On Leadership
Video | PostLeadership | FedCoach | | Books | About |
Exploring Leadership in the News with Steven Pearlstein and Raju Narisetti

Bill George
Scholar/Former CEO

Bill George

Bill George is a management professor at the Harvard Business School, the former Chairman and CEO of Medtronic, Inc., and the author of several best-selling books on leadership. His latest release is 7 Lessons for
Leading in Crisis
.

Radical Surgery Required

None of the Big Three CEOs presented compelling plans to enable them to be competitive in the North American market. What they presented were survival plans to keep them afloat with a government bailout -- until the money runs out again.

What they are asking for is equivalent to a patient dying from heart disease asking to be put on "life support," when they need radical surgery to get healthy and live a long life.

Here's my proposal to make General Motors competitive for the long-term:

1. Divide GM into two companies, the first composed of Chevrolet (including trucks), Buick, and Cadillac.

2. Install new management and a new board of directors, move the headquarters to a new location, and create an empowering culture for all employees.

3. Negotiate new employee agreements with wages and benefits competitive to those of foreign producers' U.S. factories (around $44 per hour, not GM's current level of $73), including health plans, pensions, and retirees comparable to its foreign competitors.

4. Retain only GM's most productive American and foreign factories--those that operate at greater than 80% of capacity.

5. Embark on an aggressive new-product development program to make its autos fully competitive in engineering, features, and styling within five years.

6. Commit to a fleet average of 40 mpg by 2015 and 50 mpg by 2020, competitive with European standards, with a mix of hybrids, electric cars, lighter vehicles, and efficiency improvements.

7. Re-charter the dealer network for these three brands with fewer, healthier dealers.

8. Establish a viable capital structure enabling this company to operate with sound cash balances and a reasonable debt-to-equity structure.

9. The second company would contain all the remaining elements of GM, including the remaining five brands, the jobs bank and retirees. It would be run by the current GM management. This company would be liquidated with reasonable settlements for employees, retirees, suppliers, and creditors, comparable to what a bankruptcy court would offer. The U.S. government would have to step in and pick up the remaining obligations after this company's resources were exhausted, which is what it would have to do in the case of bankruptcy for pension benefits.

10. The president and the president-elect should jointly appoint an "auto czar" and an independent auto board to oversee this restructuring.

In the interim period, extend GM and Ford loans from the already legislated Innovation Fund. Chrysler is a separate case, having been foreign-owned for several years and now owned by a wealthy private equity fund that has been unwilling to put more money in; until Cerberus does so, the government should not bail out the company, or force a merger with GM.

By Bill George

 |  December 8, 2008; 7:08 PM ET
Category:  Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: Admit That You're Broken | Next: The Courage To Be Sorry

Comments

Please report offensive comments below.



Yes, Cerebus needs to cough up more money FIRST -- this is not Chrysler welfare without ownership contribution.

THAT SAID, WHY I'D LOVE TO BE THE NEW CAR CZAR, OR EVEN THE USED CAR CZAR.

I FIND THAT LAWYERS MAKE EXCELLENT CAR CZARS AND I HAVE BOTH DOMESTIC & FOREIGN CAR EXPERIENCE, NAMELY, FORD AND GM ON THE DOMESTIC SIDE AND HONDA AND TOYOTA ON THE FOREIGN SIDE

AND I KNOW CHINESE

为什么I' 是D的爱新的汽车沙皇,甚至半新车沙皇。 我发现律师做优秀汽车沙皇和我有两国内& 外国汽车经验,即,在外国边的国内边的福特和GM和本田和丰田

AND JAPANESE TOO.

I'なぜ; Dは新しい車の皇帝、また更に中古車の皇帝であることを愛する。 私は弁護士が優秀な車の皇帝を作る私持っている両方国内&をことが分り、; 外国の側面の国内側面の外国車の経験、即ち、フォードおよびGMおよびホンダおよびトヨタ

Posted by: brucerealtor@gmail.com | December 10, 2008 3:05 AM
Report Offensive Comment

I agree with Bill George on almost all points. Point 3 is the scariest in terms of the reality dealing with the UAW. Greed and anti-competition has taken over unions. I don't know who is making $73/hour, but that seems an awful lot of money to turn a screw or engineer a design. For that amount of money, someone could live very comfortably in the DC region which is very expensive. I know, I've lived here all of my life. All this does is to reinforce my belief over the past decade that unions as a whole across the U.S. have outlived their usefulness and promote anti competitve behavior. I work in the Telecomm industry and can tell you from first hand experience that unions are a problem. Any time a project came along to install equipment in any city where union labor was required to be involved or exclusive, we automatically had to spend 10 to 20 percent more money just for union labor. And many times the quality of the work wasn't even up to par or even near as good as competitive labor. Dont get me wrong, I'm always for workers rights and a fair wage, but let's get real here. If someone can do the work cheaper and for better quality, I should have the option of chosing that quality of service rather than having union BS shoved down my throat. Trust me when I say the problem with unions is bigger than what GM has to deal with. Local and State Governments support those problems as well by supporting union labor with laws backing their interests. They are part of the problem too. Mr. George is right when he says major surgery is required. Otherwise they should be allowed to wither away into history.

Posted by: William | December 9, 2008 9:51 AM
Report Offensive Comment

The only two divisions of GM that should be retained or sold are Chevrolet (including the trucks) and Cadillac. The senior management could be replaced with competent executives recruited from the Japanese manufacturers or other well run U. S. non-auto companies. Under no circumstance should Chrysler be rescued. Let the private equity firm "pony up" rather than letting it drink at "the public trough." Businesses, like humans, have life cyles, and when the business consistently fails or refuses to institute "preventive or remedial meassures," it should not be put on the taxpayer's life support.

Posted by: jrmdal | December 9, 2008 9:25 AM
Report Offensive Comment

The comments to this entry are closed.

 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company