Editorial: General Motors Zombie Watch 5: Cross-Eyed and Painless

Robert Farago
by Robert Farago

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.

Robert Farago
Robert Farago

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  • U mad scientist U mad scientist on Jun 16, 2009
    4) The extra-legal takings against bond holders who had their ownership rights dozed over and the chilling effect of this action on future investors. As previously noted, this clearly shows the commenter is copy pasting talking points (ie. lies), rebuttals for which are readily available including on this site, and thus has fallen into that trap designed to waste everyone's effort. Next time I'd suggest tackling existing arguments in the thread first to at least show there's some activity going on upstairs, and has the full benefit of reducing the amount of partisan churn that many were complaining about in the "flaming" tread.
  • Geeber Geeber on Jun 16, 2009
    carlos.negros: Let’s at least try to be honest. Yes, and you can start by not casting the public education system as an example of capitalism in action. It's anything BUT capitalism in action. carlos.negros: Nice. I see how much you respect democracy. Now you are calling the American people ignorant because you disagree with them. I seem to recall Democrats and those on the left doing this for the past eight or so years (check their reaction to the results of the 2004 election). Your newfound dedication to the will of the people is touching - at least, to those who have no memory of events prior to 2009. To the rest of us, however, your protests ring hollow. carlos.negros: The last time I looked, Obama still commands a clear majority of support. Those, like yourself, who want to see him fail, represent a fringe. All of which is completely irrelevant to the discussion at hand. Might help to stay on topic.
  • Blueice Patient 28, sorry, but it is Oktoberfest. Bring a kegof Kraut beer and we will 50% you.
  • Bd2 Probably Toyota, Hyundai is killing them these days.
  • Bd2 Japan is evil, stop buying their vehicles. I hope TTAC has a holiday for PEARL HARBOR.
  • Wolfwagen If Isuzu could update this truck and keep the cost between $25K - $30K they would sell like ice pops on dollar day in a heat wave.
  • 3SpeedAutomatic I'm at that the inflection point of do I continue to putting money in a 12 yr old SUV entering a heavy maintenance cycle or start shopping.I have noticed comparable new SUVs with $2.5k knocked off the sticker price, but still with the shenanigans of $300 for nitrogen in the tires. However, I have noticed the same 2 yr old SUV which are only $4.5K less than the original sticker price. Usually the used cars price should be 35% to 40% less. This tells me there's a stronger market for used as opposed to new. Part of this is to handle the monthly note. Considering installments of 72 months, you'll never pay the beast off. Just wait till the end of the model year which is just two months away, and I think the comparable new SUV will come with larger markdowns. May not be the color you want, but there are deals to be made. 🚗🚗🚗