New GM, Chrysler Leaders -- Wrong for the Jobs

It took fewer than 60 years for America to forget the causes of the Great Depression, unbridled greed and avarice in the banking industry and on Wall Street, until we made all the same mistakes again, and invented some new ones, too.

But throughout the reorganization of the US auto industry, some of the much more recent lessons of the past 30 years have already been forgotten.

Frighteningly, at least to those of who focus on the product side of the auto industry, few if any of the Obama Auto Task Force members and the new leaders of Chrysler and GM taking over after the bankruptcies have product-sector experience.

And as you'd have thought Detroit and Washington might have learned the past few years, the Harvard MBAs in the auto executive suites wouldn't know a good car if they got run over by one.

And ultimately it's the cars which are going to save GM and Chrysler.

The announcements this weekend that GM will build a series of small cars in the US rather than make them in China, and that Fiat will sell their Mini-like Cinquecento (500) in some Chrysler dealers within the next 18 months were welcome, but not nearly enough to guarantee these companies' futures.

With the sad facts now well-known, with Chrysler's assets being sold to Fiat and General Motors entering bankruptcy, the men appointed to lead these companies post-bankruptcy don't have any background in the automotive business.

In the last year, since dropping fuel prices and the collapse of the credit market sealed the fate of the former auto giants, I suggested the US government spend time and money recruiting some of the top executives from the world's car companies, asking them to take a highly-paid sabbatical from their own firms and share their expertise with GM and Chrysler for a two- to three-year period. It would be patriotic in a world sense.

While even I thought it a little outrageous, I still think it's a better idea than who Washington has come up with to run GM and Chrysler.

Behemoths like this 2008 Ford Expedition and low gas prices kept sales of giant SUVs strong through the early part of the 21st century

Robert Kidder will be the new chairman of Chrysler and Al Koch will be "chief restructuring officer" at that's left of The General.

Business consultant Robert Kidder is now set to become the new chairman of Chrysler Group as it emerges from bankruptcy. Kidder, 64, will replace the ill-fated and bumbling Bob Nardelli, who was hired in 2007 after Daimler sold Chrysler to private equity group Cerberus.

A new board of directors, to be formed after the bankruptcy, will hire a new CEO for Chrysler. But that position is expected to be filled by Sergio Marchionne, CEO of Fiat. Yet Kidder will initially hold the top Chrysler job.

Kidder's résumé includes a stint as CEO of Duracell. He currently is a lead director at investment firm Morgan Stanley and CEO of 3Stone Advisors of Columbus, Ohio, which manages a private equity fund focused on investing in water-quality testing. Great -- Nardelli did such a wonderful job at Chrysler after his hiring by private equity fund Cerberus.

Bob Nardelli was hired in 2007 to run Chrysler by Cerberus; it's been an unmitigated disaster for the company, Nardelli, a former Home Depot chief, having no automotive background

Cross-town from Auburn Hills, GM plans to name turnaround executive Al Koch to serve as its chief restructuring officer to help the company through bankruptcy protection.

Koch, a managing director with AlixPartners LLP, is a veteran turnaround specialist who helped Kmart Corp. through its bankruptcy protection reorganization. He will lead the separation of the automaker's assets into a "New GM" and the remaining parts of the company that will form "Old GM." Koch will lead the management team that winds down the "Old GM" company once the automaker emerges from bankruptcy.

Another finance guy from another private equity firm.

Unless and until GM and Chrysler and the Obama Auto Task Force develop a balance of middle and senior management which can handle not just the finance side of these companies but the product sides -- developing the cars and trucks Americans and the world will want to buy in the near-term -- there's little chance for either GM or Chrysler to make successful rebounds.

Follow Steve Parker on Twitter: www.twitter.com/autojourno

Comments

[DesertDogAlpha]

Not worth the energy to argue. These companies are dead men walking. The taxpayers have bought some jobs for long enough to get through the next election cycle and pay off debts to union supporters of electoral campaigns (at in excess of $150,000 per job preserved). This is just a badly conceived jobs program. The companies were dead 3 years ago. And the UAW still won't match the wage and benefit cost packages paid to Toyota or Nissan workers in the US. It's over.

[oilcan821]

this guy is right on!!! as a retiree from gm, i can say that since the "beancounters" took over the mighty gm, it's been on a downhill slide! they took an established moneymaking machine, sold off all it's assets, stripped all the money from r & d, let the tooling get old, package 5 car models from the same box with no styling or differences and drove a great company into the ground! we need car guys up from the bottom who aren't idiots promoted up to get them out of key jobs! car guys who build the excitement here, not phony camaros designed in australia, assembled in canada, then dumped here with a $40,000 pricetag! drop pontiac? stupid! build "pontiac excitement!" how about a retro goat that looks like a 1969 gto judge? or a chevelle off a 1970 ss454, or a hurst-olds with some rock and roll in it? if ford can build a mustang that was designed and built here, what's stopping gm? ask the beancounters!!! they aren't in business to build cars, only profits! when will they learn to make cars people want, the technology is here for fuel economy, price them to be affordable, and people will buy them, and the profits will return! put people back to work so they can afford these cars, and make them here in the good ol' usa, we'll be great again!!!!

