hedge fund sharks, gets no love from me. May greed be their undoing as a warning to future investors (though institutional memory is terribly short and the whiff of an easy buck will always blind people to consequence and history). My guess is that’s how this all plays out – Chrysler RIP, GM somehow saved (through intervention or bankruptcy) and trimmed to a few core brands, resulting in 2 major US automakers going forward.
Impressive speaking voice Mr. Farago, especially after hearing your voice through the tin-can you use in the previous podcasts.
And are you April-Foolsing us about the regularity of your podcasts to come? I hope not.
Robert,
I don’t write much these days as I am one of those people fighting for survival in the wake of carmageddon (funny, how that used to be a tacky slogan for dealer sales events).
Nice to see the podcast is back. It was always the best part of the site IMO and you do get your points across effectively in the spoken word (perhaps even more than in the written one).
Now then,
If the crux of the editorial is that history provides lessons of what not to do and that it takes several attempts (sometimes) to get something right, it would also follow that history provides lessons of what can be done and that you never, ever throw everything away just because it did not work the first time.
I think it is fair to say that every conceivable option will be tried to resuscitate GM before the government allows the nuclear option of total liquidation.
Why? Pensions. If I am correct, the feds are on the hook to guarantee every single last pension now covered by GM. Granted, I would assume some of the billions given to GM is covering those pensions now but can you imagine what would happen if a “100% New GM” is allowed to form with no obligation towards those pensions? Right now, rebuilding GM with taxpayer dollars is possibly a cheaper option than guaranteeing pensions in perpetuity.
Now if I am off base on that I still think the following is a worthwhile point.
If history is to be a guide, why can’t a new GM be a lot like the old GM? Not the GM of the 70’s through today but the GM that overcame larger competitors (Ford) and others (Chrysler, Nash, Studbaker, etc) that on the first try, eventually morphed into the large, sclerotic behemoth that is only now facing its Waterloo.
Perhaps everything that grows too large must eventually shrink or possibly die. Well, we all die eventually but we should never go down without a fight.
So here is what I would ask about GM instead:
What kind of a company grew their market share to fifty percent in the world’s largest, most competitive car market? What kind of a car company grew their myriad brands into household names that still evoke paradigms of excellence (the Cadillac of…) or the bedrock of America (Baseball, hot dogs, apple pie and…).
That’s the kind of company I would want to emulate.
Is there even a flicker of the old GM within GM? Are there still some execs, engineers, designers, marketers and financial types (you may hate `em but they are essential) that still have a window open to that past?
Is there still a workforce that will stand up a little taller when they say “I work for GM”?
If so, then history can also provide a guide to what it will take for a new GM to be a lot like the old GM. It’s all there, likely most of it in writing, waiting to be brought forth, studied and applied to the modern world like some forgotten Aristotelian scroll.
History can repeat itself for good and ill. While the weather vane currently points toward ill, nothing says the winds of change cannot shift with the right momentum behind it.
My favorite palindrome was by Napoleon Bonaparte while imprisoned on Elba Island…When asked if he wish he had done things differently that led to his abdication at Fontainebleau he replied:
” Able was I, Ere I saw Elba “
Not long afterwards, he escaped Elba and the 100 Day Campaign soon commenced.
Yay! Panama! I was born there.
Funny thing about the Canal, not only were fellas from the West Indies hired to dig, but there were also a number of Chinese. You haven’t done everything until you chat it up with Asian-Panamanians with West Indian accents. I had no idea until I saw the band at our family reunion. Those guys could play.
More to the point, I think its important to mention the human cost of construction, if we’re going to use this analogy. Malaria claim more than their fair share, but lets not forget the…um..hiccups along the way. Like diggers (dealers) getting a full face of TNT.
GM, CH11…there will be blood. But I ain’t complainin’. This should have happened in 1977, too.
What, no Marine Corps?
Have you considered a weekly podcast instead of a daily podcast? Distilled wisdom every Tuesday instead of every day?
Good podcast. It provides a cogent argument, and is definitely worth a listen.
But I can’t agree with aspects of it. It presumes that the federal mission is to operate GM into perpetuity, along the lines of British Leyland.
I believe that this presumption will prove to be wrong. The feds will attempt to ultimately sell or transfer power to other parties, and will pull the plug at a later date when the economic consequences are more manageable if they cannot. They don’t wish to be long-term owners here, anymore than the FDIC wants to own failed banks for very long after they’ve seized them.
GM would be attractive to a foreign operator that wants an easy entry into the US market. The brands may be broken today, but an aggressive effort to fix them, as difficult as it would be, would be easier and cheaper than starting from scratch. The US remains an attractive market in which to do business, as well as the opportunity to pick up some of GM’s overseas business, so there should be more suitors than there were for the decided Anglo-oriented British car companies.
Part of the key here is to identify what would be acquired here. A new GM might carry the name but otherwise bear little resemblance to the old company (or one would hope.) With much of the upper and middle management gone and an aggressive attack on the defeatist mentality, this could be achieved, just as Ghosn was able to with Nissan.
PCH101:
I agree, Bailouts that Worked shows us how our feds will manage this. I would hope, however, it’s not as drawn out as the Penn Central scenario.