I can’t decide whether GM’s “reinvention” will fail through government action or inaction. On one hand, I share the commonly held belief that GM’s product portfolio will be skewed towards small cars, to satisfy the Obama administration’s love of all things green and beautiful. Even without express orders to do so, GM’s craven executives will seek to please their elected overlords’ politically-driven desires. On the other hand, paralysis. The last thing GM’s cumbersome, dysfunctional management needs is another layer of command and control—especially one where accountability is measured in votes and patronage, rather than dollars and cents. The tendency to do nothing slowly, as is the way of all government, is great. If I had to guess which way this is going to go, I’d say both.

There’s a superabundance of evidence that the Obama administration will actively intervene in GM’s affairs. First and most incontrovertibly, the feds are on the brink of nationalizing the company, assuming a sixty percent share of “New GM.” In fact, the administration’s promises to be a “hands-off” owner reminds me nothing so much as Rasputin’s philosophy: sin is the key to redemption. We have to be hands-on to be hands-off. You have to wallow in sin to know the value of repentance. We had to fire the CEO to find a CEO who could operate effectively without government influence. Same deal.

More metaphorically, the feds have broken their interventionist cherry. Why not continue to fuck with GM? The government’s already bobsledding down that slippery slope; from appointing the entire GM Board of Directors to killing brands to killing dealers. The Presidential Task Force on Automobiles (PTFOA) says the changes are necessary, but that it will back off when post C-11 GM finds it sea legs. In this case, momentum speaks louder than words. Once a pattern of behavior is established, continuing it is easier than changing it.

Ah, yes, change. In announcing its one trillion dollar health care reform package, the Obama administration is once again showing us its willingness to enter a realm formerly reserved for free enterprise. Just as Obama wants a federal health care program to go toe-to-toe with private insurers, a federally owned GM will be soon be competing with privately held automakers.

The rationale underlying Obama’s intermingling of private and public organizations: Something must be done! As Obama said today, “the status quo is untenable.” GM can’t fail. Health care can’t fail. Same deal. Here’s another quote:

The German and American New Deal may have been merely whatever Hitler and FDR felt they could get away with. But therein lies a common principle: the state should be allowed to get away with anything, so long as it is for “good reasons” . . . It represents the triumph of Pragmatism in politics in that it recognizes no dogmatic boundaries to the scope of government power.

Author Jonah Goldberg is dismissed as a right wing crank by his many detractors, but there’s no getting around the fact that president Obama is shunning free market principles to boldly go where Chrysler’s previous elected saviors didn’t dare go before (federal loan guarantees are a far cry from public ownership). The conflict of interest in is inherent. The same government that regulates the entire automobile industry will now have an enormous stake in one of its biggest players.

This will undoubtedly lead to unwelcome distortions, and, ultimately, disaster. Because even as the feds attempt to literally reform GM, they will be unable to institute the dramatic changes GM needs to survive. It’s not just a matter of political meddling, of which there will be plenty. It’s also a question of corruption.

If you think GM’s previous Board of Bystanders was incapable of policing GM’s arrogance, stupidity and sloth, wait to you see what won’t happen when Uncle Sam is paying the bills. Actually, there’s no need to wait. In today’s New York Times, we learn that the United States trustee overseeing GM’s bankruptcy case (another layer of management) called the fees collected by GM’s bankruptcy consultants “staggering” and “excessive.”

In one year, Alix Partners and Evercore soaked the taxpayer to the tune of $130 million, including a $17.9 million “success fee.” Oh and an as-yet-unknown “discretionary fee” with “no boundaries in amount and scope . . . calculated in an unknown manner.”

As anyone familiar with government procurement knows, that’s small beer. Suffice it to say, in this regard, New GM will not be a microbrewery. Anyone who thinks that the feds will cancel these fees—or institute the kind of product planning, brand building and financial controls that New GM needs to earn a profit—is as delusional as a government that thinks there will be a graceful exit strategy for this unbridled adventurism. There’s but one way out of this mess, and the Obama administration isn’t even looking for the door.

