General Motors Death Watch 62: Grounded

[Klaus]

General Motors Death Watch 62: Grounded


11 March 2006
By Robert Farago



Ward's Automotive recently profiled Pete Gerosa, GM's former Vice President for Field Sales, Service and Parts. Although Gerosa's heading for retirement, he's still on the road, selling the company line to GM's dealer network. Reporter Steve Finlay painted the 42-year industry veteran as a living link between GM's past and professed future: selling the vehicle, not the deal. While Finlay pressed Gerosa on GM's so-called value pricing, the scribe failed to confront the exec about GM's recent sales incentives or The General's March Madness campaign. In any case, Finlay's feature contained a telling tale.

At a dealer conference, David Latshaw, finance director at Shaver Pontiac in Thousand Oaks, CA, asked Gerosa why GM can't build enough Solstii to meet demand. “Our dealership had 600 initial orders and only got thirteen cars," Latshaw said. “What is the right number?" Gerosa answered. "Too many, and you discount. Too few, and there are waits. But thirteen is too low.” Ya think? Latshaw: "We put a sold Solstice in the showroom just to display it, and people were saying, ‘I want to buy that car!’ They got mad when we told them they couldn’t. They were freaking out. We had to hide the car in back.” Before we file that one under defeat, from the jaws of victory snatched, note Gerosa's inability to accept responsibility for the company's screw-up or promise any kind of resolution to an ongoing problem.

Mr. Gerosa may be a tenacious and dedicated foot soldier. His efforts may have earned The General tens of millions of dollars. But his career arc and atttitude reflect and reveal a company without the slightest hint of personal accountability. Where middle management fails upwards or, at worst, sideways. Where assembly workers' jobs are secure whether or not there's a market for the products they produce. Where a CEO and his team can oversee the inexorable dimunition of their company's market share, losing $8b in a single financial year, and continue to get paid millions of dollars to hold the tiller. Where GM's Vice President of Global Product Development can threaten American jobs without repercussions.

Check it: At the Geneva Auto Show, Maximum Bob Lutz addressed the pressing issue of US labor costs and dropped this pearl upon the press: "Hourly workers in the U.S. no longer are faced with a choice between high-paying jobs and low-paying jobs. They must choose between jobs or no jobs at all… In a few years time, it’s clear that the Chinese automobile industry will be capable of exporting products. There’s no doubt that someday we will be (using) GM China as a source of products. I’m very optimistic.” Even if it's true, it's not exactly what you'd call helpful-- given GM's do-or-die labor negotiations at bankrupt parts supplier Delphi.

But who's going to stop the septuagenarian Car Czar from shooting his mouth off? Rick Wagoner? Like Gerosa, GM's CEO is a lifer. Rabid Rick's learned that there's no comment or action or inaction that doesn't disappear off the face of the earth if you just give it enough time. Drop $4b on FIAT? Pontiac G6 a sales dud? Hybrids and muscle cars ten years too late? GMAC sale a bit... delayed? SEC probe unearthing some nasty accounting problems? Forgeddaboutit. Literally. It's a logical corollary of unaccountability: all failure is temporary, survivable and, ultimately, irrelevant.

GM watchers who are shocked by the lack of urgency over at RenCen don't understand that GM's corporate culture is the ultimate defense against reality. Nothing can go that wrong because even if it does, well, life goes on. Rabid Rick cashes in GM's chips at Suzuki, uses the money to pay off Delphi's workers and everyone goes back to business (or lack thereof). That fire burning-up GM's cash reserves? Oh, we'll put it out eventually. It's the same mentality that the UAW displays in its negotiations: tough it out, give them nothing and everything will be OK. That's the way we've always done things around here, bankruptcy or no bankruptcy. Even if the union leadership knows better, they know their members don't.

It's Pan Am redux. The international airline once enjoyed a clear playing field: no significant competition and enough money to give the unions whatever they wanted. When deregulation arrived, the company considered itself too big to die-- even as it lost market share, sold off assets, wiped billions off shareholder equity, suffered union strife and floundered in an endless sea of red ink. An article by Jon Marcus and Gretchen Voss quotes a financial advisor to the company: "Half of Pan Am's problems were caused by circumstances. The other half was caused by the culture, which seemed to make perfectly rational men think they were invulnerable once they walked through Pan Am's doors." Nuff said?

http://www.thetruthaboutcars.com/con...7337934924044/