By on May 3, 2009

“G.M. is very different than Chrysler,” said Rahm Emanuel, President Obama’s chief of staff. “But I suppose the one lesson for G.M., and all the other players, is that this is a moment when a Democratic president said, ‘I am really willing to let a company dissolve, and there’s not going to be an open checkbook.’ There’s got to be real viability.” Huh? I was under the impression that this was the moment when a Democratic president said “I am NOT really willing to let a failed automaker dissolve. Uncle Sam’s checkbook is as open as a hooker’s gams. For the sake of political expediency, there’s got to be pretend viability.” Of course, it’s much worse than that. The White House has caught Detroit disease, where stupid decisions vie with no decisions for supremacy, leaving the status quo bruised and battered, but triumphant. 

Like the Motown moguls that the Presidential Task Force on Autos (PTFOA) protects, all the president’s car guys’ dementia began with an idee fixee. Unlike Chrysler and GM execs, the PTFOA’s starting point had nothing to do with ensuring that they could afford to fly first class to Gleneagles for a round of golf and a hot stone massage for the Mrs. It was a simple question: “How do we save these failed companies (a.k.a. union votes)?”

At that point, the PTFOA developed a massive hardon for federal intervention that’s lasted a lot longer than four hours. Bad craziness was a given.

For example, the bureaucrats running GM’s car business—giving a thumbs-up or thumbs-down on any transaction over $10 million—swear up, down and sideways they don’t want to run a car company. PTFOA boss Steve Rattner has publicly declared that his employer will not “interfere” with GM’s decisions about brands or products. This at the same time that the PTFOA is planning to convert $22.8b of GM’s federal “loans” (so far) into a controlling stake in a newly reconstituted GM. Even The New York Times wonders WTF that’s all about.

Members of Mr. Obama’s auto task force say that even after the government owns a majority of the company, it will have no role in management. That, they say, will be farmed out to professionals, the work supervised by government-appointed members of a new G.M. board.

That doesn’t even make sense. The federal government won’t be involved in GM’s management, but the federally appointed Board of Directors will. And that’s totally different because they’ll be independent, right? Even though they’ll serve at the government’s pleasure. Anyway, I guess we can be thankful that the PTFOA has no desire to farm out GM to amateurs—although God knows I’d put my money on my fellow armchair executives before I’d “invest” a single dime on a GM suit. You know; if I had a choice.

I’m completely confused by the PTFOA’s reluctance to roll up its sleeves and tell GM how to build what for whom, where, what brand to sell it under and how to sell it. I don’t want the feds to run GM. But if they are running it—and they are—how can they do so without getting down to brand and product-related decisions?

Truth be told, the car business is about . . . wait for it . . . cars. If the feds are “protecting the taxpayers’ investment” in GM, they should start by firing all the people who had anything to do with GM’s current brand and product plans—before they make any more. How in the world does anyone expect Fritz “the Wagoner Clone” Henderson to make the correct pre- and post-bankruptcy car-related decisions when the ex-CFO has shown no ability to do so in the past?

By the same token, not firing marketing maven Mark LaNeve is proof positive that the lunatics are still running the asylum. This is the man who ran eight GM brands into the ground, destroying any and all brand equity through a massive miasma of mixed messages. I wouldn’t let LaNeve write a Craigslist ad for my minivan, never mind control a $3 billion ad budget. Why has no one rid GM of this troublesome man?

Again, I’m not in favor of Uncle Sam running GM. Clearly, they don’t have the appetite or the aptitude for the job. But as the Brits say, it’s time for the PTFOA to piss or get off the pot. Either the quango should take full responsibility for GM’s product-related plans (please, God, no) or offload this entire mess on someone else (liquidation or cough-Nissan-cough).

Either way, an immediate palace putsch would be a damn fine idea. Given that the PTFOA has already shit-canned GM’s CEO, there’s no reason to delay a more thorough housecleaning. Every day that the PTFOA allows GM’s current management to chart the automaker’s course makes reversing their lunacy more expensive. And less likely.

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48 Comments on “General Motors Death Watch 251: Putsch Your Money Where Your Mouth Is...”


