Yesterday's big news was GM Chairman Ed Whitacre's announcement that he'll be retiring in less than a month.
Timed to be on the day of GM's big earnings announcement, the best in years, I'm sure Whitacre is trying to continue his smoke-and-mirrors act of a few months ago, on which Paul Ingrassia, the Wall Street Journal's legendary auto sector reporter/executive, also commented at the time.
If you ask me, Whitacre knows this latest earnings pop is the best GM's going to see for a while. And Ed should know.
Having arranged the faux-debt repayment stunt in April, and seemingly presided over this past quarter's recent record earnings, Ed can make a quick exit, stage left, a la SnagglePuss, leaving his replacement holding a very large, public bag.
This was the subject of a couple of hot and heavy debates on CNBC yesterday morning and afternoon. The network trotted out its biased new contributor, Bob Lutz, who promptly gushed over everything Whitacre has done or said. Ironically, Lutz gave accolades to Whitacre for being a telephone guy, but turning around the failed auto maker, when auto execs could not.
Pardon me, Bob, but, uh, weren't YOU one of those inept auto execs? After all, you worked at every one of the Big Three.
This set Lutz up to crow about Whitacre's replacement being a non-car guy. In fact, he's another telephone veteran. No surprise there. And he's a former US Navy nuclear submarine officer. Lutz is a former fighter pilot, so he stressed the military connection. I'm not saying it's not something that is often helpful. But surely there have been inept corporate executives who were in the service.
Tom Labrecque of Chase Manhattan Bank comes to mind...... what a loser. See my point?
Anyway, Jeff Sonnenfeld of Yale's Management School concurred that Ed is running off the field and into the clubhouse before the game is over and the clock has run out.
As I surmised earlier in this post, one has to ask why a chairman would do this? Certainly not because things are about to get better. No, it's more likely that this is a lucky confluence of events.
If Art Laffer is right about the US economy collapsing next January, Whitacre's exit is nearly perfectly timed. By the way, unemployment claims were up by a surprising amount this morning.
GM isn't fixed. It's not an attractive investment. It's still an aged, ailing auto designer and assembler which was forced by the government to hand over large amounts of asset value to its unions. There's no way it's an attractive investment in an attractive sector.
I neither like nor respect Ed Whitacre. But give him credit for having a good sense of timing. Watch him prepare for the next act in his career.
The "it was doing fine when I left" phase.
Showing posts with label Whitacre. Show all posts
Showing posts with label Whitacre. Show all posts
Friday, August 13, 2010
Thursday, May 13, 2010
GM Wants A New Captive Finance Unit
The headline in yesterday's Wall Street Journal, "GM Looks At Return To Auto Lending," caught me completely off guard when I saw it.
Is Ed Whitacre nuts?
The lead paragraph in the Journal article stated,
"General Motors Co. is weighing an attempt to buy back its old auto-lending arm or start a new finance company in a bid to become more competitive and bolster the company's appeal ahead of an initial public stock offering...."
This is surely among the more wrong-headed, disastrous moves I've read regarding the failed auto maker.
If the 'core competence' notion has any value, this is one stupendously dumb idea. GM has shown over several decades that it couldn't even build attractive, competitively priced gasoline-engine cars.
Its financing arm, GMAC, eventually grew to be its own entity, pursuing profitability through....sigh.....residential finance. Where it went fabulously wrong and lost billions.
True, an equally-naive Cerberus bought into the unit before the implosion. But my point is that finance is, or should be, a related but non-core function for making and selling vehicles.
The temptation has been, in past decades, for US auto makers to cut price through finance terms, making their financing arms the repository of losses while their vehicle operations look healthier.
Granted, the Journal piece went on to note,
"GMAC, which recently renamed itself Ally Financial, made $653 million on its North American automotive operations in 2010's first quarter."
Of course, operational profit on auto lending may, and probably does not address the balance sheet risks for Ally of holding, selling or hedging its portfolio of auto loans.
Like any financial institution which has borrowed in the credit markets, is highly leveraged, and makes loans, Ally and, thus, GM, when it either repurchases part of Ally or starts its own new finance unit, has to manage asset/liability risks.
