General Motors Death Watch 41: Fiddling Around
'I'd just like to set the record straight here and now,' Rabid Rick Wagoner wrote in an email circulated yesterday on GM's intranet. 'There is absolutely no plan, strategy or intention for GM to file for bankruptcy." Obviously, the growing suspicion that GM is heading for a cataclysmic financial failure prompted Wagoner tell the world that The Man in Charge isn't playing kissy-kissy with a bankruptcy judge behind the bike shed. At the precise moment when Wagoner should have been rallying his troops with a bold survival strategy, he chose to declare the fact that he's not [currently] negotiating surrender. Wrong answer.
If you still believe that Rabid Rick and his cronies can save GM, I suggest you surrender that opinion now and join the industry analysts wise to Wagoner's wicked ways. Every time there's trouble at the mill– an occurrence whose increasing frequency is only matched by its escalating intensity– Rick announces Something Is Being Done. The scandalous manipulation surrounding last quarter's financial statement, when Rick revealed the bogus United Auto Workers (UAW) health care "giveback" on the same day GM lost $1.6b, is a perfect example of Wagoner's MO. It's got the point where any executive assertion of corrective action signals yet another financial disaster.
So when The Detroit News (DTN) duly reports that "Ailing GM speeds up fix-it plan", it's a sure sign that The General is closer than ever to flat lining. As part of this nominal plan, whose bullet-pointed description is only marginally better than "lower costs, increase sales", Wagoner vows to cut 25k hourly employees by '08. Only GM's contract with the UAW prohibits plant closures until September 2007. And that means Wagoner actually intends to "idle" the excess workers, or try to lure them into early retirement. Either way, the employees will be almost as big a drain on GM's resources as if they were building cars no one wants.
Meanwhile, back in Wagoner's email, The General's general went to great pains to show he understands the gravity of the situation he's put the company in, and the need to sort it all out, you know, soon. Rabid Rick acknowledged that GM's North American meltdown created losses which are "unsustainable, for sure, and require a comprehensive strategy… that must be implemented promptly and effectively.' In case you haven't guessed it by now, Rabid Rick is saving this meta plan for next quarter's financial statement, when the latest red ink report reveals the full extent of GM's arterial spray.
Hey, if Rabid Rick Wagoner's got a cure-all to keep GM from the corporate crash cart, how come the North America's Vice President of Vehicle Sales, Service and Marketing doesn't know about it? DTN reporter Brett Clanton recently got some face time with Monster Mark LaNeve, and asked LaNeve to outline Wagoner's plan to revitalize GM's sales and marketing. Here's what he got:
"What he means by that is doing a much better job of delivering eight distinct brands to the marketplace that all have unique target customer groups. He's talking about focusing the brands. He's talking about my plan, which is to go to market with value orientation rather than incentive orientation. Do better in the key markets such as the coasts where we've lost a lot of ground in recent years. And then, have a world-class dealer base."
While we're glad to see LaNeve wrest ownership for GM's recently abandoned "Total Value Promise" from his boss, Monster Mark's remarks indicate that Wagoner has yet to hit refresh on his turnaround browser. Even if you accept LaNeve's spinvaguery, there's no evidence whatsoever that Wagoner's crew are doing anything to conquer the coasts or implement brand differentiation. In fact, the recent revelation that GM is preparing 14 crossover vehicles for its eight brands indicates the exact opposite. And if GM's front end is in such disarray, what hope is there for sorting things out in the back?
None. All GM's management maneuvering brings to mind the connection between an ancient Roman conflagration and Emperor Nero's musical abilities. Big Ron Gettelfinger's belligerent remarks regarding the UAW's negotiations with parts maker Delphi reaffirms our contention that Delphi will be crippled by a strike in December, which will cripple GM roughly five minutes after that. Did I say cripple? Perhaps I should have used the word "kill".
Buried inside the DTN story on Wagoner's bankruptcy denial is a startling revelation; a factoid that obviates any move GM's brass could make to save the company's ass. "A Delphi-related shutdown at GM would force the automaker to tap into the $19 billion in cash it has on hand. The investment firm UBS Securities estimates that GM would run through its cash hoard in 10 weeks." In other words, our GM Death Watch is heading for its inevitable conclusion. For sure.
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