By on November 18, 2008

GM’s at the cliff’s edge looking deep into the chasm and sees…nothing. How pathetic. Here’s a company with $150b in annual revenues and all they can say is “give us the money or else.” How lame is that? Frankly, it speaks to the complete lack of leadership and direction at this company. GM has not advanced one shred of evidence that it knows what to do if it goes onto the government welfare roles. In fact, all we’ve heard is “more of the same” restructuring and downsizing that’s been completely ineffective to date in stemming the tide. That dog just won’t hunt. But if GM’s Board of Directors and executive managers had a clue, this is what they would do heading into the showdown with Congress…

First, outline a demonstrable plan for the road to recovery. Something akin to the plan laid out by Ford. A strategy whereby we have an idea of what products we can expect, realizable market share goals, and a stated return to profitability. To date, all we’ve heard from GM is nothing more than downsizing, the Chevy Volt and better products are on the way. If you think about it, GM’s been playing this tune (sans Volt) for more than thirty years.

The plan has to address all of the shortcomings found in the company today. Let’s look at these by major area of interest:

Brands – GM’s trying to field a roster of brands that have little meaning to the public. Eight brands for a 15 percent retail market share doesn’t compute. GM needs to pick two or three brands and then develop, foster and love them with unique vehicles. It’s too costly to support GM’s minor brands, even if they’re commingled in “sales channels.”

Dealers – If GM cuts brands, it also loses those dealers. So what? Franchise laws protect franchisees from many actions of the franchisors, but they don’t guarantee future outcomes. Nothing stops GM from outlining a five-year or even ten-year termination play. The dealers will sue. Let them. Let them join a class action suit; GM will just drag it out forever in court. By that time, either GM will be a stronger company with the ability to make some payoff to these franchisees or it won’t. That’s a risk that needs to be taken, now.

Financial Creditors – Cram-down! Put it out there now. Make them take a whole bunch of newly issued stock now in return for an 80 percent cut in debt obligations. They can’t count on government money to pay them off, and they’ll be lucky to recover 20 percent in a bankruptcy anyways. And there’s zero chance they’ll ever get ahead of the government in standing if GM does get a bailout; the government always collects ahead of everyone else.

UAW – United Auto Workers boss Ron G. needs a wake-up call. Big style. He’s hoping his Democratic pals in Congress will come to his aid and protect his flock. Too bad he’s barking up a very small tree. He forgets that big swaths of this country are anti-union, and those Southern Senators would like nothing more for the UAW to go down in flames and stop trying to organize their foreign-brand assembly plants.

GM should scrap the Mother of All Health Care Funds (a.k.a. VEBA) now; it can’t afford the big upfront payment required. Instead, GM should unilaterally reduce hourly retiree health care payments. Make these retirees suffer with the same crappy HMO care the rest of us get. Let’s keep in mind that salaried retirees get nothing now for health care (except a modest boost in pension payouts as an offset).

Rick Wagoner – Gone. He hasn’t done the job. Stop pretending that Red Ink Rick knows what to do – because he doesn’t. In fact, it’s not clear the guy has ever done anything that set a new direction for GM besides his “foresight” with regard to its China JVs. It’s always been more of the same: praying that the next “new” rig from GM would be the spark that lights the fire of American consumers. Find an outsider as CEO with strong industrial experience, a person appointed to be czar who can break down GM’s muddled and stifling bureaucracy.

Board of Directors – Toast. They should resign too before they get dumped. Better to die with your head attached than sacrificed in shame on the altar of bankruptcy. They’ve allowed this charade to go on way too long. Since the current shareholders are going to get massively diluted anyways, they won’t be able to control Rick’s puppet board any longer. Instead, the financial creditors should pick nominees for the Board using their newly-issued stock as leverage.

Bailout –  Stop whining. Stop blaming everyone and anything but yourselves for your current predicament. You look stupid as a company. GM should stand up and tell the truth we’ve all known for years: their problems are entirely of their own making. Man up!

There’s an old adage told by aviators all over the world. When your airplane is in trouble, do something, anything, to change the outcome. Doing nothing and you’re sure to hit the dirt. Right now, GM’s doing nothing besides begging– and not getting much sympathy. Maybe it is time to roll the crash trucks?

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36 Comments on “General Motors Death Watch 215: Man Up!...”

