Bailout Watch 195: As the Worm Turns
Back in the day, I wrote one General Motors Death Watch a week and that was pretty much that. Now that GM’s hit the buffers, begging for bailout billions with loquacious (if louche) lobbying, you can’t click on a news source without encountering an editorial or news piece on Motown’s meltdown. And it IS an important and fascinating story, the first real litmus test of politics-as-usual versus America’s bedrock belief system. [NB: I’ve promised some of our Best and Brightest that I’d alternate bailout articles with car stuff.] One of the most amazing aspects of these revolting developments: how GM’s lobbying campaign has unleashed a wave of anti-bailout pistonheads. Normally, the GM FastLane blog is home to home team boosterism of the most sycophantic “Top of the morning Guv’nor!” variety. But now, after Christopher “You Guys Hate Us” Barger (a.k.a. Director, GM Global Communications Technology) posted the Peter Hart study claiming America supports a GM bailout ( debunked here), the shit has hit the fans. While there are still GM gadflies flitting about, there are a LOT of pissed-off posters. If anti-bailout posters have stormed this bastion of BS, GM’s claim on the public purse is, shall we say, “challenged.” I suggest you head over there before Barger tidies it up.
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The three US companies should be treated differently but bailout legislation has to treat them the same way. The prospect of Cerberus being given billions of taxpayer dollars to salvage a bad investment is startling, to say the least. GM probably cannot carry out the radical restructuring it needs to become competitive outside Chapter 11. Bailing it out to stagger along with 8 divisions and 80+ nameplates won't result in a viable company with a decent return on capital even in a stronger economy. GM's problems did not start recently and they are not all exogenous despite what management wants people to think. Ford might have a chance. It doesn't have the organizational bloat that is sinking GM and it has a lean portfolio of good cars. If one were to hold one's nose and bailout just the company with the best chance of success afterwards Ford would be the one. There is no telling if an auto company could survive Chapter 11. The auto companies say they couldn't but there is no evidence. There hasn't been an auto maker of significant size go bust in the US for a long time. Americans have become used to companies operating in Ch 11 for a long time, like United which spent 30 months in protection. Of course a vehicle purchase is a long-tail transaction, unlike a plane ticket.
GM reminds me of OCP.
It should, as that was Paul Verhoeven's intent. Note the resemblance between OCP's corporate headquarters and RenCen, plus the Detroit setting.