I really think so, for the time being anyway. This whole GM/Chrysler thing is an unneeded diversion right now. GM doesn't have the time, money, focus or energy to be d!cking around with this thing right now. I know the prize here is Chrysler's alledged cash - which in the long run, is not enough to save GM anyway.

Okay, I'm not an expert here, but I have owned, bought, sold, started up, run, managed, turned around afew businesses over the past couple of decades. I've also worked for large corporations. There's a difference between how a corporate culture runs a business and how an owner runs a business. My overall sense is that GM's leaders don't run their business as if they're owners, they run it as if they're middle managers just looking for next quarter's numbers. They need to start acting like owners. Or at least they needed to about a decade ago. It could be too late already. In contrast, Ford's Mullaly, shows ballsy leadership. GM has totally squandered most of it's options already, selling profitable businesses, investing in ill-concieved brands, allowing partners to dictate terms (Fiat, GMAC) - it just disgusts me. I just hope it's not too late for GM, they're almost out of chances.

Hey man, don't shoot the messenger. Not to put too fine a point on it - but this was yet another missed opportunity for GM.

 

The problem with Chrysler going forward on their own is that JPMorgan chase is calling in their $9 billion loan, which forces Cerberus to merge Chrysler with a corp. that could pay back JPMorgan or sell it off in parts. JPMorgan sees an opportunity to get out of a failing automaker while there is still a chance to get its cash back, and really doesnt give a flying fu(k how many workers are displaced.

 

 

Both of you are right, but you also have to look at 2 points. One, which direction causes the least damage, and two, which one does the most good.

It's pretty obvious what GM wants. Money, minivans, and maybe Jeep. Everything else will almost certainly be phased out and assets sold. It's also obvious that unless GM does something drastic themselves, all that's going to come out of this is GM crashing and taking 2/3s of the US automaking business and companies dependent of it down with it unless they get a Wall Street-like bailout of dozens if not hundreds of billions of dollars.

At least with the Nissan-Renault tie in, Chrysler becomes an American manufacturer and distributor of badge engineered Renaults (much like Ford producing it's European models here in the US) while keeping it's minivans, trucks, and have a good chance for an LX replacement (perhaps based on Nissan's RWD chassis). Chrysler may lose a few jobs in the process, but nothing like the catostrophic losses that would definately occur under GM and without costing the government as much as twice the Homeland Security budget.



Jumping back to GM's situation for a moment, I think the view that GM's upper management runs GM like middle managers instead of owners is a very good point. But I'd take it a few steps farther.

Rick Wagoner, CEO of General Motors has far less authority at GM than Alan Mually has at Ford, or Dieter Zetsche had at Chrysler despite having to answer to his bosses in Germany. Bob Lutz has the title of Chairman of Global Product Development, simplyfied: "Car Czar". Yet, he has had to "navigate" the Solstice through the approval process, had to "win" a business case to get the G8, had to get together with a couple of other GM exectives (including the CEO) to end-run and then all but ram the new Camaro through to production. Early this decade, Rick Wagoner saw and championed a CTS coupe that was all but ready. However he was powerless to approve it and encouraged the team working on it to make a good case to get it to market. It was shot down.

The problem with GM isn't a lack of talent or people wanting to make the right decisions. It's that no one is truly empowered to make the right decisions. From the CEO on down. When you are in an organization where you don't have the power to decide, you don't take chances. Anyone that has the power to derail, block, or slow down anything from anybody is going to be far more intrested in holding on to that power than they are to make the right decision for the good of the company. When someone comes along and does an endrun by them, they can retaliate the next time. That's why Bob Lutz refused to go to GM unless he had a Chairman (not President) title. And even then, that hasn't done much good (ie: the RWD Impala and the Buick Park Avenue).

There is a management problem at GM. But it's not due to individuals, it's the system. The way GM is set up. To be honest, I can't see how it could change.

The Ford Motor Company (although a corperation) is really a family business. The family can put anyone they want in the CEO position. The family can give the CEO near dictorial powers. Allan Mulally has had progressively increased authority as the comfort level with the owners and Bill Ford has increased and the market has grown tougher.

Chrysler has always had a "Us against the World" mentality, and has operated more like a "Skunkwerks" than a traditional car company. Getting something done rarely needed more than a few key meetings with higher ups and a few rooms in a building. Bob Lutz and Tom Gale almost singlehandedly created the Viper with Carrol Shelby as an advisor. The Plymouth Prowler was born of a napkin doodle during a power lunch. Even the LX chassis development team had an atmosphere similar to that of Ford's old SVT team (working as a tight group outside of the main company...Daimler).

GM, again, has great talent. GM is still the planet's biggest automaker, and it has the purchase power that only economy of scale can wield. Only GM could dominate the Chinese car industry as it has. Most of GM's ideas are not just sound, they are unassailable like using China to counter a no-growth car market in Europe and North America, creating global homerooms for different platforms, integrating development and design via supercomputers on a global scale.

The problems come when GM's decision processes don't change with it's abilities. You have integrated development but they don't engineer a car for global markets. You create a low cost RWD chassis with the US market in mind, but then wipe out almost all plans to produce it in the US. You have a name brand that's number one in China, while that same brand here in the US flounders with models that aren't even as new or advanced as what you're selling 'over there'. You create a position of "Car Czar", but outside of improving materials and design, has no independent power to move new vehicles to market.