That’s not exactly what GM CEO Fritz Henderson said to BusinessWeek, as part of the bankrupt automaker’s charm offensive. The exact quote was ”I know I have to re-prove myself.” So, just as there’s a “bad” GM (the one that latched onto the federal teat) and a “good” GM (the other one that latched onto the federal teat), there’s now a “bad” Fritz Henderson (the one who weaseled his way to the top of GM’s dysfunctional corporate culture) and a “good” Fritz Henderson (the one who wants to reform the stultified system that spawned him). As we say in these parts, good luck with that. Those of our Best and Brightest who’ve seen large companies try to reform their not-so-wikkid ways will recognize the resulting lip service . . .

In the meantime, Henderson is tackling GM’s glacial decision-making process. A couple of four-hour meetings have been cut in half. Gone are the “premeetings,” when the agenda for the real meeting was set. “I don’t have time for that,” Henderson says. Delegation, never GM’s strong suit, is now an imperative. In early April, just after Treasury made him CEO, Henderson and several executives were discussing whether to add some pricey features to a future Buick model. Some wanted to save a few bucks while others figured they needed to step out and show consumers that the brand is truly upscale. After some debate, Henderson turned to Buick-GMC boss Susan Docherty. “You’re the vice-president of Buick,” Docherty recalls him saying. “Make the call.” She opted to spend the money, and that was fine with the CEO. “Fritz is creating a culture where we don’t need 17 meetings,” Docherty says. “In the old GM, we would have to hear from everybody.”

A couple of points . . .

1. Did Fritz have a pre-meeting before the meeting to decide whether or not to lose the pre-meeting before the meeting that eliminated the pre-meeting? What’s that about SEVENTEEN meetings? Is that hyperbole or “out of the mouth of bankruptcy babes”?

2. Where are the consultants? Promoting this kind of stuff—both internally and externally– is what helps America’s consultants afford/drive BMWs. Oh here they are!

Last month, Henderson hired Booz & Co. consultant Jon R. Katzenbach to help make GM’s middle managers less risk-averse and more willing to make decisions. Katzenbach and his team have begun scouring the company for mavericks adept at getting their ideas past a recalcitrant bureaucracy. Katzenbach asked each department chief to name five candidates. In most cases, he says, they aren’t top managers or people on the fast track. Typically they have toiled at GM for a long time and know how to game the system. The plan is to make their attitudes and work habits the norm, not just a rarity among the few who will buck the system.

Did I say “good luck with that” already? But rest assured that Booz & Co. understand automobiles. Well, engines. OK, “empathy engines.” Katzenberg’s paper is full of piercing glimpses into the obvious, but one of his bullet points is worth repeating vis à vis GM. “A fundamental misunderstanding, by a company’s executives, of the real nature of the customer experience their company provides.” How does Mandark laugh again? Haa ha haa, haa ha ha ha ha!!!

You want to talk about self-delusion?

In a June 1 blog post to employees, Henderson asked for suggestions and criticism. Several workers said people are afraid of challenging the status quo. When pressed in an interview on the culture of fear, Henderson said he gets criticism all the time, and then added: “I’ve never had a situation where people were afraid to speak up.” Maybe so, but that doesn’t mean managers further down won’t discourage new ideas from their underlings.

A perfect example of using “maybe so” to mean “you’ve got to be fucking kidding me.” Translation: Henderson is so insulated from genuine criticism, so drunk on GM Kool-Aid, he thinks he’s drinking coffee. A point which BW can’t resist making. Ish.

Henderson also says GM’s product planning group is just fine. Yet it has routinely missed major trends and rarely sets them. GM’s top-selling Chevrolet division, for example, is just this year launching decent crossover SUVs; rivals have been selling them for years. Plus, the product planners’ indecisiveness has led to many delays on new programs. It’s not that GM’s designers and engineers can’t work fast. They often wait for the “numbers dummies,” as GM product adviser Robert A. Lutz calls them, to hash over the research. By the time the green light comes on, GM has missed the moment.

So Lutz blames GM’s culture for his own failure. No wonder they’re keeping him on; he’s just stupid enough to blow the lid off of GM’s global incompetence. Of course, by thy bankruptcy thy shall be known, guys.

I had an interesting conversation with PCH101 about New GM’s governance. Like many observers, the TTAC commentator is not ready to dismiss The Presidential Task Force on Automobiles (PTFOA) out of hand. I, of course, am. Have done. Will do. But before I do (again), consider PCH101‘s logic. He credits the PTFOA for clearing out the deadwood: finally ridding the failed automaker of the troublesome man who guided the company on its final descent into bankruptcy. He also believes that the 25-member PTFOA is a better bet for GM than the original plan for federal oversight: a car czar. “I remember a study in B-School that concluded a committee of managers without any direct experience in an industry made more effective decisions than a single autocratic insider.” With all due respect, crap. And completely irrelevant.

