Rattner, Wagoner, and How to Run a Car Company

I’m going to have a few follow-up posts about Steven Rattner’s Overhaul generally and Saturday’s book salon on it. But for the moment, I wanted to add something to two excellent reviews of it by Malcom Gladwell and Felix Salmon. Together, they both distinguish between the product GM makes and the debt it had. Here’s Salmon:

That Rattner’s team managed not one but two insanely complex bankruptcies in a hitherto unimaginably short timeframe is a real and noteworthy achievement of the Obama administration. Rattner is right about that. But Gladwell’s got a good point too. This kind of biz-school restructuring is easy to show off about. What’s hard is making millions of cars which are so good that the picky US consumer will buy them rather than the incredibly well-made competition — and making a profit by doing so. Eliminating GM’s monstrous debt burden by sending it through bankruptcy was a necessary step in getting there. But it’s not at heart what managing a company like GM is or should be about.

And here’s Gladwell making a point bmaz and I argued, that Rick Wagoner, whatever his faults, had done significant work to fix GM before the overhaul.

Wagoner was not a perfect manager, by any means. Unlike Alan Mulally, the C.E.O. at Ford, he failed to build up cash reserves in anticipation of the economic downturn, which might have kept his company out of bankruptcy. He can be faulted for riding the S.U.V. wave too long, and for being too slow to develop a credible small-car alternative. But, especially given the mess that Wagoner inherited when he took over, in 2000—and the inherent difficulty of running a company that had to pay pension and medical benefits to half a million retirees—he accomplished a tremendous amount during his eight-year tenure. He cut the workforce from three hundred and ninety thousand to two hundred and seventeen thousand. He built a hugely profitable business in China almost from scratch: a G.M. joint venture is the leading automaker in what is now the world’s largest automobile market. In 1995, it took forty-six man-hours to build the typical G.M. car, versus twenty-nine hours for the typical Toyota. Under Wagoner’s watch, the productivity gap closed almost entirely.

Most important, Wagoner—along with his counterparts at Ford and Chrysler—was responsible for a historic agreement with the United Auto Workers. Under that contract, which was concluded in 2007, new hires at G.M. receive between fourteen and seventeen dollars an hour—instead of the twenty-eight to thirty-three dollars an hour that preëxisting employees get—and give up all rights to the traditional retiree benefit package. The 2007 deal also transferred all responsibility for paying for the health care of G.M.’s retirees to a special fund, administered by the U.A.W. It is hard to overstate the importance of that second provision. G.M. has five hundred and seventeen thousand retirees. Between 1993 and 2007, the company paid out a hundred and three billion dollars to those former workers—a burden unimaginable to its foreign competitors. In the 2007 deal, G.M. agreed to make a series of lump-sum payments to the U.A.W. over ten years, worth some thirty-two billion dollars—at which point the company would be free of its outsized retiree health-care burden. It is estimated that, within a few years, G.M.’s labor costs—which were once almost fifty per cent higher than the domestic operations of Toyota, Nissan, and Honda—will be lower than its competitors’.

In the same period, G.M.’s product line was transformed. In 1989, to give one example, Chevrolet’s main midsize sedan had something like twice as many reported defects as its competitors at Honda and Toyota, according to the J. D. Power “initial quality” metrics. Those differences no longer exist. The first major new car built on Wagoner’s watch—the midsize Chevy Malibu—scores equal to or better than the Honda Accord and Toyota Camry. G.M. earned more than a billion dollars in profits in the last quarter because American consumers have started to buy the cars that Wagoner brought to market—the Buick Regal and LaCrosse, the Envoy, the Cadillac CTS, the Chevy Malibu and Cruze, and others. They represent the most competitive lineup that G.M. has fielded since the nineteen-sixties. (Both the CTS and the Malibu have been named to Car and Drivers annual “10 Best Cars” list.)

