By on June 5, 2013

Now that the GM share finally is trading a wee bit above its IPO price, The Treasury is eager to bail from the bailout. The government’s  fiance department announced “plans to sell 30 million shares of General Motors Co common stock as part of its ongoing effort to wind down the government’s stake in the bailed-out automaker,” Reuters says.

On June 6, the formerly disgrace stock will rejoin the S&P 500, which usually provides a lift, because index funds must buy the stock. That’s when the gov’s shares will sold, along with 20 million shares of GM stock held by the UAW Retiree Medical Benefits Trust.

Nonetheless, the “government looks certain to end up billions of dollars in the hole on the cost of the bailout,” Reuters says.

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41 Comments on “Treasury Unloads GM Stock...”


  • avatar

    the same banks are that stripped GM of cash and rinsed it thru bk are now taking it back. this is a scam of unprecedented proportions and the American Public is too stupid to realize how badly they are being fleeced.

    this bk was intentional. Red Ink Rick and his Board of Bystanders sold off everything possible then funneled the cash to the banks in pieces of hundreds of millions for “advice” on things like not buying Chrysler and Nissan. this crime of the century was lost on many if not most, but not by your friendly Buickman. I witnessed it, followed, predicted it, and now explaining it. too bad they are getting away with it. Wagoner belongs in prison along with Ebbers and Madoff.

    • 0 avatar
      jkross22

      It’s not that the public is only stupid. They simply don’t care. Sure, some people care, but that small percentage of people paying attention don’t have a Superpac.

    • 0 avatar

      Of course the bankruptcy was intentional. Who was claiming to the contrary? There wasn’t any other way of saving GM. BK allowed firing 22,000 part and full time workers without severance, notices and risk of lawsuits. BK allowed with no negative consequences or lengthy/expensive lawsuits/huge payoffs to wipe out $90B in debt, close 1/3rd the dealerships, gain concessions from the remaining UAW workers, force bond holders to accept pennies on the dollar, expand the two tier pay structure to other assembly plants, give away toxic sites to old GM and not worry about billions in cleanup costs. None of this could have been done if GM hadn’t filed for restructuring. GM’s cost structure was not sustainable. They would have run out of cash and liquidated in a few months hadn’t govt intervened. You seem to think that GM didn’t have any problems pre bankruptcy. GM didn’t have a product problem, at least not in the last 8 years. The fact that GM is making $4B a year in North America compared to pre bankruptcy years when they would lose nearly $10B a year selling twice as many cars, should make it clear to anyone that BK was the only way out. It sucks that a lot of workers, bondholders and dealers got shafted. The alternative was for all workers to lose their jobs and all dealerships to close if GM had died.

      The same argument can be made when many claim they will never buy a GM product because of Govt intervention. These few thousand sales a month are a small price to pay considering how GM would be selling zero cars if not for the govt intervention.

      I doubt banks had anything to do with the BK. Chrysler owed JP Morgan Chase about $5B IRC that would have gotten wiped out. Chase was fighting till the end to thwart any attempts for the Obama admin to restructure Chrysler.

      • 0 avatar

        they did. look at the stair step decline in NA share over decades. stupidity is not sequential. it was on purpose from before you know. I know.

        • 0 avatar
          jimbob457

          Been there and done that. You gotta look at it this way: if your boss is a moron, and his boss is a worse moron, and his boss is an even worse moron, and his boss is (God forbid) Roger Smith, then what does that make you?

          BTW, marketing (at least advertising) is probably what GM is best at. It’s all that other stuff they don’t do so well. Gotta go now. Hurrying down to the local dealer to test drive the exciting new Buick Encore.

        • 0 avatar
          ect

          Are you sugesting that the “plot” to bankrupt GM was hatched in the 70′s? Fascinating as such a story might be, it just isn’t possible.

          GM lost its way, to be sure. The steady decline in market share (and resultant loss of revenue), the enormous cost structure that they couldn’t or wouldn’t tackle, misadventures like Saab and Fiat – all of these played a part. But they were the result of bad management decisions made by a failed management culture.

          No conspiracy here, just a sad history.

          • 0 avatar
            jimbob457

            In truth there was a brief moment back in the day when GM had roughly a 50% market share in the USA. The Justice Department was vocally considering anti-trust action against them.