What’s GM’s single largest problem? Uncompetitive vehicles? Yes, well, there is that. Dead brands? Sure. Too many dealers? Doesn’t help. But it’s executive torpor that’s the root cause of the automaker’s longstanding inability to take in more money than it spends. The automaker has far too much bureaucracy, and all of it’s deeply dysfunctional. Ipso facto.

In fact, GM’s management ethos is so obviously broken it’s become a PTFOA talking point. Despite President Obama’s semi-pledge to kinda keep his distance from GM’s [hand-picked] executive team, PTFOA jeffe Ron Bloom recently promised to tackle GM’s moribund culture in a non-interventionist way (presumably).

Good luck with that. Before we calculate the odds, let’s be clear about the problem.

The majority of GM’s executives don’t care about the customer. They may pay lip service to the people paying the bills (before the U.S. taxpayer stepped in). But their day-to-day decisions are not motivated by a desire to provide GM customers with the best possible products and services.

Their single, over-riding concern is . . . themselves. Their career. Every decision that GM’s suits make is made with an eye to protecting and (perhaps) extending their territory within the automaker’s byzantine structure. CYA is their modus operandi. “Yes” is the operative word.

No surprise there. That’s how they got where they are in the first place. Case in point: VP of sales and marketing for GM North America Mark LaNeve.

From 1981 to 1995, LaNeve worked his way up Cadillac’s executive ladder. When he assumed the General Manager’s job, LaNeve knew Caddy’s survival depended on remaining resolutely upmarket. “Young people should aspire to owning a Cadillac,” LaNeve said back in the day. “They shouldn’t be able to afford one.” And then LaNeve joined the corporate mothership. He did what had to do: “modify” his beliefs. Go along to get along. STFU. Entry-level Caddies arrived without debate or delay.

Actually, it’s worse than that. GM’s suits don’t even care about the company. Yes, even now. Especially now. If anything, Chapter 11 means they’re even LESS motivated than before. Think of it this way: if GM’s overlords screw the pooch (again), what are the feds going to do? Declare bankruptcy?

PCH101 believes the PTFOA will, eventually, clean house. Even if we accept the idea that all the president’s men kept a GM insider at the helm in order to fire him in favor of a genuine reformer who will eliminate and/or replace, say, 25 percent of GM’s upper management, the bigger picture still sucks.

“Hands-off” or not, the 25-member PTFOA adds another level of bureaucracy above the existing GM bureaucracy. If each PTFOA member fires off fifty emails a day, that’s 1,250 more internal comms per day. The PTFOA also has a staff. Meetings. Agendas. Targets. Reports. Memos. The federal quango is a shadow governing body for a company that needs less management, not more.

True story: New GM is inherently worse than old GM. And it’s going to get worse from here.

At the moment, Ron Bloom and Steve Ratter are running GM well. I freely admit that President Obama’s minions are outperforming GM’s previous administration. (Of course, Captain Kangaroo could do a better job than the last mob, and he’s dead.) If the PTFOA orders the night of the long knives at RenCen, if they clear the forest of deadwood, I’ll publicly acknowledge the appointees’ collective wisdom.

And then what? By the time the PTFOA’s new brooms fail to sweep GM to a rapid turnaround—a virtual impossibility given the depth of GM’s decay and the car biz’s timelines—Bloom and Rattner will be long gone. Leaving . . . what? Administrative kudzu.

If President Obama wanted to save GM, he should have let it fail. There’s only one way to change deeply-ingrained habits: pain. GM’s management will not change its slavish devotion to its fundamentally inefficient way of doing business until and unless it’s more painful for them to keep doing what they’re doing than to do something else.

By making bankruptcy painless for GM’s upper echelons, by adding complexity rather than removing it, the President has effectively sealed GM’s fate.

