Rust-Covered Car Execs? Kick 'Em To The Curb
As Thanksgiving approaches and I watch the dire economic situation in Detroit unfold, I keep having a recurrent thought: Washington must try to prevent economic disaster for Michigan workers, but GM executives should get their gooses cooked.
There is no question that the collapse of the Big Three manufacturers in Michigan would have devastating consequences for millions of workers. Bankruptcy proceedings for a huge company like GM, for example, would likely bring about a radical shift in retirement and health benefits to workers who gave their entire lives to American industry. It is difficult to imagine anything more cruel and humiliating than that. And yet, nobody with a conscience should shed a single tear for GM executives.
The history of GM executives throwing up roadblocks of arrogance in the face of change goes back half a century. Perhaps the most famous example was the time management guru Peter Drucker came to write his masterful study of GM The Concept of The Corporation--and how GM executives ignored it with pigheaded ignorance.
Published in 1946, Drucker examined the dynamics of the new management style created by GM which had given rise to the enormous, centralized manufacturer. John Kay of the Financial Times described the episode in a piece written shortly after Drucker's death:
The book was a bestseller. But its contents and its thesis were not what Sloan and Brown had envisaged. Both Drucker and GM understood that Sloan and his team had created the practice of modern management. Their organisational [sic] structures did not rely, as large businesses before GM had done, on the inspiration of idiosyncratic geniuses or on mimicking military hierarchies. These systems relied on professional managers with the same kinds of skills that were sought from lawyers, doctors or public service: refined intelligence, specific knowledge and commitment to professional rather than personal goals.
But while GM wanted to focus on the implications of these developments for the management of business, Drucker's primary concern was with the consequences for the organisation of society. The professionally managed corporation was a new type of institution. Sloan and Brown wanted a description of its functioning to bequeath to their successors. Drucker wanted to explore the responsibilities of such an institution, and what rendered its enormous authority legitimate - questions his paymasters did not much wish to raise. GM ignored Drucker's book.
Both questions - how best to run a large multidivisional corporation? and what is the proper role of business in society? - remain relevant. But never again would GM bring to them the intellectual firepower of Sloan and Drucker. The anti-intellectualism that Sloan's team feigned would become real. In the 50 years that followed, General Electric, not General Motors, would pioneer the development of new management principles in practice. The results can be seen in the differing status of these corporations today.
John Kay was more polite than I would have been in that column when he used the word 'anti-intellectualism' to describe GM's executives. I would have called them as idiots.
An executive cohort that willfully ignores advice to become more nimble, innovative, and competitive to weather a shifting modern economy must be value idiocy over good business sense.
The fact that GM executives have barely begun to think about sustainable car models, production lines, and labor practices--while more nimble manufacturers elsewhere are already doing all three--points to the cancerous impact GM executives have had on the Big Three.
With decades of this retrograde management culture behind it, GM's executives have not only refused to understand change in the auto industry, but have also resisted understanding change in American society writ large. Perhaps the most important change has been the balancing of car production and use under the rubric of "sustainability."
What would it mean for GM to become a scion of the American sustainability revolution? For starters, it would mean an embrace of a set of principles for sustainable industry with economy, ecology, and equality.
In theory, General Motors has already embraced sustainability as a founding member of the Southeast Michigan Sustainable Business Forum (SMSBF), although most Americans would hardly know it. And yet, one might wonder how the continued investment in muscular, luxury hybrids does not undermine any possible commitment to sustainable manufacturing by GM's executives.
One of the SMSBF reports available on the site discusses the organizations desire to shift the region towards 'Smart Growth,' defined in these terms:
Smart growth is community and regional land use planning that encourages:
• Mixed land uses
• Compact building design
• Housing opportunities and choices
• Walk able neighborhoods
• Distinctive, attractive communities with a strong sense of place
• Open space, farmland, natural beauty, and critical environmental areas
• Direct development towards exiting communities
• A variety of transportation choices
• Development decisions predictable, fair and cost effective
• Community and stakeholder collaboration in development decisions
• Minimizing impacts to the environment
• Improved economic competitiveness
• Brownfield Incentives
It is a great idea, except for one problem. The SMSBF's idea of of Smart Growth--ostensibly endorsed by GM executives by virtue of their being a founding member--depends on a de facto agreement with the thesis that environmental degradation is caused by human factors, known more commonly as 'global warming.' Too bad GM executives have spit on the idea of global warming in other contexts.
Robert Lutz, for example, a top GM executive in charge of much-talked-about Chevy Volt project only recently said that the theory of global warming, 'is a total crock of shit.' Even if GM executives put the company logo on a few sustainability forums, studies, and products, they spend just as much time dismissing sustainability as if it were a liberal hoax.
That Lutz is only one GM executive putz among many was made apparent by Carl Levin's (D-MI) recent statement on Meet The Press--that executives who ground GM into its current hole should be willing to resign if need be to facilitate a government relief package. Levin was more polite than many would be at this point. Like me, most Americans would just say: GM execs? Kick 'em to the curb.
