December 28, 2008

• While I'm no fan of bailouts (or GW) either, I think what we're seeing is simply the beginning of the 'orderly liquidation' of GM as we know it. I agree that in long term (to the extent that exists) GM needs more ideas like those generated at Yulon. But I think that in the short term they need cash and they need it fast. One could argue that these needs could and should have been foreseen months ago, but that's water under the bridge for now. The Yulon sale gives them a few extra months worth of operating cash to make payroll while they renegotiate contracts and sell off other assets. (Saturn? Saab? Any takers for Hummer? Anyone?) Many of the 'good' ideas from places like Yulon are probably well known by GM management anyway. The problem is that their management seems so inept or bureaucratic that actually executing anything revolutionary isn't a possibility. And even if they could make improvements they'd still be selling cars at a $3k disadvantage due to past labor commitments. So, sadly, the strategic value of Yulon may have been lost on GM anyway. They're probably better off buying time by selling it. Hopefully, this will allow time for the quasi-bankruptcy process to work its magic.
• The problem is that their management seems so inept or bureaucratic that actually executing anything revolutionary isn't a possibility. There's little specific I can say here, but I have known close contacts to upper level management at companies very closely related to the big three and can attest from what I've learned that this is precisely the problem. Decisions are made with more of a concern for appearance than for actual problem solving. Executives understand that if they follow the herd and fail, that failure will likely be far less memorable than if they really do try to implement revolutionary ideas that fail. And the funny thing about revolutionary ideas is that they're based on easily obtainable facts, usually. You just have to take the time to do your homework. I have personally heard a high-ranking executive at a multinational corporation defend a business decision by saying, and I quote, "This isn't about who has the best system." The natural question, why, nobody asked. They did this because they feared for their jobs. They also did this because they knew the true answer: it's not about what's best, it's about what's considered the standard. You play it safe and fail, your failure will likely go unpunished. This executive failed spectacularly, and was quietly moved to another division without any punishment that I'm aware of. You'd think that with the thousands of MBAs US universities are cranking out every year, that only the best and brightest would win out in competition for those top spots. I have yet to personally meet one or meet anyone who met one that rose above average intellect and vision. But that's only part of the problem. Part of it is also getting things done by committee. A CEO who's really going to revolutionize a company will, at least in the beginning, have to do so in spite of most of the rest of management and the major shareholders. Steve Jobs didn't revolutionize Apple just by having a great vision for the future of the company and its products, he also did it by being a colossally egotistical and arrogant asshole who was content to tell everyone who disagreed with him that they were wrong, and they could follow him or fuck off. Such leadership is rare. There are plenty of visionaries who lack the cutthroat nature, and lord knows the world is brimming with middling pricks who think they're geniuses. The big three won't fail utterly, but only because the government won't let them. But their time is done for now, until at least one of them finally gets leadership that has the guts to start turning out efficient and responsible vehicles that people actually want to drive. I think it could happen -- remember where Apple was a decade ago? -- but I've been wrong before.
• mct - I agree with what you say, and it lines up with my (minor) experience with _a certain kind of_ manager. However, in the interests of fairness, I think GM/Chrysler are finding out just how _hard_ it is to make meaningful change when your model lifecycle, from conception to rolling off the production line, is measured in years. Ford, at least in its non-US divisions, seems to have managed it (see Fiesta, Focus) but only by taking "bet the business" type decisions.
• It's all in the name. GM should roll out the Chevy Fetus and all would be well.
• This bloke thinks you should sell the big three to Chinese companies.
• But, but... the Taiwan News report said that GM sold their stake for $NT 1. That's only a few pennies. Not much of a good business deal to buy operating money, is it? Maybe some executive can pro-rate a stick of chewing gum for that?
• Dan, Oops, I somehow missed the $NT 1 price. You're right - not much operating capital gained in this deal. Still, we don't know what liabilities they were able to shed by jettisoning the venture. If nothing else, it allows executives to focus on US operations while saving the cost of airfare. For a company worth less than zero that's not insignificant.
• Of COURSE the guy that thought this up deserves a 1.5$ million bonus!!! MonkeyFilter: brimming with middling pricks who think they're geniuses *tips hat to MCT*
• I like to think I'm more than just middling, GramMa...