How is Ally doing on that score right now? If GM owned Ally, and continued its infamous 0% rate financing programs, to which it has seemed to always turn when tempted by slow sales or share erosion, how would it manage borrowing money at positive interest rates and lending it at lower ones?
Sounds to me like yet another recipe for disaster at GM.
My proprietary research has shown that financial services firms which concentrate on just one, or a few businesses, tend to have higher, more consistent total returns over time. Broadening a firm's business mix, especially when the businesses don't share many fundamental functions, tends to overtax management and promote the lack of attention to the core businesses.
In GM's case, the only link between the two businesses is that the finance arm would be making loans whose collateral was the cars GM made and sold. Aside from that, the real question is whether auto financing, as a standalone business, can generate long term superior returns relative to GM's auto making business.
If so, shouldn't any US investor, who, by definition, as a taxpayer, is already long GM, have the option of buying equity in the finance company that services GM, rather than be forced to own that, too?
Is Ed Whitacre nuts?
The lead paragraph in the Journal article stated,
"General Motors Co. is weighing an attempt to buy back its old auto-lending arm or start a new finance company in a bid to become more competitive and bolster the company's appeal ahead of an initial public stock offering...."
This is surely among the more wrong-headed, disastrous moves I've read regarding the failed auto maker.
If the 'core competence' notion has any value, this is one stupendously dumb idea. GM has shown over several decades that it couldn't even build attractive, competitively priced gasoline-engine cars.
Its financing arm, GMAC, eventually grew to be its own entity, pursuing profitability through....sigh.....residential finance. Where it went fabulously wrong and lost billions.
True, an equally-naive Cerberus bought into the unit before the implosion. But my point is that finance is, or should be, a related but non-core function for making and selling vehicles.
The temptation has been, in past decades, for US auto makers to cut price through finance terms, making their financing arms the repository of losses while their vehicle operations look healthier.
Granted, the Journal piece went on to note,
"GMAC, which recently renamed itself Ally Financial, made $653 million on its North American automotive operations in 2010's first quarter."
Of course, operational profit on auto lending may, and probably does not address the balance sheet risks for Ally of holding, selling or hedging its portfolio of auto loans.
Like any financial institution which has borrowed in the credit markets, is highly leveraged, and makes loans, Ally and, thus, GM, when it either repurchases part of Ally or starts its own new finance unit, has to manage asset/liability risks.
How is Ally doing on that score right now? If GM owned Ally, and continued its infamous 0% rate financing programs, to which it has seemed to always turn when tempted by slow sales or share erosion, how would it manage borrowing money at positive interest rates and lending it at lower ones?
Sounds to me like yet another recipe for disaster at GM.
My proprietary research has shown that financial services firms which concentrate on just one, or a few businesses, tend to have higher, more consistent total returns over time. Broadening a firm's business mix, especially when the businesses don't share many fundamental functions, tends to overtax management and promote the lack of attention to the core businesses.
In GM's case, the only link between the two businesses is that the finance arm would be making loans whose collateral was the cars GM made and sold. Aside from that, the real question is whether auto financing, as a standalone business, can generate long term superior returns relative to GM's auto making business.
If so, shouldn't any US investor, who, by definition, as a taxpayer, is already long GM, have the option of buying equity in the finance company that services GM, rather than be forced to own that, too?
Friday, April 23, 2010
Paul Ingrassia On Ed Whitacre's Publicity Stunt
Paul Ingrassia, the one-time Wall Street Journal reporter, bureau chief and senior executive, and Pulitzer Prize-winning author, wrote about Ed Whitacre's big publicity stunt on Wednesday, in this morning's edition of the Journal.
Echoing my own comments, Ingrassia explained that the amount of government equity in GM, versus the 'debt' it loaned the bankrupt company, was really a matter of discretion. Not some market-determined mix.
As such, Ingrassia pointed out that, while it's true Whitacre paid off a $5.8B loan far ahead of anyone's expectation, GM still owes the government, meaning you and me, about $52B in 'equity,' which was really just old GM debt converted, via government bailout money, into government ownership of the defunct car maker.