How can Washington play such a strong card on this issue? For starters, the White House can convene a Presidential Forum on Sustainable Practice in the Automotive Industry and 'invite' executives from the Big Three to attend. I put 'invite' in quotes because attendance at such a forum should be a prerequisite for federal receiving federal bridge loans.
The goal of such a forum would be to define a common set of principles for retooling the industry. Moreover, the federal government should make it clear that it is not going to waste taxpayer time or money by listening to the same, arrogant and idiotic bunch of automotive executives that caused all the problems in the first place. The Presidential Forum would, in other words, provide incentive and a deadline for GM, Ford, and Chrysler to ditch current deadbeat executives and replace them with management truly dedicated to sustainable practices.
Such a Presidential Forum would also make it clear that salvaging and retooling the automotive manufacturing sector in Michigan involves two steps: short term loans, followed by long-term investment. Executives who have hitherto thought of retooling as turning Cadillacs into luxury-hybrid-SUV Cadillacs--need not apply.
Ultimately, the new generation of automotive executives should be willing to do more than design electric cars. They must be willing and able to envison (1) a nation-wide revamping of automotive practices and (2) a state-by-state commitment to rebuilding environmentally sound, economically durable working communities.
Just imagine the floodgates of possibility opening were such a Presidential Forum were to be held. All the innovative thinkers in the automotive industry would finally gather in one place, unfettered by the dismissive arrogance of the old school executives. It would be the most exciting departure point for American innovation in decades. It would also inject much needed optimism into a nation that knows it must embrace sustainable practice, but is not quite sure what that would look like. Such a Presidential Forum would also be amazing for bloggers to write describe from the floor as it unfolded (ehem...hint, hint).
As I see it, the next two weeks can lead to the worst Thanksgiving in recent memory, with millions of current and retired workers in Michigan worried sick about the future or--it can be a time of great optimism brought on by a massive and symbolic dumping of rusty automotive executives.
Washington and Michigan have a clear choice before them.
(cross-posted from Frameshop)
Follow Jeffrey Feldman on Twitter: www.twitter.com/JeffreyFeldman
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I may be a vindictive pleasure to fire the execs but running an auto company is not something a fresh graduate from MIT or a senior exec from GE can do..
Bill Gates
Hewlett Packard
Apple
I agree with TXFemmon's: Why should we bail them out when they are shipping the jobs to China, Mexico and Canada?
The auto companies should go into bankruptcy, and then the government could guarantee financing, without having to put up all the money, but have huge attachments to it, such as get rid of this bunch of losers, have control over compensation for executives, force the companies to bring back to the United States at least 95% of parts and assembly, and other things.
Why should we bail them out when they are shipping the jobs to China, Mexico and Canada?
Business Schools, a.k.a. "Commerce and Finance Departments", are hatcheries for the boorish Babbits who now run corporate America. An M.B.A. degree signifies nothing other than the willingness of its possessor (and it isn't difficult to possess) to surrender all interest in cultural history, literature, or any other liberal arts, for the sake of making a few fast bucks. The results were predictable. The ignorant arrogance displayed by the executives in the American auto (and banking) industry and their myopic search for even more fast bucks should not be rewarded by robbing others through taxation.
Right, right, except it's all about the unions
do the unions make the lousy strategic choices about big fat cars?
Nope...a GM fat head named Wagoner made the decision to buy the rights to build the Hummer back in 1999 (about the same time Booosh was being groomed as the GOP candidate for president.
I agree the auto execs have to go and not just the CEO's. The myopic corporate auto culture is so entrenched you're going to have to lop off at least the top 3 levels of management just to have any chance of something other than a vehicle constructed out of the current parts bin with an extra battery so they can call it green. Otherwise take that $25 billion and just set it on fire as it will probably save the government 10 times that amount in the near future and a hundred times that over the long haul.
Everyone talks about the millions of jobs that need to be saved. Well get a frickin grip! Those jobs are NEVER going to be saved unless that corporate culture gets the axe bigtime. Otherwise they are just playing us and the government for fools.
I laugh that even though were talking about the big three, it seem that the focus seem to be on General Motors
UAW has to be dismantled first. then only detroit will survive !!
sure the UAW at fault for the lousy designs that GM puts out.
I'm sure everything bad that's been said about the American auto industry is true. But another factor worth looking at for a moment is that, when technology moves as fast as it presently does, giant companies often try to hover near the sidelines and let the next new wrinkle in their industry, of the long-term variety, manifest. Many have lost money thinking they knew what version of new cell phone technology would take the lead (remember the Treo?), what version of computers would catch on, what disc format, etc. New technology brings new forks in the road. Might not at least part of the reluctance by American auto manufacturers to embrace green machines be connected to the risk that if they leap at hybrids, hydrogen cars could sneak up from behind, and so forth? This is an industry that moves forward more like a truck, with slow brakes and big blind spots, as opposed to a sleek sports car that can stop on a dime, pivot, and be up to speed in any situation in a flash. If government could buffer this factor for business in some way, and I mean other industries as well, we'd all see some great innovations come to market a lot faster.