[mountainweb]

Chrysler and GM did not have the correct product mix before the BK and I have yet to see anything that would indicate a wealth of new products after the BK, the lack of customers and the lack of loans to customers are going to kill them.

[therealredstateblues]

believe it or not GM still has the largest world market share.

the ChevyGMC pickup is still the second best selling vehicle in the world after the Ford F series

[sc300nc]

GM and Chrysler are doomed to fail. The Gov't will continue, must continue due to their actions, funding these operations. They will both need infusions of cash in the future, Obama will oblige.

The public will decide the fate of these companies. Whether they can put up with the gov't stink that these cars will carry will be determined.

I will be supporting Ford, as long as they stay independent and free from taxpayers bailout money. I hope others will too as the gov't will be forced to buy only GM cars to protect their futile investment. Ford will be operating at a financial disadvantage due to all of the free cash GM and Chrysler have got and will be getting. (I'm sure we will see all of it back).

Socialist vehicles have no place in my garage.

[Ben6768]

If you dont like socialist vehicles, you cant have a Mercedes, BMW or Audi your garage.

Are any of these brands good enough for you ? they are made in a country where conditions are socialist according to many peoples standarts.

[Car84]

Show me that Mercedes, BMW, and Audi are government-owned. Can't, can you?

[indy100]

I hope that socialist programs and benefits (such as unemployment, medicare, police and fire protection etc.) also have no place in your life.

While I disagree with how all of this is playing out, and feel that the average hard-working middle class American is being screwed AGAIN as usual, the "socialist" argument carries no meaning or logic for me.

[ancientuno]

But i bet you will take socialist medicare and socialist social security. And rely on the social police and socialist fire department.

[RichardYarnell]

The problem with Parker's analysis is that it assumes the same old products will save GM. They won't.

While there may be a place for small cars of some kind, the salvation of GM will come when it is quickly transformed to produce products which need the infrastructure it already owns and which can employ many, if not most, of its downstream suppliers.

If the administration doesn't instruct GM to convert most of its assets to produce passenger rail rolling stock, light rail, true electric autos, wind turbines, and other truly energy conservative products, there's little point in perpetuating the company.

We have an opportunity, one forced on us, perhaps, to make a major course change: we should make the most of it, modernize our transportation policy, and keep a lot of people working, first converting the factories and then producing an enlightened family of products that won't kill us.

[Dean Crutchfield]

America defined transportation and it can define it again. Henry Ford said that if he had asked customers what they wanted they would have asked for a faster horse. Today we want better cars, faster, that fit the profile: good for planet, good for people and good for profit; green car madness, rules.

Even as the Big Three rationalize their product portfolios, they all have lagging sales, high costs, legacy costs, an over abundance of dealerships, contractual commitments and lethargic company management. The more potent issue is that the credit strapped, over extended, saving short US driver has retrenched requiring an entirely different role for marketing to get that new car smell back in popular demand.

To extricate motor-city from combustion it needs what drove Silicon Valley to lead the world in technology via informal social networks of properly funded “spontaneous” groups of influential and interested venture capitalists, engineers, designers and autoworkers nationwide to engage in positive discussions on how to advance transportation; not stepping on the brakes, strangling R&D and merely focusing on lower emission technologies. The Big Three have what’s needed; there’s a strong sense of culture and urgency. Management knows that formal and informal social networks have always been highly effective. And the unions also have the infrastructure, the talent, networks of communications, newspapers, press departments to start to make this happen and make one thing for certain: General Motors, Ford and Chrysler can be great again.

[joebaggadonuts]

Nice vision. What's missing?

[Ben6768]

" And ultimately it's the cars which are going to save GM and Chrysler."

Yes Steve, this is what it is all about !!! people with flair and taste and a sense of elegance and beauty are what is needed.
Of course the cars have to be reliable - what can I say, the world is already filled to overcapacity with reasonably reliable cars.

Unless GM and Chrysler make irresistibly attractive cars, they have no place in the car market of the present and the future

[indy100]

What's an "irrestibly attractive car"? The world is already filled to overcapacity with gas guzzling, pollution spewing, oversized, inferior quality vehicles; many of them made in America. What we need is reliable, quality (like Toyota or Honda), fuel efficient or alternative powered vehicles. If the American car companies do not change their entire operating philosophy and completely revamp the products they create they are doomed to failure.

[therealredstateblues]

Ford cars already rate as high and in some cases higher in quality than Honda and Toyota according to JD Power

Ford owns 5 of the top ten spots for safest vehicles according to the Highway safety institute

GM has the most models that get over 30 mpg

The Ford Fusion hybrid according to nearly all the automotive press is the most advanced technologically hybrid currently and gets better mpg than the toyota

[drymartini1]

people do not cars with flair.

what they need is HIGH RELIABILITY and HIGH RESALE VALUE. thats all.

car is just like any other appliance. You are not what you drive. people have been believing the opposite for too long.