Ingrassia then smugly noted that market-leader Ford, a much healthier and better-managed competitor, by comparison, has a market cap of only $48B.
This reinforces the point I made in that post,
"It is just this process that is frustrated by crony capitalism such as we've witnessed in the GM bailout. Instead of the resources wasted at GM being freed up to be used elsewhere in the economy, they were allowed to remain in place, then more capital added, from taxpayers, as a free equity injection. Free to GM, but very costly to taxpayers and the economy in general.
Force GM off government life support, force it out into the private sector whole or in pieces, forcing taxpayers, the federal government and, most of all, you, Ed, to see what a discount to the government's bailout price is taken on the IPO.
Now, wouldn't that be eye-opening? Somehow, Ed, I doubt you'd be toasting that event."
Thanks to Paul Ingrassia's convenient provision of Ford's numbers, we can easily see that GM could not possibly get $52B from private investors to replace the government's "equity" position. It's underwater.
So far from repaying a loan in full, Whitacre merely made a downpayment of just over 10% of our taxpayer bailout to GM, or about $6B of the $58B in old GM balance sheet capital replaced with public money.
Quite the different picture, eh? A 10% payoff, not 100%.
Keep trying, Ed. You've got a very long way to go.
Echoing my own comments, Ingrassia explained that the amount of government equity in GM, versus the 'debt' it loaned the bankrupt company, was really a matter of discretion. Not some market-determined mix.
As such, Ingrassia pointed out that, while it's true Whitacre paid off a $5.8B loan far ahead of anyone's expectation, GM still owes the government, meaning you and me, about $52B in 'equity,' which was really just old GM debt converted, via government bailout money, into government ownership of the defunct car maker.
Ingrassia then smugly noted that market-leader Ford, a much healthier and better-managed competitor, by comparison, has a market cap of only $48B.
This reinforces the point I made in that post,
"It is just this process that is frustrated by crony capitalism such as we've witnessed in the GM bailout. Instead of the resources wasted at GM being freed up to be used elsewhere in the economy, they were allowed to remain in place, then more capital added, from taxpayers, as a free equity injection. Free to GM, but very costly to taxpayers and the economy in general.
Force GM off government life support, force it out into the private sector whole or in pieces, forcing taxpayers, the federal government and, most of all, you, Ed, to see what a discount to the government's bailout price is taken on the IPO.
Now, wouldn't that be eye-opening? Somehow, Ed, I doubt you'd be toasting that event."
Thanks to Paul Ingrassia's convenient provision of Ford's numbers, we can easily see that GM could not possibly get $52B from private investors to replace the government's "equity" position. It's underwater.
So far from repaying a loan in full, Whitacre merely made a downpayment of just over 10% of our taxpayer bailout to GM, or about $6B of the $58B in old GM balance sheet capital replaced with public money.
Quite the different picture, eh? A 10% payoff, not 100%.
Keep trying, Ed. You've got a very long way to go.
Wednesday, April 21, 2010
Ed Whitacre's Disingenuous Photo-Op
Unelected, government-appointed GM CEO and Chairman Ed Whitacre wrote an editorial timed to appear in this morning's Wall Street Journal in conjunction with his CNBC photo-op showing him repaying $5.8B of government loans to the US and Canada.
It was amusing to watch CNBC anchors congratulating themselves and reporter Phil LeBeau for an interview with Whitacre that, honestly, would have been best if it had never occurred. Talk about free advertising while misleading the public! Just another benefit of crony capitalism- more on that a little later on in this post.
It's a truly disingenuous staging of something Whitacre wants us all to cheer, but, in reality, should remind us to be disappointed and angry.
Elements of Whitacre's Journal piece appear below in italcs, with my comments following.
Today, General Motors is announcing that it has made a payment of $5.8 billion to the U.S. Treasury and Export Development Canada. We're paying back—in full, with interest, years ahead of schedule—loans made to help fund the new GM.
