TTAC receives a great deal of excrutiatingly boring PR copy on a daily basis. When I caught sight of this sexy PR prose poem, I had to know more: 'The purely mechanical device, made up of four chambers, attaches directly in front of the throttle body. A movable flap senses pulsations generated when the engine vibrates due to acceleration. As the flap moves, via a spring-mass system, it changes the high-frequency whistle of the turbocharger to the more muscular tone that is the natural byproduct of the combustion process.'
Category: Podcasts
Ray Wert is a member in good standing of the so-called 'Swedish Mafia': the new breed of internet-based automotive journalists who write what they think and let the chips fall where they may. In other words, Ray's a TTAC kinda guy. We're pleased that he's joined us on the GM Death Watch, bringing his keen understanding of high finance to bear on The General's orchestral maneuvers in the dark. Given the fireworks to come, I reckon we'll be seeing more of his piercing glimpses into the not-so-obvious.
In the run-up to our June re-launch, The Truth About Cars is proud to present a new feature: the TTAC Daily Podcast. The 10-minute recordings will feature interviews with our correspondents, industry folk and enthusiasts. If you have a product, service or event to promote; or an axe to grind, contact me via email to arrange a call. We'll have more news on the new site soon…
I've never run a multi-billion dollar multi-national car company. But I've driven hundreds of cars, and every car I drive tells me everything I need to know about the company that builds it. Literally. What do I need to know about GM's product development process that I can't glean from the Solstice's fiddly roof? What can Daimler-Chrysler's flackmeisters tell me about the company's strategy that I can't appreciate by hammering an SRT-8? What does BMW have to say that their X3 doesn't? And how can I be expected to take Ford's "Bold Moves" campaign seriously after driving a Ford 500?
Someone forgot to tell Billy Ford that everything– sales, service, marketing, the money in his pocket– starts with product. First you build cars, trucks and SUV's that do one thing better than anyone else, THEN you market them according to their unique selling point. If you want to sell ultimate driving, start by making damn sure all your vehicles ride and handle better than anything else in their segment (Boxster-beater my eye). If you're selling safety, begin by building cars that get five stars in all crash categories (S40 four-star rollover rating my toches). If you're starting an American revolution, it's probably best to sell cars built in America. And if you want to be known as bold…
In one Ford TV ad, a mother and daughter jump into a swimming hole. After affirming their generational courage, they motor off in a Ford Escape– a vehicle so generic I wouldn't be surprised to find one for sale at Costco. The Ford 500, Explorer, Fusion, Freestar, Freestyle, Focus, Crown Victoria, Sport Trac, F150 and even the spiffy new(ish) Mustang GT are about as far from bold as you can get without hiding behind a rock. (The Ford GT was Starbuck's bold blend bold, but they killed it.) You could argue that that Ford's current management team inherited this less-than-audacious product portfolio, and that the Bold Moves campaign is more of a promise than a come-on. But you don't have to be a Times Square pimp to know you don't talk the talk before you walk the walk.
In fact, Ford's Bold Move message borders on self-parody: be bold and buy a vehicle from a car company struggling for survival. Anyway, we've been here before. Back in November, I suggested that Ford's customers want an innovative vehicle (the automaker's last marketing mantra) about as much as they want an innovative toaster. What bright spark at FoMoCo suddenly decided that the company's core clientele have moved on, from a non-existent desire for technological gee-whizzery to an equally fantastic desire for personal attention? Hey, I'm all for car companies taking risks. But I'm the kind of guy who lusts after a '71 Buick Riviera 'boat tail;' a machine whose bold design did nothing whatsoever to revive Buick's fortunes.
I understand the genesis of Ford's BM. It started with new Ford boss Mark Fields' "Red, White and Bold" shtick. Somewhere between the focus meetings and the Kool-Aid filled water cooler, the campaign's patriotic thrust got ditched for the "There's only way we're gonna get out of this mess: take some chances." Which is fair enough. Ford's survival does indeed depend on losing their 'play it safe and fail upwards' mentality. They need to take a chainsaw to their stifling bureaucracy and moribund product line. But they're a mainstream motor manufacturer, not friggin' Ferrari. Their customers are deeply, fundamentally, inherently, genetically conservative people whose prime motivation is to avoid risk, not make bold (i.e. risky) moves.
You want bold moves? Kill Jaguar. Kill Mercury. Sell Volvo. Sell Mazda. Sell Land Rover. Cut half the remaining models and plow money into the ones that survive. Re-invigorate your rear-wheel drive, box-frame car with new sheetmetal, a bad-ass motor and a killer cabin. Build a world-beating Lincoln luxury sedan. Make the Ford Focus the world's best small car. Get the Explorer's mileage into the mid-20's. Develop a more powerful engine than the Hemi and stick it into everything– including a new minivan. Set SVT loose on the entire model line-up. OWN quality interiors. Don't badge engineer ANYTHING.
