Why Everyone Hates GM
Pity the poor one million General Motors shareholders.
GM shares now trade at less than three bucks – they’re almost certainly worth zero. And the company can’t even produce a CEO who knows how to properly beg for Washington bailout money.
The testimony of GM boss Rick Wagoner before the Senate banking committee came across as defensive and arrogant. In the Wagoner-ian universe, everything was just fine at GM before this nasty recession came along.
Of course, it would be a small miracle if Wagoner wasn’t delusional. He’s been at GM since 1977.
But in truth, Tuesday’s testimony from the Big Three CEOs probably didn’t much matter. The $25 billion emergency bailout for Detroit was dead on arrival even before the hearing. The Republicans can block it – and Bush would veto it.
But interestingly, the case made by the Big Three to tap the TARP was so weak, that even some Democrats may now be thinking that bankruptcy is the only sensible endgame for Motown.
How weak was it?
Well, every taxpayer should watch the Senate testimony from Tuesday and decide for himself. You can watch it on http://www.cspan.org. It’s four hours long, but actually pretty riveting. Okay, parts of it are riveting.
Wagoner, Ford’s Alan Mulally, Chrysler’s Bob Nardelli and United Autoworkers honcho Ron Gettelfinger rehash their well-rehearsed arguments. As they put it, millions and millions of jobs are on the line. The future of American manufacturing is at stake. All apparently because Americans with lousy credit – who shouldn’t buy on credit – can’t buy on credit.
There are the inconvenient facts of decades of declining Big Three market share and grotesque overcapacity. Only in the World of Wagoner could the industry be making ‘tremendous progress.’
If pressed for time, skip to the hearing’s third hour when Democratic Sen. Bob Menendez uncovers the ‘big lie’ of a Detroit bailout. The $25 billion number is a fudge. It would only plug the hole for a few months. Menendez was blunt. Detroit will soon be back hat in hand.
And Menendez is a sympathetic voice. Ouch. Next comes, Bob Corker, Republican from Tennessee and a no-nonsense businessman. He is brutal. ‘GM is spiraling downward.’ Chrysler has ‘barely a heartbeat.’ ‘Which of the three should survive and which shouldn’t?’
Corker dares to point out what everybody knows but nobody will say. The entire American car industry is already bankrupt. One and maybe two companies will have to go. Industrial triage is inevitable. That’s the way business works.
Corker’s brilliant maneuver is to have the ‘impartial’ Gettelfinger – whose UAW has fleeced all three – rank them by viability. Gettelfinger’s answer: Ford, then Chrysler, then last, GM.
Minutes later, Wagoner’s detached statesmanlike composure finally gives way. His face grows red. His voice rises. It’s clear just how desperate GM has become.
Chrysler CEO Bob Nardelli and Ford boss Alan Mulally at least know how to grovel properly. Of course, they don’t carry the emotional baggage of a longtime Motowner like Wagoner.
Nardelli has been at Chrysler for just over a year. He knows Chrysler’s days are numbered and looks like a man who just wants out. Every time he has the floor, he reminds lawmakers of Chrysler’s ‘fragile’ position. Oddly, for someone who took home hundreds of millions in a disastrous stint as Home Depot’s CEO, Nardelli can still elicit sympathy. That’s good salesmanship. He should be on a Chrysler lot.
As for Mullally, he makes it clear numerous times that Ford doesn’t even have to be in Washington asking for money. It’s the troubled, ne’er-do-well Rick Wagoner at the end of the table that’s bringing him there. ‘I’m here because GM is here,’ Mullaly intones with aw-shucks brotherly love.
That, of course, is disingenuous. Mulally concedes that, by 2010, without an upturn in the U.S. economy, even Ford will run out of money. Nor does he mention that Ford’s share price closed the day at less than two bucks.
Luckily for the Big Three, the Detroit bailout will be resurrected early next year when a new Congress and Barack Obama are sworn in.
Mulally and Nardelli will have a few months to brush up on their performances.
Wagoner may not be as lucky. His board can put up with a failure to turn a profit, but it probably won’t stand for his failure to bring money back from Washington. If this is GM’s best salesman, no wonder the company can’t move cars.