Man, it was cold out there running this morning. Maybe I should have had a Plan B. You know — treadmill or something. Nah. GM, now apparently less than 30 days from going belly up, doesn’t have one. Strategic planning is probably overrated anyway. Harvard MBAs will be the next bailout group. Wait and see.
But at least in the midst of all the blather about the auto industry bailout we finally got some honest responses yesterday as the Captains of Industry made their way back to Congress by car, boat or bus. And that lack of honesty — which has diminished trust and credibility — really should serve as a lesson for all of us. A little more straight talk will help here guys.
OK. Frederick “Fritz” Henderson, GM’s chief financial officer, said yesterday that the company needs $4 billion by the end of this year — and another $6 billion by March. Here’s from USA Today:
“There is no Plan B,” he told reporters. “Without support, frankly, the company can’t fund its obligations.”
Ah shucks, Fritz. A billion here and a billion there, to paraphrase the late Everett Dirksen (U.S. Senator from Illinois), and soon you’re talking about real money. Make no mistake, we’re talking about real money here on top of the billions going to banks, insurance companies and mortgage lenders. And this shit sandwich would be a little easier for the American people and lawmakers to swallow if it weren’t for the fact that the story — and numbers — keep changing.
Still, as I’ve mentioned previously, no thoughtful person wants the automakers to disappear. Too many jobs go with them — in Ohio and elsewhere. And I go back to the view of former Firestone CEO John Nevin who opined two decades ago that the United States could not prosper as a nation of paper-pushers and burger flippers. Remember when Firestone was still a manufacturing company, providing thousands of jobs in what was once the Rubber Capital of the World. (Don’t rush to Wikipedia. It was Akron.)
Yet it troubles me that we have had so little honest disclosure and thoughtful discussion on the issue of how to best help the auto industry — and the thousands of people whose jobs are directly and indirectly related. It’s the rush to Iraq and the Wall Street bailout all over again. Maybe we should stop and ask, “Isn’t there a Plan B?” And if not, how confident are you that Plan A will really work?
Saying that, I believe we are starting to see some honest conversations of big, complex issues — and here’s where I believe we are going to end up.
- Congress and the administration are going to agree on some form of a rescue plan — call it a bailout or not — before the holidays. Can’t take a chance that GM and Chrysler are actually telling the truth and that the lights will go off New Year’s Eve.
- Ford is going to survive this mess — although emerging as a much different company. It has already taken a number of steps to restructure its operations and its product offerings. And the company wants access to federal money as a last resort, but has no plans now to touch it. Otherwise, CEO Alan Mulally wouldn’t be agreeing to work for a $1 — if the company has to use the loan money. Get it!
- Mr. and Ms. U.S. Taxpayer are going to keep Chrysler afloat until the company merges with GM or is sold off in pieces. Wonder what happens to my Jeep warranty?
- And GM — wow! GM will get the money it needs to avoid bankruptcy — but even its Plan A calls for a lot of bloodletting in the next months and years. Company says it will close more plants, going from about the 64 it operated in 2004 to 38 by the end of 2012. And it will focus on four brands: Chevrolet, Buick, GMC and Cadillac. If you own a Saab or a Saturn, well, good luck.
Here’s from an article in The New York Times today:
But G.M., the world’s largest automaker for decades, said Tuesday that it was in such dire straits that it would deeply cut jobs, factories, brands and executive pay as part of its plea to get $12 billion in federal loans and an additional $6 billion line of credit. G.M. also promised that it could be competitive on labor costs with Toyota by 2012.
G.M.’s president, Frederick A. Henderson, said the company would be insolvent if it did not receive federal assistance, including an infusion of $4 billion in cash before the end of the year.
“Absent support, frankly the company simply can’t fund its operations,” Mr. Henderson said in a call with reporters.
Actually, I give Henderson credit for being honest. “There is no Plan B.” He had the guts to face the Talking Heads on TV with that message last night. Good for him. OK. Now let’s hope that GM’s management, the leadership of the U.A.W. and a host of others can make Plan A work.