Lose the glass fishbowl; redesign Ford showrooms to look like a modern retail outlet. Trim the dealer network and sell cars on the web. Undercut everyone's price with every vehicle. Interact with every single customer on a regular basis via internet. Institute no-haggle pricing. Make financing cheaper. Drop 80% of your print budget and dominate the web. Do it all, and do it all at once– regardless of cost. Then sell value for money. Ford: the best car money can buy.
I'd like to think that these ideas are on the table at Ford. I like to think that Billy Ford has the juice and the courage to reinvent his family business. And then I drive a Ford 500 and despair.
My automotive odyssey began in a Ford Pinto. I didn't need Ralph Nader to tell me that The Blue Oval's first sub-compact was a death trap. The Pinto was so nasty on so many levels I'm surprised it didn't spontaneously combust in shame. Then again, why would it? Ford had no shame. Like the rest of the Big Three, their greed, arrogance and incompetence handed the small car market to the Japanese. As far as I can tell, nothing much has changed in the last 35 years. Once again, gas prices are squeezing cash-strapped motorists. Once again, domestics don't have a compelling answer. And once again, Toyota does: the Toyota Yaris.
Do without any optional frills (power windows, remote keyless, a radio) and an autobox Yaris Liftback will set you back about twelve large. If the repo man has never darkened your drive and you have a grand to put down (or are willing to also do your own shifting), payments are within spitting distance of $200. That's to own the car, not a lease with a phone book's worth of fine print. And not just any car, but a brand spankin' new, made-in-Japan, everyone's-sister-knows-it'll-never-break Toyota. A Hummer driver spends twice as much just to keep the tank topped off. Speaking of which, you get over 35 mpg in a Yaris, with a three-year bumper-to-bumper hakuna mutata.
Now that General Motors is poised on the brink of disaster, the smallest setback could send the The General sliding into bankruptcy. What will be the straw that breaks The General's back? Most of the world has focused their attention on New York federal bankruptcy court. They're waiting to see if Judge Robert Drain voids bankrupt parts supplier Delphi's union contracts, and what effect that will have on GM. After all, there's so much to think about…
Will the United Auto Workers (UAW) react to the judge's ruling with an immediate strike at Delphi, starving GM of vital parts and driving The General into Chapter 11? Or is UAW boss Big Ron Gettelfinger secretly scheming to use the judge's decision to scare his members into accepting an otherwise unpalatable 15th hour compromise? Does Big Ron still have enough juice to make it so, given that he's up for reelection in June? Will a more radical union leader emerge and convince members of the rank and file to stage wildcat strikes? Will the larger number of Delphi retirees overrule their hotheaded "active" brothers and sisters to save their health care and pension payments?
Will GM CEO Rabid Rick Wagoner buy back Delphi's US operations at the 14th hour to assure a supply of mission critical parts until GM's foreign outsourcing is complete– and then jettison the whole shebang before the UAW contract negotiations in '07? Does GM even have the cash to pull it off? Will the judge's ruling plunge The General's credit rating below the minimum needed for the sale of their GMAC mortgage unit to Cerberus, killing the deal and removing the cash needed to buy-out Delphi? Or is Rabid Rick simply hoarding Delphi parts and outsourcing as fast as possible in the hope that he can withstand a late summer strike at Delphi? Have Rick and Ron secretly agreed to a worst case scenario short strike? Could Ron deliver?
Yes, well, the Delphi situation is only one of the storms gathering above GM's head. Lest we forget, the company's suppliers are none-too-happy with their terms of business; GM could not afford a 'run on the bank' scenario. And if the banks smell trouble and refuse to guarantee fleet sales… Meanwhile, management bet all its chips on the gas-guzzling GMT900 SUV's. Although early sales have been strong, the canary in the coal mine– pickup truck sales– is looking decidedly punk. April sales of the four-wheeled flat-bedded cash cows fell 5.9% compared to last year. Not to put too fine a point on it, every day that gasoline prices stay at or hovers around $3 a gallon is another bad day for GM– and we haven't hit the so-called "summer driving season" yet. If gas prices head northwards from here, if America starts downsizing its fleet in a big hurry, the company's market share will go into free fall. Again. Still.
And then, today, I received an email titled "Quick Question." The correspondent asked "Can you offer your opinion on how GM troubles/possible strike would affect a new Chevy owner? I am strongly considering buying a Suburban next month, but don't know if this would be a good idea." It would be easy to blame me for this communication, dismissing it as the inevitable result of TTAC's ongoing "attack" on GM. I wouldn't recommend it. This is the first time I've been asked that question. It represents the "third front" in GM's fight for survival: consumer confidence. If the Delphi situation is allowed to fester, it could be the tipping point that spills GM into oblivion– even without a strike.