Matthew 6:24: “No man can serve two masters; for either he will hate the one and love the other, or he will be devoted to one and despise the other.” Applying this biblical admonition to General Motors, it’s clear that the federal bailout will accelerate rather than retard its ultimate demise. The automaker’s corporate culture was dysfunctional before the feds took the reigns back when its over-compensated suits made sure that failure was impossible (and not in a good way). Now that GM employees must answer (at least in the theoretical sense) to both management and politicians, it’s twice as screwed-up. As I indicated in this morning’s Wall Street Journal Op-Ed, the political interference with the company’s operations is already underway. Well of course it is. And it will continue. As will GM’s descent into oblivion. Simply put, there’s no way GM can get its house in order when Uncle Sam is the landlord. SNAFU × 2.

Today, GM CEO Fritz Henderson reported for work. In and of itself, that’s about as bad a sign of GM’s ongoing failure as you could get. Lest we forget, Henderson is old-school GM: the former CFO who watched the company’s balance sheet go tits up. Henderson is also guilty by association: the hand-picked successor to GM’s phenomenally failed CEO (also former CFO) Rick Wagoner.

The fact that Henderson made it to the top of GM diseased corporate caste system is all you need to know about his suitability as a turnaround artist. Inmates. Asylum. Administration. That sort of thing.

This stout defender of GM’s status quo emerged from yesterday’s meeting with The Presidential Task Force on Automobiles (PTFOA) proclaiming that his job was safe. Ish. While Fritz expects to remain large and in charge of the small and getting smaller automaker as it exits bankruptcy, “nothing’s guaranteed.” How . . . reassuring.

In a familiar sort of way, it’s the same set of weasel words PTFOA jefe Ron Bloom used to hedge his promise not to keep plowing taxpayer money into the quagmire increasingly (and accurately) known as Government Motors. Am I the only one bothered by the fact that, despite having not one but two masters, GM’s strategy is still in flux?

I reckon two things are certain: GM’s death and your taxes. GM and its new presidential overlord are doing all they can to counteract that politically unpalatable reality, trying to make it seem as if there’s hope for change. Their latest attempt to give wing to these (recurring) delusional flights of fancy: the new Chairman of GM’s Board. GM supporters seized on former telecoms magnate Edward Whitacre’s appointment as a sign of “fresh” thinking.

Back on planet Earth, why the Hell interim BOD director and PTFOA lackey Kent Kresa picked a man without any automotive or manufacturing background is an interesting question. As in “clueless old white guys that not-so-interim GM CEO Fritz Henderson can con with a spreadsheet for $50,000, Alex.”

“He was someone who [PTOFA chief] Steve Rattner knew, or knew of,” Mr. Kresa told the New York Times, by way of explanation. And now Kresa says he’s searching for other board candidates “who have been involved in companies where there has been a dramatic change in the marketplace.” Oh, I know! What about the guy who put Kodak in the shitter?

No, wait; he was on the last GM BOD. And I guess Kresa’s looking for candidates who saw a dramatic change in the marketplace and reinvented a chronically unsuccessful company with a huge, bumbling bureaucracy into a leaner, greener, faster, smarter and enormously profitable participant in same. (Experience working for politicians a plus.) He just forgot that last bit.

Not that it really matters. A board chairman is, at best, a watchdog. (You might say Whitacre is a lapdog, but I couldn’t possibly comment.) Even if Eddy W. understands that culture eats strategy for lunch and caps Fritz’ ass, it must be remembered that GM’s Board of Directors is merely a front for the Powers That Be.

The PTFOA is the real BOD. They are the masters to whom the bankrupt automaker’s employees—which includes Whitacre—must answer.

So, ultimately, it must be asked: what the fuck do THEY know about the car business? I know: it’s not a new query. But it’s one that remains unanswered, even as GM continues to suck-up taxpayer billions and realign itself for the future.

By thy deeds thy shall be known. Only one problem: the deed required is a complete rehabilitation of a car company that’s screwed its customers for decades. Even if GM built a Camry and Lexus-killer, it would take them another decade and at least another $100 billion to recover their missing marketplace mojo.

Given the “dramatically changed” US auto scene, no one but the feds would sink that kind of cash into a GM-shaped money pit. And neither should we. That’s not a politically palatable conclusion, but it’s the God’s honest truth.