[MDhome]

Kidder and Koch? We are sooooo SCREWED!

[Punchumgum]

OMG! This is the third millenium. Didn't the last century prove that having Harvard MBAs being called in was a complete bust? These people are the very LAST thing that America in 2009 needs. We need people who can do something better than sack workers - and fool off the street can do that!

[sirwilliam]

There is a "model" for cars.......have not read the latest sales figures; but in January I read Subaru was up 7% in sales.

I buy used ones to put another 100 to 200 thousand miles on them after the original owners.

In the past few monthes here on Long Island it has been reported that they (Subarus) are selling at "Blue Book" on the wholesale auctions. Cars I could have purchased for a thousand dollars a couple years ago are now bring 3-4-5000.

And the reason is: when properly taken care of they will last for 2-3-4 hundred thousand miles.

The average for a "detroit" car seems to be 100,000 miles before it 'falls' apart.

And Subaru's are economical on gas etc.

Sometimes when "logic" is staring in one's face; it is impossible to "see' it.

So why can't Detroit produce a car like this? Is it because of the illusion called "planned obselesence"? Not sure I spelled that correctly; but this seems to be an illusion about many products.
And I am sure it is taught by those MBA types. Wonder what the real research numbers are on this illusion. Does a company really make more money for making an inferior product? Seems Subaru is making more money and still in business; and makes a product that lasts.

So where are the Subaru executives recruited ?

Or for that matter; the Toyota, Honda people? Who also make better cars than Detroit.

[therealredstateblues]

GM until very recently owned a controlling stake in Subaru USA

Most cars properly maintained will last a long time

the new forester is bigger, heavier and gets worse mpg than the previous model

Just read a car and driver article and they liked the older model better too

But yes, subaru has found a great market niche. most are assembled in Indiana

[hivanh]

I worked in the industry for 25 years and all I know is that when you let bean counter MBA's run the car company , you get expensive beans. If you watch the Coppola movie "Tucker", there is a scene wherein a "board of directors" attempts to completely derail Tucker's innovatiions in the interest of making money. Happily (in themovie) Tucker fires them all. Sadly (in real life) Detroit succeeds in derailing Tucker. We could have had Tuckers, but instead we got icons like DeSoto. Detroit is doomed.

[ringmaster]

It is worth noting that the only large American companies to be consistently profitable are the oil companies. They are staffed at the top exclusively with petroleum engineers.

[Car84]

Bless them. We're going to need oil for the foreseeable future. And when all the pretender replacements (wind, solar, and other boutique sources) prove to be insufficient replacements for fossil fuels, the predominant energy source will necessarily be nuclear. Get used to the idea. Nuclear is the future for a world of billions of people.

[Insightful]

How in the name of common sense can a normal size family fit into one of these tin cans the government wants to build. SUV's were too big and ego driven. But how about something in between and practical and a lot safer in a crash.

We go from one extreme to another. Sardine cans are not the answer.

[oldgeek1]

It appears to me that car guys pretty much screwed up GM and Chrysler.

[therealredstateblues]

history shows that when the "Car guys" are in charge i.e. the people that know how to engineer, design and build cars are periods of success and innovation for automakers Lee Iacocca is a prime example when he was with Ford he was responsible sor some of the most iconic Ford models of recent times, and of course his fame grew with the amazing turnaround of then struggleing Chrylser. Iacocca was a "car guy"

and when the "bean counters" ie you MBA types are periods of contraction for the inbdustry - their answer for everything is cut corners, outsource, close plants etc

Walter Chrysler had his own toolbox and was not afraid to turn a wrench - his toolbox used to be on display in the lobby of Chrysler HQ, and now in the Henry Ford Museum

[bighat]

Govt cannot run a car company/ Does not matter who they hire. Members of congress will want their 2 cents worth. They will force ideas from the green movement to parts must be made in my district. Social issues will be the norm of the day.

I doubt if $1 will be spent finding out what the public wants or will buy. the cars made will be based on what our congress and lobbyists think is good for us, Then when no one buys. the govt will buy for the govt fleet. Somewhere in here there will be tax incentives. Then more regualtions for all car compaines. and so son until we all have the same small car painted concrete gray. If it happens to be electric for get about air conditioning and electric door locks, windows, charging of cell phones etc

[Ben6768]

In Germany, 20% of Volkswagen is owned by the local government of the state in wich they are located. They all togetjer do a good job, I think.

If in the U.S. we have a collection of Big Dummies in government, then what are we going to do.

[Ben6768]

By Big Dummies I mean the people that Washington tends to appoint to run things.

In France, for example, it is considered an honor to work for a major public company, and they appoint very talented people to fill these positions.

[Charlie M]

It seems the men running GM and Chrysler didn't know a good car either . They knew profits and how to con the public into buying what was the most profitable. They knew over 20 years ago they had to many auto plants . I worked At Ford motors and there was talk of downsizing back then .