Analysts constantly underestimate the importance of all the bad will GM and its dealers have amassed over the years. I've got hundreds of THOSE emails– from a stricken motorist who was assured by an OnStar representative that there wasn't a Chevy dealer in Dearborn Michigan, to a lifelong Cadillac owner whose dealer experience was so awful he promises never to buy another GM product as long as he lives. In fact, "should I buy a vehicle from a wounded company" is more like "why the Hell should I buy a vehicle from a wounded company?" I reckon the media buzz about GM's bankruptcy is already taking its toll on a company that can not afford to lose a single sale. The smallest bit of bad news could be the sound of butterfly wings beating, drumming up the chaos that spells GM's doom.
While The General's flackmeisters will scream bloody murder about self-fulfilling prophesies, current events are the fulfillment of a prophesy made over thirty-five years ago, when GM and its fellow domestics responded to higher quality foreign imports with arrogance, derision and scorn. They had their chance to change by their own free will. Now change will be thrust upon them. The Death Watch continues.
Before you can buy a firearm in Rhode Island, you have to finish a gun safety course. My instruction consisted of a pot-bellied ex-State Trooper telling war stories about ballistic incidents and accidents. It was a strangely effective education. Not only did I learn that you shouldn't shoot a crack addict with a .22 ('It just makes 'em mad'), but I also had Rule Number One drummed into my brain: if you draw your gun, use it. Which is why I'm sure that The United Auto Workers (UAW) is about to bring GM down.
On Thursday, UAW Vice President Richard Shoemaker told all locals unions covering bankrupt GM parts supplier Delphi to conduct strike authorization ballots by 14 May. The chances of the vote going against the union's request are about the same as Zimbabwe's electorate voting out Robert Mugabe. In other words, 24,000 union workers are about to chamber a round in their Delphi destroyer. The first bullet was loaded by 8500 members of The International Union of Electrical and Communications Workers, who authorized a Delphi strike back in February. The next four rounds will come from the United Steelworkers, the International Brotherhood of Electrical Workers, the International Association of Machinists and Aerospace Workers and the International Union of Operating Engineers.
Organized labor will de-holster this week, when federal bankruptcy Judge Robert Drain (yes really) accepts Delphi's motion to void its union contracts. As sure as Officer Krupke drew his weapon and plugged a hole in the aforementioned crackhead, the unions will strike. All the media punditry claiming that the prospect of mutually assured destruction would stay the union's hand will disappear. All those analysts who claimed that union management would do anything to avoid putting Armageddon on their resume will watch as union workers cheer these self-same officials on the picket lines. It won't be pretty, and it will be fatal, for someone…
The media has focused much of its recent energy on GM's worker buyout offer– as if this expense-trimming plan could somehow denude and neuter union intransigence towards Delphi's proposed salary and benefit reductions. GM's much-heralded early retirement package offered thirteen thousand Delphi workers a lump sum to get the Hell out of Dodge. The UAW reports that just 3620 Delphi workers have bailed. Although the payoff deadline has been extended to June 30th, it's perfectly clear this plan will have about as much effect on a strike vote as toothpick on a walnut. Not that any of the principals care. While all this has been going on, the UAW, GM and Delphi have all been preparing for war.
What happened to all that talk about GM assuming responsibility for the difference between what Delphi wants to pay its workers and what it currently pays its workers? Gone. Instead, GM's on-again, off-again "subsidy" on Delphi parts– delaying the supplier's contractual agreement to lower its parts prices in the first quarter of '06– is off again. At the same time, the General is stockpiling Delphi parts (including complete vehicles), reducing Delphi content and offering Delphi contracts to other suppliers (e.g. spark plugs now come from Denso, Honeywell and NGK). There is no question whatsoever that GM is racing to reduce its reliance on Delphi before the unions walk and its Tier One mission critical parts supplier's business hits triage.
Meanwhile, Delphi is readying itself to give the middle finger to both the UAW and GM. While GM accounts for roughly 60% of its total turnover, Delphi's US operations are the least profitable part of its business. If Delphi jettisons GM's less-then-enormously rewarding parts contracts, its US labor costs and all those damn lawyers' fees ($61m since filing), the supplier still has enough cash flow and foreign capacity– both actual and potential– to survive. Delphi's losses for March were half that of the previous month ($56m vs. $136m); it could be an indication that Delphi has already begun outsourcing its operations.
It's a domino deal. When the federal judge issues his ruling, the UAW and its fellow unions must strike. Surrendering salary or benefits would be tantamount to accepting the death of unionism. The unions may lose Delphi and GM, but they'll remain intact at Ford and DCX. When the UAW strike begins, Delphi must move its operations overseas. They can't survive with their current US cost structure. And when Delphi stops selling The General parts, GM must die.
The world's largest automaker won't be able to adapt under fire. GM's too Delphi dependent, their bureaucracy too slow and inefficient, their image too tarnished and their finances too precarious to cope. As my firearms instructor said when asked for the best course of action in an impossible scenario, "Gun or no gun, when you're done, you're done.'
