D-Day Near for GM
The Toledo Blade
AUTOMOTIVE insiders mostly have disdain for investor Kirk Kerkorian's efforts to force General Motors into an alliance with Nissan and Renault. The old coot doesn't know what he is talking about, they say.
The conventional wisdom is that the turnaround plan set by GM's Rick Wagoner needs more time. That might make sense, until you look at the numbers.
This is a company that has been in so much trouble for so long that Americans have become almost numb to the terrible shape it is in -and how badly it has been managed.
Last week there were actually headlines that treated as good news the fact that the shrinking auto maker lost only $3.2 billion in the second quarter. This is a company, remember, that lost almost $11 billion last year, or almost a million dollars an hour.
Kirk Kerkorian, on the other hand, knows how to take risks that somehow end up making money, not losing it.
He flew unarmed bombers across the Atlantic during World War II's Battle of Britain for $1,000 a trip. The penniless son of refugees from the Armenian Holocaust, Mr. Kerkorian then went on to make billions building hotels and resorts in Las Vegas.
Whatever else you think of him, you have to have a touch of admiration for a man vigorous and healthy enough that he is trying to gain control of a major American corporation - at age 89.
Whether his proposed international alliance makes any sense, there is little or no excuse for the state of GM's management, especially given that the company went through a similar crisis in the early 1990s. That time, a desperate board eventually turned to Procter & Gamble's John Smale, a one-time toothpaste salesman, to bail them out.
The present crisis is worse. In the second quarter alone, GM's world market share went from 15.1 percent to 13.8 percent. In the United States, its share of auto sales is almost in free fall.
Back in the 1960s, more than half of all cars sold in the country were GM-made. Today, they are under 24 percent, and the Chinese are on their way with another competitive threat.
When one looks at General Motors, it's hard to imagine that even a bunch of former Soviet collective farm managers could have done a worse job of positioning a major corporation for the future.
Kirk Kerkorian may not have all the answers, but this much is clear: his track record is a lot better.
And at General Motors, something has got to give.