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Tag: GM

Mitt Romney vs Reality

I’ve been saying for a while that Mitt Romney’s biggest problem will be his compulsive lying. It’s stunning how he repeatedly changes his positions, and then denies ever taking the previous position.

With that track record, the Obama campaign seems to have come up with an appropriate slogan – “Mitt Romney vs Reality.” The first ad has to do with Romney’s hilarious statement in Cleveland that he deserved plenty of credit for the recovery of the auto industry . . . even though he opposed the bailout. The ad is excellent, though coming up with ads against Romney should be pretty easy.

CNBC’s Dennis Kneale is a hack

I may have spoken too soon several weeks ago when I called Melissa Francis the “dumbest person on CNBC.” Dennis Kneale has thrown his hat in the ring.

Dennis Kneale rarely provides any real analysis, and that’s the biggest problem on CNBC. Too many of the CNBC hosts use each piece of news to regurgitate their political views, and Kneale is one of the worst offenders.

Today he was outraged that the Obama administration would ask Rick Wagoner to step down. He talked about it on the air, and he even managed to write a column about it.

He starts with a rational statement, but he quickly lets his anger get the best of him.

Yes, it’s about time. Wagoner had been in denial about the auto industry’s woes for far too long. He just wasn’t scared enough. But if this IS the right move, um, then why didn’t the REAL shareholders of GM—the big pension funds and mutual funds in particular—demand it long ago? Maybe because they felt Wagoner was doing as good a job as anyone could under impossible difficulties.

So, he starts by admitting this might be a good move, but he’s concerned that the “shareholders” didn’t ask Wagoner to leave. Of course, the stockholders really don’t have that power (GM is a Delaware corporation, so it’s “stockholders,” not “shareholders”). The board of directors has the power to fire the CEO, not the stockholders. The stockholders can elect a new board, but elections usually happen once per year. The stockholders of course HAVE weighed in by hammering the stock from about $40 to under $5 in just six months. Do you think they’re happy with Wagoner? He also doesn’t mention that the Obama administration also wiped out most of the Board of Directors as well.

Also, at this point, who gives a damn what the stockholders think? This company would be bankrupt without the help of the federal government and the stockholders would lose everything. As the most senior lender, and as the ONLY entity or person on the planet capable of saving this mess of a company, the government has every right, AND the obligation, to put in place a management team of its choosing.

In the next paragraph, we see his real agenda – using this incident to take cheap shots at the Obama administration.

The bigger worry is this summary execution betrays a deep antipathy toward Big Business on the part of the Obama Administration. Lamentably, the president’s henchmen may have imposed this coup mainly for reasons of image and example-setting. No wonder stocks are down big today.

Here we go again. Anyone who uses the phrase “the president’s henchmen” in this context shows he’s not serious about analyzing the issue. Can’t he just explain why he disagrees with the decision? Does he have to use this kind of language? Is someone at CNBC asking him to act like an asshole so he gets more page views for his articles? We’re in the middle of a huge financial crisis that has produced real anger among the American people, and reasonable people will disagree about how we should address these political problems, so is it really necessary for CNBC hacks to ratchet up rhetoric in this case?

Then he goes on to slam Fritz Henderson.

Otherwise, how is it that GM . . . is any better off run by Wagoner’s doppelganger—Frederick “Fritz” Henderson, like Wagoner a GM lifer who helped preside over the automaker’s years-long decline?

Naturally, he doesn’t answer his own question. That might require some actual reporting that would compromise the pissy tone he has worked so hard to establish. He probably spent at least five minutes coming up with the “doppelganger” crack. If he had done a little digging, he might find that some people actually think Henderson could do a good job.

Then again, Henderson is no Wagoner. Where the boss is measured and aloof, Henderson is fast-talking and direct. He attacks problems with gusto, which is why GM sent him to trouble spots on three continents. “Fritz has a real sense of urgency,” says Joseph Phillippi, principal of firm Auto Trends Consulting. “His intensity would be a big plus.”