General Motors is at war with itself. Thanks to a staggering, though not unexpected, lack of decisiveness, GM’s management has managed to completely alienate its major, public-facing “stakeholder”: GM dealers. Without the guys on the sharp end moving the metal, General Motors might as well declare bankruptcy and surrender the keys to the executive washroom to a 25-member federal quango led by Washington insiders with no manufacturing experience whatsoever. Oh, wait. In fact, GM needs its dealers even more now that it’s a zombie than before, when it was also a zombie (but didn’t know it). And of all the items of GM CEO Fritz Henderson “to do” list, not throwing GM’s entire US dealer network into chaos should have been somewhere near the top. I want to say something about a “race to the bottom,” but I’ll let you connect those dots.

Last week, GM CEO Fritz Henderson faced a Spanish Inquisition from the company’s paymasters. Senator Rockefeller wanted GM’s former CFO to explain his rationale for cutting over 2000 dealers from the roster. Fair enough, right? If you’re going to unleash a political shitstorm by shit-canning a large, politically-connected, highly litigious, battle-tested, lyin’, cheatin’, boozing, whoring, testosterone-fueled group of GM “customers” (the dealers are the ones who actually buy the cars from GM), then you want to make sure you have your proverbial ducks in a row.

Oops! Fritz forgot his Ross Perot-ian “We’re In Deep Shit for Dummies” charts back at Days Inn. Or did he leave them on the plane? Rick friggin’ Wagoner just HAD to fly to D.C. in the Gulfstream to beg for bailout bucks, the bastard. Senator Rockefeller also wanted an actual list of dealers culled. Damn! I must be wearing a different jacket! Anyone remember the scene in Raiders of the Lost Ark, where Indy casually shoots the scimitar flailing baddie? GM’s the dope with the flashing steel.

THIS is how the new, “smarter” GM rolls? It gets worse. On the same day that Henderson failed to defend the company’s decision to downsize its dealer network, Fritz granted eleven axed dealers a reprieve—without revealing the exact methodology used to separate the wheat from the chaff. Yeah, that’s a good idea: play favorites. That’ll REALLY piss off the disappeared. And if that didn’t do it–which it did—GM’s crafted a new state-trumping franchise agreement for their remaining dealers that makes slavery seem like an oral contract.

According to Automotive News, New GM’s New Deal with its new dealers puts the “con” into “draconian.” To remain a part of “the family,” all GM stores must agree—in writing—to increase sales by 10 percent (maybe twenty), carry larger inventories, eliminate non-GM brands from their showrooms, upgrade dealerships, maintain high customer satisfaction scores and STFU if a new GM store locates more than six miles away from their dealership.

In other words, GM’s new contract includes a “just shoot me now” tick box at the bottom.

Sell more vehicles? The fact that GM’s market share has been on a downwards trajectory since the last century (news flash: the company is now bankrupt) should tell the corporate mothership a little something about how easy it is to sell GM vehicles these days. Hang on; shouldn’t GM make better products before they “force” dealers to sell more cars?

By the same token, what’s with the dealership upgrades? GM stores are hurting for cash. Wait, let me guess. The feds are going to provide loans (or loan guarantees) so that GM dealers can put Ford, Toyota, Honda, Hyundai, etc. dealerships to shame. Because Uncle Sam believes that rewarding losers is really just “leveling the playing field,” and when it comes to debt, more is always better. Meanwhile, pay no attention to that $1 million per dealer HUMMER upgrade fiasco. That was then. This is crazy.

As for the mandate to “maintain” consumer satisfaction scores (a.k.a. CSI), it’s Big Mac time. They CANNOT be serious. GM’s CSI scores have been a complete sham since they were first foisted upon their retail operations. I’ve got two words for anyone who thinks otherwise: Bill Heard. And another two: blind eye.

If GM was actively trying to screw-up its future, they couldn’t do it more effectively than they are right now. Saying that, I have every confidence that GM will somehow find a way. Let Barney Frank fuck with your plant closing plans? Sure! Piss away resources on a new green car that can’t compete with Toyota’s last generation hybrid? To paraphrase Albert Einstein, “employing the same people to do different things is the definition of eternal insolvency.”

Meanwhile, remember Fritz Henderson’s pledge to We The People promising transparency as it “reinvents” itself to repay our hard-earned tax money? How’s this for opaque: dealers are prohibited from discussing the agreement with anyone other than employees or business partners without GM’s expressed written consent.

Dead automaker walking.