What Wagoner meant in his testimony before the Senate, in other words, was something like this: “At G.M., we are finally producing world-class cars. We have brought our costs, quality, and productivity into line with those of our competitors. We have finally disposed of the crippling burden of our legacy retiree costs. We have expanded into the world’s fastest-growing markets more effectively than any other company in the United States. But the effort required to bring about that transformation has left our balance sheet thin—and, at the very moment that we need a couple of years of normal economic activity to refill our coffers, auto sales have fallen off a cliff. Do you mind giving us a hand until things get back to normal?” [my emphasis)

Now, FWIW, I’m agnostic about keeping Wagoner on as CEO. Gladwell makes the same points bmaz and I were making. But I am utterly sympathetic to the notion that any CEO getting a bailout should be fired as part of the deal. The best solution, IMO, would have been to keep Fritz Henderson on as CEO. That’s partly based on my impression–developed during my visit to GM’s Tech Center just a few weeks after Fritz took over as CEO–that he had begun to implement the same kind of cultural change that I saw very quickly at Ford after Alan Mulally took over.

But neither Salmon’s nor Gladwell’s review mention two key details that I think are important to this debate. The first is Rattner’s description of learning about the dire straits of the auto finance companies on April 1, 2009.

I entered the byzantine world of the fincos the very next day, April Fool’s Day, as it happened. We faced off in a Treasury Department conference room against an imposing lineup of businesspeople: the top management from Chrysler Financial, GMAC, and Chrysler, plus Steve Feinberg and the guys from Cerberus. They all knew more about automotive finance than we did. We were trying to fly solo without having taken flying lessons, and I hoped we wouldn’t crash and burn.

Pretty quickly I discovered that the fincos posed a bigger problem than I’d imagined. Auto finance companise are a lot like banks, but there is one crucial distinction: Banks rely on deposits form consumers and businesses for most of the money they use for loans. Finance companies have no such depositors unless they happen to own a bank: instead they must depend on larger borrowings from banks and investors for the cash that they lend to car buyers (known as the retail trade) and auto daelers (known as the wholesale or floor-plan borrowers).

I began to understand how the collapse of the financial markets had created havoc for automakers. As a result of the credit crunch, both GMAC and Chrysler Financial had seen their ability to borrow form banks severely curtailed. To raise added funds in recent years, the fincos had also made heavy use of securitizations, in which their loans to consumers and dealers were bundled, sliced up like a layer cake, and sold off in tranches, typically to investment funds. This market, too, had imploded in 2008, cutting off another key source of funds. As a result of this, the fincos had drastically reduced lending to consumers and dealers, a major factor in the steep falloff of car sales. (145)

Well over a month after Rattner officially got started, he finally sat down with the fincos. Remarkably, Rattner emphasizes that he was out of his league discussing auto finance; nowhere in his book does he make such an admission about the car business, about which he was far more out of his league.

And Rattner describes learning, well over a month after he came on board, that one of the key causes to the auto crash was the Wall Street crisis.

Which is precisely what Rick Wagoner, Carl Levin, Debbie Stabenow and all the other Michiganders–the ones Rattner loves to mock–were saying back in November and December when they first came asking for money.

Rattner doesn’t say it explicitly, but this is basically a concession that all those people he describes as morons were right.

Of course, Rattner either simply didn’t know that this is what the entire debate was about (another problem having someone completely ignorant about the auto industry leading its bailout), or he chose not to believe it until a bunch of finance guys–guys like his fellow private equity guys at Cerberus–told it to him.

And then there’s the second point, which I’ll just touch on (hopefully, I can nudge bmaz to do a full post on it). As Gladwell and Salmon note, Rattner’s book suggests the success of the BK overhaul equates to full success. It’s true that it is a huge accomplishment. But it is very premature to judge the bailout in any case. That’s partly because GM may still do things–like use taxpayer dollars to start importing cars from China–what will be devastating on many levels. More importantly, it all does come down to product. The products that are getting some kudos right now are Wagoner and Bob Lutz’s products, not Rattner and Ed Whitacre’s. And Whiteacre did at least two things that may have detrimental effects on product down the line, two or three years from now: he accelerated the development process beyond the Toyota standard that GM had already achieved (even while Toyota has slowed their own down in response to their quality issues). It remains to be seen whether GM can sustain its quality improvements with this accelerated schedule. In addition, Whitacre ousted Lutz, who even Rattner describes as one of the culturally important things GM had going for it.

