7thriv

Robert Farago, who blogs over at the excellent Truth About Cars, has hit the bigtime (for a blogger) with an op-ed in the W$J about the prospects of political influence at GM. Farago is a voice worth listening to since, unlike all of the stakeholders at GM and the pros in the business world, he was calling BS on GM's self-reform years ago; and, starting in 2007, declared loudly and lengthily that GM would go bankrupt: Washington Can't Be 'Hands-Off' With GM

Many commentators worry that this new, nationalized GM will answer to politicians rather than profit and loss. They fear that this could lead to a $100 billion quagmire. Their fears are not without reason.

GM's post Chapter 11 decision to continue developing the Chevrolet Volt, its technologically dubious plug-in hybrid, is Exhibit A. The Volt is the same experimental vehicle that the president's automotive task force excoriated in its analysis of GM's federally mandated turnaround plan. The hybrid's survival shows that the company's new political taskmasters are ready, willing and (now) able to put green dreams ahead of commercial reality.

But there's a far greater danger to taxpayer interests than a plethora of unloved, environmentally-friendly cars: GM itself.

GM's management caused its failure. Its corporate culture lacks anything even remotely resembling accountability. Many of the same people who drove the company into the dirt are running the company now on the federal government's dime, continuing their failed death-by-downsizing turnaround plan.

Moving forward, the auto task force will either leave GM's sclerotic corporate culture intact -- as it is currently doing by allowing Mr. Wagoner's hand-picked successor, Fritz Henderson, to run the show -- or it won't.

What is striking about GM is how it is such a fundamentally lazy company. From the guys reading newspapers at the Jobs Bank to the folk wisdom that you should avoid buying GM cars made during hunting season to the executives who did nothing beyond half-measures to remedy GM's many ills until it was too late (and then ran to the gov't, rather than take drastic measures on their own), GM's corporate culture was one in which work-avoidance was many people's daily goal. Oh, I'm sure they kept BUSY. On certain summer days, they may have even broken a sweat. And, even at its lowest point, GM was still generating tremendous amounts of cash (I believe it was #7 in the Fortune 500 last year). It's just that it was burning cash at a much higher rate, and no one seemed willing to put out the fire.

It's not enough to blame the union's unreasonable pay structure, work rules, and retirement benefits. There are plenty of unionized manufacturers in the United States (Boeing being the most obvious) that still manage to remain competitive and innovative despite an equally obstreperous union. GM's management simply lacked the will and the energy to confront the UAW when it counted.

I don't approve of the gov't/UAW takeover of GM. I certainly don't approve of Congressmen raising a stink over the closing of plants in their districts (what are they, military bases?). But, if the gov't really is going to own GM, then let's at least try to cure its dysfunctional corporate culture. Move GM out of Detroit. Change the work rules. Make it easier to fire bad employees. Something! Sadly, I think that it the last thing the gov't is willing to do.