  • avatar
    Stein X Leikanger

    Wouldn’t trust them with boiling an egg without screwing up. Accountability is no longer in the vocabulary.

  • avatar

    Well, THAT post should distract some fire from my Carmageddon piece that degenerated into partisan warfare. I’m on a plane from Beijing to NYC and will report this week as limited time allows.

  • avatar
    Robert Schwartz

    “How do we save these failed companies?”

    The real question is how do we pay off the UAW.

  • avatar
    ajla

    I think the feds will give GM away to anyone that wants them as long as the taker is willing to keep a couple token US factories open.

    The government is probably reluctant to clean GM’s house because they don’t want to be seen as running the show during Detroit’s meltdown. Plus, a potential “buyer” might not want to deal with layers of US-appointed management.

  • avatar
    AG

    The next time someone claims that nationalized health care would result in a nightmarish government bureaucracy, I can point to GM as an example of a private sector bureaucracy that was less efficient than a public sector bureaucracy.

  • avatar
    PeteMoran

    @ RF

    I’m completely confused by the PTFOA’s reluctance to roll up its sleeves and tell GM how to build what for whom, where, what brand to sell it under and how to sell it.

    This Comedy-Farce-Tradegy long since passed the point of being about what GM does, but what it represents.

    For example, if the US unemployment numbers improve next month, the bailouts will end, immediately. Unlikely? Then expect GM to be held-up Weekend-At-Bernie’s style until it does.

    In the near-term future, with everything else put in place on the stimulus side, the Administration might be getting closer to risking a GM Ch11 (or Ch7 for Ford’s sake);

    “After years of GM mismanagement and an unprecedented economic crisis, we have tried hard for GM. Thanks to our wider economic management, the US economy is now in recovery. We expect employment losses to ease. Now is the right time to for an orderly wind up of GM.”

    Chrysler was/is way-gone. Ch11 for them was the outcome for the same reason GM is being kept alive, but it should have been straight to Ch7.

  • avatar
    Rastus

    This priapismic elongation of the federal manhood will only impregnate those who are already on welfare and who are thus incapable of self-help…let alone self-respect.

    Where is the ingrained self-respect which God has bestowed upon us all? Why is it so absently missing in a few degenerates who work hand-and-fist at the only thing they are good at– that being self-destruction and self-debasement?

    I am convinced the heads of these American auto companies are psychopaths.

    Witness the birth of American Leyland…impregnated with your hard-earned tax dollars:

    http://4.bp.blogspot.com/_XBzdQo4oISk/SaXrKKugTdI/AAAAAAAAB0M/r5wjzF8O4AY/s400/octomom.jpg

  • avatar
    agenthex

    And that’s totally different because they’ll be totally independent, right? Even though they’ll serve at the government’s pleasure.

    I don’t see why this is so controversial. Employees of plenty of federal institutions serve with relative competence.

    In fact, I believe it was a controversy when the last administration didn’t perform to that standard.

  • avatar
    schmuck281

    The next time someone claims that nationalized health care would result in a nightmarish government bureaucracy, I can point to GM as an example of a private sector bureaucracy that was less efficient than a public sector bureaucracy.

    Oh, give them a chance. I have worked in government for 40 years. The government bureaucracy can out do the private sector in stupidity before the first coffee break.

  • avatar
    dpeppers

    @schumck281
    So they kept you employed for 40 yrs……and I assume now on pension…..hmmmm. You could be right.

  • avatar
    Luther

    Rahm Emanuel is a liberal parasite similar to the swine flu…Why bother with anything this primitive microbe says?

  • avatar
    97escort

    The Detroit Disease is really the American Disease. Doesn’t “stupid decisions vie with no decisions for supremacy, leaving the status quo bruised and battered, but triumphant.” describe American policy in a lot of areas?

    It certainly describes the American Health Care System. It describes American Energy Policy for sure. It’s right on for Iraq and Afganistan. And of course Congress falls into that description without a doubt.

    The Detroit Disease transfusions are peanuts compared to what the American Disease is costing us in other parts of the body.

