Matthew 6:24: “No man can serve two masters; for either he will hate the one and love the other, or he will be devoted to one and despise the other.” Applying this biblical admonition to General Motors, it’s clear that the federal bailout will accelerate rather than retard its ultimate demise. The automaker’s corporate culture was dysfunctional before the feds took the reigns back when its over-compensated suits made sure that failure was impossible (and not in a good way). Now that GM employees must answer (at least in the theoretical sense) to both management and politicians, it’s twice as screwed-up. As I indicated in this morning’s Wall Street Journal Op-Ed, the political interference with the company’s operations is already underway. Well of course it is. And it will continue. As will GM’s descent into oblivion. Simply put, there’s no way GM can get its house in order when Uncle Sam is the landlord. SNAFU × 2.
Today, GM CEO Fritz Henderson reported for work. In and of itself, that’s about as bad a sign of GM’s ongoing failure as you could get. Lest we forget, Henderson is old-school GM: the former CFO who watched the company’s balance sheet go tits up. Henderson is also guilty by association: the hand-picked successor to GM’s phenomenally failed CEO (also former CFO) Rick Wagoner.
The fact that Henderson made it to the top of GM diseased corporate caste system is all you need to know about his suitability as a turnaround artist. Inmates. Asylum. Administration. That sort of thing.
This stout defender of GM’s status quo emerged from yesterday’s meeting with The Presidential Task Force on Automobiles (PTFOA) proclaiming that his job was safe. Ish. While Fritz expects to remain large and in charge of the small and getting smaller automaker as it exits bankruptcy, “nothing’s guaranteed.” How . . . reassuring.
In a familiar sort of way, it’s the same set of weasel words PTFOA jefe Ron Bloom used to hedge his promise not to keep plowing taxpayer money into the quagmire increasingly (and accurately) known as Government Motors. Am I the only one bothered by the fact that, despite having not one but two masters, GM’s strategy is still in flux?
I reckon two things are certain: GM’s death and your taxes. GM and its new presidential overlord are doing all they can to counteract that politically unpalatable reality, trying to make it seem as if there’s hope for change. Their latest attempt to give wing to these (recurring) delusional flights of fancy: the new Chairman of GM’s Board. GM supporters seized on former telecoms magnate Edward Whitacre’s appointment as a sign of “fresh” thinking.
Back on planet Earth, why the Hell interim BOD director and PTFOA lackey Kent Kresa picked a man without any automotive or manufacturing background is an interesting question. As in “clueless old white guys that not-so-interim GM CEO Fritz Henderson can con with a spreadsheet for $50,000, Alex.”
“He was someone who [PTOFA chief] Steve Rattner knew, or knew of,” Mr. Kresa told the New York Times, by way of explanation. And now Kresa says he’s searching for other board candidates “who have been involved in companies where there has been a dramatic change in the marketplace.” Oh, I know! What about the guy who put Kodak in the shitter?
No, wait; he was on the last GM BOD. And I guess Kresa’s looking for candidates who saw a dramatic change in the marketplace and reinvented a chronically unsuccessful company with a huge, bumbling bureaucracy into a leaner, greener, faster, smarter and enormously profitable participant in same. (Experience working for politicians a plus.) He just forgot that last bit.
Not that it really matters. A board chairman is, at best, a watchdog. (You might say Whitacre is a lapdog, but I couldn’t possibly comment.) Even if Eddy W. understands that culture eats strategy for lunch and caps Fritz’ ass, it must be remembered that GM’s Board of Directors is merely a front for the Powers That Be.
The PTFOA is the real BOD. They are the masters to whom the bankrupt automaker’s employees—which includes Whitacre—must answer.
So, ultimately, it must be asked: what the fuck do THEY know about the car business? I know: it’s not a new query. But it’s one that remains unanswered, even as GM continues to suck-up taxpayer billions and realign itself for the future.
By thy deeds thy shall be known. Only one problem: the deed required is a complete rehabilitation of a car company that’s screwed its customers for decades. Even if GM built a Camry and Lexus-killer, it would take them another decade and at least another $100 billion to recover their missing marketplace mojo.
Given the “dramatically changed” US auto scene, no one but the feds would sink that kind of cash into a GM-shaped money pit. And neither should we. That’s not a politically palatable conclusion, but it’s the God’s honest truth.
The names have changed but the business hasn’t. Here in Canada the dealers never got the bankruptcy memo. My son went to two GM stores looking for a new small pickup. Both dealers refused to deal. They were willing to give what GM put on the hood but not a penny less. They both treated him like they were doing him a favor even talking to him so he left. A friend had the same experience shopping for a VUE. If GM doesn’t fix the dealer attitude they will continue to crater.
