[NOTE: This post has been UPDATED … twice]
Since Oldsmobile died an untimely death in 2004, perhaps the name can be revived and applied (in slightly modified form), O’smobile, to the new General Motors. Or perhaps it will be sufficient simply to refer to GM from now on as BM (Barack Motors).
UPDATE
In his statement this morning President Obama said:
… my administration will offer General Motors adequate working capital over the next 60 days. And during this time, my team will be working closely with GM to produce a better business plan. They must ask themselves: Have they consolidated enough unprofitable brands? Have they cleaned up their balance sheets, or are they still saddled with so much debt that they can’t make future investments? Above all, have they created a credible model for how not only to survive, but to succeed in this competitive global market?
Now, leave aside the question of why consolidating unprofitable brands is a good idea. But ask yourself how, after discussing how his “team” would be “working closely” with GM to ensure that it do this and that and the other thing, he could then say in his very next presumably teleprompted, stern voice:
Let me be clear: The United States government has no interest in running GM. We have no intention of running GM.
Reminds me of another of his other brilliantly articulated assurances, that he wants massive government spending “’not because I believe in bigger government—I don’t,” as well as his assurance that his proposed budget “will cut the deficit that the president inherited upon assuming office at least in half by the end of his first term.” For that matter, it also reminds me of another president’s declaration before a national audience that he “did not have sex with that woman.”
How long will it be before someone asks, “Would you buy a used car from this government?
UPDATE [31 March]
Not long. Would You Buy A Used Car From This Man?
UPDATE II [31 March 9:20PM]
Apparently, the article struck a nerve with you, too
(:
Rick
The Pres. told us we could not drive as much as we want nor eat as much as want. So people stopped buying cars in general and SUVs in particular. Fewer auto companies and higher prices will mean less CO2 emissions. So isn’t the bankruptcy of GM and Chrysler just what Obama wants?
Maybe after bankruptcy GM can be renamed “Diversity Motors” with Bill Ayers appointed as head corporate diversity trainer.
Of course, the alternative is let millions of more Americans lose their auto industry based jobs, which will result in even more stress on states’ already maxed out unemployment systems, untold home foreclosures and continued misery for the American people.
I’m just waiting for the Obama-haters to offer THEIR solutions to these issues, since the ones before January 20, 2009 were oh, so effective.
–Cobra
It’s interesting GM and other companies who frequently trumpet the “Diversity is our strength” slogan are now on the ropes.
These companies were relentless practitioners of AA in the professional ranks, and here is the end result. They always wanted to make a company that “looks like America”, regardless of the job candidates qualifications. It was never about hiring the best or most qualified, but merely “qualified”, and they had to lower the standards to even accomplish that!
Cobra – while I don’t think insisting on the firing of Wagner does anything and hence I don’t support the Obama administration in that regard (it just doesn’t accomplish anything on its own), I do think that some of the administration’s moves here make sense, particularly in imposing urgency and time limits on their affairs. Accordingly I don’t read as much into his comments as others. I have little doubt car czar Rattner (a private equity guy who is looking at the horrid numbers without a car guy’s sense of promise) has whispered bankruptcy is likely what is needed. No one wants thousands of jobs to be lost, but taxpayers simply cannot pour billions into a non-sustainable company and business model. Bankruptcy may be inevitable – both in terms of reworking the union contracts and the bondholder’s instruments. There may be no other way to force the hands of all parties, particularly the unions, who are really having trouble accepting the position they are in.
And I don’t understand your reference to the Bush Administration in this regard. I can find no difference so far in the policies between the two administrations as concerns the auto companies. Paulson and Bush were all for funding these companies during the final days of their administration. And the ideas are the same – simply more time has passed (maybe a good thing as I point out). Either the Obama administration is making sense or not – references to Bush are elliptical and irrelevant – we elected Obama to govern with the cards that have been dealt.
Casting this in a political light is not really helpful. The truth is that the time and money spent the last few months likely has prepared GM for a smoother bankruptcy – even a prepack – along with some understanding the Government will offer DIP financing (again, the same carrot the Bush team recognized was necessary).
By the way, I don’t think it is fair to imply (as some have done) that AA is the cause of GM’s demise. I have long thought it folly to not recognize the significant costs that AA imposes on business, but GM’s problems are due to a myriad of factors. There are other times and fora to discuss the significant costs that AA imposes, as well as a recognition of its benefits.
