March 30, 2009, - 11:15 am
GM’s Forced CEO Resignation: When You Take Govt. $$$, That’s What You Get; Will Obama Design New Yugo Next?
By Debbie Schlussel
The big story heard round the business world–especially here in the “City Formerly Known at Motown”–is the Obama forced-resignation of General Motors CEO Rick Wagoner.
I have mixed feelings about this.
I see it like the federal anti-trust exemption Congress long ago gave Major League Baseball. By accepting special government protections, you’re opening the door for the government to come in and borrow the keys to the car and use the bathroom, anytime it wants. Big Brother is never an ideal house guest. He doesn’t like to leave, he consumes all the food, and leaves a mess in every room he enters. GM took the federal money. That’s the breaks. When you take federal money, you risk government involvement–although in this administration, it seems the government is trying to run corporations, whether or not they’re on the public dole.
How to Fix GM?: Not By Firing Him . . .
But By Firing Them . . .
CEOs are fall guys all of the time in the corporate world, as Rick Wagoner clearly is here. It’s no different here, but for who is making the decision–a non-stock holder who flies around on Air Force One and hangs at Camp David. And that’s the objectionable thing here. I have no tears for Mr. Wagoner, who likely has a nice golden parachute, unlike the many workers whose jobs were lost under his “leadership.”
That said, the new GM leadership won’t deal with the unions or Barack Obama any differently than Wagoner would have under this new set of circumstances of tremendous government oversight. They won’t have a choice, nor would he have had one. But sometimes a change in leadership is necessary just for PR purposes and momentum. Still, it’s extremely troubling for a man who a few years ago was a “community organizer” in sleazy Chicago politics to be hiring and firing CEOs. Also, of note, with the exception of AIG, Barack Obama didn’t demand or get changes in leadership as he continued to pump in gazillions to many of America’s banks and investment houses.
What’s next–will Obama be designing cars and picking our choices of what to drive? It seems to me that when government gets involved in making official state cars, you get Yugos. Will we no longer be able to buy SUVs? None of this is a stretch since Barack Obama has now decided he will run GM, hire and fire, and set policy. Anything and everything is on the table. And that’s scary when you have a green-zealot running a former automotive giant. GM is planning to shed Hummer, which is now a market dud because of uncertainty about gas prices in the future and what they were last year when gas was at nearly $4 a gallon. What if Obama tells GM to make less trucks and SUVs? It’s not beyond possibility.
But while Obama is telling GM which CEO it can and can’t have, where is he on the $1,500 to $2,000 of every GM car that goes to pay for Viagra, Cialis, and other drugs of retired GM employees? I wrote about this problem two years ago, and it continues to fester. What I wrote then remains true today of where GM’s giant loss center is located.
It lost $10.6 billion, last year. MORE THAN HALF of that was its overall health care expenditure of $5.6 billion per year.
And that little blue pill is expensive. You are paying an extra $1,500 per GM car (if you bought one) to pay for the out-of-control spending (and payment of HMO paper-pushers’ salaries).
That’s where the focus should be, not on who will get the golden parachute next and how soon. Yes, it’s true that these people made a contract with GM to get health benefits and a pension, but Viagra, etc. are like cosmetic drugs. They’re not medically necessary and life-sustaining. And they weren’t even in existence when many of these people retired years ago.
Again, the state-run vehicle industry reminds me of two instances–the Yugo and Hitler’s Volkswagen. Sadly, Barack Obama’s moves here have echoes of both. Neither left much to be desired.
Right now, President Obama is speaking about this live, and television broadcasts here in Detroit is pre-empted for it. So far, I’ve heard nothing new from him. It’s the same old, “We need to make sacrifices. What he means is everyone else “but me” needs to make sacrifices. It’s the same old “I feel your pain” crap that we heard from someone else, eight years ago.
Barack Obama won’t save the auto industry. The marketplace will. And until he gets that–which he never will–look for GM not to survive as it is now, no matter how much money is pumped in.