by Lloyd Frazier
At an unprecedented time, when automakers around the globe are struggling, we capitalist American’s are knee deep in socialist ideas to resolve our economic ills. As much as I love our American automobile icons such as GM, I am not so sure the federal government has a ‘Better Idea’, to steal an old Ford marketing phrase, about managing an automobile manufacturer to stave off its failure. Congress wants to appoint an ‘Auto Czar’ to oversee the daily business of the Big Three as a stipulation for government loans. Since when has our federal government been efficient at anything related to business? That is like leaving the fox in charge of the hen house.
Recently, there has been a call to oust GM CEO Rick Wagoner.
Growing pressure on Wagoner to step down emerged over the weekend as Washington readied a rescue bill for the industry. On Sunday, U.S. Sen. Chris Dodd, D-Conn., head of the Senate Banking Committee and a key player in the bailout situation, said it was time for the executive to “move on.” Dodd reiterated his position on Monday, though he said it’s not his job to “hire and fire.”
detnews.com – Tuesday, December 9 2008
Since Wagoner took the reigns in 2000, GM has bled billions of dollars in cash. Wagoner has slashed billions in costs as well. To pin GM’s woes on Wagoner is like blaming him for all the bad decisions that were made prior to his leadership. This is not to say that he should not take some heat for failing to liquidate some assets ahead of the foreseen downturn or for the company relying heavily on truck and SUV sales while the masses turn to gas stingy vehicles. But at the same time, you have to credit him for building a huge overseas market in China, India and Russia. General Motors reigns supreme in those markets. One major problem GM has is a bulging portfolio of brands. Ford made the financial decision to shed Rover and Jaguar as well as Aston Martin. That is a big reason why they are not in a major cash squeeze like GM and Chrysler. In fact, Ford, under former Boeing executive Alan Mulally, has put themselves in a good position to weather this economic storm. Ford has also accomplished a huge jump in quality ratings that Toyota and Honda brands have been enjoying for years. Being flush with major brands, GM finds themselves scrambling to shed some of them. Brands like Saab, Hummer, and Saturn have been sucking cash from GM for quite some time. There are rumors of the Saturn brand getting the axe soon. The brand was created to compete directly with Toyota and Honda. Quality was never the problem with Saturn. It was more like ‘too little, too late’ to break into the compact market that the Asian brands pull off so well.
We should get an answer to the Big Three bailout as early as today. We will be keeping a watchful eye out as to how the success this symbiotic government/business relationship plays out. This is much different then the government assistance Chrysler received 20+ years ago. Keep your powder dry, Americans!
Lloyd…signing out