Although off topic, unlike many people educated at our so-called top schools, I have actually been a Teamster. Living it causes a quick loss of illusion. Yes, unions drive up the cost of wages and benefits – but that is not the real source of harm – and indeed not what really hurt GM. The ponderous, unworkable union work rules (an auto union contract is likely 12 inches high – most of it single spaced) and the inability to get people to work hard and work flexibly – is the problem. In a fast paced economy this is what is needed – and I can’t think of a worse way to accomplish that than with the union contracts that have been signed. And its greatest cost has been quality – consumers just don’t forget. That is the worst culprit in a business that must thrive on creating a customer focused meritocracy. Very few wish to talk about it openly – but it is ground zero in terms of causation. And good luck having a frank discussion about it in today’s political environment.
“Yes, unions drive up the cost of wages and benefits – but that is not the real source of harm – and indeed not what really hurt GM. The ponderous, unworkable union work rules”
Exactly right. And while the work rules have a profound direct negative effect on both quality and cost as you note, there is also an indirect effect on management. Successful managers are those who best patch together the resulting garbage. Prioritizing what should be an irrelevant skill leads to accepting less skill in more relevant areas.
Willowglen writes:
“Although off topic, unlike many people educated at our so-called top schools, I have actually been a Teamster. Living it causes a quick loss of illusion. Yes, unions drive up the cost of wages and benefits – but that is not the real source of harm – and indeed not what really hurt GM. The ponderous, unworkable union work rules (an auto union contract is likely 12 inches high – most of it single spaced) and the inability to get people to work hard and work flexibly – is the problem.”
I’m not going to disagree that Unions make demands that without management comparison, look excessive. Let’s understand however, that in 1980, the average CEO made 40 times the salary of the average worker. Today, it’s over 350 times. Are today’s CEO’s almost nine times as good as their counterparts thirty years ago?
Willowglen writes:
“And I don’t understand your reference to the Bush Administration in this regard. I can find no difference so far in the policies between the two administrations as concerns the auto companies.”
Well, the title of the thread is “O’smobile”, so I thought it was appropriate to bring up that this was not just an Obama issue. As a matter of fact, with Chrysler, we can go back a long way to the Carter and Reagan Administrations.
One fascinating part about this article (from the National Review, no less!!!) is the story of how Lee Iaccoca got the Reagan Administration to go along with auto market protectionism, and limit the Japanese to only 15% of the American Market, allowing Chrysler to and it’s brethren to thrive….until the Japanese got around the loophole and build factories in the US. Ironically, there was also a rumor in the 19 year old article of Chrysler merging with Fiat.
Third, if there’s no credit for consummers to get auto loans I don’t care what make and model the car is…it’s going to stay on the lot.
–Cobra
cobra – excessive executive pay is a problem, but again it is not the cause of GM’s demise. It has a lot of populist appeal to those on the left, it is hardly anywhere near a high priority problem in the real world scheme of things. And the executive pay issue in general needs to be handled by strengthening our corporate governance regimes so shareholders can impose long term performance incentives, something no one has touched in decades. In fact, in a society generally ignorant of economics today, good luck getting but a handful in Congress to talk intelligently about corporate governance and ways to strengthen it. Can you imagine Nancy Pelosi talking about such a thing?
I am not sure Chrysler of yesteryear is as apposite to today’s problems. The Big 3 have so many structural problems and quality problems they need radical surgery, not just a government loan as Chrysler obtained.
And I really just don’t want to pick on the unions. But if I had a dime for every time I heard an Obama voting, pro card check guy in the DC area (lots of well heeled Government employees – two gov’t jobs here equal 250k) tell me he would never buy a union made car because of quality problems, I would have quite a few dollars. The irony is never lost on me. The union model as it exists is a continued slow death for these companies – even if they get wages and benefits to Toyota parity. There is simply no substitute in a global light speed economy for a flexible work force, not burdened by archaic union contracts and practices – the real drivers of cost and poor quality throughout the enterprise. Pretty tough subject to raise, but those in the auto industry darn well know it. I feel intensely bad for all of them.
Willowglen writes:
“There is simply no substitute in a global light speed economy for a flexible work force, not burdened by archaic union contracts and practices – the real drivers of cost and poor quality throughout the enterprise. Pretty tough subject to raise, but those in the auto industry darn well know it. I feel intensely bad for all of them.”
Well, I think we should all be honest about this, and recognize that we are NOT dealing with the “free market” when it comes to globalization.
The United States doesn’t have anywhere NEAR the access to the Japanese auto market as they do to ours. Japan has SOCIALIZED medicine, so the cost of health care isn’t heaped upon the cost of every vehicle produced.
Plus, look at the nations whipping us in the Automobile industry…Japan and Germany, two nations who aren’t technically allowed to develop weapon systems and offensive military technology. So where does that government subsidy go, if not towards the industrio-military complex of those countries?
Let’s get real. You can’t call it fair competition when you never get a home game.
–Cobra