Our ability to pay back these loans less than a year after emerging from bankruptcy is a sign that our plan for building a new GM is working. It is also an important step toward eventually reducing the amount of equity the governments of the U.S., Canada and Ontario hold in our company. Combined, these governments hold a majority of GM's equity, and we want citizens to know how their governments' money is being put to work.
Too bad, Ed, as Gerald O'Driscoll recently wrote in the Journal, that citizens of the countries didn't get to allocate that capital via free markets but, instead, were forced to watch their governments engage in crony capitalism. Why bother with the photo-op Ed, when all you have to do is convince Congress and the administration to continue supporting you?
Oh, and that union which was basically paid off, while shareholders and creditors got stuffed. Did you agree with all those actions, Ed?
Wait, you spent your entire career in one of the most heavily-regulated industries in history, telecom. You're used to fawning on your knees to government officials.
Following the initial crisis and the bankruptcy of the old GM last year, a new GM has emerged as a leaner, stronger company. We have eight new members on our 13-member board of directors. Twelve of the top 13 senior leaders are new to GM (from places outside the industry such as Microsoft and AT&T) or in new jobs at the company. You can feel a renewed energy and commitment at GM. Our new vehicles are generating sales, and these sales are allowing us to make investments and create jobs.
To support our steady sales growth at Chevrolet, Buick, GMC and Cadillac, in the past nine months we have made investments totaling more than $1.5 billion at 20 facilities in the U.S. and Canada, restoring or creating more than 7,500 jobs. Just this morning we announced that we will make a $257 million investment in existing plants in Detroit and Kansas City, Kan., to build the next generation of our award-winning Chevy Malibu.
Gee, Ed, aren't you forgetting a little thing in economics called "opportunity costs?"
Who are you, or any government official, to say that the alleged new 7,500 jobs at GM are better than letting capital markets create jobs?
Maybe if GM were allowed to go through a normal bankruptcy, and another firm had bought and reorganized various divisions of the old GM, all that borrowed Canadian and US money may have stayed in the private sector and funded other, better jobs with new firms.
My brilliant boss at Chase, SVP Gerry Weiss, used to remind us that the real value of informed resource allocation across the bank's many businesses was realized by transferring money and employee counts from the least-efficient, money-losing units, to more efficient, more profitable and, typically, much faster-growing units. The major delta in the bank's performance would result from this move of resources from extremes. From extremely bad uses to extremely good uses.
It is just this process that is frustrated by crony capitalism such as we've witnessed in the GM bailout. Instead of the resources wasted at GM being freed up to be used elsewhere in the economy, they were allowed to remain in place, then more capital added, from taxpayers, as a free equity injection. Free to GM, but very costly to taxpayers and the economy in general.
Did you ever consider that, Ed? Isn't that an unseen, hidden, but very real cost to our economy?
What about the lasting damage to the US economy by having global investors watch us bail out a failed company in an old industry with borrowed and printed money? You don't think that will have lasting negative consequences for the US economy in terms of government borrowing costs, or the ability to continue borrowing in global markets? Will investors really want to invest in a country, knowing their funds go to overpaid union workers at a has-been, failed auto company?
Aren't these also hidden costs of the GM bailout?
Of course they are. This is what O'Driscoll highlighted as the downside of crony capitalism. Economics is about efficient allocation of resources in a free market of true prices, not politically-motivated bailouts of old, commoditized industries supporting bloated payrolls of highly-paid, over-paid union workers churning out largely unwanted vehicles. That's how GM managed to go bankrupt, Ed.
If you can't understand the notion of opportunity costs and efficient resource allocation, Ed, maybe you're not the right guy to chair a major US corporation. Then, again, since GM is, in essence, now just another government agency, I guess you probably qualify as a government bureaucrat, after all those years being just like one while running a Bell System operating company.
As a global car maker, GM is investing in energy solutions that will increase efficiency across our vehicle lineup in the United States. For example, we are adding a third shift and 1,050 jobs at our plant in Lordstown, Ohio, to build the fuel-efficient Chevy Cruze, which has been a hit in every region where it has been introduced. An Eco version of the Cruze, with a 40 miles-per-gallon highway rating, will give customers the fuel economy of a hybrid without the high price tag.