What's worse than farce? Political correctness. When farce ends, people look around and say, "Wow! That was stupid." With political correctness, the stupidity never ends. It moves from stupid to bizarre to delusional to dangerous to destructive. Yesterday, the Attorneys General of California, New York, New Jersey, Maine, Connecticut, Massachusetts, New Mexico, Oregon, Rhode Island and Vermont filed a joint suit against the federal government, trying to increase CAFE (Corporate Average Fuel Economy) light truck standards. By doing so, they placed the entire fuel economy debate on the far side of the PC arc. First the science…
The National Highway Traffic Safety Administration (NHTSA) sets, monitors and enforces CAFE legislation. The agency does NOT, however, calculate the fuel economy figures. That job falls to the Environmental Protection Agency (EPA). The EPA makes its determinations by measuring the amount of carbon dioxide coming out of a vehicle's tailpipe. (The higher a vehicle's fuel economy, the less CO2 it expels.) The federal government does not classify carbon dioxide a pollutant. Environmentalists do. They consider CO2 a planet-warming "greenhouse gas." Now, the politics…
The environmental lobby would like the federal government to raise CAFE standards as high as humanly possible (if not higher), forcing manufacturers to increase fuel efficiency. For practical and political reasons, that ain't gonna happen. To win the war without fighting a losing battle on Capitol Hill (again, still), the aforementioned "Greenhouse Gang" decided to attack the new CAFE standards on the basis of CO2 emissions, rather than the fuel economy numbers themselves. Yes it's a distinction without a difference, but hey, you gotta work with what you got.
Only the environmentalists ain't got nothing. CAFE regulations prohibit states from regulating fuel economy. Despite the fact that the California Air Resource Board (CARB) sets tailpipe pollution standards for California, and thus the entire country, the Greenhouse Gang seeks dominion over federal CAFE standards as well. The lawsuit alleges that NHTSA failed to "fully take into account the new standards' impact on the environment and fuel conservation, as required by federal law." In other words, forget the failed Kyoto accord (aimed at reducing CO2 emissions), let's duke it out here.
The rhetorical battle has been joined. Connecticut Attorney General Richard Blumenthal loosed the most succinct opening salvo. "These rules shamelessly seek to short-circuit regulations in Connecticut and other states to curb greenhouse gas pollution. In the face of increasingly incontrovertible evidence, the Bush administration is not only denying the reality of global warming, but also seeking to block the states from addressing this deadly problem." So the feds are trying to short circuit the states, not the other way 'round. That makes sense– in a diminishingly inconvertible sort of way.
The truth is raising CAFE standards by a few more mpg's won't make any appreciable dent in domestic oil consumption. As Mr. Elton has revealed here, many car companies simply eat the CAFE fines as the cost of doing business. The fact that a 2002 National Academy of Sciences' report concluded that CAFE-triggered downsizing caused an additional 2000 road deaths per year is, I suppose, beside the point. Anyway, what IS the point? Unless US energy consumption is drastically reduced across the board– heating, cooling, appliances, manufacturing, agriculture, etc.– our growing economy will obviate any theoretical "savings" made by more efficient automobiles.
As for the harmful effects of CO2 gasses on our environment, I'll leave that to more (less?) scientific minds. Suffice it to say that the amount of "real" pollution coming out your tailpipe has nothing to do with fuel efficiency, and while new technology might reconcile America's quest for energy independence with environmental concerns, then again, it might not. While we're waiting for THAT debate, I reckon we should file this whole CAFÉ mishegos under "Bad Landing, Wrong Airport."
America is a country rich in resources, both financial and natural. The Bureau of Land Management estimates that three trillion gallons of oil and 362 trillion feet of natural gas lie just offshore, maybe more. We also have enormous coal shale fields, and coal fields, and nuclear power plant technology, and endless alt energy ingenuity. While we should be launching a massive and comprehensive push for energy self-sufficiency, a bunch of point-scoring politicians are pandering to tree-huggers getting high on self-righteous Bush bashing down at the low-CARB CAFE.
Of course, extracting our oil, coal and gas, or building nuclear power plants, or erecting enormous wind farms, could damage the environment. And a Manhattan-style energy self-sufficiency project would require bi-partisan political support (God forbid). I guess it's better to pay money to countries fostering terrorism and/or put our military in harm's way in the Middle East. Oh wait, that's not it either. Right, the politically correct answer is… driving cars with better fuel economy. You see, if that was farce, it would be funny.
Fit. That's a good one. At the exact moment that America's obese SUV's are giving the country petrochemical chest pains, Honda invites us to get healthy. Why chug-a-lug gas and stagger around like a big-bellied lummox when you can sip petrol and sashay around town with all the moral superiority of a marathoner? OK, but getting fit involves sacrifices: unpleasant bending, less grunt, no street cred, etc. Or does it? Let's face it: the less we give up, the higher the likelihood we'll do it. Does the Honda Fit let us frugalize without fear?
