Auto bailout, from within

[pimento]

Steve Rattner is a man we admire but do not envy. Rattner, a former Wall Street banking type with zero experience in the automotive or manufacturing world, was tasked by President Obama with guiding General Motors and Chrysler through their restructuring efforts. Not a small job, by any means. Or one we would wish on our worst enemies. That said, it was a HUGE job, and huge jobs typically make for great stories. Rattner, in an article he penned himself for CNN's Money doesn't disappoint. At all. Allow us to tantalize you with some quotes:

When the Obama administration took office on Jan. 20, it inherited nothing in the auto area: no staff, no stacks of analyses, no plans of any kind. The Bush administration had decided in late December that GM and Chrysler were not going to go bankrupt on its watch and had shoveled $17.4 billion of TARP money into the companies to keep them afloat, but without any meaningful stab at restructuring them.

Oh snap! But really, that's not even the tip of the juicy iceberg. How about this apple, er, lack of apple:

When I asked our energetic young chief of staff, Haley Stevens, what we were going to give our visitors for lunch, she replied, "Nothing. Treasury has no budget for even bottles of water." It seemed harsh to expect our guests to go many hours without eating, so I gave Haley $100 and told her to go to a sandwich shop. That became our hospitality protocol.

Hungry for more? We haven't even scratched the surface, as our man Rattner is just getting warmed up. Here's one more for you about Rattner and friends first trip to Detroit:

What we didn't prepare for was the intense public interest in our visit to these hard-hit communities. Throngs of reporters awaited us at every stop while a news helicopter buzzed overhead. More peculiarly, the ensuing press coverage seemed wildly over-focused on our test drive of the Chevy Volt, as if the company's salvation rested on this one vehicle.

Don't tell Lutz. And hey, speaking of Maximum Bob and his pals, here's what Ratner has to say about Detroit Management:

Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

And Mr. Rattner is just getting warmed up. Just wait 'till he gets to Wagoner.

Autoblog article, full CNN article. It's a long, but quite interesting read. It's alwaus good to hear from the people involved with these things, anyway.

[RacingManiac]

Good read, and very comprehensive...

[Runfromcheney]

Good article, even though it was pretty much stuff that I knew already. (I followed the bailout/GM's decline to the closest detail for just a little over two years). The thing that really irks me is Rick Wagoner's criticism of Alan Mulally. Mulally has proven himself to be a good CEO who knows what he is doing and a capable leader; If it weren't for Mulally's reorganization Ford would have gone bankrupt a long time ago. Mulally is easily the best leader Detroit has had since Iacocca, and I can not stand the fact that the moron who ran GM into the ground - and was so dumb and unorganized that he didn't even know how much money his company had: [ame="http://www.youtube.com/watch?v=YD9sz8rvheI"]YouTube - GM CEO gets drilled[/ame] - has the balls to criticize him. I actually wouldn't be surprised if it turned out that Mulally took Wagoner's advice and did the exact opposite, George Costanza style. It would certainly explain the night-and-day difference in GM and Ford's outcomes.....

[pimento]

I reckon Mulally was just asking Wagoner for good places to get lunch..

[fpv_gtho]

What was it Wagoner criticised Mulally for?

[Runfromcheney]

What was it Wagoner criticised Mulally for?

I guess I didn't describe it accurately as criticism, but here is the part that I was referring to

Rick Wagoner and his team were scheduled to be in Washington the following day, March 27, to discuss the progress of GM's restructuring. I was also aware that the GM board was meeting by phone every Friday during this crisis and asked Rick's assistant for a few private minutes with him, early enough to be sure it preceded that board call.

I don't know whether Rick had any inkling of why I had wanted to see him alone. His face was impassive as I said, "In our last meeting, you very graciously offered to step aside if it would be helpful, and unfortunately, our conclusion is that it would be best if you did that."

I told him of our intention to make Fritz acting CEO and he supported that idea, cautioning me against bringing in an outsider to run the company. "Alan Mulally called me with questions every day for two weeks after he got to Ford," he said.

It still pisses me off because Rick Wagoner seems to be trying to convey that he is superior to Mulally, and of course, we all know that isn't the case. Mulally is leading a spectacular turnaround of Ford and was elected to the Time 100 list, Wagoner spent ten years running GM into the ground; In his tenure GM lost 90% of its market value and in his final years, lost more than $82 billion dollars. He had to be fired by the President to ensure that GM would last through this year. Wagoner isn't even qualified to act superior to the dumbos that crashed Wall Street - like Dick Fuld and Angelo Mozillo - yet alone act like he's above a proven turnaround CEO.