  • avatar

    from http://www.GeneralWatch.com

    After years of watching GM decline, I am firmly convinced that the troubles at General Motors lie squarely at the feet of management. It is customary to hear every excuse under the sun, ie. wages, health care, pensions, exchange rates, material costs, government regulations, the weather, fuel prices, the economy, credit crisis, and on and on. Never is the blame pointed out as failed leadership.

    GM has cut thousands of employees, closed plants across America, taken away benefits from retirees, sold assets with reckless abandon, and borrowed to the hilt. Now the solution of the day is eliminating dealers, how tragically wrong is that? These people running GM really have no clue what to do and take ill-advised actions in the name of “reorganizing” and “turning around”. Their strategies don’t work and yet, they are still in charge. Nonsense!

    Where would GM of today be had the company heeded the advice of John Delorean, Ross Perot, and Jerry York? For that matter, what if they had implemented Return to Greatness? Even bankruptcy can’t save this bunch. All that will happen is a lessened liability structure, then back to business as usual with Mark LaNeve and company continuing the most methodically mundane marketing. Wait, make that asinine merchandising.

    It’s time for people to wake up and realize that what needs to happen is a complete restructuring of GM management, and by that I mean a housecleaning in the executive suites. That’s where the trouble lies, not with tens of thousands of loyal employees, retirees, suppliers, dealers, and salespeople.

    It’s really our only hope.

  • avatar
    postman

    It’s another case of swine flu = swine flew = pigs will fly before anyone changes the status quo in Detroit. These people are spackeling the walls as the building is coming down around them.

  • avatar
    PeteMoran

    @ Luther

    Michelle Bachmann‘s office called, she thinks you’d fit right in as a researcher; you know garbage cans, mindless name calling, conspiracy theory development, etc…

  • avatar
    mikey

    Yes! Right you are Buickman.

  • avatar
    paris-dakar

    Either way, an immediate palace putsch would be a damn fine idea. Given that the PTFOA has already shit-canned GM’s CEO, there’s no reason to delay a more thorough housecleaning. Every day that the PTFOA allows GM’s current management to chart the automaker’s course makes reversing their lunacy more expensive. And less likely.

    Good analysis. I agree that the ‘sipping on bad medicine’ aspect of this serves an agenda. Obama and his people don’t want to ‘fix’ GM and send it on its way – a straight Ch 11 would serve that end. They really want a National Automaker run by the .gov in partnership with the UAW.

    God help us all in that case.

  • avatar
    GS650G

    I like how the UAW is getting fed in these deals. Huge ownership stakes, big unemployment benefits (80%. Lose your job and see how much you get) and the investors take one for teh team.

    Someone has to pay and it won’t be Ron Pullmyfinger.

  • avatar
    psarhjinian

    The reason they don’t want to make decisions is because they don’t want to be accountable. It’s the same reason, sadly, that GM ran itself into the ground: no one wanted to be the one left holding the bag if things failed, and such it was just easier to roll downhill.

    I’d be ok with the Feds running GM, but the emphasis is on “running”. I want the cold, hard hand of government squeezing GM’s collective testicles until they get it through their head.

    What I don’t want is a wishy-washy compromise engineered to offend more people to a lesser degree. The problem is that image politics is, by definition, a game of “pass the hot potato” played by people who are professional responsibility-dodgers, and that much modern decision-making, private or public, derives from this kind of ethos. That they’re keeping La Neve is an example of this: no one wants the job of being responsible for GM’s single biggest failure, so they’re not even going to try replacing him, or the hundreds of people like him.

    Sad, really.

  • avatar
    indi500fan

    I think the interesting part will be what tactics the FedGov uses to advantage Government/Getterfinger Motors vs its many competitors, domestic and foreign.

  • avatar
    Pch101

    The reason they don’t want to make decisions is because they don’t want to be accountable.

    That isn’t it. It’s because the incoming new operator is going to be one choosing the management.

    What the government is doing is typical of private equity deals involving bad companies. The incoming party does the housecleaning and chooses its own people. The government isn’t hiring the managers because the new guy would just pick his own team, anyway. That’s typically a condition to entry; management is key, and the new guy will want to have managers whom he can believe in.