Toyota is the master of the pastiche. The company's designers never met a Mercedes they couldn't morph, or a Bangled BMW they couldn't bootleg. Granted, capturing the essence of a rival's design without ending up on a hard bench outside the World Intellectual Property Organization is something of an art form. But quite what Toyota had in mind with the FJ Cruiser is hard to fathom. In one sense, they're finally getting 'round to ripping themselves off: riffing on the FJ40 Land Cruiser's riff on the original Jeep. On the other hand, anyone who clocks the FJ Cruiser's brick-like bearing and doesn't think Hummer just isn't trying hard enough– which ain't something you can say about Toyota. Ever.
From the front, the FJ Cruiser is a Lego Transformer. Funky chunky bumpers– complete with molded silver "wings"– combine with a cylindrical light assembly, swooping sides and a gun slit front window to create a mondo-bizarre snap-to-fit aesthetic. The FJ's hood– which looks like a half-submerged bomber hangar– doesn't quite work. But it's Henry Moore to the side profile's Dali-esque dissonance. The FJ's rear windows makes the SUV look like it's sagging in the middle, while the gigantic C-pillars are almost as funny (both humorous and peculiar) as the mini-flares over the rear arches. And the FJ's back end makes the full-size spare hanging on the door look like a child's inflatable pool.
You've got to wonder about the mood at RenCen these days. Watching the price of gas crest $3 a gallon must make GM CEO Rabid Rick Wagoner feel like the Captain of the Poseidon as he trains his binoculars on the dark horizon and spies a mountain of water heading his way. It's not just the horror of knowing what's coming that makes the moment so terrifying; it's the crew's utter powerlessness to alter events. Only the Poseidon just happened to be in the wrong place at the wrong time. Wagoner and his mates have spent their entire time on the bridge steering GM into harm's way. And there's not a damn thing Rabid Rick can do about the gathering tsunami. To review…
For more than a decade, the Tahoe, Suburban, Yukon, Yukon Denali and Escalade have been the cash cows keeping The General in cream. As readers of this series know, when the winds of change gathered force, Rabid Rick called out "Steady as she goes!" Instead of developing new hybrids to capitalize on the growing anti-SUV gestalt, instead of spending money on refining and marketing the fuel efficient vehicles already in GM's vast fleet, Rick bet the company on a quick refresh of GM's gas-guzzlers. Last September, Maximum Bob Lutz launched the resulting GMT900-based Chevrolet Tahoe– between the two hurricanes that decimated America's gasoline production facilities. GM's "new" vehicles were born under a bad sign: $3 a gallon gas.
As always, Maximum Bob put a brave face on events, claiming that The General only sought to maintain its dominance over a shrinking market. Early indications were positive. The American consumers' notoriously short memory and sunny disposition helped them shrug-off rising gas prices as a temporary aberration, an Act of God. TTAC has since unearthed GM's carefully-guarded GMT900 sales numbers, broken-out by model year. In the first financial quarter, GM sold 19,739 new Tahoes, 5028 Yukons and 4228 Escalades. As you'd expect, these figures are dwarfed by sales of heavily discounted '05/'06's: 45,104 Tahoes, 14,398 Yukons and 8145 Escalades. Bottom line? GM pushed some 96k full-size SUV's out the door in Q1, adding about $800m to its balance sheet.
Without that profit, GM's would have lost over a billion dollars in the first financial quarter. But the second major spike in gas prices casts a long shadow over the GMT900's and GM's viability. The recent pump price escalation proves that soaring prices are tied to larger, less random forces than errant hurricanes. American drivers are beginning to cotton-on to the fact that the days of cheap gas are gone. If the price of gas crests $4 a gallon and stays there for the summer– as many analysts predict– the gig is up. Sales of GMT900's will tank, inventories will swell, discounts will follow and GM's descent into Chapter 11 will gather pace.
President Bush has directed the Environmental Protection Agency to temporarily suspend rules requiring different blends of gasoline in various cities (regulations designed to reduce air pollution). If state governments follow suit, losing the legal requirement for ethanol blending, gasoline supplies could be ramped-up and trans-shipped to help meet demand. Gas prices will fall and GM's SUV sales will be saved! That's a big "if." There are plenty of variables that could immediately and completely offset any legislative measures designed to free-up supply: conflict in Iran, Venezuelan nationalization, the summer driving season, a terrorist attack on supplies, distribution and/or refineries; etc.
In short, this might not be the best time to be building lumbering gas hogs. Or is it? The Arlington Morning News reports that GM's Texas factories have added overtime shifts to crank out as many GMT's as possible: about 900 per day. Rabid Rick Wagoner has publicly admitted stockpiling parts in anticipation of a strike at parts maker Delphi. GM's Just In Time manufacturing facilities are not warehouses; given the volatility of key components, the best way to store Delphi parts would be… a complete vehicle. Is GM is stashing GMT900's in the Texas sun? TTAC is investigating.