As I indicated in this morning’s Wall Street Journal Op-Ed, the political interference with the company’s operations is already underway. Well of course it is. And it will continue.
This is what happens when you nationalize in a half-assed manner: the worst combination of private enterprise’s profiteering and lack of accountability, combined with government’s “too many cooks”.
If the government is going to have a stake in GM, it needs to be authoritative and direct about it. If they’re going to be privately run, then the government needs to get it’s hands out and only get involved at shareholder’s meetings and when the loans come due. The model should be Renault’s privatization, not British-Leyland.
I’d be impressed, though, if the US government would so anything so forthrightly leftist, partly because it’s un-American, but mostly because they’re just doing damage-mitigation until this becomes someone else—likely GM’s new owners’—problem.
Today, GM CEO Fritz Henderson reported for work. In and of itself, that’s about as bad a sign of GM’s ongoing failure as you could get.
If GM is going to be sold off, then it makes sense to keep Henderson or someone else within GM (other than Wagoner, who was uniquely obstructionist) as an interim CEO. You’d never be able to hire another CEO, anyway, if the job is only going to last for a few months.
Look at what happened with Nardelli. He was kept in place while Wagoner got the boot. They kept Nardelli in because they knew that he wouldn’t be there for long, so finding a replacement hire was pointless.
If another operator such as Nissan comes in, they will hire the CEO. If not, then I suspect that the new board will choose one. If I was Fritz, I wouldn’t get too comfortable in the new digs.
I think I have it figured out. The Government really has no intention of rehabbing the dead auto makers. Nor do they believe that they have any chance of any sort of resurrection. All they are doing is kicking the corpses forward, via huge pumps of tax money. The Obamans are gambling that by the time that GM and Fiatsler make their final approach to the pavement, the economy will have recovered enough so that the final failure won’t appear to be as much of a sign of The End Of Times as it would if it happened today.
If the economy DOESN’T recover before the big face plant, I think at that point it’s all going to start to get REALLY ugly.
So, to summarize: GM’s executives suck and government (especially left-of-center government) sucks.
I wonder if people are going to realize that even if GM ultimately goes belly up a few years down the road, macroeconomic benefits can easily exceed the costs.
This isn’t just about GM, nor the unions.
As long as one shares the Norquist viewpoint, nothing the government does will ever be right, save fund the military and cops.
@Potemkin..Your son should just walk out the door,at the first sign of atitude. Maybe the dealer is on the kill list. There is a lot of unhapiness with that bunch. If your pissed off enough,talk to the sales manager get his card and tell him your calling GM to complain. Or do what a lot folks do, go to the competition. Its a travesty that some of the best dealers are getting the axe. At the sametime some of the assholes that helped GM get in this position carry on as they always have.
For the record GM Canada is not bankrupt…yet
RF
OK, the thing is, you have the power of the pen at least.
The really BIG question that is eating everyone of us up is this…
What the hell do we do?
We can stir up each other all we want on TTAC, but then what?
Most of us are very busy and politically stupid.
By that I don’t mean to say we are stupid, but naive in the art of political persuasion.
Is there anybody who participates at TTAC that can broadcast a government email list so it will much easier for us as a group to direct our misery ?
Is there no way we can become organized?
Feeling pretty helpless here.
PCH101:
We disagree about the timing. No matter what course GM’s new owners wish to set, this is not a time for a caretaker CEO. It’s never too early to put a proper leader in charge. That said . . .
The only possible excuse for allowing Henderson, LaNeve and the rest of the RenCen mob continue in power is the one you allude to: a takeover by another company (Renault). The problem is that every day the deal doesn’t go down, is another day these clowns are driving GM into the dirt.
long126mike
So, to summarize: GM’s executives sucks and government (especially left-of-center government) sucks.
The point isn’t whether they “suck” but whether either is reasonably capable of running GM. GM management has proven for 30 years that it is incapable. Government? Left Right or Center, they are incapable as well because governments do politics and good political decisions are seldom good business decisions. Government’s only contributions could be money or management. If GM would be saved by spending money, it would be in fine health right now. Government management? Yeah.
RF
The problem is that every day the deal doesn’t go down, is another day these clowns are driving GM into the dirt.
The continuing management blunders at GM are a bad sign. Chrysler was wise enough to shut down and do nothing stupid while the decks were cleared for the Fiat deal. No matter who made the call, Bloom and the task force clearly approved.
Here’s the problem with GM. These guys are doing stupid things by the day. If there were a deal pending for someone else to come and run GM, Bloom & Co. would surely put the General in neutral as well. But this is not happening. Alternatively, New GM has to be ready to go (expect no lawsuits this time) so why hasn’t the task force throttled the old guard yet? I fear that they can’t find any one.
