Rally the Troops
The change in public attitude between the auto executives' first visit to Washington, and the second, was noticeable and represented a significant change. But I think they could have done more.
Think about it. What we're dealing in here, basically, is a workout situation that in most respects is what goes on during a Chapter 11 bankruptcy reorganization -- only in this case without the stigma and legal complexity of actually being in court. So the companies needed to show that the workout process was already well underway -- that they weren't just sitting around waiting for Washington to bail them out.
Happily, the United Auto Workers union has already stepped up to the plate. President Ron Gettlefinger should get a lot of credit for offering two big concessions last week -- delaying the next payments to the new retiree health fund (VEBA) and eliminating the "jobs bank" for workers with no work to do.
For the first time that I can remember, Gettlefinger dropped the contract-talk bluster that the union usually uses, which is to talk tough in public about how they've already given enough and then agree to concessions in private talks. His comments to the committee were candid and realistic even as he was clear in pointing out that the workers were hardly the only culprits in terms of the companies' problems. It would have probably helped if he had also offered, in the context of a larger restructuring, to get the companies to immediate parity with foreign transplants in terms of overall labor costs and to swap further concessions in retiree health benefits for equity.
Beyond the union, it would have been useful to see heads of all the dealership councils announcing that they were actively at work on plans to shrink the dealer networks by at least 30 percent, without holding out for financial sweeteners from automakers. You would have wanted to see the major banks and creditors there saying that they were working on a debt-for-equity swap plan tailored to each company's particular balance sheet and cash-flow requirements.
Most important, I think it would have been good if the companies had announced that all of their current directors had tendered their resignations and that new outside chairmen had been appointed who would consider which ones to accept and to recruit new members as needed. These new chairmen should be drawn from outside the industry but have stellar reputations as business leaders familiar with turnaround situations.
Think of GE's Jack Welch or Wilbur Ross, who almost single-handedly restructured the steel industry, or Lou Gerstner, credited with turning IBM from a hardware to a service and software company. The important thing would have been to demonstrate that the board and top management were taking some personal responsibility for having brought the companies to the point where they needed to ask for government help.
Finally, before these guys got into their hybrid vehicles for the drive to Washington, they should have held rallies outside a big local factory in or near Detroit, with thousands of employees gathered around, white-collar and blue-.
And they should have given the speech of their lives -- one that demonstrated candor about the direness of the situation, empathy with the plight of employees, a vision of where the companies had to go, a determination to pull the companies through and to make whatever personal sacrifices were necessary to get it done.
They could have also used the speech to talk to the country about the history of these companies, how they have been intimately intertwined with the history of the country for the last century, appealing to the sense that we all have that we need to pull together as a country in this time of deep economic crisis.
At this point, it looks like the companies will get their short-term loans without doing any of this. But how much better it would be if they could have had the country behind them as well.
Posted by: email@example.com | December 10, 2008 2:46 AM
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Posted by: Alan Shapiro | December 9, 2008 7:25 PM
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