Meanwhile, the General's ability to provide its assembly lines with mission critical parts is under threat. The Financial Times reports that Tier One supplier Yorozu America recently threatened to stop making suspension components if the automaker didn't fork over $3.7m in disputed payments. More worryingly, Yoruza also demanded an irrevocable letter of credit for at least three times its average monthly turnover with GM, roughly $75m. Deep Throat reports that another, much larger US-based supplier is also demanding up-front payment from GM. As reported here, if this trend takes root, GM faces a 'run on the bank' scenario that would capsize the corporate mothership– whether they like it or not.
Clearly, GM faces dangers from all directions. Pity the poor passengers trapped inside the upside down world of GM.
The ancient Greeks knew the truth: character is fate. If Oedipus hadn't been such an asshole he wouldn't have killed his father, married his mother and kept psychiatrists busy for centuries. By the same token, if Rick Wagoner wasn't a corporate narcissist, he would've completed the Herculean tasks left by his predecessors. GM's CEO would have cleansed The General's stable of excremental vehicles, severed its eight-headed brand portfolio, subdued the UAW's cretinous bulls and sent Cerberus packing. Instead, we get to watch Rabid Rick's company sink into the mire, bribing a financial journalist and engineering a sports car whose roof flies off at 60mph. To wit:
Robert B. Reich is a journalist and commentator who once worked for President Clinton in the Labor Department. He currently enjoys a regular slot on NPR's nationally-syndicated "Marketplace" program. On Wednesday, Reich announced that he'd been approached by a "public relations firm working for General Motors." Reich said the flack asked him to praise GM's buyback deal for its workers. He then offered to pay Reich "remuneration" for a positive story "out of respect" for his reputation. Reich declined the unspecified offer.
The man attempting to bribe the twenty-second United States Secretary of Labor was Richard Strauss of Strauss Media Associates of Washington, DC. According to the company's website, Strauss Media uses its "integrity, perseverance, and skill" to help clients "realize the power and influence of radio." The PR company's client roster includes Nike, Eastman Kodak, Coca-Cola and General Mills. Although Strauss Media Associates doesn't list GM as a benefactor, a description of recent projects includes work on the Saturn brand's Second Annual National Donor Day.
Marketplace's host Kai Ryssdal confirms the connection. In a phone interview with TTAC, Ryssdal said Richard Strauss personally set-up a recent radio interview with GM CEO Rick Wagoner. When I asked if the show's producers investigated Reich's claim that he'd been bribed, Ryssdal said they had. According to Ryssdal, Strauss backpedaled furiously; calling the offer a "misunderstanding." Ryssdal also said the program had spoken directly to GM's new PR Supremo, Steve Harris. Harris said he never authorized payments to "sympathetic journalists." When Reich's damning piece aired, GM and their Washington PR firm remained silent.
So, The General's own PR firm didn't have enough confidence in the value of GM's employee buy-out plan to let a journalist draw his own conclusions. Clearly, the General's generals feel embattled and desperate. And why wouldn't they? What has their imperious leader said or done that would lead them to believe that GM is a company that deals with its problems head-on?
Meanwhile, on the same day, Sprite2005 posted two pictures of his semi-decapitated C6 on a Corvette forum, with an accompanying explantion. "I still can't believed this happened. Had just shifted out of first @ around 6900-7000k, hit 2nd and hear a loud crack, pull over and my roof is missing…" Sprite2005 is not alone. On the 23rd of February, GM sent out tech bulletin number #05112A, which states the following.
"On certain 2005-2006 Chevrolet Corvette vehicles, the painted roof panel may separate from its frame in some areas if it is exposed to stresses along with high temperature and humidity. The occupants of the vehicle may notice one or more of these symptoms: a snapping noise when driving over bumps, wind noise, poor roof panel fit, roof panel movement/bounce when a door or hatch is closed, or a water leak in the headliner." Dealers should "apply adhesive foam to ensure proper adhesion, or in a small number of vehicles, replace the roof panel."
Although the defect doesn't appear to affect the Corvette's structural integrity, an airborne roof panel raises some pretty major road safety issues. Equally important, the situation does nothing to bolster GM's supposed reputation for improving build quality– or the company's willingness to accept responsibility for customer concerns. Notice that the notice says the roof may become separated 'in some areas,' blames "stress, high temperature and humidity" and recommends replacing the roof panel "in a small number of vehicles." If that attitude isn't familiar to disgruntled GM owners, perhaps this [unedited] response is:
"I can't believe how many of you people are actually defending this and saying its not that big of a problem," writes forum member Sweetvet. "The mans roof flew off his brand new $75K car- thats a pretty big friggin deal to me- I would be livid, and would ensure this car was bought back by GM, and would never buy another GM product again. God, I'll be glad when my corvette is sold so I can get back into something with build quality- something (anything) German"
GM's first quarter losses less than last year? So what? As long as Rabid Rick Wagoner is tempting the fates, GM's is sealed. Ipso facto.