  • avatar

    Well put. The amount of cherry-picked [mis]information that we get drip-fed from the PR flacks is nearing the annoyance level of political ads (as I was just about to breathe a sigh of relief).

    I think the fact that GM refuses to own up to any problems of its own creation is signal enough to indicate they have deluded themselves into thinking there is no more they can do. It’s a sad state of affairs. What was once an industry of innovative spirit is nothing but a shell of spineless, accountability-dodging stuffed shirts.

  • avatar
    Point Given

    You hit it right.
    “do something, anything, to change the outcome. Doing nothing is a sure way to hit the dirt. ”

    This site has chronicled this falling for sometime now, if we common citizens can see this coming why couldn’t those in charge with access to reams more of data than us see this coming?

    Sadly, the only reaction has been more of the same.

    Radical action…do something different. Fight for your company damnit.

    Hmm. Now where’s my honda parked?

  • avatar

    Here’s GM’s problem:

    Somehow, someone got convinced that there is such a thing as a GM car that I want to buy.
    They forgot the individuality of the separate brands – and they are still screwing around, pretending it doesn’t matter.

    Look at

    Sad, sad, sad.

    Then look at Porsche – the automaker that just bought VW:

    They know what a brand is.

  • avatar

    Cut brands, dealers, the UAW and management, and stop begging for help. If you can’t right the ship on your own, how does your “plan to profitability” have any credibility?

    Great editorial, Ken.

    I can’t help but believe that every person following this saga, with half a brain, can see the direction that this story needs to go …EXCEPT the idiots in the RenCen.

  • avatar


    The “idiots in RenCen” are trying to save their reputations, hoping to put the blame for their mismanagement on anything but themselves. And that includes the board.

    And that’s why they have been completely unwilling to accept their idiocy. When management also have the board supporting instead of replacing them, then you get more of the same.

    Ken’s completely right here. As if that will change anything.

  • avatar

    Suppose I had told GM in the 60’s when the gov’t was cuing up the anti-trust goons in the justice dept that 50 years later they’ed be looking down this deep dark hole. Somebody would have thrown a net over me.

  • avatar

    “We’re ready to make a compelling case that were it not for the worst financial crisis in generations, our company was making real progress,” GM spokesman Greg Martin said. “We just need some support to bridge the present.”

  • avatar

    GM management needs to remember Warren Buffet’s maxim: It’s only when the tide goes out that you find out who’s been swimming naked.

  • avatar

    or to paraphrase the Great One: “….which Rick has smallish …”

  • avatar

    Interesting editorial but:


    What a quaint 19th century notion. It may still exist in some backwaters like Japan, China and the mid-east.

    Do you really have the feeling that the CEO and BOD of major US corporations really care about the eventual outcome as long as no one attacks their personal assets? Their actions don’t show that they care.

    If they did care they would have joined the team, tied their total maximum compensation each year to perhaps 10-20 times the average worker and if it still didn’t work out reorganized the company in a disciplined fashion.

    I don’t think many in his social circle would turn down invitations from Rick Wagoner because of his management at GM.

  • avatar

    “We’re ready to make a compelling case that were it not for the worst financial crisis in generations, our company was making real progress,” GM spokesman Greg Martin said. “We just need some support to bridge the present.”

    If such a case existed, wouldn’t it have been presented somewhere, to someone, in the last several years???

    BTW – If there was such acase/plan, it certainly never revolved around ‘saving jobs’ in America – if anything it was basically give up on the NA car market, except what jobs you had to promise the UAW, and bet big on China and Russia. I doubt that Congress would like that kind of plan…

  • avatar

    The “blame the customers” attitude is the best reason I can think of that they need to die. There you are, begging for our money, saying it is OUR fault that you are in that position. It’s not our fault you make compromises… err, cars we don’t want to buy.

  • avatar

    Good editorial, Ken. Since I was just reminded that TTAC doesn’t have a stance, but that its individual writers do, I guess I’ll just have to agree with you. Makes sense to me. Begging is not a plan.

    I’ve had to write serious engineering proposals for the disbursement of as litle as a few hundred K, and defend them before the board of directors of an electric utility. The least we can expect from GM is a professional business plan before handing them a check for $25,000,000,000. If they cannot even do that, then too bad, it’s goodbye.