Gladwell and Salmon are right: there’s far more to running a car company than just finance. Because of that, it’ll be a few years before we know whether Rattner’s choices for CEO will end up undoing much of the work that Wagoner had achieved.

Marcy has been blogging full time since 2007. She’s known for her live-blogging of the Scooter Libby trial, her discovery of the number of times Khalid Sheikh Mohammed was waterboarded, and generally for her weedy analysis of document dumps.

Marcy Wheeler is an independent journalist writing about national security and civil liberties. She writes as emptywheel at her eponymous blog, publishes at outlets including the Guardian, Salon, and the Progressive, and appears frequently on television and radio. She is the author of Anatomy of Deceit, a primer on the CIA leak investigation, and liveblogged the Scooter Libby trial.

Marcy has a PhD from the University of Michigan, where she researched the “feuilleton,” a short conversational newspaper form that has proven important in times of heightened censorship. Before and after her time in academics, Marcy provided documentation consulting for corporations in the auto, tech, and energy industries. She lives with her spouse and dog in Grand Rapids, MI.

  1. bobschacht says:

    Thanks, EW!
    One of the other factors in this equation is how can we steer the American love affair with trucks (and cars with truck bodies, like the Toyota 4Runner) towards a love affair with compact, fuel-efficient cars? There are cultural factors, like the equation of manhood with big, brawny trucks (when have we ever seen a big, rugged looking cowboy like John Wayne slip into a Honda Civic and brag about what a great car it is?)

    The car companies will tell us that they’re just following cultural proclivities, but they are also feeding and enhancing those proclivities at the same time. Whose responsibility is it to feed and enhance other cultural proclivities that promote the values of frugality and economy?

    Bob in AZ

    • emptywheel says:

      Well, the government ALSO chooses not to do what other developed nations do and try to recoup the externalized costs of gas inefficiency through taxes. So long as they do that, then US manufacturers either have an incentive to build their small cars overseas to make them profitable, or to not build them seriously at all.

      • bobschacht says:

        My concept there was that fuel-economy cars aren’t considered “macho.” So what we need is a “macho” figure matched up with fuel-efficient cars.

        I don’t think Bucky Fuller would send that message.

        Bob in AZ

        • Mauimom says:

          I’m also wondering if the car-makers could get some “mileage” out of a “buy American” program, playing on the economic anxiety and need to create jobs.

          However, I’m wondering just how many of these cars, and/or their parts, are “made in America” any more.

        • thatvisionthing says:

          The Marlboro Man driving a Hummer… smokin’ dinosaurs…

          You see Twilight? And Edward’s little Volvo? Now I have no idea what the gas mileage on that car is, and it certainly didn’t look like he was driving to conserve gas, but… man! Just saying, cool car.

          But I would still take Bucky @4. With Edward driving.

  2. timbo says:

    Thanks for this post. I now understand a lot more of how the financial crisis effected the American economy thanks to you! So many intangibles!

  3. thatvisionthing says:

    And Rattner describes learning, well over a month after he came on board, that one of the key causes to the auto crash was the Wall Street crisis.

    See L. Randall Wray:

    Indeed, the largest financial institutions were run by their management as what my colleague Bill Black calls “control frauds”. That is, the banks used accounting fraud to manufacture fake profits so that they could pay huge bonuses to top management. The latest data out on Wall Street bonuses show that these institutions are still run as control frauds, with another record year of bonuses paid by cooking the books. The fraud continues unabated.

    This is the biggest scandal in human history. Indeed, all previous scandals from around the globe combined cannot even touch this one in terms of scale and scope and stench. This is the mother of all frauds and it will be etched into the history books for all time.

    This criminogeny is unbroken still, is it not? Is the auto industry on some cutting edge of fixing this, or are CEOs still getting paid fabulous bonuses to cut their workers off at the knees and outsource their jobs to China?