    Wagoner had to go because he was uniquely obstructionist, but it will be the decision of whoever takes GM (Renault?) to hire the new CEO. If that is the case, you can expect Ghosn or one of his top dogs to take the job and they’ll pick and choose whom to keep and who to boot among the top GM managers.

    The government will maintain board positions because those board members are there to protect the taxpayer’s “investment.” When you paid big money for a big chunk of equity, you’d be a fool not to have board representation. But aside from the CEO, the board doesn’t usually do much of the hiring; that’s left to the management.

    The government is taking equity because there isn’t enough cash to pay us. We knew that this was coming. Our position in the current (soon to be Bad, Dead) GM may be “secured” in theory, but that doesn’t mean much when the street value of the assets is well exceeded by the liabilities.

    The union is taking equity because they have no negotiation leverage to get what they and every other creditor wants, which is cash. I honestly don’t know what motivates some of the posters here to believe that equity in a new entity that is worth, oh, zero, is exactly some sort of coveted prize.

    All of this makes perfect sense, it’s pretty much how the private sector would handle it. The question mark is whether there is someone to actually acquire GM. The list of prospective partners is pretty short, and I’m sure that we don’t want any who speak Russian or Mandarin as a first language, which makes it even shorter. (Get Magna on the phone, eh?)

  • avatar
    PeteMoran

    …it’s pretty much how the private sector would handle it…

    Well, apart from the fact that the private sector would just get on with it rather than a Night Of The Living Dead marathon.

  • avatar
    Pch101

    Well, apart from the fact that the private sector would just get on with it rather than a Night Of The Living Dead marathon.

    Deals in the private sector can take years to close. These guys may be close to putting two deals to bed, and they’ve been at it for just four months.

    On the whole, that’s not bad at all. The problem for the task force is that there are very few eligible candidates for taking control of a car company. It’s not as if they can just post it on Monster and get 500 qualified applicants lined up to get in.

  • avatar

    Pch101

    You’re assuming that the feds will surrender control of GM to an incoming party/outside carmaker, sooner rather than later. In that case, correct: leaving GM alone is both SOP and “the right thing to do.”

    But despite yesterday’s Nissan – Renault WAR, we’ve heard nothing about any GM “partners.” And the feds AREN’T leaving GM alone. They’re pushing GM’s current management team into making all kinds of radical moves.

    The April/May race to reconfigure GM (e.g. killing brands, flogging foreign ops, closing factories) is giving GM consumers, suppliers and workers the heebie-jeebies. If there isn’t a suitor waiting in the wings, if the feds aren’t going to liquidate, why let these Bozos keep screwing things up?

  • avatar
    Pch101

    You’re assuming that the feds will surrender control of GM to an incoming party/outside carmaker, sooner rather than later.

    It’s easy to assume, because their actions suggest how motivated they are. They obviously want to sell out.

    Whether or not they’ll succeed is another matter, because of the lack of prospects. The effort is sound, but the odds would be stacked against anyone at this point. (Look at how well the rather non-public Cerberus did in its efforts to cobble together partners. Private does not always equate to better.)

    Meanwhile, the feds are pushing GM’s current management team to make all kinds of radical moves: killing this, that and the other thing.

    They have to. They need to contain the burn rate.

    Cash is always scarce for turnarounds, and cutting the burn needs to be a priority. The bankruptcy does allow them to chuck some of these “assets,” which lowers the cash payments that will be required to satisfy the remaining creditors. If they tried to keep all of the assets, then the new company would have to put up more money. I wouldn’t suggest paying money for bad brands and useless R&D, just so that the new company can just punt on them.

  • avatar
    PeteMoran

    @ Pch101

    Deals in the private sector can take years to close. These guys may be close to putting two deals to bed, and they’ve been at it for just four months.

    My apologies for being the contrarian, but not in the deals that I’ve seen our company involved with.

    Million dollar deals and a few billion dollar ones too, across continents and tens of thousands of employees, operating offices, assets, legal entities etc… on and on.