            I recall reading that at the time GM considered deliberately losing a little market share (but not necessarily sacrificing profits) to avoid anti-trust problems. Subsequently, GM did lose a whopping 20 points of market share for entirely different reasons that we know all too well.

            Some morons will always take a kernel of truth and spin it into a cockamamie conspiracy theory. Like a great cornpone comedian once said: “You just can’t fix stupid.”

    • 0 avatar
      doctor olds

      The bankruptcy was forced upon the company the old fashioned way. They ran out of money when the economy collapsed in 2008.

      • 0 avatar

        we made money in the Depression. the difference is management. Sloan vs Wagoner. you do the math.

        • 0 avatar
          jimbob457

          Grow up! It was the functional equivalent of a Chapter 11 reorganization done under pressing and unusual circumstances. Even Ford (which stood to gain from the elimination of some of its competition) supported it because they didn’t want half their parts suppliers to go belly up.

          KMart has been through Chapter 11 so many times a new name Chapter 22, Chapter 33 and Chapter 44 (not sure of this one) had to be coined for it. If you don’t understand how free-market Capitalism works, at least don’t knock it.

        • 0 avatar
          doctor olds

          There was no UAW in the Depression. No doubt it was tough to be an auto worker with regular layoffs for changeover and market slowdowns, but the car makers at least had the ability to reduce labor cost when conditions required it. That changed with the FDR era Wagner act and the UAW monopoly it enabled.

          GM, along with Ford and Chrysler, lost the ability to reduce labor costs in line with business realities under UAW contracts. Even If they could somehow magically have kept 90% of the market, arithmetically impossible with strong new global competitors, the business still evolved to require far fewer employees per vehicle produced anyway.

          The Detroit 3 essentially had to continue paying every UAW member who ever worked for them forever, with lifetime health coverage, to boot. Health Care grew from around $500/year to $20,000/year! That $73/hour labor cost was real, and unsustainable.

          We finally saw some light at the end of a very long tunnel with the new contract in ’07. It created VEBA and eliminated the Jobs Bank, saving GM alone nearly $8B/year with just those two items.

          • 0 avatar

            your points are well made and pertinent. still I blame management for the bk. they continued with the most incompetent marketing imaginable. I know these people, they are good people…just horrible at what they do.

            heading to The Tubes for the Annual Meeting. will you be there?

          • 0 avatar
            doctor olds

            You are certainly right in the sense Dr. Deming would say, “Management is always responsible.” That is a hard fact of business.

            Management also has to play the hand they are dealt. The industry was weak for a number of reasons, many of your and other criticisms, included. It was crashed onto the rocks with the market collapse of ’08 and commercial credit did not exist, particularly in the $billions needed across the industry. Most people don’t know that mighty Toyota lost more money than GM in Q12009, all because of the US market collapse. They had deep pockets. Ford had a credit line. GM and Chrysler had Barack Obama’s team.
            Not forgiving all their sins, but describing the direct cause of the BK.

          • 0 avatar
            sunridge place

            @Doc

            You’re debating someone (Buickman) who also believes that Chem Trails caused the Oklahoma tornados and that 9/11 was an inside job by the US Govt. Ask Buickman if he thinks a plane actually hit the pentagon.

            Take anything he says with that in mind.

          • 0 avatar

            nothing hit bldg 7 and my kids are all sneezing, hacking from geo engineering. when you wake up let me know.

          • 0 avatar
            sunridge place

            Your kids probably have allergies. Or, perhaps they are adults dealing with problems from growing up around second hand smoke.

            You’re on record that 9/11 was an inside job with Bush etc all in on it…that says enough to me.

          • 0 avatar
            28-Cars-Later

            I’m not sure what happened that day but much like the Kennedy assassination, we’re not being given all of the facts. Whether this is a conspiracy or just because gov’t has to look like its in control when its not, I cannot say. Some people draw outlandish conclusions based on the facts they are given, but the intelligent person uses his critical thinking skills and then decides how off base those outlandish conclusions truly happen to be.

          • 0 avatar

            over 2100 architects and engineers have signed on that 7 was imploded. the boogie man is more than on the dance floor.

      • 0 avatar
        jimbob457

        They forgot to buy enough back up credit lines to avoid a liquidity crisis. So did Chrysler. The Ford heir and his able new hire didn’t make that rookie mistake.

