Shutdown opens door for a new GM

April 26, 2009

Shutdown opens door for a new GM


When General Motors Corp. decided last week to slash output this summer by 190,000 vehicles, shutting down 13 assembly plants for stretches of up to nine weeks, the rumor mill was instantly ablaze.

It was a sure sign that GM would file for Chapter 11 bankruptcy.

Or that the Pontiac brand is a goner.

Or that Buick and GMC are toast, too.

Or that GM is just starting to mothball everything in the United States and ship all production overseas.

Troy Clarke, president of GM North America, wasn’t actually thinking any of those things when he took the summer shutdown idea to Fritz Henderson, GM’s chief executive officer, for approval.

Rather, Clarke was thinking that nobody knows for sure yet what’s going to happen, whether GM will file for bankruptcy or not, as the jawboning grinds among the GM bosses, bondholders, labor unions, dealers, retiree groups, politicians and the members of President Barack Obama’s auto industry task force.

People in metro Detroit are transfixed by the dramas playing out, as Chrysler faces a government-imposed deadline this Thursday to strike a deal with Italian automaker Fiat, and GM has a similar date with destiny next month.

What Clarke does know is that GM, dependent on federal loans to stay alive, faces a June 1 deadline to show Obama’s task force that it has shed enough debt and found the right focus to survive on its own and pay back U.S. taxpayers.

Otherwise, the loan spigot stops, GM defaults on debt payments and files for Chapter 11 bankruptcy protection. Hopefully, if GM does enter bankruptcy, it would be a short trip.

What Clarke was thinking was this: Whether GM reshapes itself inside or outside of bankruptcy, he doesn’t want the New GM to begin its next life saddled with a huge glut of old 2009-model cars and trucks clogging dealer lots until the early months of 2010.

He wants a clean start with excited dealers and a fresh lineup of the latest 2010 models in GM showrooms this fall.

Obama’s task force has been looking for signs of bold thinking from Detroit’s automakers, who are perceived, rightly or wrongly, as stodgy and risk-averse. The big summer shutdown idea was big and bold.

Henderson liked it.

The auto task force did, too. They asked if it would be a big drain on cash, and Clarke supplied the numbers to show it wouldn’t be.

What I like about that story is that Clarke — and hopefully other key players at GM, Chrysler, their unions and bondholders, and at the White House — is envisioning what a successful outcome will look like.

Just like a baseball pitcher who envisions strike three, or the quarterback who foresees the winning touchdown pass floating into his receiver’s hands.

Too much of the dialogue about a Detroit bailout during these depressing last six months has been whining and finger-pointing about who’s to blame, who’s being asked to make bigger sacrifices, who’s grandstanding and who’s playing political games.

Unfortunately, some of that’s still going on. Democratic members of Michigan’s congressional delegation and Michigan’s Democratic governor have been quick to criticize Chrysler’s banks and GM’s bondholders for being greedy and refusing to sacrifice.

These same Democrats, of course, do not harangue their labor union supporters for failing to be more flexible.

Conversely, the southern Republicans who gleefully beat up on Detroit’s automotive CEOs and skewered GM, Ford and Chrysler for being uncompetitive dinosaurs, are quick to heap blame on labor unions for the fix we’re in.

As for the auto industry task force members, who appear to be conducting themselves with resolve and professionalism, well, they don’t escape the barbs, either.

Government-haters are appalled that Rick Wagoner could be ousted as GM’s chief executive officer, while conspiracy theorists are convinced that either: a) the fix is in to crush the GM and Chrysler labor unions in bankruptcy court, or b) that Obama wants to nationalize the auto industry and do away with free enterprise altogether.

Depends on which of the political extremes you get your Kool-Aid from, I guess. (My e-mail comes from all sides.)

As we approach the nail-biting climax to Detroit’s auto bailout drama over the next five weeks, here’s hoping that the key stakeholders set aside greed and self-interest and forget about protecting the status quo. Wishful thinking, I know, but wouldn’t it be more fun to create something fresh and vibrant from all that worn-out baggage of the old Detroit?

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