Instahoglets - Detroit Edition

Commentary By Ron Beasley

Obama has announced his plans for the US automakers.  Here is what people are saying.

Our friend Shaun Mullen says that GM's failure represents a failure of leadership all around: 

Wagoner had begun to turn GM around with some decent new products after 15 years years of lousy "leadership" while the automotive world was stealing a march on him, but these products are far too little, far too lacking in innovation and far too late, while Wagoner himself continued to be accountability averse and his board tone deaf regarding the hash he had made of things.

Meanwhile, the recovery plan that Wagoner fashioned was laughably inadequate.

He believed that GM could remain far larger than was realistic in today's hyper competitive global market. His recovery plan did not cut deeply enough and assumed the best at every turn, including hanging on to its already diminished market share and even growing while projecting losses for years to come.

What we have here is a failure of leadership all around starting with Wagoner and his board of directors to the enablers in Congress led by a Michigan delegation that looked the other way for years, to the Bush administration and congressional Democrats, who proved to be better at panicking and throwing our money at the mess than than getting tough.

I think that part of it is the systematic failure of the Wall Street driven casino economy.  GM like all corporate entities was forced to maximize short term profit at the expense of long term goals.

For once David Brooks comes close to getting it right.

There are many experts who think that the whole restructuring strategy is misbegotten. These experts think that costs are not the real problem. The real problem is the product. The cars are not good enough. The management is insular. The reputation is fatally damaged.

But if you are in the restructuring business, you can’t let these stray thoughts get in the way of your restructuring. After all, restructuring is your life. Restructuring is forever. Restructuring is like what dieting is for many of us: You think about it every day. You believe it’s about to work. Nothing really changes.

When the economy cratered last fall, the professionals at G.M. went into Super-Duper Restructuring Overdrive. In October, they warned the Bush administration of a possible bankruptcy filing and started restructuring. In December, they came back asking for a loan while they … (wait for it) ... restructured.

The Politico reports that Obama caught the Republicans flat footed and threw a wrench into their well oiled spin machine.

President Barack Obama may or may not be able to save the U.S. auto industry, but his dramatic restricting plan is already having some effect: It’s sent the highly disciplined GOP message machine careening out of control.

Sen. John McCain, the Republicans’ 2008 presidential candidate, accused Obama Monday of “unprecedented window dressing” and said his plan didn’t go far enough. But Rep. Thaddeus G. McCotter, chairman of the House Republican Policy Committee, complained that Obama was being tougher on Detroit than he’s been on Wall Street.

California Rep. Darrell Issa praised Obama for having “struck the right chord.” But Tennessee Sen. Lamar Alexander said Obama’s plan was “not the right direction.” 

Over at The Moderate Voice Martha Randolph Carr thinks GM CEO Rick Wagoner should have been shown the door.

Governor Jennifer Granholm, (D) of Michigan appearing on the Today show after the news of his leaving the company referred to him as a ‘sacrificial lamb’ apparently viewing him as a fallen leader who was forced to take one for the team.

The team, in case the governor has forgotten, would be the hundreds of thousands of hardworking Americans who are one step closer to losing their jobs, pensions and medical coverage as a result of Wagoner’s management style. Let’s review a little recent history.

Nothing about the car business happens quickly. That holds true whether the cars are made in America or Japan or Germany. Designs have to be created, discussed, refined and broken down into potential costs that cover a wide range of issues. If even a tail light changes it affects what has to be discontinued to make a space on the assembly line and causes a momentary and expensive disruption as a plant is retooled, even if ever so slightly.

Now couple that with the mountain of research surrounding global warming and its affects on the environment and a growing consciousness by the American public. Every car company in the world got the memos.

Toyota and Honda started addressing the ramifications to the bottom line 20 years ago so that when the new century started they had something to offer.

GM’s response was to introduce a new model of the gas-guzzling Hummer, the H2 and in 2003 stage a publicity stunt by driving a rainbow caravan of H2’s to South Florida to promote the Inner-City Games Foundation chaired by California Governor Schwarzenegger. GM’s Hummer marketing analyst, Randy Foutch described the Hummer buyer at the time as, “daring, self-assured, entrepreneurial people who see Hummer as being a reflection of themselves; unique.”