Sorry to bang on about Fritz Henderson. But, well, there he is. Again. Still. With every passing post-C11 day, the GM CEO is sealing his position as the “Uncle Walt” of the federal automotive bailout. With every news conference, media suck-up and, now, congressional inquiry, it’s increasingly clear that Government Motors’ masters aren’t going to give GM’s mustachioed public face the old heave-ho anytime soon. Or, more accurately, soon enough. Let’s face it: the Presidential Task Force on Autos should have sent Fritz his walking papers on the same day they defenestrated his mentor: GM’s last CEO. In and of itself, this failure to excommunicate is enough to abandon all hope of the zombie carmaker’s resurrection (which is an inherently ridiculous idea anyway). Drilling down deeper, we hit nothing but sewage.

Since assuming the position (so to speak), Fritz has abandoned his faster, deeper, oh baby! mantra. He now has one message about “new” GM for its new owners (that’s you!): leaner, greener, stronger, smarter. Astute readers will notice that this is actually four messages, only the first of which makes any sense.

Leaner? That’s what happens when your market share collapses like a dwarf star. Spinning GM’s formerly bloated now emaciated soon to be lifeless corpse as some kind of egg-white eating athlete fools no one save GM’s own corporate flunkies (nothing new there). Americans equate large with successful. Why shouldn’t they?

Greener? Who gives a shit? I know that American industry, the MSM and public school teachers have been selling “green” this, that and the other thing for nearly a decade. But I reckon anyone who wants a “green” automobile is driving a Prius. And that’s pretty much that. Placing “greener” as new GM’s number two priority smacks of financially fatal, congress-pleasing political correctness.

Stronger? Does Fritz seriously expect US consumers to consider buying one of its products—or, more to the point, not not consider buying one its products—because $50 billion worth of taxpayer subsidies has bolstered Government Motors’ bottom line? As a homeowner with a big ass mortgage, I’m here to say that The Mother of All Re-fis is not an indication of Government Motors’ financial strength. Deficit financing, indeed.

Smarter? Anyone with a horse in this race (that’s you!) wants to know if GM’s “new” management (i.e., the old management) is going to make the same dumb-ass decisions that led it to complete collapse. Parsing the propaganda, do GM’s federally-funded spinmeisters mean smarter as in “intellectually superior” or “politically astute”? Either way, no.

The Henderson administration’s breathtaking lack of intellectual firepower was on display at yesterday’s Senate hearing re: GM dealer closures. The CEO singularly, spectacularly failed to make his case.

A smaller, more healthy dealer network reduces GM’s costs, primarily related to support we provide for information technology systems, dealer and sales person incentives, field sales, service and training, service parts, and advertising. This support costs GM roughly $1,000 per vehicle, or a multi-billion dollar expense.

Note Henderson wants a “healthy” dealer network, instead of a “profitable” one (“profit” replaces “bankruptcy” as new GM’s new “Voldemort”). Also notice that the Fritz seems be asserting that the less cars GM sells, the more money they make. When pressed on his pretzel logic, Fritz said the dealer closures would lower the aforementioned dealer costs by . . . $100 per car.

Henderson isn’t an idiot. He just plays one on TV. We can debate the wisdom of GM’s dealer cull, but showing up at The United States Senate without a compelling explanation of how his team ran the numbers leading to the politically-charged confrontation that led to the public hearing is either the height of hubris or just plain dumb. Anyway you look at this we lose.

Henderson’s squirming would be funny if someone else was paying for it. Particularly galling: Fritz began his statement with a promise of transparency and fealty to the United States taxpayer—and then resisted Senator Rockefeller’s request to turn over a list of dealers slated for closure. His rationale was almost as well engineered as a Chevy Aveo; “We’re giving them a 12-to-15-month window to decide what to do with their business.”

Crap. Now where’s the goddam list? Meanwhile, we’re forced to listen to a refrain which makes an alcoholic’s promises of sobriety seem credible. ”This is our last chance to get it right,” Henderson said, and not for the first time. “To fix permanently those parts of the business that have diverted us from consistently building winning cars and trucks and the consumer experience to match.”

Crap. If only this was GM’s last chance to fix their business (you know; since the last last chance). They’ll be back, if only because their top man somehow got the idea into his head that GM was diverted from its success. In other words, we were doing everything right except what we were doing wrong. Hey, what do you expect from a dead CEO walking?