  4. thatvisionthing says:

    I missed the book salon, but the question that’s upmost in my mind re GM and the bailout has always been — aren’t you enabling obstruction of innovation? Does anyone anywhere see the big picture about limited resources and planetary disaster, and how GM specifically played a major role in killing the electric car — not just letting a program die, but actively working to get California law repealed, get battery technology hidden away, and maniacally capturing and shredding every single EV-1 out of existence?

    Wikipedia: As CEO, Wagoner focused on highly profitable but fuel guzzling sport utility vehicles and light trucks. In an [2006 Motor Trend] interview, Wagoner stated that the worst decision of his tenure at GM was “axing the EV1 electric-car program and not putting the right resources into hybrids. “It didn’t affect profitability,” Wagoner claimed, “but it did affect image”.

    At the time of the auto bailout hearings in November 2008 I wrote this diary on Daily Kos:
    Question to Senate Banking Committee: Who Killed the Electric Car?

    I keep wondering about all the solutions and innovations Big Auto squelches. And whether it’s in the interests of anybody who has power in the system to see that.

    • Rayne says:

      Sometimes technology dies for a good reason. Like Toyota killing off its Li-Cobalt battery technology because it had a nasty habit of bursting into flames or exploding.

      In the case of the EV-1, the car didn’t provide the kind of performance which consumers would expect, and the battery was also prone to bursting into flames. It was massively expensive to General Motors as a potential risk, so much so that it couldn’t pass the price onto consumers or reasonably expect them to want and drive what was little more than a disaster waiting to happen. It was simply too far ahead of its time.

      If battery technology could deliver, you’d have already seen many competitors bursting into the market place as gasoline approached $4/gallon in 2008 — but you didn’t because the technology still isnt’ there, no matter which supplier.

      • thatvisionthing says:

        If battery technology could deliver, you’d have already seen many competitors bursting into the market place as gasoline approached $4/gallon in 2008 — but you didn’t because the technology still isnt’ there, no matter which supplier.

        The technology was hidden in an oil company’s closet. GM sold it to Chevron/Texaco.

        Here’s that part of the movie: youtube

        • Rayne says:

          You think that one company alone holds all the successful battery technology?

          That’s not the way it works. Really. I worked for a chemical company which had battery technology and sold it to a battery company more than ten years ago because they couldn’t make it competitive. And that battery company is still out there, in business, working in battery technology.

          I remember pooh-poohing a futurist I worked with who told me then it would be more than 10 years before fuel cells would be successfully commercialized for use in vehicles. He was right, I was wrong — and he was right because he understood the technology was still not far enough along in development. We were talking about the use of nanotech-based catalytics at that time, and there still isn’t commercial-scale proven nanotech-based fuel cells.

          It’s simply not out there. Yet. And the biggest single bottleneck has not been oil companies snapping it up, but our government’s lip service for the last decade to investment in development. This is what electing George Bush brought us, if you want a more specific impediment — someone who wouldn’t even meet with the car companies when they wanted assistance with fuel cell development, even though GM alone had already invested $2 billion by that time on fuel cell power.

          That same futurist? I also talked with his cohorts about different kinds of display technologies at the very same time we talked about battery and fuel cell technology. At the beginning of the decade it looked like it would be five years to commercialization of the display technology they were working on in the lab at that time; if you buy one of couple different e-readers now on the market, you’re buying the fruit of those discussions. It had everything to do with the ability to realize a stable product that would deliver consistently every time, which could be manufactured at a price competitive with alternatives.

          Ditto the automotive battery and fuel cell. If you can’t buy the components, if you can’t make one that doesn’t blow up, if you can’t make them approach the cost of existing competing products within 3-10 years, they’re simply not ready.

          • thatvisionthing says:

            It’s been a while since I saw the movie, but one of the motives for killing the electric car was to clear the way for hydrogen — is that fuel cell? Competing technologies, but the guy on the CARB board who led it and the other shill board members to vote against the overwhelming wishes of the public at the fateful hearing to keep the EV mandate — that guy had a personal interest in hydrogen, which was always being touted as the next thing, except it wasn’t the next thing. I remember Chelsea saying the EV wasn’t the car of the future, it was the car of today. And GM helped make it go away.