[henk4]

Very comprehensive indeed, and sheds a very positive light on the decision making capabilities of the US Supremo in charge. Gives the "laissez-faire" promoters on Wall Street a chunk to chew on.

[fpv_gtho]

Mullaly isnt an auto guy, you cant ignore that, which i think would be the basis of Wagoners point. I think his acclimatisation into the job though makes his success at Ford so far (or prolonged failure if you're that way inclined) all the more impressive.

[LeonOfTheDead]

Looking at the video posted above, I have the impressions Wagoner should have stayed at home that day. It was quite obvious he would have to defend his operate based on what he did in the past and not in the previous days(hours, and that's kinda indefensible.

If his point against Mullaly is the second not being an auto guy as he supposedly is, then I'd see that just as a good point considering how the auto industry was/still is.

[RacingManiac]

I think a lot of Ford's policy shift was in motion before Mullaly got there, but he basically sees the need to execute them business wise....

[LeonOfTheDead]

I think a lot of Ford's policy shift was in motion before Mullaly got there, but he basically sees the need to execute them business wise....

It definitely was already in motion, and the first evident signal was Mullaly himself.

[fpv_gtho]

Mullaly's been responsible for most of Ford's turnaround. The few things Ford already had set before he got there were plans for a massive downsize and the ~$24B mortgage. Bill Ford was the one though who knew he couldnt get it done and stepped aside so an outsider could come in and hack the necessary fat away from the company without remorse.

Since Bill Ford announced the first major downsize/restructure for Ford, theyve had to revise it 2-3 times, each time likely as they werent matching their predictions. Their latest revision was to the current OneFord policy led by Mullaly, which has been mostly successful but for some tweaks needed to combat the GFC.

[Runfromcheney]

I have always respected Bill Ford for being humble enough to understand that he didn't have what it took to turn Ford around, and being able to step down and let an outsider with turnaround expertise run the show. (Remember, before coming to Ford, Mulally turned around Boeing). That is also one of the reasons why I loathe Rick Wagoner as much as I do; as it became more and more obvious that he was an idiot without the slightest clue of what he was doing, he refused to hand the reins over to someone who knew what they were doing, and GM's BOD never was able to gather the balls to fire him.

Anyways, to the best of my knowledge, this is what Bill Ford is responsible for and what Mulally is responsible for.

Bill Ford, Jr.:
* Dramatically increasing the quality and safety of Ford's vehicles
* Investing in environmental technology
* The Escape and Fusion hybrids (Development on the Fusion Hybrid started during his tenre)
* Investing in Ford's car lineup as the SUV craze in America peaked
* Ford's basic downsizing and turnaround plan. ("The Way Forward")

Mulally:

* Synchronizing Ford's Domestic and overseas operations, as well as bringing some of Ford's European models to the American market. (This is the backbone of Mulally's OneFord turnaround plan)
* The $25B mortgage
* Streamlining Ford's management and dramatically changing the corporate culture
* Selling Aston Martin, Jaguar, Land Rover and Mazda
* Hiring a new marketing team (During Bill Ford's tenre, Ford's NA marketing suuuuuuucked)
* Reviving the Taurus nameplate (The 2010 Taurus is pretty much Mulally's baby)
* Stabilizing Ford's finances and market share


fpv_gtho is right when he says that Ford's turnaround is mostly Mulally's work. Bill Ford Jr. layed some of the pieces, but most of Ford's progress was made in Mulally's hands. My point remains that Mulally is the difference as to why Ford is still viable while GM and Chrysler are on government life support.

[G35COUPE]

Very interesting article. Rick Wagoner was simply living it up the same way many failed american business leadership, are also doing. I once mentioned that the single greatest threat to american business is its leadership.

[culver]

It still pisses me off because Rick Wagoner seems to be trying to convey that he is superior to Mulally, and of course, we all know that isn't the case. Mulally is leading a spectacular turnaround of Ford and was elected to the Time 100 list, Wagoner spent ten years running GM into the ground; In his tenure GM lost 90% of its market value and in his final years, lost more than $82 billion dollars. He had to be fired by the President to ensure that GM would last through this year. Wagoner isn't even qualified to act superior to the dumbos that crashed Wall Street - like Dick Fuld and Angelo Mozillo - yet alone act like he's above a proven turnaround CEO.

It is not correct to say Wagoner ran GM into the ground. GM was in bad shape when Wagoner took over. Wagoner has done many good things for GM. The current products and the products to be released over the next year or two are those that were created while Wagoner was CEO. That isn't to day Wagoner fixed GM. I'm not sure that GM could have been fixed without a bankruptcy. Certainly Wagoner didn't stop GM's crash but it is grossly unfair to say he ran it into the ground.