      • 0 avatar
        ect

        doctor olds, they were fast running out of money before the economy went into the tank. Alluster is right when he says GM was within months of bankruptcy in mid-2008.

        Having said that, people foreget how close we came to a complete collapse of the financial system when the Bush administration decided to let Lehman Brothers go and introduced real counterparty risk into a complex financial industry structure that couldn’t handle it. The freeze in the credit markets was real, and would have led to the complete collapse of the global economy had governments in the developed world not acted quickly and decisively to stave it off.

        The TARP program, and others like it in other countries, was part of a determined effort to avoid that collapse. The GM and Chrysler restructurings were another part of that effort.

        Government bailouts of failed businesses with taxpayers’ money is quite distasteful in most circumstances. Late 2008-early 2009 was NOT most circumstances, at all. In that extraordinary situation, the US government had no option – reorganizing GM and Chrysler simply had to be done, and it could only be done under government sponsorship.

        What is unfortunate is that government action started and stopped with the financial terms and the “ritual execution” of Rick wagoner. What GM needed was a thorough cleanout of its executive ranks and the introduction of many sets of fresh eyes and minds across the organization.

        That didn’t happen, so the people running GM are still the people brought up under the old, failed culture. The opportunity to make real change was lost, and that may well doom GM to BK2.

        • 0 avatar

          my friend Jerry York predicted they would run out of cash. this was apparent prior to the bubble bursting. it’s convenient for those who don’t understand and those looking to shift the blame, to redirect causality. I laugh at the shenanigans and pity the gullible.

        • 0 avatar
          doctor olds

          @ect- your take on events is not accurate. GM responded to the $4 gas spike and weak market in early ’08 with a plan to add $15B in liquidity. That plan included retirement offers, of which I personally took advantage, but I was well familiar with the quarterly business results at the time and through the end of October. The UAW contract of ’07 truly was a breakthrough, would lift at least $8B/year in cost off from GM’s bottom line, but wouldn’t take effect fully until 2010 due the time necessary to get the VEBA up and running. That plan had a reasonable prospect to keep GM going until then. By mid October, the market virtually came to a standstill. GM burned through the whole $15B in about a month, Toyota was dragged to its first annual loss in history just due to their NA exposure. The lost a lot more than GM in Q1 ’09. The market collapse was caused by the same external financial collapse that made government the only possible financier for GM and Chrysler, be it loans or bankruptcy.
          Government added virtually NO value other than financing, and wrong-headedly insisting that Pontiac be killed.
          Since you don’t understand events, it is not surprising that you make simplistic comments about “failed culture” with virtually no knowledge of reality, personal or organizational changes over time.

          • 0 avatar
            jimbob457

            Sorry, truly sorry, but I have to go along with ect on this one. In a serious financial crisis, even a strong corporation may be unable to roll their commercial paper as it comes due. This is why a product called a ‘back up credit line’ was invented. It costs a little money, but it is insurance against a Chapter 11 bankruptcy (or equivalency) given a worse case economic scenario.

            Ford did the right thing. GM and Chrysler did not. They were the grasshoppers. Ford was the ant. The one difference between them that strikes me is that at Ford, ownership still had some clout. At the other two, the overseers were running the plantation with no effective oversight. Some writers refer to this as ‘the agency problem’, and it is real. I have seen it myself up close and personal.

            As far as the steps GM management took just before and during the early stages of the crisis, I really don’t know enough about the details of your situation to make any truly informed judgment. But, that has never stopped me before, and it won’t stop me now.

            The two numbers you mention $15B and $8B seem too insignificant to matter for a company the size of GM. A liquidity crisis (think Chapter 11) is usually created by an inability to roll short term debt (which tends to be a big number even for smaller companies). It is analogous to having to pay off your entire home mortgage in three months and your only source of money is your paycheck.

            Well anyway, GM and Chrysler survived as operating companies because they were deemed worth more alive than dead. Can they reform their corporate cultures and prosper in the future? Only time will tell.

          • 0 avatar
            ect

            doctor olds, with respect, I am accurate on this.

            GM lost money pretty steadily during the years prior to 2008: $10.4 bn in 2005, $2 bn in 2006, $38.7 bn in 2007. Most of the 2007 loss resulted from income tax bills, but not all. Operating losses in those years were $16 bn, $5.8 bn, and $4.4 bn, respectively.

