On the Fritz

Frankly, again, I don’t get it.  Frank Stronach’s vanity purchase of an OEM might not have been wise for Magna, but as W.C. Fields said, never give a sucker an even break.  You need the money, he has it, and he wanted to spend it.  It is part of Darwinian evolution that not only do the fittest survive, but the feeble get fleeced.  Instead, now, GM will shoulder Opel’s problems, which means that the U.S. taxpayer, the UAW and IG Metall all stand shoulder to shoulder to prop up GM’s money-losing European subsidiary.  “Workers of the World Unite!”

This isn’t to say that the cars, engineering, or chassis dynamics of the current crop of Opels is or is not sublime.  But it is not without its costs and obligations.

No, the merits or demerits of skinnying down GM aside, what really cost Fritz was the culture shift at GM Ed Whitacre is trying to achieve.  It is hard to say if Ed was going a bit “rogue” from the rest of the board, or if the rest of the US and Canadian government and UAW members agreed, but the effect on operational personnel was clear and direct.  If you’re in your forties, you are part GM’s youth movement.  If you are in your fifties or (heaven help) sixties you are a suspect dinosaur and need to be replaced.  

Mr. Whitacre is astute in that GM’s hidebound culture needs to change.  Firm commitments to a customer focus need to happen, as well as a repudiation of management sanctity and privilege.  It seems, too, that Mr. Whitacre seems to think that the longer you survive in GM’s toxic culture soup the more likely you’re infected.  Two winners from this shoot out have emerged, Susan Docherty and Mark Reuss.  Both seem like perfectly capable young people.  But Susan just penned a piece in Automotive News defending pulling the plug on Pontiac in favor of antediluvian Buick, and Mark is the ultimate insider, being the son of veteran Lloyd Reuss.

Now, I’m sure that Susan’s letter to Keith Crain was carefully crafted for her, and that Mark’s choice of ancestors was not his fault.  But it is not clear, youth movement or not, that the needle has moved.  To Fritz’s credit he understood the shortcomings of GM’s history, and as a competitor he might have been the best person to move that needle.

It is clear, though, that the next CEO for GM will be fairly young, probably late forties, perhaps very early fifties, probably not from GM and perhaps not from the industry but mainly dedicated to burying whatever is left of GM’s hidebound culture.  Now, I know a little about GM’s culture, having survived it in the late eighties.  But I can’t believe that the intervening twenty years hadn’t chastened most of the remaining management.  Further, while some of GM’s traditional hubris probably remained during Rick Wagoner’s years, how could the bankruptcy and obvious fall from grace have escaped the attention of the surviving management?

So, I am careful not to say, “shake up” the GM culture, but rather dismantle what’s left of whatever arrogance remains.  I would have to think that James Bond’s vodka martini is less shaken that GM is.

Whoever takes over GM will have quite a job.  Luckily, with a fresh start, there will be a chance to reclaim relevancy in the market.  Already there’s talk of reinstating some hastily dismissed dealers, and perhaps some rethinking of the dismantling of divisions is in order.

Huh?  Well, that whole Pontiac/Buick debacle might be re-reviewed.  Now, Pontiacs should emphatically not be rebadged Chevrolets ever again, and the NUMMI joint venture might never be revived, but the G8, and G6 might be viable entrants against the day GM’s fortunes and product development budget revives.

Now that Opel is back in fold, why wouldn’t Saturn be tapped as a source of sales, perhaps sufficient to boost volume past breakeven?  And that way, those dollars sent to Europe might go towards saving some American jobs, too.  The potentially best selling Saturn, the four door sedan Astra, is currently built in low-wage Poland, and would be a better seller than the (rather expensive) Belgian-built hatchbacks foisted on Saturn’s previously loyal economy buyers.

With Opel being reintegrated into the GM family, might Saab be rescued as well?  Unlike Saturn and Pontiac, though, a thorough re-thinking of Saab would be needed.  Pretensions as a premium brand would have to be tossed out, as any more product line extensions on the cheap, like the “Saabaru” 9-2 and gargantuan 9-7X SUV.  The 9-3X small crossover SUV might be greenlighted, and more mid-range Saabs off Opel components might be built in Opel facilities.  Terroir considerations aside, continued Swedish manufacture in Trollhattan would have to be seriously evaluated, and the manufacturing arm of Saab might need to be amputated.  

While reversing shuttering Pontiac and Saturn might be difficult and embarrassing (another Emily Latilla “never mind” moment), keeping Saab going would require rethinking a long time of misguided and hard to fathom GM policies.  And even if carried out might not result in any success, as the market may have passed this particular brand by.  Given, though, today’s interest in quick, sporty, and relatively fuel-efficient hatchbacks, at least on the niche level (MINI, GTI), an Astra-based turbo Saab with evocative “cookie-cutter” wheels might be the “MINI” of the 2010’s.  Using mainstream European plants and not a dedicated Swedish plant might provide the business case.  That is, if GM could attract enough profit in the meantime.  I know, good luck with that.

These bits of frosting aside, GM’s real revival will be based on its three of its four strongest sellers, Chevrolet, Cadillac, and GMC (Pontiac being the third best, after Chevy and GMC).  Whoever takes charge will need to restock the shelves quickly and often with desirable and on target product.  Flexible manufacturing along with a wide, full product line would seem to be the recipe going forward.

By the way, the competition isn’t resting.  Hyundai hit a home run last month, increasing sales by 34% over last year’s November.  They did it on the strength and interest in B and C class cars, but supported by having a full line of mid and full-sized cars and trucks as well.  Might Mr. Whitacre be looking, like George Steinbrenner used to, at who is kicking his butt in order to bring him (or her) on board?