GM is a great company with great potential. But GM needs to worry more about internal restructuring, wiping out fifedoms and empowering it's executives to make decisions and take action, as well as rewarding them for successes as well as hold them accountable for failures.

Even Alan Mulally would fail at GM under their current setup.

 

So, how is Daimler playing in all this (or how are they responding)? Are they really looking to give up their 20% control in Chrysler that bad? How much money would need to be put in the table to get their share?

What about GM, how much money are they going to have to come up with? Does anyone have the money/resources to get a loan from anyone right now to make a Chrysler sale happen? JPMorgan wants out, but what bank is going to ***** up the money for someone else to buy up the 80% Chrysler stake?

Also, I remember the Ford "financial board" was making all the calls as to whether what cars were made and such. It was where the Ford family still held control of Ford. Soon after Mullaly came in, they gave up that control so he could do what needed to be done to turn Ford around. So, is there a similar setup at GM? Some penny pinchers board that can have complete control of killing off good models because they don't think its a good venture?

 

I agree Guy. GM is culturally biased towards indecision or rather decisions by committe. Bold moves are virtually impossible. Risks or investments which might payoff big, years down the line, are hardly taken or even considered. What for? Someone else will get the credit for them by then, and you'll just take the heat for this month's/quarter's/year's/ decade's expenditures.

 

So, does GM know this?? I mean seriously, one would think that in a desparate time like this that desparate measures should be taken, like restructuring it's management team and desicion makers. Just like Guy said, "Take Chances"...

Is it possible that the real issues are just to close to their face that they cannot see them?

I read a post like guys, and I just want to handcuff everyone at GM in one big room and force them to read it. This particular thread would be a good one! Then, not let any of them out until they come up with a plan on how they are going to re-structure and plan for a successfull GM future!!!

GEESH!!!! Is it to much to ask for?!?!?!?!?!?

 

Apparently, yes, it's too much to ask for.....because if that were to really happen, some of the people handcuffed in that room would walk out without their jobs and/or power stake in the company - even if that's exactly what it takes to save GM.....sad indeed.

 

Right on the nose!

 

Of course they do.

 

Great Read Guy! Questions though: Was GM always like this, and if not, what caused them to become this way? Is there a solution to this from within GM management, or are the levels of management to thick for them to right themselves? If they can't turn themselves around, would it take someone to buy them out, fire all these layers of management, and install a new philosophy from the top down?

 

If you say "North American Car" then that can work.

I agree with you 150%, but sadly there are reasons for the situation, top to bottom. OSHA and Environmental stuff on the legal side, minimum wage, unemployment, and disability... Tax rates, property values, utility prices... Atleast on the top end some engineering/design outsourcing is coming back to the US. I've seen several companies that have dramatically shrunk their outsourcing to India and elsewhere over issues that American workers just dont have.

Wasnt it Ford himself long ago that said if you have a guy on an assembly line that can't afford what he's building that the system is bound to fail?

GM's management is more like a government than a corporation.

Alan Mulally is trying to turn around a super tanker in a small harbor, and he's got the cajones to do what it takes... time will tell if he manages to avoid a spill. If GM made the same decision Ford has now made with Mulally when it was painfully obvious that this was coming (ala the truck market tanked), or even earlier this year, their odds of survival would be loads better.

Even to this day the executives and upper management, who are well aware of their likely demise, would rather hold to their stock options and paychecks till the company burns then actually letting go of their power and money to hope their company survives and give it a breath of nothing more than hope.

I honestly dont think GM's upper level, aside from a handful of individuals, even truly cares about GM anymore, and they stopped caring about cars a looooong time ago.

 

that is indeed what it seems

 

Hasn't this thread taken a turn?

It wasn't long ago that people were saying GM should sell off GMAC. Now that GM's done so, the very entity it sold GMAC to is threatening to put the whole auto industry on its knees?

It's Cerberus and JP Morgaon that doesn't care about the fate of Chrysler and they're now using GM to get their money back! That's how I read the current turmoil... but always happy to be corrected!

 

Yes, GM has always been like this.

Ross Perot sold his company to GM in the 1980s with the intention of getting inside and shaping things up. Instead, he ran into GM's bureacracy, and both him an GM got frustrated to the point where GM paid him alot of money to leave, and he was willing to take it and leave.

The thing is, GM's system worked well when GM owned 50-70% of the US car market. Today, they own barely 20 and the market is changing in a matter of months not years. GM is still stuck in the 60s and here we are with even Korea making some amazing cars and Ford at the point of making and selling their European models. GM modernized it's systems and development. But IMO, they can't make any real use of it.

Today, GM can create a all new car quicker than they can get it approved.

It's about 18 months to develop the Camaro, from the time money was released till today. Yet, it took (depending on where you start) anywhere from 2 years to 5 years just to get from idea to approval. All the engineering, testing, sourcing, contracts, OEM development, testing, and verifying, all takes lass time than to make a product decision.

The Cobalt took about 18 months from approval to intro.

The product side is darn near perfect.

The decision making side is far from it.