GM’s Bailout Plan: “F”

Wow. In an era of grade inflation — where anything below “A-” is considered failure, GM CEO Rick Wagoner turned in the most important term paper of his career a few weeks ago. And Professor Obama gave him an “F.” Ouch. To paraphrase John Belushi (Bluto) in the film Animal House when told he was being expelled with a zero point zero GPA: “Seven years of college down the drain.”

OK. I think Wagoner should have been asked to leave years ago. But by the GM Board and shareholders, not by the federal government. Still, the fact that he (and other senior managers like the resident blogger Bob Lutz, before his retirement a month or so ago) was able to remain at GM — a company that has lost some $80 billion and virtually all of its market value in the past four years — says a lot about the economic and moral recession that we are mired in these days.

And there really doesn’t appear to be great support thoughout the nation to rescue the auto makers. Some of the air went out of that balloon when the Big Three Auto Chiefs were asked how many of them came to Washington on a commercial flight a few months ago. Not one.

Obama is going to outline his plan for GM and Chrysler later this morning. Apparently Chrysler is toast. It’s one of the few companies in this entire bailout and nationalization debacle that isn’t too big to fail. And reports indicate that Chrysler will have 30 days to merge with Fiat. Wonder if I’ll have to be semi-fluent in Italian next time I take my Jeep Wranger in for service? I digress.

Then, according to reports I’ve read this morning, GM will have 60 days to resubmit another restructuring plan — one that I guess the Obama team hopes will actually work. Good luck with that — particularly if the plan rests on the electric car GM is developing to be the flagship of the fleet. Not a long enough extension cord for the amount of driving we do in this country. Europe, maybe. USA, nah.

Shoveling my bullshit aside for a minute, this really is a serious matter. Thousands of jobs — blue and white collar — are at risk. Communities — many in Ohio — may receive another economic blow that they can’t recover from. And we may very well be looking at the endgame of the fundamental restructuring of our economy that began decades ago. Ever see Michael Moore’s Roger and Me?

And we get back to some themes that I write about a lot these days: fairness, responsibility, trust and confidence. It will be interesting to me to see how Obama — and others both inside and outside GM and Chrysler — address these issues today and in the days to come.

I know. Jimmy Carter said life isn’t fair. But you really do need to hold a barf bag when looking at the millions that have gone to senior managers — in autos, banking, insurance and so on — who have crashed their companies and the economy and really taken no responsibility for failure. And I really do believe that this perception — and in many cases reality — about a lack of fairness undercuts trust and confidence.

There will be plenty of commentary about Obama’s plan and about the future of the Detroit auto makers, the willingness to bail out the Wizards on Wall Street but not the workers on Main Street and so on. But if you read only one article, take a look at this one from The New York Times over the weekend, “Detroit Faces Its Critics With Anger and Tears.”

It’s about Detroit — and about families who relied on the auto industry from generation to generation. It’s also about a community that has already undergone tremendous change — with no clear roadmap ahead.

I can relate to that growing up in Pittsburgh and living my adult life in Akron.

I think we are witnessing the dismantling of the America that was built by my mother and father’s generation — post World War 11 and post the Great Depression.

And maybe when historians write their term papers about this era years from now they will conclude: “Wagoner should have flown commercial.”

Time will tell.


5 responses to “GM’s Bailout Plan: “F”

  1. Re-reading E.F. Schumaker’s “Small is Beautiful” would be appropriate in times such as these.

    The remainder of the book’s title: “Economics as if people mattered”

    This is the price of unsustainable short-term gains at the expense of long-term sustainability.

    Oh, wait, I’m in the newspaper biz. My turn in the barrel is coming.

    • Hope I’m wrong about this, but something tells me a lot of jobs/industries are going to be “in the barrel” before we are done here. And Obama has a point. The auto industry reflects a crisis of leadership. Still, plenty of people, families and communities are paying the price. And I still don’t see how we will ever replace the auto industry jobs — white and blue collar.

  2. I grew up in Trumbull County, home to the GM Lordstown plant. Therefore, this topic truly hits home.

    I’d guess approximately 30 percent of my high school graduating class had at least one parent working at the plant. Every person living in the county can name at least five people he or she knows who works at GM.

    You make a great point. It’s sad to see how a lack of solid leadership can affect communities across the country on an immense level. GM Lordstown is one of the largest employers in the dying Mahoning Valley. It will be interesting to see what happens to the communities that rely so heavily on the auto industry as Obama, GM and Chrysler work to restructure the U.S. auto industry.

    We can only hope that in time, future organizations will learn from such mistakes and build their companies on such values as fairness, trust, etc.


  3. Rebecca,

    Thanks for your comment. And you are absolutely correct. Much like you, I grew up in a city that relied on manufacturing: Pittsburgh. When I graduated from high school (1965), most didn’t go to college. They went to work in a manufacturing related job — or to the Army. And most carved out very good middle-class lives.

    I worry that this lack of leadership — and our national belief over two decades or more that manufacturing doesn’t matter — will really hurt this country in the long run.

  4. The current news on the bailout plan is that there are still $328 billion left in the fund that hasn’t been spent. And because of that, a debate in congress could coincide on the topic of how the remaining money be spent.

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