            Actually electric cars were also the car of yesterday — See Jay Leno and his 100-Year-Old Electric Car.

            Why are we so Can’t Do anymore? My dad (greatest generation) was Can Do. We should be like ducks to water, this challenge to invent and perfect, that’s what Americans DO. Instead we’ve blindered ourselves into hopeless violence and war for oil and do nothing to create anything but misery and profits. That’s not an economy. That’s a fail. That’s a shame.

            • Rayne says:

              We are Can-Do, but it’s we the shareholders who hold back the Can-Do, that’s what you don’t seem to grasp.

              As a society we demanded double-digit yields for over a decade, and we wanted increases in share value in tandem. When the 1990s were over, we settled for single-digits, but the damage was done; we’d turned into a short-term society who can’t think five and ten years out. We can barely make it through a two-year congressional term, let along a quarter. We’re spoiled brats with ADD, economically speaking.

              When shareholders persistently demand yields, money required for funding ventures only goes to those products which can not only be commercialized but make a profit within a very tight time frame. I’ve had proposed projects costing 50K with a 2M yield inside a one-year time frame killed because the 50K could make more money faster – and there were many other projects killed off for the same reason.

              That’s what we’re up against. Somehow we have to change the definition of success and the models for investment, or we will never realize breakthrough products. We’ll be watching countries like China eat our lunch, where the government handles swaths of the venture process and invests heavily in science.

              Given this mindset, it’s no wonder Rattner really seemed to have learned little about the automotive industry. He didn’t need to. He just needed to ask the auto makers to show him using the language of capital how they were going to cost-justify their continued existence, leaving the how-to up to the little people. Who really gives a rat’s butt about health care? Just show the man how the firm is going to buy itself back from the U.S. inside XX number of months.

              • thatvisionthing says:

                A frustrating answer. In short, We Can’t Do. We’re just helpless in the face of quick buck chasing. We’re junkies that can’t say no.

                Ew wonders if GM is truly rescued and if it really can compete. I’m guessing not. I’m guessing the buck sickness is well and truly seated. And I can see that if the workers can’t afford to buy the car they make… and GM gets “profitable” by slashing more workers and offshoring more jobs — while rewarding accounting fictions with big bonuses — that’s an economic model that has already failed. They should call their next car the Zombie or the Vampire. It sucks our blood and just won’t die. It goes on and on and on.

                Not to mention the planet and our finite, dwindling, critical resources. Like they say, there is no Planet B. I don’t suppose corporations can hear that.

                It’s the stupidity of it all that makes me so angry. Like, no one could have foreseen? Like, it’s better to keep failing as long as possible than it is to meet a challenge and create new solutions? I hear you when you say that battery wasn’t a big thing — but I think it’s much bigger than you say. GM shredded every EV-1. They sold the super battery rights to an oil company that would keep it from being used. Meanwhile we go to war and kill people for lies and oil and greed. The fuckers.

                • bmaz says:

                  You know, the popular myth you purvey about the EV-1 is pretty much bunk from what I know. It was not a pleasing car as a car. Now maybe some early adopter eco freak would think it was just dandy, but average people expecting a car would have hated the fucking thing. I did when I drove one just for part of an afternoon. And I agree with Rayne, the battery story is just flat an old wives’ tale; just not the case. The movie you refer to “Who Killed The Electric Car” is a bunch of ginned up bunk lionizing something in a light that is simply not honest to either the facts or reality.

                  • thatvisionthing says:

                    Spoken like a true dinosaur. Just to gauge how much credence I should give your views as opposed to the ones expressed by the people who made the film, the people who leased the car and drove the car and loved the car and banded together to track the cars when GM forced the cars back, the people who rented a helicopter in Arizona to catch GM out in lies — people who protested, gave a funeral for the car, testified in the film, yada yada yada, all that, all those — did you even see the film? Did you — anything?

                    pretty much bunk from what I know

                    With all due respect, I think I’ll believe my lying eyes.

                    • bmaz says:

                      Everybody is entitled to their own opinion, and I salute yours. But I have seen the movie, driven the car and know a little about GM. I will stick with my perspective completely; however I salute your enthusiasm.