The new Cadillac Escalade is a mission critical machine. It's one of the few remaining General Motors products whose sales don't depend on Mexican-sized kickbacks and/or a Day-Glo "Closing Down, Everything Must Go" sticker on the windshield. What's more, as a badge-engineered Chevrolet Tahoe, it's only slightly more expensive to build than a Chevrolet Tahoe. In other words, the 'Slade's is a cash cow on factory double dubs, trying to keep it real for GM's ten point six billion dollar man, Rabid Rick Wagoner; know what I mean? No? Let me spell it out for you: if the 'Slade ain't da bomb, it's a nail in the General's coffin. Well guess what? RIP.
Clock those side vents. At the precise moment when Caddy's luxury SUV should swagger into town with unabashed American style, the 'Slade arrives with its main design cue "borrowed" from Land Rover's Range Rover Sport. While the cynical amongst you might assert that the Escalade's target market is no more likely to connect the two vehicles than smoke crack and drive (as if), the fact remains: the porthole plagiarism betrays a staggering lack of confidence and originality. Of course, badge engineering a Chevrolet Tahoe betrays a staggering lack of confidence and originality, but, um where was I? Something about the enormous gap in the SUV's wheel arches making the 'Slade look like a punk ass bitch? No that wasn't it. Or was it?
At yesterday's New York International Automobile Show, Bob Lutz provided the hook for GM's PR counterattack. Of course, the Car Czar's rallying cry wasn't planned. As usual, the former Marine aviator simply greeted the press, opened his mouth and OoRah! came out. 'GM has the worst behind it.' Whatever else you can say about Maximum Bob Lutz, the man is an idiot. While GM's first quarter results will be a lot less bad than last year's annus horribilis, Lutz' statement flies in the face of the growing, looming, unresolved, irresolvable conflict over at bankrupt parts supplier Delphi; the fact that GM's gas-guzzling SUV's are heading straight into a $3 a gallon shit storm; and a shoal of dangers so extensive that GM CEO Rick Wagoner has taken to calling it "stuff." But wait; there's more!
"Soon all will be revealed,' Lutz said. 'I can't mention figures, because I'd get in big trouble." So, Mr. 'Don't Tell Mommy' wants the nattering nabobs of negativity vulturing GM to believe that his company's management team (whom MB has just placed in harm's way) has a secret plan to pump-out GM's umpteen flooded compartments and restore the company to preeminence. Well, profit. Never mind that GM watchers have been waiting for an aggressive restructuring plan since 1973, or that every time Rabid Rick Wagoner steps up to the dais these days and says "Ta Da!" he's closing, cutting and/or buying out something or someone. If we're looking for company-saving revelations, what could possibly top the still only potential sale of 51% of GMAC for $14.1b? The mind boggles.
Or maybe I misunderstood. Maybe Maximum Bob's saying that GM's financials are about to get better. That would be odd. In March, GM's market share tumbled from 26.5 to 23.3%. Car and truck sales fell 15%. As for new product, The General has shot its wad, placing its bets on gas-guzzling GMT900's. Although Bob and his Booster Brigade are cheered by the supposed surge in sales of these brand new-ish Tahoes, Yukons, etc., it's best to remember that GM books fleets sale on "allocated preference" (i.e. when they're scheduled for production) and/or as soon as an SUV ships to the dealer. Also, Rabid Rick's publicly admitted stockpiling parts in preparation for a Delphi strike; perhaps Bob's optimism is based on "phantom" figures…
In fact, GM might be teetering on the brink of financial collapse. No one outside the company knows how low GM's US cash hoard has gone between balance sheet dates. And while Maximum Bob was busy entertaining the press corps, GM's purchasing guy publicly stated that The General is stretching its account payables to 55 days, essentially financing itself on the back of its vendors. That's not good. Nor is the recent revelation that the GMAC sale will NOT improve GM's credit rating and WILL slaughter GM's cash cow, starving The General of ANY dividends for five years. As one correspondent put it, "This deal does nothing to facilitate a restructuring of North American operations, but rather lets them keep the lights on until the UAW calls the end game."
I reckon the light at the end of Bob's tunnel is the headlight of an oncoming General Motors FP59 diesel-electric locomotive. But hey, that's just me. And Bob thinks I'm full of shit. 'Most of the analysts living in New York don't even own cars, and have never even visited one of our dealerships,' Maximum Bob proclaimed. 'At some point, I start to question whether they're holding short positions on the stock.' (FYI: This writer owns a car but not GM stock. And thanks to GM blacklisting, I've visited several GM dealerships for test drives.) As Detroit News reporter Brett Clanton pointed out, Lutz' analytical anti-Christs are the same effete intellectual snobs who heard GM predict that the company would be solidly profitable in '05– the year it lost $10.6b.