This year, we will introduce the Chevrolet Volt, which can provide up to 40 miles of electric-only, emissions-free driving, backed up with a range extender (a small engine) that can keep you going should the battery run low. Developing the Volt has led to new investments in battery labs and battery manufacturing and it has put GM, and by extension the North American car industry, in the front row of the global electric vehicle race.
Ed, I can't help but think that dozens of smaller, truly electric power-oriented startups would have done much better on this sort of product and component development than you will at GM.
After all, as a conventional car maker, GM failed. You guys couldn't even make money on gasoline-powered vehicles.
Now, with absolutely NO risk premium, but, instead, sweetheart loans and equity injections from Washington, you expect all of us to believe your crew can profitably do in alternative fuel vehicles that at which you failed in a technology in which you had nearly a hundred years of experience?
C'mon, we're not that naive. Capital markets never would have funded GM doing this. That's why you went broke. Instead, many smaller, more innovative, hungrier firms convinced the private sector to invest in their ideas.
You and your company simply mozied up to the public trough and began chowing down on low-cost taxpayer funding.
We still have a lot of hard work ahead of us, but we are making real progress toward our vision of designing, building and selling the world's best vehicles.
Nobody was happy that GM needed government loans—not the governments, not the taxpayers and, quite frankly, not the company. We believe we can best thank the citizens of the U.S. and Canada by making sure that their investments are hard at work every day, building high quality, fuel-efficient vehicles our customers can count on.
Ed, I believe you can best reward citizens by immediately selling the company into whatever pieces private sector buyers might want. And simply close the rest. True, the government-run faux-bankruptcy of GM, to the benefit of unions, and detriment of legitimate creditors, was a mistake.
And we can't really undo it entirely. But we can still terminate it earlier, at less opportunity cost to our economy, by doing now what should have been done over a year ago. Force GM off government life support, force it out into the private sector whole or in pieces, forcing taxpayers, the federal government and, most of all, you, Ed, to see what a discount to the government's bailout price is taken on the IPO.
Now, wouldn't that be eye-opening? Somehow, Ed, I doubt you'd be toasting that event.
It was amusing to watch CNBC anchors congratulating themselves and reporter Phil LeBeau for an interview with Whitacre that, honestly, would have been best if it had never occurred. Talk about free advertising while misleading the public! Just another benefit of crony capitalism- more on that a little later on in this post.
It's a truly disingenuous staging of something Whitacre wants us all to cheer, but, in reality, should remind us to be disappointed and angry.
Elements of Whitacre's Journal piece appear below in italcs, with my comments following.
Today, General Motors is announcing that it has made a payment of $5.8 billion to the U.S. Treasury and Export Development Canada. We're paying back—in full, with interest, years ahead of schedule—loans made to help fund the new GM.
Our ability to pay back these loans less than a year after emerging from bankruptcy is a sign that our plan for building a new GM is working. It is also an important step toward eventually reducing the amount of equity the governments of the U.S., Canada and Ontario hold in our company. Combined, these governments hold a majority of GM's equity, and we want citizens to know how their governments' money is being put to work.
Too bad, Ed, as Gerald O'Driscoll recently wrote in the Journal, that citizens of the countries didn't get to allocate that capital via free markets but, instead, were forced to watch their governments engage in crony capitalism. Why bother with the photo-op Ed, when all you have to do is convince Congress and the administration to continue supporting you?
Oh, and that union which was basically paid off, while shareholders and creditors got stuffed. Did you agree with all those actions, Ed?
Wait, you spent your entire career in one of the most heavily-regulated industries in history, telecom. You're used to fawning on your knees to government officials.
Following the initial crisis and the bankruptcy of the old GM last year, a new GM has emerged as a leaner, stronger company. We have eight new members on our 13-member board of directors. Twelve of the top 13 senior leaders are new to GM (from places outside the industry such as Microsoft and AT&T) or in new jobs at the company. You can feel a renewed energy and commitment at GM. Our new vehicles are generating sales, and these sales are allowing us to make investments and create jobs.