                      And to follow up, I am not sure what you and others so adamant about the EV-1 wanted. It was a worthy project, but never was advanced or buttoned down enough to let out to the public. Are you mad that they took back something that never should have been on the market at the time? Don’t you think it was telling that no other front line manufacturer in the world was putting out an electric vehicle as a production vehicle? As to whether the entire program was killed off, as a stand alone it may have been, but the work and research morphed clearly into the Voltec program.

                      I also think you misjudge what GM has been doing since the start of the century. While to those many that demand everybody in the world shift to econoboxes and have absolute hatred of GM for not killing themselves by doing so, Wagoner and crew rode the last vestige of the SUV craze as a profit center to make the turns in product and quality that you are now seeing evidence of with the line of vehicle platforms coming out at the New GM. That did not come out of nowhere and it did not come for free (nor was that paid for by the government). It may indeed have been a painful double edged sword, but without having milked that profit center, I am not sure they could have done the good they did either.

                      It is not that I think there is no blame at GM, there is a shitload of it; but by the same token, the rose colored small and electric joyworld some (not necessarily you; I say this generally) simply a fantasy. They could have been, and should have been, much better in many regards; but even granting that, I think you are severely mischaracterizing where the heart and soul of the American market was, and to some extent still is.

                    • thatvisionthing says:

                      Trying to think how to say this.

                      I get that you and Marcy and Rayne too I guess are in tight with GM and Big Auto, and that informs your opinion. I get that Michigan is in a world of hurt and depends on Big Auto. I also get that you all are analytical and mechanical and literate and can do things with your minds that I can’t. I respect that.

                      But, from the ozone, where ecofreak treehuggers like me caucus, gees you guys seem to have a huge blind spot. It’s not solid, but it’s cumulative. And now as I think about how to put it in words, I just know you’re going to run over me with Big Autos and back up and run over me some more. I’m just taking that as a given, I’m flattened already.

                      But here goes: As I see it, the whole system of Big Anything is diseased and broken. Fraud is global, systemic. Dollars are diseased with fantasy accounting that metastasized. The planet is a Dead Man Walking when the stars we navigate by are Big Dollar Signs disconnected from reality.

                      When the government props up GM and monster banks, without dealing with the things that caused them to fail to begin with, it’s committing us to more of the same fail — impossible growth to keep feeding fraud. Build that house of cards higher. Real wealth makers weren’t fantastic enough, so the dollars chased fantasy through fees and accounting churn. Jobs went overseas but who needed workers here, and who cared if they could earn enough to participate in an economy? Who cared about environmental protection? That goes on still, thanks government.

                      There are real world limits, but Big Anything can’t afford to see that.

                      We have to get off oil. It’s the planet, stupid. It’s the air and the trees and the bugs and the water and the people, stupid.

                      God bless California airheads, because we once had a zero emission mandate that made EV-1s and other electric vehicles happen. But Big Auto and Big Oil killed it chasing Big Dollars.

                      The biggest things — the planet, and how we treat each other — are obscured by Big Dollars. I can’t look at our wars-for-oil crusades and our murderous paranoia and greed and not think of the EV-1 and how GM helped kill it. We should be inventing and innovating and growing from what we learn, but instead GM shredded every single EV-1 it could, the way Congress shredded banking regulations. That’s not logic, that’s pathologic. That’s disease talking.

                      You say EV-1s weren’t affordable. I say GM isn’t affordable. Not in the real world.

                    • bmaz says:

                      Well, neither Marcy not I am “In with Big Auto”. And in some regards, I do not think our ideals are that far off of each other. However, the California putative regs did not alone cause the EV-1, those are the types of projects GM has always done on the concept level. They rarely if ever prematurely released the damn things to the public before, and I think it was a monumental mistake they did here – the product was nowhere near ready for any kind of consumer release (not even close). The other place I think we really differ is that you think just because it makes environmental sense that consumer demand could have been force shifted. If GM had done that, they truly would have died; it would have been insane from a business perspective. I love idealists, to some extent I am one; but that has to be tempered by the reality too.