    Just yesterday, Fiat said they wanted to merge Opel with Fiat Cars and spin it back out for investors during May for completion before the end of the European summer.

    4 months is bags of time if the aim was to restructure/split/spin-off various companies, but even you’ve said that’s not the aim. They’re just keeping GM aloft for as long as possible. Hard decisions aren’t part of that equation.

  • avatar
    Pch101

    My apologies for being the contrarian, but not in the deals that I’ve seen our company involved with.

    I’ve worked on stuff that was smaller that has taken two years to close. There are a lot of moving parts, and not everybody is motivated to hurry when they’re putting fine points to the details.

    If you want a comparison, just look at Cerberus. They started the talks with Fiat a year ago. A year ago. They’re supposedly private and efficient and got their capitalist mojo, and they still hadn’t closed. It obviously isn’t that easy.

    Part of the problem is that during times like these, Fiat, Renault, and a few select others are the only girls at a prom for desperate, anxious guys who don’t have dates. Here’s a bet — if Fiat and Nissan fail to close, there is no Plan B. That is not exactly an enviable position in which to be.

  • avatar

    Pch101

    I understand your point (and fully expect to be crushed by the weight and frequency of your logic), but I’m saying that this management team is not the one to decide which “assets” (a.k.a. liabilities) to sell.

    I think that we agree that

    1. Time is of the essence, that burn rate’s gotta go down
    2. GM’s current management really sucks
    3. Someone else may soon call the tune

    Perhaps you’ll also agree (stranger things have happened) that

    1. Brand and product decisions will make or break the “new” GM, just as they did the old one
    2. The management decisions taken now (as in right now) on that front will affect the incoming leader’s abilities to sort that car-related shit out.

    And that’s where I say either get a new leader now or stay the hand of the current team. In terms of “investment,” we (the people) need to think long term. Unlike GM past and present.

  • avatar
    Pch101

    The management decisions taken now (as in right now) on that front will affect the incoming leader’s abilities to sort that car-related shit out.

    I disagree with that, IF the new player (Nissan, Fiat, etc.) enters quickly.

    In any case, it’s sort of a done deal, in that the incoming company is going to choose the management. It’s simply not our choice to make; the incoming group would undo it all, anyway, if they didn’t like it. There’s no point in us making changes that can’t stick. You don’t need a new marketing guy if he’s going to be dumped in a matter of weeks, anyway.

    In GM’s case, Henderson is just there because Wagoner was a big PITA who was uniquely obsessed with keeping his job and would therefore be unsuitable for even a transition. (Wagoner reminds me of the guy in “Office Space” who absolutely couldn’t accept the idea of being gone.) Henderson will probably not survive, although if he does, it won’t be the government’s doing.

    The sticky point arises if Fiat, Nissan, etc. don’t come through. Then the government will have no choice but to pick the management, because they can’t just let the companies sit in limbo forever.

  • avatar
    PeteMoran

    …they can’t just let the companies sit in limbo forever…

    But that appears to be the game-plan.

    Busy-work for all concerned without a single hard decision being made.

    Hard decisions won’t be made because stretching this out appears to be the automotive anti-unemployment strategy that anyone in the administration (including PTFOA) has come up with.

  • avatar
    Pch101

    Busy-work for all concerned without a single hard decision being made.

    How does having a new incoming company run the joint suggest the lack of a “hard decision”?

    The government is effectively saying that they don’t want to operate them, they’d rather have the private sector take over. What would you do if this was your problem to solve and you had the same constraints?

  • avatar
    geeber

    agenthex: I don’t see why this is so controversial. Employees of plenty of federal institutions serve with relative competence.

    Federal agencies and departments are not expected to turn a profit, and aren’t worried about competitors providing the same good or service. That’s a huge difference compared to a manufacturer of a consumer good that must compete with the products of other corporations on quality, price and style. In that environment, “relative competence” on the part of company employees – let alone leadership – isn’t enough.

    The Environmental Protection Agency, for example, doesn’t have to worry about Toyota and Honda providing a nearly identical service at the same or lower cost with better quality…

  • avatar
    PeteMoran

    What would you do if this was your problem to solve and you had the same constraints?