            At the end of 2007, shareholders’ equity was in deficit, to the tune of $37.1 bn. The company had nothing left to secure additional debt, and needed to start making serious coin to service the massive debt it had in place. That didn’t happen.

            In Q1 of 2008, GM had an operating loss of $589 million, pre-tax loss of $2.657 bn. In Q2, operating loss went to $12.5 bn (sales were down significantly) and EBT was a loss of $15.4 bn. The jig was already up, and GM had no hope of making it to 2010.

            In Q3 of 2008, the Treasury refused to lead an organized windup of Lehman Brothers, that company went down and all hell broke loose.

            GM brass seized on the financial meltdown as an excuse for the company’s failure, but is is very clear from the numbers that the meltdown only accelerated by some months what was already inevetable. By the end of 2007, it was impossible to turn GM into a money-making concern without going through Chapter 11.

            Toyota did lose money in 2009 – about $5 bn. But they started the year with a strong balance sheet and over $100 bn in shareholders’ equity. They could easily sustain that loss, GM had run out of room.

          • 0 avatar
            doctor olds

            @jimbob457- I know you are not knowledgeable about the details, because I am.

            I was there, I had real “skin in the game”.

            Ford was just “lucky” to be in financial trouble that led made them to hock everything including their HQ and the Blue Oval when commercial credit was available.

            All three US makers were in similarly poor financial straits. The financial crisis of ’08 dropped vehicle sales from 17M to 9M, an unprecedented decline.

            I can appreciate that you don’t really understand, because I do.

          • 0 avatar
            ect

            doctor olds, Ford was in much better shape than GM going into 2008. They did lose money in 2006 & 2007 ($12.6 bn & $2.7 bn, respectively), but their losses were much smaller than GM’s and they still had $5.6 bn in shareholders’ equity (compared to GM’s $37 bn deficit), plus a strong new product pipeline.

            Also, it should not be forgotten that the Ford family has multiple-vote shares that allow them to control the Board, despite having only 6% of the total equity. They would lose this in any reorganization, so they have real motivation to avoid it.

            Ford was never going to accept a government-sponsored reorg of the type that GM and Chrysler went through, unless everything was lost. Alone among the D3, they hadn’t lost everything, so they had that choice.

            It must also be noted that Bill Ford had the great good sense to step aside from the CEO role and bring in a true outsider who led a transformation of the company. Similarly, Marchionne and his team were outsiders to Chrysler, and led a transformation of that company.

            You are correct when you say that “Government added virtually NO value other than financing”. Pity. GM’s results from 1976 to 2008 clearly show a company with a failed management culture. Insular, self-absorbed and unable to acknowledge (let alone solve) the basic problems facing the company, and (after a while) its diminished place in the industry.

            GM needed a transfusion of new eyes and minds at the executive level. At different times since 1970, industry leaders like Xerox and IBM whose descent into insularity and complacency brought them to the brink of failure were able to transform themselves through new leadership and major cultural change. Companies like Kodak, Polaroid and GM developed the same syndrome, but didn’t find the cure.

            The fact that Ford survived the crisis without a government bailout proves that GM’s failure was self-inflicted.

            In 2012, Ford and Chrysler were profitable, while GM was not. GM’s Q1 2013 results are also worrying, compared to Q1 2012 (sales down, gross margins down, income down). Government should have, as a condition of the bailout, insisted on a thorough housecleaning of GM’s executive suite. They didn’t, and GM is now heading towards BK2.

            As Peter Trueman used to say, “That is not news. But that, too, is reality.” I have no emotional or financial investment in any of the D3, but I am very data-driven. And I know people (including relatives of my wife) who depend or have depended on GM for their livelihood. Sadly for all who are part of the GM ecosystem, the company’s results speak volumes.

