GM-The Fix Was In

Earlier this week the United States government rejected General Motors restructuring plan. Common sense, and Occam’s Razor, which, roughly put, is a line of reasoning that says the simplest answer is often the correct one, points to the submission of GM’s plan as well as the government’s rejection of it as being a thoroughly scripted and choreographed political and economic drama.

Despite its precarious condition, General Motors had the ways and means to use internal staff and external consultants to put together a coherent and viable proposal. It’s naive to think otherwise. Lobbyists, bankruptcy attorneys, and creative bean counters were at their beck and call, for fees which a fraction of the bailout monies they’ve received would have paid for. But GM didn’t want to be solely responsible for the cuts that would have had to be made in order to get the government nod.

Enter DC, stage left. The plan’s not viable, they say. Off with Wagoner’s head, they say. Decisive action, at least on the surface, that doesn’t yet alienate the GM employees, who a cynic would say are seen as voters, not workers and families with an uncertain future. What’s next for the company is not presented immediately, but as the week proceeds, with the President safely distanced in London for the G-20 economic conference, it’s clear that GM is headed, with the government at the wheel, for a carefully orchestrated declaration of bankruptcy. A bankruptcy that’s meant to occur without causing the kind of panic that one would expect to follow such a declaration from an American industrial icon.

So far the massage is working. No riots in Detroit (at least not yet), although the internal psychological state of its residents must be fragile at best. The blame has been spread around to the degree that there’s no one party to whom all can point with an accusing finger.

When many are perceived to share the blame, no one has to shoulder more than a fraction of it. So all parties get more of pass than any of them deserve.

Nicely choreographed, nicely executed. Appearance trumps reality.

But all will pay down the line for either betting that we’re more ostrich than human, or for being more ostrich than human. The longer the short term denial, the greater the eventual pain.

Act II should be a doozy.

Detroit, GM, and the Final Four

The ironic juxtaposition of GM and Chrysler going through their death throes in the same town that’s about to host college basketball’s Final Four, one of the most garish, opulent, and escapist spectacles in sports, boggles, and troubles, the mind.

There’s a kind of cognitive dissonance that results in a headache at best, and a heartache at worst, when one thinks of the hundreds of thousands of unemployed auto workers licking their wounds alongside the partying corporate and sports honchos.

Yes, there’s a positive side to this, as millions of dollars in commerce is coming to Detroit, an area starved for both commercial revenue and sales tax from that revenue. And the locals will embrace the temporary bump, while gritting their teeth knowing that it’s too fleeting to make a substantial and long lasting difference in their lives.

Michigan State earning it’s way to the Final Four also presents a study in contrasts with the likes of the auto executives who let the world, particularly the Japanese and Koreans, pass them by while they themselves crawled along in the slow lane, either devoid of innovative ideas or enacting them at a snail’s pace.

Had Michigan State lost, they’d be out, headed home, essentially fired. Their appearance at the big dance is a shining example of pure capitalism, survival of the fittest, at its best. The fact that it took 8 years and the government to get rid of Rick Wagoner as the head of GM is capitalism at its worst. Cronyism trumping creativity. Government intervention instead of free market forces running the show.

Michigan State is my sentimental favorite next weekend.  It’d be nice to bring Motown’s residents a tiny sliver of joy in the midst of their troubles.

Superbowl Advertising – GM, Chrysler and Ford are missing the point

Kannon Fodder:

It’s been noted in virtually every newspaper and online resource that the American car companies are not advertising in the Super Bowl, for example, this article in the Baltimore Sun.

The argument is that it would appear tacky to spend $3 million for one thirty second ad when they just got a sweet handout from Uncle Sam.

The Kannon Fodder team thinks it is what you advertise that is tacky – not where you advertise it. Just the other night, one ot the team saw a Ford as that shouted “THIS IS YOUR LAST CHANCE TO BUY AT EMPLOYEE PRICES. PRICES WILL NEVER BE THIS LOW.”

Bull Crap. We don’t believe that, you don’t believe it, the dealers don’t believe it. No one does.

What we need now is some honesty – and some transparency. Step forward and be the first manufacturer to say:

“Please go to Consumer Reports or our own website to download the dealer invoice. You’ll see exactly the price our dealers are paying for these cars. We pledge to you that this is the lowest we can sell them for to still be able to pay back the money we borrowed from you, the tax payer.

We’ve instructed our dealers to charge you no more than $500 more than this price. If they try to play games, find a dealer who will treat you fairly.

We’re all in this together. “

That Ad would sell cars. If that ad was on the Super Bowl, and the manufacturers really followed through and stopped playing games, and the dealerships stopped doing business as usual, people might start trusting again.

Not running an ad in the most viewed event this year is just playing more games.