  • avatar





  • avatar

    Great editorial Ken. To bad none of it will happen. They will just continue to beg for the money and if they don’t get it and I’m starting to think they won’t. They will cut all product development and everything to the bone, maybe even shut down most production temporarily to make it until Obama gets in. Then they will go begging again and claim shutting the doors is next, they have done all they can possibly do “in this economic climate”.

    Their only plan for survival is us(taxpayers) saving them. This company just needs to be liquidated and let someone more competent manage their resources, they can’t be saved with no real revolutionary plan.

  • avatar

    “We’re ready to make a compelling case that were it not for the worst financial crisis in generations, our company was making real progress,” GM spokesman Greg Martin said. “We just need some support to bridge the present.”

    Ironically enough, Mr. Martin, I’m ready to make a compelling case that the “worst financial crisis in generations” only accelerated your downfall. Your company was not making “real progress”, but instead were only doing things to delay the inevitable. But of course, the problems with your company has been said ad nausea that they almost lose meaning today. And the list is so long that several important factors would only be forgotten.

    But if you think you have a compelling case to make, make it! Maybe people will actually believe it instead of rolling their eyes whenever GM blames others for their predicament.

  • avatar

    “Man up” would indicate there is a man in the room, or at least someone with cojones. That does not exist at the top of GM, as has been demonstrated over the last several years.

    There’s a football field of reasons why GM is at the edge of Niagra Falls in a boat with no oar. Credit contraction is not a fundamental reason. GM’s lack of highly desired products is.

  • avatar

    It’s getting so bad, I actually dreamt about coming up to a huge chasm in my wife’s Sonata last night. I was hooning (not really my real-life persona) in the car, and the hill was getting steeper and steeper; the road became gravel then dirt. I stopped, got out, walked up to the top of the hill and looked over – no way could any car make it across.

    Looked to my right (Republicans?) and saw an old construction job. It was plain and obvious that a bridge had been planned for the chasm, and that construction had essentially ended. Grass was growing between the slabs on the roadway which simply ended near the edge of the cliff.

    Clearly, my subconscious either is thinking of the US auto industry or the world economy or both.

    Equally clearly, in order to bridge this chasm, we have a LOT of work ahead of us.

    I suspect that whatever “bridges” we build now will work out about as well as the real bridge which collapsed in Minneapolis a couple of years back. But that’s another story.

    As for GM building what the public needs, well, they do. It’s just that they do it in South Korean, China, Germany, Hungary, Brazil, etc. instead of in Michigan, Ohio or Ontario. Instead, they have taken the easy way out and built what they damn well pleased then marketed the hell out of it (read: SUVs) to convince people they “needed” 5000 pound V8 on-frame truck based station wagons with all wheel drive to commute 5 or 10 miles and take the kids to soccer or t-ball. Because? Because, profits were $8000 per or better, since on-frame trucks were cheap to build, old engine designs were useable (tooling, dies, transfer lines and production lines of which had long been amortized – the Chevy V8 was introduced in the autumn of 1954, for gosh sakes). Now that the bubble has burst, both GM and the UAW (and also Chrysler) are totally screwed, glued and tatooed.

    In the mean time the suits at GM more resemble this mental picture; cue Curley dressed in a high-dollar suit, saying “I’m a victim of
    coicumstance!” “Nyuk nyuk nyuk.”

    Time for the Republican congress to do a Larry and poke these stooges in the eyes.

  • avatar

    Ken-I think this is your best to date.

    Your initial point, that they already have 150 bil coming in every year and can’t make a go, is brilliant.

    What in the name of a sniff of sanity makes anyone think 10-20 bil more in one shot will make any diff?

    Case closed.


  • avatar

    “Pride goes before destruction, a haughty spirit before a fall.”

    I’m sure that Rick & Co. know exactly what’s going on and have seen this coming for a long time. But given the immense personal pride invested (not to mention the immense paychecks involved), they couldn’t possibly admit that GM’s failure is due to their own failure.

  • avatar
    Martin B

    Interesting facts from regarding the GM board:

    GM’s 14-member board includes four directors who also advise or sit on the boards of financial services firms that have received bailout funds: Erskine Bowles serves at Morgan Stanley, Armando Codina at Merrill Lynch, John Bryan at Goldman Sachs and E. Neville Isdell at SunTrust. … Mr. Codina also sits on GM’s compensation committee, as do Messrs. Bryan (the committee chair) and Bowles. All three sit on the compensation committees at their respective Wall Street firms as well

    “Don’t worry, Rick. The government is dropping money from helicopters on anything with a balance sheet. Want an extra couple of million yourself? Here you go. Oh, about our fees…”

  • avatar

    as far as sheading brands goes, they need to dump gmc,hummer, buick saab and keep chevy for mainstream,pontiac for performence and cadillac as luxury. its jus that siple. but this aticle hit the nail on the head. someone needs to mail this article to congress and tell them to give gm an ultimatum: either follow these guidelines or you wont get the money.