GM CEO Fritz Henderson has filed a deposition with the federal bankruptcy court [download here] pleading for a 363 motion that would create the “new” zombie GM from the corpse of old debt-ridden GM. “In the face of the global meltdown of the financial markets, and a liquidity crisis unprecedented in GM’s 100 year history, there is only one way to maximize the value and permit the survival of GM’s business and save hundreds of thousands of jobs associated with not only GM, but also its vast supplier and dealer networks: these chapter 11 cases and the prompt approval of the 363 Transaction.” While I don’t expect Fritz to say “GM has entered this crisis due to epic mismanagement of which I am a fundamental part,” it strikes me as odd that this blame avoidance arrives on page three. Isn’t it a bit early to say “it’s not our fault?” Apparently, early and often is the strategy here.

On page 5, again with the “it wuzzn’t me”:

Recent events, however — including both international competitive forces and the worldwide recession that has resulted in an economic contraction and dislocation not seen since the 1930s — have led to the dramatic financial distress of the world’s largest automotive company.

And again on page 6:

Most recently, GM’s sales have been materially affected by the overall decline in domestic automobile sales, which continued unabated given the deteriorating economy and financial markets. The Seasonally Adjusted Annual Rate (“SAAR”) of automobile sales for the United States industry declined from 15.6 million units in January 2008 to 9.8 million units  in January 2009, which is the lowest level since 1982. This affected all domestic OEMs, but GM in particular.

And again on the bottom of page 6:

As a result of the economic crisis, in November 2008, the Company was compelled to seek financial assistance from the Federal Government.

And again on page 16:

While foreign OEMs enjoyed, among other advantages, lower wages and far lower annual healthcare and benefit costs, the Company’s obligation to support pension benefits and provide healthcare and life insurance benefits (OPEB) for its former employees increased exponentially, even as its revenues eroded because of a drop in market share and the downturn in the national and global economy.

And again on page 18:

Notwithstanding significant progress in cost reduction and increased efficiency, competitive pressure on GM was exacerbated by (i) substantial increases in the price of crude oil to nearly $150 per barrel during 2008, which precipitated a sharp downturn in driving and sales in the large vehicle segments in which GM was dominant and most profitable and (ii) a sharp decline in the global economy, including substantial increases in unemployment and a freeze-up of consumer and business lending. The resulting drop in new vehicle sales led to a steep erosion in GM revenues and, in turn, significant operating losses.

And again on page 19:

Even as fuel prices stabilized and moderated to some degree during the fall of 2008, the Company faced sharply deteriorating economic conditions during the second half of 2008 and the first quarter of 2009, which can only be characterized as the worst economic downturn and credit market environment since the Great Depression. Significant failures occurred in America’s financial sector — including the forced sale or liquidation of two of America’s five largest investment banks, the crippling of the nation’s largest insurance company, the conservatorships of both Freddie Mac and Fannie Mae, and the financial distress of two of the nation’s ten largest banks. The financial market crisis not only affected large institutions, but also affected consumers, as both income and financing for buyers and lessees of automobiles evaporated.

And again on page 21:

Thus, the combination of the sharp run-up of gasoline prices with its direct impact on the Company’s most profitable vehicle segments, rapid declines in the housing/mortgage/credit sectors, the freeze-up of equity and debt capital markets, and the lowest levels of consumer confidence in nearly thirty years, had an unprecedented effect on the automotive industry generally and GM in particular.

This is the same page that contains the money shot:

Under these extraordinary conditions, the Company’s liquidity rapidly eroded to a level below what was necessary to operate the business. Consequently, GM had no choice but to reach out to the U.S. Government for financial assistance.

And again on page 36:

As discussed below, the deepening economic crisis has affected not only GM, but also the thousands of direct and indirect suppliers and vendors that provide components, products, and material to the Company. In light of the credit crisis and the rapid decline in automobile sales, many of the Company’s suppliers are unable to access credit and are facing growing and serious uncertainty about the prospects for their businesses.

I don’t think this is spin. The zombie now known as Government Motors doesn’t even know why it died. Henderson and his minions continue to believe they’re victims of circumstance. Even worse, I’m not sure GM’s First Step in its $100 billion recovery program is important anymore—and not in the way that Motown’s zombie cheerleaders might imagine.