General Motors Death Watch 208: Autopilot

Ken Elias
by Ken Elias
general motors death watch 208 autopilot

Well, it’s official. The Wall Street Journal reports that GM pleaded its case to U.S. Treasury Secretary Henry Paulson. The General’s looking for a mere $10b in “continuation” money to fund its Chrysler “absorption.” That’s a nice cover story for saying that GM cannot muster any other spin on “crying uncle.” Regardless of what Hank “the Hammer” Paulson answers, it’s a safe bet that we’ll be seeing an epic amount of taxpayer money flow into the RenCen’s silos of despondency in the near future. Mark my words: at the end of this, we’ll be saying that never have so many paid so much to so few for so little.

TTAC has chronicled the inevitable slide of the financial train wreck called General Motors. Maybe we’ve had greater foresight than Wall Street. Or maybe we’re just smart enough to see through the “all’s well” smokescreen created by GM’s masterful spinmeisters. Truth be told, it’s neither. The American public has voted for a long time on GM, and that vote marched out the door towards non-domestic brands. And for certain, they’ve never looked at an income statement or balance sheet in a 10K. I’ll say it here: the great unwashed mass of American car buyers know better than we can scribe in 800 words.

So let’s put aside any misconceptions here. There’s zero chance of GM (with its Chrysler sibling) ever again achieving past glories in market share or sales. In fact, the two companies together won’t achieve 30 percent market share. It will be much less, especially as GM simply rebadges more of its own vehicles at Chrysler, Dodges or Jeeps going forward. It didn’t work before (bye bye Oldsmobile) and ain’t gonna work in the future.

Any interested taxpayer has to ask: why should the Federal Government bail out General Motors to preserve the status quo? Why keep this monstrous hulk that gave us more than three decades of shoddy product, misguided investment adventures, and lousy managements? Sure, there were some glimpses of brilliance, and maybe some of GM’s cars and trucks today might be better than ever. Still, it doesn’t seem like Consumer Reports or the buying public thinks its vehicles rank higher than most of the Asian competition. The days of adventurism still haven’t ended with the Chrysler deal. And management-– well how the heck does a CEO who presided over the biggest evaporation of-– name a metric, any metric-– keep his job?

Yes, we certainly feel for the people that will lose their jobs. The suppliers that will disappear. The dealers forced to shutter their stores (well, some of them deserve their fate). They’ve all been given a lousy hand of cards, fed by years of pretending that “the next great vehicle from GM is coming.” It’s time to stop the music and deal with reality.

Any taxpayer monies that go to General Motors must have some very tight terms and conditions. The Feds cannot buy into the story that it’s just a matter of the economic climate today; sunshine is just beyond the next cloud. No way. It’s time for a radical restructuring of GM so that it can emerge as a self-sustaining and profitable enterprise in North America.

The terms should be as follows:

Board of Directors – Completely replaced by an independent group answerable only to the taxpayers – not the shareholders, not the management – no one but us. GM should have split the Chairman’s job from the CEO many years ago – but didn’t. Rick Wagoner answered to himself, surrounded by his handpicked failures, especially lead outside director George Fisher. Kick all of them out. No one from management sits on the new Board.

Management – Hire a new CEO. Find someone like Alan Mulally, an outsider with industrial experience but who has loyalties to no one inside of GM. Make GM’s new leader a czar. Corporations aren’t democracies. GM needs a firm and heavy hand to break down its internal fiefdoms. The new boss answers to no stakeholders save the new Board.

Financial Creditors – Force a cram-down on them. Painful but necessary. The balance sheet cannot remain as structured today regardless of how many dollars the government feeds into the beast. In return, make the creditors the new shareholders of GM, in return for debt foregiveness.

Shareholders – Tough luck, pennies for you. Especially the institutional shareholders that failed to force more action from the Board years ago.

Salaried Employees – The days of guaranteed career growth and job advancement will come to an end. No more buffoons promoted upwards. In fact, thinner and leaner management will now be the “in style” at the Ren Cen.

Organized Labor – We commend your wisdom on the VEBA deal. But you get a cram-down on that too. Retirees will have to take a generic plan versus a gold-plated deal. Everyone has to give. Their “contracts” are being broken. Yours too.

Dealers – If you’re not a Caddy or Chevy dealer, be prepared to wither on the vine. Just like Isuzu did to its dealers. Starve those weak brands of product. They’ll get the hint that their days are numbered.

Maybe this can be construed as “tough love.” But I’ll be damned if my taxpayer dollars go to save the status quo. Ethics aside, a no-strings attached Detroit “continuation” bailout will only continue the misery for all those who depend on GM for their living.

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2 of 30 comments
  • Honda_Lover Honda_Lover on Oct 28, 2008

    What if GM only had 3 brands: GMC - trucks(3-4), SUVs(mid-size and large) Chevy - sedans(subcompact, compact, full-size), 1 minivan, 1 CUV Cadillac - luxury sedans(3) and 1 luxury SUV(Escalade) No more overlap, distinct brand identity. This would work!

  • MgoBLUE MgoBLUE on Nov 06, 2008

    @Honda-Lover You don't need GMC to be the truck brand. Chevy can manage cars and trucks, just like Toyota and Nissan (and to a lesser extent, Honda) do. RF has said it 17,437 times, and I'll say it again: Chevy and Caddy. Git 'er done...or die tryin.

  • RICK Once had 78 TOWN COUPE and wish I had never let it go! Ultimate OTT excessive luxury! Have since had RWD FLEETWOODS, RWD Fifth Avenues ,as well as 89 Lincoln Town Car Signature Series and current 2007 TOWN CAR Signature Limited! All great cars, but 77 through 79 was KING 🤴 of the road! So sad to see what is now considered a luxury vehicle 😢. Who wants to drive a glorified truck 🚚?
  • Kwik_Shift There are better cars to drop $80G on.
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