Saving the US Auto Industry

[Undertoad]

David Brooks in the NYT echoes tw's concerns that GM's problems are fundamentally cultural and terribly ingrained. He says that gov't ownership of GM won't solve GM's biggest problem at all.

On Jan. 21, 1988, a General Motors executive named Elmer Johnson wrote a brave and prophetic memo. Its main point was contained in this sentence: “We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute.”

On Jan. 26, 2009, Rob Kleinbaum, a former G.M. employee and consultant, wrote his own memo. Kleinbaum’s argument was eerily similar: “It is apparent that unless G.M.’s culture is fundamentally changed, especially in North America, its true heart, G.M. will likely be back at the public trough again and again.”
...
G.M. will not become more like successful car companies. It will become less like them. The federal merger will not accelerate the company’s viability. It will impede it. We’ve seen this before, albeit in different context: An overconfident government throws itself into a dysfunctional culture it doesn’t really understand. The result is quagmire. The costs escalate. There is no exit strategy.

$50B is throwing bad money at a broken corporate culture. The only way to save GM is to kill GM.

[classicman]

Originally Posted by Undertoad

$50B is throwing bad money at a broken corporate culture. The only way to save GM is to kill GM.

Yup - and throwing $50B at a company that is worth just a fraction of that is insane. We already tried that, repeatedly. Seems like the mentality in Washington needs some adjustment too.

[glatt]

I've had one GM vehicle in my life. It was given to me by my grandfather when he got too old to drive. A Buick Century sedan. I got it when it was 8 years old and had only 70K miles on it. The molding on the driver's door started peeling back and getting in the way of the door operation, so I epoxied it back down. The light in the glove compartment would stay on when the compartment door was closed, draining the battery over a day or two. So I removed the bulb. The electrical connections located underneath the glove compartment were loose, and if the passenger accidentally kicked that panel, the car would die immediately. Wiggling the wires around and pushing the connections together would let it start up again. At about 85K miles, it needed a new engine because several seals were leaking, and I actually got it rebuilt for some reason. Then about 10K miles later, the transmission went. I actually got that fixed too. It was then that I started shopping for a new car.

I can say that the Buick was very comfortable on long road trips. You could easily sit in that car all day on the road and not be in pain when you climbed out. Other than that, it was a piece of garbage. I will never buy another GM vehicle (my Geo Prizm is technically a GM, but that doesn't count.)

[TheMercenary]

Originally Posted by classicman

Yup - and throwing $50B at a company that is worth just a fraction of that is insane. We already tried that, repeatedly. Seems like the mentality in Washington needs some adjustment too.

Yet everyone continues to give the Dems and Obama a pass on this failed plan. They should have let them go down earlier.

[classicman]

Originally Posted by TheMercenary

They should have let them go down earlier.

I agree. $50 Billlion could have gone a long way for the employees and ancillary companies - the suppliers and all. Of course the previous administration was quoted as being short sighted and acting out of haste... This seems an eerily similar decision.
Of course we all know that "deficits don't matter, Reagan proved that" This is dwarfing anything Reagan could have ever possibly dreamed of creating.

However, like Reagan, Obama has come into power at a time when the country has a multitude of challenges which offer his administration a great opportunity to excel.