          • 0 avatar
            doctor olds

            @ect- I know better than to challenge your data! I am certainly correct to say that GM’s business plan foresaw a need for an additional $15B as requisite to last in the already down market caused by the early ’08 weakness due to the gas shock. I also know that Ford could not possibly have lasted through the collapse of the market if they had not procured the credit line when credit was still commercially available and that when the true depth of the collapse became apparent there was no commercial credit available to anyone, which itself caused the extreme drop off in vehicle sales in the last few months of the year. Your assumption as to whether or not GM’s moves to slash structural costs, an integral part of the plan to increase liquidity, and just some availability of commercial credit would have allowed the company to avoid going to the only source possible is unknown and unknowable.
            It is a matter of fact that the current GM products have generated reasonable profit, quality awards and are generally well received and that all of them were created pre-bankruptcy, as was the technology they are rolling out now. The lead times in the business are great.
            With all due respect, I reject your claims about the leadership, Not because I was among them and am being self defensive, but because I know what was going on, the changes from the slice and dice organizational dysfunction of 1984 through the structure that created more JD power awards than anyone but Toyota in the most recent study. The company has been changing for much of the last three decades. The success of today was created by Wagoner and the leadership of 2007-8, which allowed the bankruptcy to succeed on the shoulders of the breakthrough UAW contract. It also is the enabler of Ford’s and Chrysler’s return to profitability. It actually allows GM to make money on cars the law makes them build here and lifts an $8B, zero value added burden from GM and smaller, but still significant amounts from the others.

            GM appears increasingly likely to continue to thrive in the US as the premium brands are booming and Chevrolet is poised to release a very appealing pickup. These are not overnight changes and anyone who imagines a CEO changes a corporate culture is dreaming, especially of a company the size and scope of GM. I worked in the “bowels of industry” and can assure you it takes a very long time to change attitudes and I am proud to say the UAW folks, along with most others in GM are hard working capable folks who are producing great cars and trucks today. Not because of anything a Whitacre, Akerson, Auto Task Force, etc. could do, but because Rick Wagoner understood that product excellence was the key to everything, and assembled a team that is achieving that goal. This is the way I see it, and I lived through every bit of it.

            I agree with your statements that GM needed to change in a lot of ways. I just understand the business very well, know the profound changes that have been made, and was closely in touch with how they created the Product Development System running today. Being in the quality business, I also know the great results that the changes produced. ATS and Corvette are just the first products from the current structure that Wagoner, through Lutz, put in place.
            I am curious how you can say the company was not profitable in 2012? They reported a significant profit. How could they do so without being challenged. I understand the analysis that uses “cost of sales” to prove your claim. If You are right, they should lose big time in 2013. If Warren Buffett is right, the stock is just starting to rise. I am sticking with Buffett.

          • 0 avatar
            jimbob457

            One more time I gotta go with ect. I think you are just making excuses. This is a very useful skill, I know, when you are part of a failing enterprise. Not so much good later on.

            In 2007, Ford’s balance sheet may have looked better than GM or Chrysler, but in any nearly 100 year old very famous company, nowhere near all the actual long term assets are visible on the balance sheet. The proof of this is that the new GM survived the functional equivalent of Chapter 11, and its stock is now worth about what was expected by those who took their chances in December 2008. (NB: trading shares in bankrupt companies is a world unto itself. A world few outsiders know anything about.)

            Much as I hate to admit it, I am beginning to think that some of them pointy-headed intellectuals is right. Corporate culture trumps everything.

            Sure, SOME of the Detroit business model from the ancien regime has changed, but as far as the people who work there, ya train ‘um, and it’s just damn hard to untrain ‘em.

            For example, in other car threads, I keep seeing comments that imply that the annual model year change is essentially sacred, and changes must at all costs be made in its honor. Why?

            By comparison, if you look at the main German used car website, they sort used cars primarily by model designation. Secondarily, you can figure out how old a used car is by sorting on ‘year of first registration’. Big difference in mindset.

            I’ll stick with this conclusion. If the Vietnam era military I knew can reform itself, anything is possible.

            P.S. A fantasy. Imagine, if you will, an alternative universe where in 1965 the Jaguar Motorcar Company eschewed major annual changes in the appearance of its E-Type roadster and coupe – mechanical and electrical improvements, of course, but few other major styling changes. What a wonderful world it would be now.

            Driving today’s Jag two-seater (currently owned by an Indian company & imo. that’s a good thing under the circumstances) would be as good or better than driving a Porsche 997 or a C7 Corvette, and we would have one more beautiful car to choose from.