    Chrysler? I’ve said it before; Ch7.

  • avatar
    Pch101

    I’ve said it before; Ch7.

    The problem here is that the government is looking at a potential derailment of the economic recovery if we permit that to happen now. Plus, it locks in the burden of the pensions and paying unemployment to everyone who gets pink slipped.

    Perhaps worst of all, it would result in a substantial writedown of what the government has already loaned, and only within weeks of providing the money.

    If Fiat is truly interested, there isn’t much reason for them not to take it, just so long as the downside risk to the government is limited. If Fiat makes an effort in earnest, then it can at the very least push off the failure to a later date when it doesn’t matter so much.

  • avatar
    buzzliteyear

    @PCH101 and RF

    I really enjoyed your discussion in these comments. It’s a refreshing change from the usual government-bashing/union-bashing that goes on.

    There are no perfect solutions to the GM/Chrysler messes, only bad and less-bad ones.

  • avatar
    mikey

    What buzzliteyear said!Let me add that I see validity in both gentlemans arguement.

    Its like being morbidly obese One doesn’t get fat overnight.And for sure your not going to lose it all overnight.The only way will see results is making massive change in your eating and physical activity.

    Thats where we find ourselves with GM and Chrysler today.But like the fat guy if we don’t start moving and changing real fast,the patient is gonn’a croak.

  • avatar
    Landcrusher

    It seems a lot simpler to me. The administration does not want to run these companies because that is hard work and makes them accountable. What they want is for someone else to run the companies and give them the results they desire – tax revenue, union jobs and greener cars. If someone can succeed, the administration can take credit, if someone fails, they blame the greedy and/or incompetent bastards. Either way, more votes for them!

    If you weed through all the excuses and posturing, that is what you are really left with.

    Now, the question about management is really interesting because motivations aside, everyone wants a success in the end. It seems to me that GM is a lot like a government, and taking over a government with new people will usually fail unless you have enough help from old people who know how things actually get done in that bureaucracy. So, there is a limit to how many heads can roll at the top. We have done a great job of replacing leadership training with MBA training for the last couple decades, so finding the right top guys who can walk in and take over will not be easy. Maybe you can get General Petreus?

  • avatar
    wsn

    Next time Boeing in trouble, there will be a Presidential Task Force for planes.

    When Kellogg is in trouble, there will be a Presidential Task Force for cereal.

    When Ralph Lauren is in trouble, there will be a Presidential Task Force for fashion.

    Good thing, if you just lost your job, just apply for a job at the federal government and be part of the Presidential Task Force for your previous industry (and potentially scrutinize the boss who fired you).

  • avatar
    jkross22

    “The problem for the task force is that there are very few eligible candidates for taking control of a car company. It’s not as if they can just post it on Monster and get 500 qualified applicants lined up to get in.”

    False assumption. Mulally’s apparent success proves a point – not having auto experience should not rule out a qualified candidate from the top post.

  • avatar
    Pch101

    Mulally’s apparent success proves a point

    It doesn’t, because the government needs a business entity to come in to take over.

    That leaves a very short list, that might include, Renault, Fiat, Magna, an Indian firm or two, some Chinese and Russians who nobody wants, and maybe some private equity guys such as Jac Nasser, as has been rumored.

    That’s about it. You can count them on your hands, and probably have digits left over. That doesn’t leave much room for a Plan B.

  • avatar
    Landcrusher

    Adding to PCH’s point, Mulally didn’t come in and fire a lot of the top dogs. He was left with plenty of people who knew how Ford operated. If you throw out all the people at GM that ought to be thrown out, you won’t be left with enough people who know how the company really works. That may be satisfying, but it won’t help you get the company up and running again soon.

    OTOH, PCH’s idea might work, but you will definitely need a team that has experience working with an interventionist government.

  • avatar
    agenthex

    1. Brand and product decisions will make or break the “new” GM, just as they did the old one
    2. The management decisions taken now (as in right now) on that front will affect the incoming leader’s abilities to sort that car-related shit out.