Why not have the oil companies buy Detroit?
If I had a dollar for everytime many of us cried out against the insanity of the SUV's and the Hummers, I would not have to work. These auto companies, like the rest of our Brave New World here in the land of MacEverything, only think of the fast buck and instant gratification. It is all interconnected, greed, ignorance and hubris.
The car execs refused to listen, buyers refused to learn and the unions failed, not because of their benefits and wages, but because, they too did nothing to meet the demands of our new reality. Unions have an obligation, not only to their members, but to the industry they represent. Only those of us that rebelled against this "irrational consumerism" knew this day of reckoning would come.
It will not stop here, we have many more bubbles (actually, more like boils) to pop. The era of bigger, more mediocre stuff will also meet its day of reckoning. I say, let them pop. As Stephan Lupasko said..."Eq
There are 250,000,000 registered cars and trucks in the US and only 200,000,000 drivers. Just how many automobiles does the country need? When is the market officially saturated?
The only growthe area for US automakers are the foreign markets. They build foreign plants to satisfy those markets. Should the US taxpayer subsidize the auto industry to continue producing products for which we already have enough? Would any of that money stay here, or would it all go to building more auto plants overseas?
Let the oil companies bail out the auto industry, not the taxpayers.
Foreign car makers gets tons of baillouts from their gov'ts all the time.
Hell, they pay for their HEALTHCARE! They do not allow US makers in their markets!
Level the playing field and THEN we can talk about whether to loan out $25B (paltry compared to $250B already given to AIG!) or not.
Uh.... Ford sells cars in Europe. Cars that have better MPG then what they sell here. I used to work for FMC and I've seen it all.
The healthcare is a benefit tho.
See Diane Tucker's Profile
Automotive journalist Peter DeLorenzo agrees with you about the unlevel playing field. To read more, here's the link:
http://www
Leaders in the world economy tend to be all about "free trade" as orthodoxy (as Great Britain was in the nineteenth century when it was the ONLY industrialized economy in the world), but the United States has been continuing to champion internatio
The same argument was made in the 70's regarding the steel industry vs Japan. They, like the US auto industry, was inefficient. That is capitalism, be competitive or die.
I'd agree... although health coverage may be the biggest issue not only for Detroit but all businesses. We just re-enrolled our health coverage through work - same plan, same coverage was 2x more expensive this year over last. I don't know how people out of work can afford insurance. From what I hear it's about $800 a month for an individual which is probably what the automakers have to mostly cover for their employees.
I think we're at the point that universal health coverage is a necessity not only for individuals but for businesses in this country to survive as well.
1. If you believe in free markets then you have to accept that GM, Ford, and Chrysler made SUVs and trucks that Americans wanted AND BOUGHT. Not for subversive reasons, but because big and imposing reflected a certain strain of American values.
2. If you belive that introducing the Prius was a green initiative by a green company (Toyota) then you're confusing green=envi
3. Note that Southern states bent over backwards to get foreign automakers into their anti-union states offering tax incentives
4. European and Asian automakers enjoy all sorts of advantages with R&D help, free post-secondary ed, national health insurance, etc., etc., etc.
5. Republicans never win Michigan and are ready to see it decimated for electoral reasons.
6. Americans are now consumers more than citizens -- we want more, cheap, and don't care who makes it or the consequences.
7. We talk about hybrids, etc. and more MPG without any consideration of declining railroad, mass transit, sprawl, single individuals using their vehicles to drive miles and miles to work on a daily basis, etc. We want a "magic bullet" to do what we like. If you own a car that gets 2 mpg and drive it once a week for 2 miles - you are not the cause of oil-dependency.
Not to mention that:
-- the Ford F150 has been the best-selling vehicle for 30 years because it fills a very basic commercial need. Why don't the rabid anti-Big 3 posters all over this blog ever attack Toyota's Tundra, Sequoia and Land Cruiser and Nissan's Titan and Armada? The Japanese are well aware of the huge market for these vehicles not only here but in other countries with large land masses as well.
-- Cadillac has made a laudable comeback from the grave with it's current lineup. Again, if people want to buy a large vehicle, at least offer them a hybrid. Toyota, again, does the same thing with its Lexus sedan and SUV hybrids.
-- Nothing is as democratic as personal transportation that a citizen can use to go where they want to, when they want to, and with whomever they would like to go with. If this isn't freedom, I don't know what is.
-- GM's mismanagement was amplified by $147/bbl. crude, which was a direct consequence of eight years of oil-besotted BushCo's malfeasance.
-- The Big 3 didn't sink the economy by playing casino with credit-default swaps and other collateralized debt obligations. Those were invented for the sole purpose of feeding Wall Street's greed.
Until we have national health care we cannot compete with the rest of the world. That should be the first step before one cent is handed out.
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