          • 0 avatar
            doctor olds

            I am not making any excuses. Just describing what is real, and what really happened when. As ect wrote, Toyota lost $5B in 2009. The also had their first global loss in 2008, just because of the US market. They had deep pockets, and the also received government assistance at home, but they couldn’t stop the losses.
            The world is not a simple story, with villains (GM management, or an imagined GM culture, for example) it is a complex set interactions and the crash of 2008 was absolutely out of the control of any auto executive. The US auto sector’s problems were systemic and shared by all three makers.

            My experience and understanding is deep and broad. If I am wrong, GM may go down hill, as ect prognoticates. The business community is more and more positive on the long term outlook for the company. The people with money on the line see it a lot more like I present, than the idea that BK2 is just around the corner. New GM is competing very well around the world, and they are just getting back on their feet here with the first all new products since BK. They still sell more vehicles than Ford, far more globally, and more cars everywhere in the world outside of Japan than any other maker in the world, well over a million more than Toyota, who enjoy approximately 2,000,000 to zero advantage over every non-Japanese make in their home market, that even Herr Schmitt admits is closed.
            This is the real world.

            I know the refrain, they had huge volume and went bankrupt anyway. That is true, but their cost structure is completely different, partially due to BK, IK claim more due to the UAW contract, particularly EBIT, where they have a $1,000/vehicle advantage in interest costs over Ford. They have reported profit every quarter since BK in a market that remains depressed, and despite Euro losses. I expect to be unable to change your mind, but gotta try anyway!

          • 0 avatar
            ect

            doctor olds, I respect both your experience and your passion. You’ve obviously had a view inside GM that few people have.

            I look at any company through data. I am not predicting that GM will go into BK2 – I don’t have a crystal ball, and haven’t met anyone who does. I am simply observing that “New GM” is experiencing the same steady slide in market share and deteriorating financials that led “Old GM” into BK1, and that this will produce the same result if it is not turned around. I would like to think that New GM can reverse this trend, but I have no idea if they will.

            According to Wards, Ford’s US market share results in the period 2001-2008 were worse than GM’s – a decline of around 7% of share vs. GM’s 6%,and GM started from a higher base.

            The financials I’ve seen on EDGAR show that Ford’s financial performance was substantially better than GM’s, though. When Ford amassed its cash hoard, it was because they could. GM had already borrowed heavily in the 2004-2007 period to fund its operating losses, and had no unused debt capacity left by the end of 2007. With or without the financial crisis of late 2008, the numbers tell me that GM was then past the point where it could be turned around outside a structured process. The hole was simply too deep.

            Ford survived the financial crisis without going to the government for a bailout. GM could not. During the period 2009-2010, Ford won back 2.5% of the market. GM’s share declined by 3%. Kudos to Ford for turning around both market share and financial results(they returned to profitability in Q2-2009) without Chapter 11 or government money.

            The fact is that Ford made it through on its own, while GM fell straight into bankruptcy almost as soon as the financial crisis hit. GM was already mortally wounded, the reult of over 30 years of steady decline.

            I will also observe that great turnarounds are usually led by new management. Iacocca and Marchionne at Chrysler, Mullally at Ford, Gerstner at IBM, Eisner at Disney are examples that come quickly to mind. These leaders did change the culture of the companies involved, as part of that.

            I have spent a lot of my career leading M&A projects, and I can tell you that the single most important success factor in acquisition planning and (especially)integration is (i) undertanding the culture of the target, and how that fits with your own company’s, and (ii) managing the integration to ensure that the combined organization has one prevailing and successful culture, not two warring ones (e.g., HP-Compaq).

          • 0 avatar
            jimbob457

            doctor olds,

            I know in my gut how you must feel. My own emotional loss in a similar situation was bad enough, but nothing compared to yours. I was a relatively young Chief Economist of a Fortune 500 company when it went off the rails and soon disappeared. As a senior staff guy, it was my f**king job to bring top management the (from my perspective) rather obvious bad news along with some ideas about what might be done. Everyone heard me out, and then just ignored me. Fortunately, I was young enough to survive and move on elsewhere.

            Imo. you and others like you would serve GM well by performing an intelligent post-mortem on the BK. Sounds to me like a Wall Street guy like ect might make a good advisor, if willing.

            No doubt others have done post mortems, but knowing what to do, and convincing the current management to do it are two different things. Your voice and those of others like you just might carry some weight.