Earlier this decade, Henderson shored up GM’s flailing European operations. He needed to cut jobs and came out swinging—announcing 12,000 layoffs even before inking a deal with union bosses. The move sparked a wildcat strike in Germany, but Henderson got his way. He also helped introduce the Chevrolet brand to Eastern Europe. After years of losses, GM Europe made $357 million in 2006 and a small profit last year. (Those gains have deteriorated along with the global economy.)

During a two-year stint in Asia, Henderson simplified GM’s brand strategy. The company used to sell Saturn, Chevrolet, and cars from former partners Isuzu, Suzuki, and Subaru in Japan. Henderson focused solely on Chevy. He can’t take all the credit, but Chevy is now GM’s global brand.

Since returning to Detroit nearly three years ago, Henderson has spent much of his time negotiating with the United Auto Workers. The deal he cut with the union will save GM billions a year. “If it weren’t for Fritz and his team,” said UAW President Ron Gettelfinger at the time, “this deal would never have come about.”

Now, we don’t know if Henderson is the right choice. One could argue he was too easy on the UAW in the last round of negotiations. But we certainly didn’t learn anything about this important move from Kneale.

The future of one of the most iconic companies in American history hangs in the balance, and all of his comments on the subject were simplistic and useless. He was more concerned with insults and politics as opposed to analysis. What a joke.

Bailing out the auto companies

What should we do about the auto companies? It’s infuriating to think that we would have to bail them out, given the mismanagement over the years. On the other hand, the economy is on the brink, and letting GM go under in this environment could take down the entire economy. Also, given the financial bailout, throwing another $25 – $50 billion to save Detroit doesn’t seem like an outrageous idea.

Of course, the devil is in the details. Many, like Tom Friedman, want to throw out management as part of the deal. This doesn’t make sense. Certainly, Rick Wagoner and the rest of the braintrust at GM made tons of mistakes, but in the past year they have made substantial progress on innovative cars like the Chevy Volt and big changes to their cost structure with the UAW. Without the financial crisis they had a credible path to recovery. Ford is in less trouble, and their new CEO should not be blamed for past mistakes.

The real issue is how many strings should be tied to the bailout. Obama wants to see real progress towards building green cars here in the United States. Investing in this area would have significant short-term and long-term benefits. The cars companies are already moving in this direction, so getting agreement on these points may be possible.

The bigger issue raised by Friedman relates to those in Congress who supported the auto industry and their disastrous policies.

The blame for this travesty not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote. That shielded General Motors, Ford and Chrysler from environmental concerns, mileage concerns and the full impact of global competition that could have forced Detroit to adapt long ago.

Indeed, if and when they do have to bury Detroit, I hope that all the current and past representatives and senators from Michigan have to serve as pallbearers. And no one has earned the “honor” of chief pallbearer more than the Michigan Representative John Dingell, the chairman of the House Energy and Commerce Committee who is more responsible for protecting Detroit to death than any single legislator.

This has led to a huge battle currently brewing in the Democratic caucus in the House.

In the first big post-election clash on Capitol Hill, two House heavyweights are battling to lead an influential committee that will have jurisdiction over global warming in the new Congress.

The fight pits California Democratic Rep. Henry Waxman, a key ally of environmentalists, against Democratic Rep. John Dingell of Michigan, who has ties to the auto industry. Waxman is trying to oust Dingell as chairman of the House Energy and Commerce Committee.

While Waxman supporters say they think they’ve got enough votes to prevail, Dingell is fighting hard to keep the position.

In an interview with WJR radio, he called Waxman an “anti-manufacturing left-wing Democrat” and said it would be a mistake to have him in charge, particularly with the auto industry struggling.

If Waxman is successful in his attempted coup, it means that two Californians would take leading roles in the contentious debate over global warming. Democratic Sen. Barbara Boxer is the head of the Senate’s environmental committee, which has jurisdiction over the issue.

The 82-year-old Dingell, the most senior member of the House, has long resisted higher fuel standards and tighter limits on greenhouse gases.

Dingell needs to go. He’s a slave to the auto lobbyists, and nothing will get done if he’s blocking the move towards alternative fuels in the House. Hopefully, Waxman will prevail.

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