I Hate To Say I Told You So, But...

On 11/10/08, the following was posted on this blog:
As our new administration contemplates a "loan" to GM to keep it afloat (let's face it folks, it's really a gift, not a loan, because it isn't getting paid back. Ever.) may I offer a small bit of advice? The government is almost certainly going to give GM $25 billion and then not: fire management, or remove the Board, dislodge the UAW, rewrite obligations to retirees, or change any of the controllable forces that contributed to the mess.
On 11/12/08, the following was posted on this blog:
A bailout of some kind will happen. Acknowledge that it will have politically pleasing constraints on executive pay and shareholder disbursements. Acknowledge that it won't target the real cause: a cost structure designed for when the industry did make your father's Oldsmobile.
On 11/14/08 the following was posted on this blog:
I, for one, buy the argument that letting these companies collapse is a bad idea, but in the absence of fundamental restructuring for the customer's benefit (instead of staying on life support for stakeholders) it's a giant waste of money and we should just let them implode.
GM and Chrysler are now seeking another $22B in federal lifelines. Naturally, the request for new gifts from Congress lacks a serious effort to confront the industry's fundamental problems.

I hate to say I told you so, but...

1 comment:

Lou said...

Industry's fundamental problems? One of the fundamental problems with the auto industry is that everyone thinks there is a easy fix. Fix the cost structure? Sounds simple, just get rid of the retiree pension & heath care obligations, make the union take a wage cut, and everything is fixed! Nope. It's not that simple. The fundamental problems with the auto industry go way beyond just that.

Bloated organizational structures, inefficient union work rules, lack of innovation, inefficient/ineffective work processes, a cancerous corporate culture, inept management, and so on and just a few of the things that contribute to the fundamental problems of the auto industry (and their cost structure). These things are not fixed overnight. In someways it might be more effective to just tear the whole thing down and start over, unfortunately, that would have some disasterous consequences for an economy already in trouble.

GM might be worth salvaging. But before the government gives them any more money, the first condition should be removal of the Board of Directors and Rick Wagoner. These clowns have done nothing but run the company into the ground, their time in charge needs to end.

Chrysler on the other hand, should be allowed to go under. Cerberus has the money Chrysler needs, but knows it's a bad investment. Let them take their chances going through bankruptcy