  • avatar
    gslippy

    No matter how high the losses to the taxpayer, there will always be some who say it was worth it.

    • 0 avatar
      Lorenzo

      But of course. There are always people who take the larger view and look at the impact of a major corporation going belly up and taking its employees, dealers and suppliers with them, the last taking out both other domestic automakers and foreign assembly plants, all as the economy is plunging into the worst financial meltdown since the great depression. Just because some people view the bailout as a simple money-in, money-out deal that has no other effects doesn’t mean the others looking at the bigger picture are wrong.

  • avatar
    BeyondBelief

    I don’t agree with the actions of the “fiance” department. Who is the government to say that dowries shouldn’t contain large amounts of GM stock?

  • avatar
    doctor olds

    @ECT- I want to express my appreciation for your respectful approach and thoughtful, data driven points. Thank you! It sure beats reading that my head is up my @ss just because I worked for GM.

    Your points are well made, though the idea that GM does not have new leadership is not quite accurate. Whitacre and Akerson both came from outside the industry as well as some new board members. The leaders of Finance and Sales similarly came from outside GM. A third of all GM executives were purged in the bankruptcy reorg and the remaining others were shuffled. A good friend decided to retire from a very high level job rather than move from the city he wants to stay in. Some of these are things my connections let me know through social relationships, though the movement of the top leaders is public.

    You make excellent points about corporate cultures. Roger Smith acquired EDS, in large part, to inspire change in GM’s culture decades ago. Just magnify the challenges of an enterprise as immense and far flung as GM compared to most companies by several orders of magnitude.

    @jimbob457- Thanks for the empathy. It is an on-going frustration to see “the word on the street”, I should say “in the blogosphere” being disconnected from reality, sometimes flat contradicted by data. Thank you also for the respectful interchange. I love to debate, and strive to remain respectful. You and ect set examples to follow in this context!
    As for expert assistance in figuring out GM’s problems, that has been going on for a long time! I once had a daunting assignment to understand why GM had recalls and help formulate action plans to change the way we did business. By that point, around the middle of the last decade, we had established a good set of systems to ensure product quality, and my main conclusion was that we had to intensely focus on the product performance in the field to identify and resolve all product problems quickly, and of course, institutionalize the learning. My exec director (I am not proud to have felt some schadenfreude when she was moved to a lower level with the BK shakeup!) did not receive it very well. We hired a former top Toyota executive for $1,000,000 a year who concluded exactly the same! As an aside, he said GM had brilliant people in a mediocre system, whereas Toyota has a brilliant system that can be effective with mediocre people. I mean no disrespect to anyone at Toyota by this, just repeating his words. In the months before I left, a single product failure would drive intensive work from wherever in the world the components or assemblies came. The intensity and urgency was amazing. I was glad to be in the role of driving the work rather than being the guy or gal who had to work all night to get the answers, usually at a supplier.

    Gotta stop, I could go on forever! Thanks for the discussion.

    • 0 avatar
      jimbob457

      When a failing enterprise offers early retirement, you can bet the farm that exactly the wrong people (for the sake of enterprise itself) will take you up on it. I have never seen an exception to this in God knows how many situations.

      • 0 avatar
        doctor olds

        @jimbob457- I agree with you. GM, through the years, offered a number of early retirement windows which gave incentive to retire or separate. It seems the more competent and prepared individuals leave while the less productive stay on.

        More recently, and unprecedented at GM, management had to select those who would be forced to retire or separate, though they would also accept volunteers. I agree that is a more functional way to do it, imho.

    • 0 avatar
      ect

      doctor olds, than you for your kind words, which I certainly reciprocate.

      Your comments about the product recall study bring to mind that the classic definition of an expert is “someone from out of town”. It has always intrigued me that so many companies devalue their own employees, but will treat the words of an outside consultant as heaven-sent wisdom.

      • 0 avatar
        28-Cars-Later

        I have seen this sort of behavior as well. My first thought it why do you even have have internal experts if you won’t listen to them and then go pay outsiders for the same advice.

        • 0 avatar
          jimbob457

          To paraphrase the former Vice President of the United States of America: “Consultants are not worth a bucket of warm spit.” Knowing that the author was from Uvalde, Texas, I don’t think he actually meant ‘spit’. Perhaps another word that rhymes with spit.


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