                    • thatvisionthing says:

                      Whatever car GM comes up with next that meets your and their criteria of viable and sustainable… I think they should call it the Neutron. That’s big with Big:

                      Unfortunately, it did not go quite as smoothly as planned. The SDIs were supposed to act like neutron bombs — killing the homeowners but leaving the homes standing, to be resold. The problem is that wiping out borrowers lowered the value of real estate, crushing not only the real estate market but also construction and through to all associated sectors from furniture and home restoration supplies to big ticket purchases that rely on home equity loans. It also led to questions about the value of the securitized toxic waste manufactured and held directly or indirectly by financial institutions.

                    • bmaz says:

                      Again, I understand your points, and even agree with many of them esoterically; however, they are really fairly far off in the ether when pressed against the realities of a major automobile manufacturer with a range of products and a hardheaded market to be concerned with.

                    • thatvisionthing says:

                      You seem to never see the really big thing in the context of this conversation: GM DID fail. It’s floating now on fantasy dollars and the full faith and credit of air. They followed your prudent path over the cliff.

                      They didn’t innovate. They failed big time.

                      That’s reality.

                      And if they build a Neutron or a Zombie, they’ll fail again.

                    • bmaz says:

                      The only reason they “failed” was likely the economic disaster; They are absolutely not “floating on fantasy dollars”; I have no idea what you even really mean by that, but you do not know what you are talking about. Let’s leave it there; you are entitled to your opinion, and I mine. Disagreement is okay.

                    • thatvisionthing says:

                      Well I would like to think we understood each other, that we reached. I’m not crazy, you are, and here’s what I’m talking about (and here, and here): No dollar is an island, not even GM’s. Everybody’s money is puffed and riddled in a termite souffle of fraud. It can and will collapse. It is diseased. Toxic. And until someone fixes the fraud, the disease will keep progressing, because it’s a bottomless maw, and disease will keep going round coming round. GM can have tons and mountains of dollars, but if the “recovery” is jobless here, then they’re building Neutrons. If the cars make no progress to getting us off oil then they’re building Zombies. I’m actually kinda liking the idea of Neutrons and Zombies, but only if a wicked funny kid was designing them to show GM got it, was on top of it, was cool. Chances are they’d be EV-2s made in Michigan and Saturn Sequels made in Spring Hill, TN.

                    • thatvisionthing says:

                      And by the way, my beloved car is a GM spinoff, a mighty fine 1995 Saturn, about to turn 300,000 miles, getting around 35 mpg. Damn GM.

                    • bmaz says:

                      Saturn was a nice idea, but it never really took. The production and quality advances that came in through Saturn are littered throughout the modern GM assembly and delivery process though. As a brand, it had to go; it simply had no future at GM.

                    • thatvisionthing says:

                      GM devours its children:

                      But of course as this story goes, the promise of that future ended with lobbyists in California and executives in Houston and Detroit. “Different” died. Those grassroots died.

                      And, as you and I both know, GM didn’t stay ahead of anything – in Spring Hill or anywhere. The last of the GM EV1’s were rolled to their “death” in 2005, and last month, you and the former-Saturn Spring Hill plant recently had the best product launch in GM history, which would be amazing …except that it came with the unveiling of a brand new SUV, the Chevy Traverse.

                      Similar to when the first Saturns rolled off the assembly line, it’s difficult to describe my feelings on this except to say that I’m so proud of you, Dad. Absolutely, yes. But I am furious with General Motors. I “support the troops, not the war.”

                      In manufacturing terms, you and the thousands of GM employees in Spring Hill, TN and around the United States are deserving of heroic praise for your work and performance, doing more with less. In executive terms, Rick Wagoner, Bob Lutz and all the rest in Detroit should be flat out ashamed.

                      The Traverse is a beautiful car by traditional American auto standards, and GM has certainly spared little of its mind-numbingly waning cash promoting that traditional beauty. This “crossover” (read: glossy covered SUV), however, was born into two abysmal climates – economic and environmental – and even starting to think about any new automotive product in traditional American auto schemes represents gut-level, irresponsible, Bush-ian failure. That any car company in 2008 actually promotes something like 25 mpg (with a tailwind, going downhill) for 100 year old suck-bang-blow technology is an absolute travesty.

