Fred Wilson beat me to a GM post that I wanted to write over the weekend. If only I had watched less football. Fred nails it so read his post, but here are my thoughts. General Motors is a disaster and we send the wrong message to everybody in this country and around the world if we give the company money without demanding changes. The republican senators stood up to the Bush, Obama, and Pelosi and said the legislation that was originally intended to “green” the auto industry should be used as a stop-gap to save GM for a few more months. It’s discouraging that Bush has the ability to use TARP money to bailout GM, but not surprising that a President who has never paid attention to what anybody else thinks would just circumvent the system using poorly written legislation. TARP was done to prevent a collapse of teh financial system not bailout any company that needs help during these savagely difficult times.
I recognize that GM employs lots of people, but we will face this problem every quarter in 2009 if we don’t make some changes. Here is what the United States government must get if we are going to bailout GM.
1. Goodbye shareholders. This is a pay to play situation. If you don’t want to pay you can’t play and the United States and GM employees should be the only shareholders at GM.
2. American Government picks up the the GM healthcare obligations for retired workers until healthcare legislation is passed that can replace it. This would give GM a competitive chance at going forward and relieve huge expense burdens that have no impact on the company’s ability to make good cars. This is expensive. Hopefully the rise in GM’s equity will help offset that. We cannot abandon these workers’ healthcare needs.
3. New Management. We are all shareholders now and I don’t believe Rick Wagoner. Find somebody else.
4. UAW contract must be revised. The union leadership postures because Pelosi, Obama, and even Bush look for ways to circumvent the Republican Senate. Everybody needs to be on same page. We can’t pay workers double what Toyota does and expect GM to compete. Only the threat of Chapter 11 will bring the UAW in line. Use the threat.
5. GM board should meet monthly to review monthly objectives and see if the company is making progress. Management should be under tremendous pressure to perform and be rewarded properly. But make no mistake. Working at GM should be the hardest job in America and every effort should be made to apply massive pressure on this mgmt team to deliver change in 2009
6. Extract the appropriate commitment to greentech as a way of getting GM’s marketing muscle and scale behind environmental changes.
7. Move GM out of Detroit. This is radical, but I think would help. Detroit is bad for the automobile industry. It’s insular and suffering from years of failure GM needs a rennaisance and the American car industry does not all need to be in the same city. If people don’t want to move, don’t move and find new people. That would help GM. Michigan has good things going for it and they need to reinvent the economy. I think GM moving to say Dallas or Atlanta or Los Angeles or even Chicago would help them find new people, new ideas, and most importantly the pyschological will to start again.