    I don’t understand the elevated sense of urgency on this. The most important thing in meantime is to not let the company collapse in the middle of a depression, and achieve that goal at minimal cost.

    Products will take orders of many months if not years to arrive anyway. If there’s a compromise to be made, it’s better to pick people who are good rather than quickly.

    Federal agencies and departments are not expected to turn a profit, and aren’t worried about competitors providing the same good or service.

    First of all, this isn’t a federal dept, and they’ve not appointing executive officers.

    But even if we’re to assume so, it’s putting cart before horse because the reason they’re not “competitive” is because they have no competition. Despite popular belief, there’s no magical touch of government that lays to waste competent people (and in general, the gov does compete in the broader labor market).

  • avatar
    geeber

    agenthex: I don’t understand the elevated sense of urgency on this. The most important thing in meantime is to not let the company collapse in the middle of a depression, and achieve that goal at minimal cost.

    Because Honda, Toyota, Nissan, Hyundai, BMW, Mercedes and even Ford aren’t twiddling their thumbs, delaying new product introductions until GM gets back on its feet.

    If the goal is to make GM a competitive player again – and have made it worthwhile to shovel all of that taxpayer money into GM – the restructured company needs to get up and running as quickly as possible. If it falls too far behind, it may never catch up to the leaders. Being a laggard in too many segments is part of what landed GM in its present trouble.

    Unless, of course, the plan is to keep injecting more government money into GM at regular intervals.

    And please note that we aren’t anywhere near a depression at this point.

    agenthex: First of all, this isn’t a federal dept, and they’ve not appointing executive officers.

    I never meant to suggest that GM was. I was responding to your post that said this: I don’t see why this is so controversial. Employees of plenty of federal institutions serve with relative competence.

    Having worked in both the private and governmental sector, I can assure you that there are different expectations regarding performance and approaches to cost control.

    This is not to say that all government employees are inept – they certainly are not – but the approach taken by most government employees will not work in a competitive, fast-moving industry.

    agenthex: But even if we’re to assume so, it’s putting cart before horse because the reason they’re not “competitive” is because they have no competition.

    Until they are tested in a competitive environment, the assumption is that, without having to worry about competition, they work under a different set of expectations and demands than a company that lives or dies in the competion for consumer dollars.

  • avatar
    paris-dakar

    It doesn’t, because the government needs a business entity to come in to take over.

    That leaves a very short list, that might include, Renault, Fiat, Magna, an Indian firm or two, some Chinese and Russians who nobody wants, and maybe some private equity guys such as Jac Nasser, as has been rumored.

    The Feds bringing Jac Nasser in to run GM would be surreal.

  • avatar
    Pch101

    The administration does not want to run these companies because that is hard work and makes them accountable.

    Ironically, they don’t want to run these companies because they are not the “socialists” who many of the politically inclined would like to believe them to be.

    They are trying to broker a no muss-no fuss breakup and handoff, much as they would with a failed bank. The government problem is that unlike banking, it doesn’t have the in-house expertise to do this for long. Since getting the government debt repaid by selling the company is the inevitable exit strategy, it would be preferable to do it sooner than later.

    If this drags on, the task force will have no choice but to get into the trenches and start running aspects of this, such as hiring the top management. It would frankly be kind of entertaining if they were to do that, because if they made the right choices, they’d probably be recruiting people from Ford Europe, BMW, Holden and a host of other non-American citizens to fix this thing. The talent pool at home is so tainted that we really need to import the help.

  • avatar
    agenthex

    If it falls too far behind, it may never catch up to the leaders.

    This doesn’t address the point, your timeline is still wrong. A couple months here is not going to be critical in the grand scheme of product dev. Making sure the necessary changes are done well in the long run is far more important.

    And please note that we aren’t anywhere near a depression at this point.

    The only reason why it’s not a “depression” yet is due to massive gov intervention, and we may get there yet once first quarter numbers are in.

    What this means is that the post hoc verdict is irrelevant in the current timeframe. The gov acted as if it were urgent, and it’s a good thing they’re doing something.