                      That it’s coming from General Motors whose very survival depended on game changers and innovation for much longer than the last 24 months, is practically a crime. I know you can’t innovate on a dime, Dad, but GM has had decades. The Traverse is like a hipster Tahoe. An oxymoron. Whatever they call it; however they promote it; as pretty as it may be, doing the same-old-thing-but-a-little-better is not innovation. And again, for a company with three million dependents, not innovating is not just wrong for business, it borders on moral corruption.

            • bobschacht says:

              Actually electric cars were also the car of yesterday —…

              They were SO the car of yesterday. See the web site Some EV History, which has page after page of electric vehicle (EV)companies going back more than 100 years– and including Thomas Alva Edison’s Electric car.

              The car industry was remarkably diverse 100 years ago. Mass production and the Great Depression forced a tremendous consolidation of the auto industry, out of which only a few major national companies emerged.

              Bob in AZ

      • bmaz says:

        Yeah, and the car just drove like a turd too. It was actually pretty quick on acceleration, but the steering felt bizarre and braking while turning gave a horrid sensation. It was a great project and the program should have been kept alive perhaps, but the car NEVER should have been released to the public, it simply was not ripe. Once they had released it though, hard to pull back without killing it. Contrary to popular belief, the program did not really die though, a whole lot of it morphed into the Voltec program.

  5. KrisAinCA says:

    and the inherent difficulty of running a company that had to pay pension and medical benefits to half a million retirees

    Let me introduce you to my grandfather, who’s dying in horrible pain because GM cut the part of his pension plan that pays for the surgeries to fix the injuries he sustained while working on the line at NUMMI for 30+ years.

    Fuckwads.

    • bmaz says:

      I am sorry to hear about your grandfather. But NUMMI did not go on line until the mid 80s and was all but shuttered in 2009, so he did not work there for 30 plus years.

  6. Teddy Partridge says:

    Finance is all that really matters to these MOTUs, so I suppose Rattner figured he understood the finance side well enough not to pay it any attention until they were well into the project.

    Arrogant, self-important, paper-pushers and pixel-poppers. They make nothing, invent nothing, add no social value. Just like the tulipmongers in Holland who speculated that country’s economy away.

  7. duncan says:

    It should also be pointed out that GMAC was a way different beast than, say, Ford Credit. Much more directly exposed to the housing crisis.

  8. Mauimom says:

    Thank you, Marcy, for this. I’m very much looking forward to whatever you write on Rattner’s overhaul and the book salon.

    I stumbled in there thinking I might “learn something,” not knowing anything at all about who Rattner was. [I mean, what his background was.] I was just reading along in the comments until I saw his “TARP had to occur because it would have been the end of the financial world as we know it,” describing what sounded like round-the-table-at-the-WH discussions.

    I thought, “uh oh, here’s a nerd who got invited to the cool kids table in the lunchroom, and now he’s back with us, but spouting all the crap he heard them saying there. It’s clear he was not accustomed to challenges to points of view other than those held by the Cool Kids.

    I look forward to your diaries/posts because, hey, I consider myself a pretty smart kid. I read FDL religiously and have cut back on most of the stuff that used to provide me info [WaPoo, NYT] as I watched their slide into incompetence and right wingery. So if I don’t have an understanding of this important issue — and I’m the one who “educates” all my “too busy” friends via e-mails and links — well, I despair for the education and understanding of most voters.

    The fraudulent memes out there — and I won’t even repeat them, but you know what they are [starting with “those damn unions . . .”] — so control the conversation and people’s understanding [sic], that clear explanations coming from you [a la Valerie Plame and pixie dust] are much needed.

    Thanks for all you do.

  9. GlenJo says:

    Marcy, thanks for the reporting. Please keep investigating. Economics, the bailout, and the stratification of our economy is the 800 pound elephant in the room that Obama refuses to talk about (other than the obligatory we saved the world tripe).