Any turnaround specialist will think long and hard before going forward with dual loyalty to the company and to the task force. Can anyone imagine a Lee Iacocca coming into GM if his every decision is subject to second guessing by political people on the sidelines. In short, the turnaround people want no part of it, and the political hacks are not qualified. So what do you do? Leave Fritz there and consider it new management.
I hope I am wrong.
From the Comments to the WSJ piece:
The assertion that “GM’s management caused its failure” leads me to believe that Mr. Farago is nothing more than a UAW mouthpiece.
RF, the union shill. TTAC’s secret agenda EXPOSED.
No matter what course GM’s new owners wish to set, this is not a time for a caretaker CEO.
It would be very difficult to find a new CEO if there is a good likelihood of being canned in a few months. Being a designated plug is not a desirable career for most people.
If Nissan comes in, Ghosn or a hand-picked protege will certainly take the job. If not, then it’s really the board’s job to hire one.
The problem is that every day the deal doesn’t go down, is another day these clowns are driving GM into the dirt.
During this stage of bankruptcy, there isn’t much that these guys can do, regardless. In my opinion, this is not a problem in the interim.
Assuming that they get an accelerated sale of the assets, there will come a point when they need to make a decision. That’s probably within a few months. Until then, there’s no need to hurry, because the company is in limbo, anyway.
That’s not a politically palatable conclusion, but it’s the God’s honest truth.
Equating your opinion with the truth of God? No one could ever accuse you of excessive humility, RF.
Nice job on the WSJ piece. Given your expected bump in WSJ-directed eyes, perhaps this was not the best article in which to drop an F-bomb . . .
For the record GM Canada is not bankrupt…yet
No, they (or rather, their A/R) has been put up as security, so they wouldn’t be.
What GM would need is a kind of automotive Gorbatchev or Napoleon, in order not only to radically change what is done, but, above all, how it is done.
I’m afraid, Henderson is not such a person.
Given the limited time to implement such a change, however, and the inherent risks, even a radical change may be doomed, thanks to Wagoner and those over-paid stupids (shareholders and board members) supporting him over the years.
I think, it’s too late now. Government interference and subsidies won’t help either. It is too much of a mess. Perhaps companies that big, that old and that sick simply have to die.
Would someone please respond to paulie’s post? I think there are a lot of people here that would be interested in the answer to his questions.
Thanks mikey. My son protested his treatment the way many people have, he simply went to a Japanese vehicle dealer and bought there. I don’t think the idiots will ever get it even when they are turning off the lights for the last time.
good political decisions are seldom good business decisions
That’s an ideology, not a fact.
Not only does Whiteacre know nothing about the car business, he is, himself, the product of a highly bureaucratic culture — the old Bell System. His last job was running Southwestern Bell, which bought what was left of the old AT&T (the long distance business) and re-branded itself as AT&T.
Why anyone would think that this guy brings something useful to the table is beyond me.
I agree with Bruce. The car business is ultra-competitive, meaning some, or many, companies are going to fail. GM needs a visionary leader, and they do not have one. They need a hard ass high IQ leader, who wants to win. Like a young Bill Gates. I think GM has no chance unless they find a true leader.
Potemkin:
That’s ludicrous.
As a GM sales manager in an “over performing” dealership, I;m so sorry to hear about your son’s treatment.
It is indicative of the attitude of many dealers, though. I know lots of people think that GM is off base by trying to get rid of some of their dealers, but your son’s experience shows the need.
I’ve always said: “They’ll build all the vehicles that I ask for, but they can’t build a customer for me.”
I hope you give GM another chance by visiting a good dealer.
bbowen28 :
I’ve always said: “They’ll build all the vehicles that I ask for, but they can’t build a customer for me.”
That attitude is of prime importance, as most customers could care less who the CEO is; they want a courteous, helpful dealer with good products to sell.
I think the 2010 Equinox with the DI 4cyl is a step in the right direction – an attractive, fuel-efficient vehicle that’s a serious competitor to the Rogue, CR-V and the RAV-4; but it will take a customer-focused dealer to give the potential buyer the confidence that this choice will be backed up by excellent service, especially with the state of the company and the fact that it’s mostly a new model.
I’d love to see the 2.4 DI/6spd auto in a new Malibu Maxx, that would be kick-ass.
@long126mike-June 12th, 2009 at 12:50 pm
So, to summarize: GM’s executives suck and government (especially left-of-center government) sucks.As long as one shares the Norquist viewpoint, nothing the government does will ever be right, save fund the military and cops.
Fixed that for ya.
“Not only does Whiteacre know nothing about the car business,”
Whiteacre is a political appointee and we all know how well that works, remember good old Browny at FEMA. That’s what’s wrong with the government meddling in private enterprise. Look forward to more clueless appointments at GM. Every senator will be wanting to give his big contributors do nothing jobs at GM.