    This is not to say that all government employees are inept – they certainly are not – but the approach taken by most government employees will not work in a competitive, fast-moving industry.

    Many are not expected to; they may hired to serve as lowly bureaucrats and they seem to bloaviate with the best of them.

    Once you reach the professional ranks, like AG office or scientific endeavors, they seem to work as their pay scale demands.

    In any case, it still hasn’t quite reached you that the running of this business is not the DMV or whatever you’re thinking of. It’s quite high visibility and likely accountability.

  • avatar
    geeber

    agenthex: This doesn’t address the point, your timeline is still wrong. A couple months here is not going to be critical in the grand scheme of product dev. Making sure the necessary changes are done well in the long run is far more important.

    When developing new vehicles, even a few months are critical. Especially when competitors aren’t standing still, waiting for GM to right the ship. Once customers leave, it’s extraordinarily difficult to get them back – especially in a mature market. GM does not have the luxury of time, if it wants to get back on its feet and compete successfully.

    If it wants to become the American Patient, that is an entirely different matter.

    agenthex: The only reason why it’s not a “depression” yet is due to massive gov intervention, and we may get there yet once first quarter numbers are in.

    The intervention was led by George W. Bush. What saved us was TARP, which was passed during the final months of his term. I can’t wait until he receives credit for it…

    And to get to a depression, the unemployment rate would have to skyrocket…and, at this point, we haven’t even reached the high point for unemployment set during the 1980-82 recession, let alone the Great Depression (unemployment hit 25 percent in 1933). And note that the unemployment rate is typically a lagging indicator – when it peaks, the worst is acutally over.

    agenthex: Once you reach the professional ranks, like AG office or scientific endeavors, they seem to work as their pay scale demands.

    Government entities still have differing expectations regarding how to manage costs and the speed needed to complete work, as compared to well-run companies in the private sector.

    Having worked in both, I can assure you that there is a difference – even if the government entity is well run.

    They simply are not as nimble or responsive as a successful company that must compete for consumer dollars.

    agenthex: In any case, it still hasn’t quite reached you that the running of this business is not the DMV or whatever you’re thinking of.

    I have no trouble understanding what is going on here. That is why I’m concerned. It helps to have at least a rudimentary knowledge of how the auto industry works.

    agenthex: It’s quite high visibility and likely accountability.

    That’s a prediction on your part, not a statement of fact.

  • avatar
    agenthex

    When developing new vehicles, even a few months are critical.

    This has no basis in reality. D3 have been building poor vehicles for decades, and it took that long for them to finally bit the dust (and they’re still twitching). So you’re only off by orders of magnitude.
    -

    The intervention was led by George W. Bush. What saved us was TARP, which was passed during the final months of his term. I can’t wait until he receives credit for it…

    While TARP and numerous other bank capitalization vehicles did save us, therein lies one of the larger ironies (and by ironies I mean deceptions) of the “conservative” ideology (and by ideology I mean dollar-store ideas meant to make a buck or billion).

    To avoid the impression of “nationalization”, public money was given/loaned/etc to these banks with no ownership or control, and extremely little transparency to the public. While throwing enough $ at it will somewhat solve the problem, it was done in pretty much the worse way possible as far as spending public money is concerned. Remember these are imbeciles who argue over a few mil for a planetarium, and turn around and hand out a great many billions and respond with righteous indignation when questioned where exactly it’s going.

    In this automaker case, we’re actually seeing far more transparency and accountability, and it’s very revealing how that part of the political spectrum is treating it compared to banking.

    -
    And to get to a depression, the unemployment rate would have to skyrocket

    It’s generally measured by gdp (~10% p-p, which we may yet reach), but whatever since you’re just making stuff up.

    Funny too you’re using unemployment since these d3 bailouts are mostly about that, and here you are bitching about it even tho it seems quite a decent deal compared to the TARP et al you enjoy.

    -
    They simply are not as nimble or responsive as a successful company that must compete for consumer dollars.

    It’s a good thing they’re looking for private partners, right?

    Often times, I have no idea what point you’re trying to make. It’s like you’re looking for something to whine about and just throw stuff against the wall to see what sticks.


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