  • avatar

    The first Pontiac that comes to mind is the Vibe— the brand is dead.

    Chevy, Cadillac. If the Chevy brand is good enough for the Vette and the Camaro, its good enough for everything Pontiac makes.

  • avatar

    TOXICROACH-exactly, “Chevy SS” has at least as much performance cred as the brand that gave us the Bland Am GT. Argh.

    Oddly the Vibe is the only “GM” product to make CR’s top reliability category in any of the last three years. Hmmm…isn’t that made by…

    With a bit of luck, for the taxpayers, GM will have to file before Jan 20th.
    THe world will not end and perhaps a tiny thread of sanity will prevail.


  • avatar

    The only use for a “Poncho” is keeping the rain off. (;^D

  • avatar

    Thank you so much, Menno!

    Bringing the Three Stooges into this discussion is really the highlight of my day. I needed the laugh.

    And CaliCarGuy — I’m with toxicroach and Bunter1.
    It should only be Chevy and Cadillac in the U.S. and figure out a way to prop up the Chinese Buick business with SAIC or one of the other companies. The rest would go to do-do land without anyone noticing.

  • avatar

    “Moe, Larry, the cheese!”
    here comes Amtrak Motors, pulling into a taxpayer funded station near you!

  • avatar
    Greg Locock

    “GM should unilaterally reduce hourly retiree health care payments. Make these retirees suffer with the same crappy HMO care the rest of us get.”

    Sounds a bit dog in mangerish. The retirees negotiated for those healthcare payments as part of their reward package. The same retirees will probably be funding part of the rescue package JUST LIKE YOU. Yet you seek to retrospectively steal part of their remuneration.

    Sure, from now on GM should (and presumably has) renegotiate pay and long term benefits, with current and future employees.

  • avatar
    Ken Elias

    Greg Locock – The UAW retirees have earned healthcare coverage and I do want to protect what they’ve earned. However, health care costs have soared well beyond what was imagined at the time those packages were negotiated. The part that you may not know is that the UAW health care package has been extremely rich – much better coverages than most Americans get. Low co-pays, universal coverages, no exclusions, etc. That needs to change so that the total health care spend gets reduced, but not eliminated.

  • avatar
    Greg Locock

    Shrugs, you have merely repeated yourself.

    So buy them out of the healthcare benefits by a reverse auction. Return the pay rises they forewent in order to get the health packages, in effect.

    Suppose their bargaining position at the time was

    a)4% straight

    b) 3% + moderate healthcare after retirment


    c) 2% + exhorbitant healthcare.

    All interested parties agreed on option c.

    Why is it fair to punitively renegotiate that wage deal in retrospect? Would it not be just as ethical for GM to phone up purchasers of their cars over the last 10 years and tell them that they underpaid for their cars , please forward a check for $1000?

  • avatar
    Ken Elias

    To answer your question – some healthcare is better than no healthcare. Everyone’s going to take a haircut in the coming restructuring of GM.

  • avatar
    mad scientist

    Goodbye, GM.

    Good Riddance!

  • avatar

    What are TTAC’s corporate style guidelines regarding ‘Watch’ series endings?

    I mean, does GM DW series officially end on Bankruptcy Day? Or B-Day +1?

    Or B-Hour? Will the bankruptcy story itself be the final one?!?

  • avatar

    ihatetrees :

    I reckon we end the Death Watch when they die (Chapter 7) or recover.

    Obviously, “recovery” is a tough thing to measure. But if we could see this train wreck before most, I guess we’ve got enough collective expertise to hazard a good guess when they’re “out of the woods.”

    From my keyboard to God’s ears.

  • avatar
    Kevin Kluttz

    An interesting article I ran across…note the date.

  • avatar

    A quote from the 1999 article cited above:

    GM (GM) shares fell 5/8 to 68-5/16 in Tuesday afternoon trading.

    $68.31 a share!!!

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