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Jeffrey Feldman Headshot

Rust-Covered Car Execs? Kick 'Em To The Curb

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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.

(Financial Times, 29 November 2005)

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)