To support our steady sales growth at Chevrolet, Buick, GMC and Cadillac, in the past nine months we have made investments totaling more than $1.5 billion at 20 facilities in the U.S. and Canada, restoring or creating more than 7,500 jobs. Just this morning we announced that we will make a $257 million investment in existing plants in Detroit and Kansas City, Kan., to build the next generation of our award-winning Chevy Malibu.
Gee, Ed, aren't you forgetting a little thing in economics called "opportunity costs?"
Who are you, or any government official, to say that the alleged new 7,500 jobs at GM are better than letting capital markets create jobs?
Maybe if GM were allowed to go through a normal bankruptcy, and another firm had bought and reorganized various divisions of the old GM, all that borrowed Canadian and US money may have stayed in the private sector and funded other, better jobs with new firms.
My brilliant boss at Chase, SVP Gerry Weiss, used to remind us that the real value of informed resource allocation across the bank's many businesses was realized by transferring money and employee counts from the least-efficient, money-losing units, to more efficient, more profitable and, typically, much faster-growing units. The major delta in the bank's performance would result from this move of resources from extremes. From extremely bad uses to extremely good uses.
It is just this process that is frustrated by crony capitalism such as we've witnessed in the GM bailout. Instead of the resources wasted at GM being freed up to be used elsewhere in the economy, they were allowed to remain in place, then more capital added, from taxpayers, as a free equity injection. Free to GM, but very costly to taxpayers and the economy in general.
Did you ever consider that, Ed? Isn't that an unseen, hidden, but very real cost to our economy?
What about the lasting damage to the US economy by having global investors watch us bail out a failed company in an old industry with borrowed and printed money? You don't think that will have lasting negative consequences for the US economy in terms of government borrowing costs, or the ability to continue borrowing in global markets? Will investors really want to invest in a country, knowing their funds go to overpaid union workers at a has-been, failed auto company?
Aren't these also hidden costs of the GM bailout?
Of course they are. This is what O'Driscoll highlighted as the downside of crony capitalism. Economics is about efficient allocation of resources in a free market of true prices, not politically-motivated bailouts of old, commoditized industries supporting bloated payrolls of highly-paid, over-paid union workers churning out largely unwanted vehicles. That's how GM managed to go bankrupt, Ed.
If you can't understand the notion of opportunity costs and efficient resource allocation, Ed, maybe you're not the right guy to chair a major US corporation. Then, again, since GM is, in essence, now just another government agency, I guess you probably qualify as a government bureaucrat, after all those years being just like one while running a Bell System operating company.
As a global car maker, GM is investing in energy solutions that will increase efficiency across our vehicle lineup in the United States. For example, we are adding a third shift and 1,050 jobs at our plant in Lordstown, Ohio, to build the fuel-efficient Chevy Cruze, which has been a hit in every region where it has been introduced. An Eco version of the Cruze, with a 40 miles-per-gallon highway rating, will give customers the fuel economy of a hybrid without the high price tag.
This year, we will introduce the Chevrolet Volt, which can provide up to 40 miles of electric-only, emissions-free driving, backed up with a range extender (a small engine) that can keep you going should the battery run low. Developing the Volt has led to new investments in battery labs and battery manufacturing and it has put GM, and by extension the North American car industry, in the front row of the global electric vehicle race.
Ed, I can't help but think that dozens of smaller, truly electric power-oriented startups would have done much better on this sort of product and component development than you will at GM.
After all, as a conventional car maker, GM failed. You guys couldn't even make money on gasoline-powered vehicles.
Now, with absolutely NO risk premium, but, instead, sweetheart loans and equity injections from Washington, you expect all of us to believe your crew can profitably do in alternative fuel vehicles that at which you failed in a technology in which you had nearly a hundred years of experience?
C'mon, we're not that naive. Capital markets never would have funded GM doing this. That's why you went broke. Instead, many smaller, more innovative, hungrier firms convinced the private sector to invest in their ideas.