But Bob's not done playing the dozens with us financial and media mavens, announcing that "The imminent bankruptcy at GM is a myth created by Wall Street and our beloved media." It's nice to be loved, however sarcastically, but this website has been begging to differ on the Chapter 11 front for over a year now. Bob's said nothing to change our perspective and plenty to reinforce it. Sure, Maximum Bob's blend of feistiness and anti-intellectual, anti-media paranoia played well with his dealers and GM's decimated, dispirited troops. Maximum Bob's force of will even gave GM's beleaguered (not-to-say overvalued) stock a temporary boost. Be that as it may, Lutz is, at best, guilty of premature recapitulation. At worst, he's completely divorced from reality. Bob says "the last skeptic in America will [soon] be convinced that we are well on the way to recovery. GM has its best days ahead of it.' We say, well, good luck with that.
I wonder what Billy Durant would have made of Rick Wagoner. GM's founder was a man of great honesty, intelligence and drive. He was also a high school drop out who started the company with a $1000 loan– and ended-up penniless. Twice. Perhaps that's why historians tend to credit General Motors' epic growth to the man appointed president in 1923; about whom an observer wrote, 'The manufacture of correct assessments, not physical products, is what most gratified Alfred Sloan.' Billy was the "car guy." Alfred was the "bean counter." The history of GM is the history of the struggle between these two opposing forces: passion and, um, accounting. Rick Wagoner is, of course, a Harvard MBA.
I suppose Durant would have liked Wagoner well enough, at least at first. Durant's legendary charm was based on a simple but effective strategy: "Assume that the man you are talking to knows more than you. Do not talk too much. Give the customer time to think. In other words, let the customer sell himself." Rabid Rick is pretty good at selling himself these days. With a new PR guy pushing the buttons, Wagoner's making the rounds, defending his chairmanship on CBS' 60 Minutes and Face the Nation, and in the pages of The Wall Street Journal and other carefully-selected publications. So if Rick and Billy were schmoozing about GM, Wagoner would have done the talking.
What would Billy have thought if Rick repeated his recent kvetch to Newsweek? 'It's not so easy to do stuff, particularly if you can't do it yourself, if you've got to do it in cooperation or in conflict with unions, if you do it with Delphi, if you need partners to consider a partial sale of GMAC. What has been done in the last six months borders on unprecedented accomplishments and advances. This stuff didn't happen because somebody decided on Jan. 15, why don't we do stuff? This stuff happens because we're working on it, we're ready to do it, we're talking to people, and then when we have it ready, we announce it.'
Durant would have been alarmed at Wagoner's use of the word "stuff." Billy may have been the yin to Alfred's yang, but he was every inch the detail man. He knew every nut and bolt of every vehicle, every nuance of the production process. Durant would not have been pleased with a GM CEO who spoke with such thinly-veiled buck-passing imprecision. As a risk-taking deal maker extraordinaire, Durant would've also wondered why Wagoner hadn't already united GM's "partners," or taken the bold action necessary to avoid GM's current morass. Equally important, as a man who lost his company to conservative-minded "insiders" (twice), Durant would've also had problems with Wagoner's "company men know best" hubris. To wit:
"These are sophisticated problems with historical tails that run back 80, 90 years. The chance of someone coming in and not understanding our business, making the right calls and doing them in cooperation with key constituencies like dealers and unions, is absolutely microscopic. That would be the biggest risk I've ever heard of." Risk? What does a man who's never worked a day outside Generous Motors (its former CFO no less) know about risk– except how to avoid it at all costs? Even so, Durant would have kept his trap shut. And then, at some point, Billy would want to go for a ride.
Durant believed that great products make great companies, and vice versa. GM began when Durant was so impressed by a horse-drawn buggy's innovative suspension that he bought its manufacturer: the Coldwater Cart Company. One wonders which vehicle Wagoner would choose for Billy's test drive. A Corvette would certainly swell Durant's heart with pride. Anything else and… there would be questions. Why doesn't this Tahoe have a hybrid engine? What makes a Pontiac G6 better than a Toyota Corolla or Honda Civic? Why isn't the Cadillac STS as good as/as expensive as a Mercedes S-Class?
Durant would have listened to Wagoner's responses thoughtfully and concluded that GM's CEO had an answer for every objection, every fault, every danger; and the answer was always the same: we're working on it. Things are getting better. We'll sort out the jobs bank, the quality gap, the Delphi situation, the GMAC finance deal, our car sales, this car, all of it, everything, later, soon, sooner or later. In that sense, Durant might have seen something of himself in Wagoner. Like his father before him, Billy squandered his fortunes on stock market speculation. Gamblers understand denial. They know that some men will always believe– no matter what– that their salvation, their resurrection, is only a deal away.
So, if William C. Durant were Chairman of GM today, would he fire Rick Wagoner? Truth is, Billy never would have appointed Wagoner CEO in the first place.
[For more info., please read 'Billy, Alfred, and General Motors' by William Pelfrey.]
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