You and your company simply mozied up to the public trough and began chowing down on low-cost taxpayer funding.
We still have a lot of hard work ahead of us, but we are making real progress toward our vision of designing, building and selling the world's best vehicles.
Nobody was happy that GM needed government loans—not the governments, not the taxpayers and, quite frankly, not the company. We believe we can best thank the citizens of the U.S. and Canada by making sure that their investments are hard at work every day, building high quality, fuel-efficient vehicles our customers can count on.
Ed, I believe you can best reward citizens by immediately selling the company into whatever pieces private sector buyers might want. And simply close the rest. True, the government-run faux-bankruptcy of GM, to the benefit of unions, and detriment of legitimate creditors, was a mistake.
And we can't really undo it entirely. But we can still terminate it earlier, at less opportunity cost to our economy, by doing now what should have been done over a year ago. Force GM off government life support, force it out into the private sector whole or in pieces, forcing taxpayers, the federal government and, most of all, you, Ed, to see what a discount to the government's bailout price is taken on the IPO.
Now, wouldn't that be eye-opening? Somehow, Ed, I doubt you'd be toasting that event.
Tuesday, January 26, 2010
Ed Whitacre Anoints Himself GM CEO
You certainly can't fault Ed Whitacre for lacking chutzpah, can you?
On this basis,
"I like the people, I made some management changes and I just felt comfortable with the team,"
Whitacre decided he will be GM's long term CEO. Never mind the board- it's been a useless rubber stamp for decades. Whitacre was appointed by the current administration, so any notionally publicly-held company would be asking for a fight with the thugs in Washington if they were to contest the federal government's wishes.
After all, consider AIG's fate.
So Whitacre crowned himself king of GM.
Unfortunately, Whitacre's experience has been in a sector more or less defined by government intervention- telecommunications. Sure, he cobbled together SBC, now named ATT, from the remnants of various Bell System operating companies and, finally, the remains of the one-time parent company. But as I noted in an earlier post, the most important task in that sector was managing the regulatory environment, and perhaps cost-cutting.
GM needs an entirely different set of skills in its CEO. To sanction Whitacre's self-promotion to CEO is to admit that GM will continue to be a ward of the US taxpayer. The new CEO's most prominent management changes were to bring in two old regulatory affairs specialists who worked for him at SBC.
Does that tell you something? It ought to.
Whitacre sees GM's most important task as managing Washington. Beyond that, I don't think Ed Whitacre has any idea how to run a competitive company, the business of which is to sell big ticket products to consumers.
Anybody stupid enough to still be a voluntary GM shareholder deserves what happens next.
Oh, right. That would be mostly union members, wouldn't it?
On this basis,
"I like the people, I made some management changes and I just felt comfortable with the team,"
Whitacre decided he will be GM's long term CEO. Never mind the board- it's been a useless rubber stamp for decades. Whitacre was appointed by the current administration, so any notionally publicly-held company would be asking for a fight with the thugs in Washington if they were to contest the federal government's wishes.
After all, consider AIG's fate.
So Whitacre crowned himself king of GM.
Unfortunately, Whitacre's experience has been in a sector more or less defined by government intervention- telecommunications. Sure, he cobbled together SBC, now named ATT, from the remnants of various Bell System operating companies and, finally, the remains of the one-time parent company. But as I noted in an earlier post, the most important task in that sector was managing the regulatory environment, and perhaps cost-cutting.
GM needs an entirely different set of skills in its CEO. To sanction Whitacre's self-promotion to CEO is to admit that GM will continue to be a ward of the US taxpayer. The new CEO's most prominent management changes were to bring in two old regulatory affairs specialists who worked for him at SBC.
Does that tell you something? It ought to.
Whitacre sees GM's most important task as managing Washington. Beyond that, I don't think Ed Whitacre has any idea how to run a competitive company, the business of which is to sell big ticket products to consumers.
Anybody stupid enough to still be a voluntary GM shareholder deserves what happens next.
Oh, right. That would be mostly union members, wouldn't it?
Subscribe to:
Posts (Atom)
