GM Death Watch 75
Tuesday, May 23, 2006
Rabid Rick Wagoner lacks self-esteem. Why else would GM's CEO submit himself to triple presidential humiliation? First, Bush tells GM to take a hike-- even before Rick shows-up with his begging bowl. Then, despite the slight, the head of the world's largest automaker sets-up a meet with the Commander-in-Chief (presumably to engage in a vigorous debate about the definition of a "relevant" vehicle). Then Bush cancels the meeting. George heads for the border; Rick detours to Congress to promote corn juice-- and reschedules the presidential pow-wow for June. To do what? How long does it take RR to take a hint?
The funny (peculiar) thing is that every time I run out of ways to make the case that GM's [lack of] leadership assures its oblivion, the company throws me a bone. On Wednesday, GM shit-canned-- sorry, accepted the resignations of-- Controller Paul Schmidt and Chief Accounting Officer Peter Bible. Given GM's recent decision to restate its earnings for the last FIVE YEARS; given the on-going Securities and Exchange Commission (SEC) investigation into GM's payments to its suppliers, its purchases of precious metals (of all things) and a New York Grand Jury alone knows what else; you'd think the double golden parachute exhibition was enough craven media manipulation for one day. But no, GM went and hired Jay Alix.
Jay Alix of AlixPartners is what Reuters called a "distressed company financial advisor." No, he's not an anxious number cruncher; Alix' firm helps companies into, through and, sometimes, out of bankruptcy. We're not talking about your local car dealership, Oriental rug dealer or electronics chain store. AlixPartners has applied its consultancy skills to some of America's largest corporate meltdowns: Kmart, auto-parts maker Dana, the trading firm Refco and... Enron. If that last name doesn't trigger some alarm bells, AlixPartners was also hired by WorldCom, whose $11b accounting scandal earned CEO Bernard Ebbers a 25-year jail sentence and his company the title "world's largest bankruptcy."
GM Chief flackmeister Gerry Dubrowski was quick to slam anyone presumptuous enough to make a common sense connection between AlixPartners' extensive Chapter 11 experience and GM's future plans: "We're hiring them for their expertise in the accounting transition. We're not hiring them for help in the turnaround effort for our North American operations." If GM was looking for a company to help sort out their "aggressive accounting" problem, why didn't they opt for a large and reputable firm like KPMG? The literal-minded amongst you may also note that filing for bankruptcy isn't exactly the same as helping a turnaround effort.
Meanwhile, as GM reaches into its threadbare pockets to pay for a Chapter 11 expert not to use his bankruptcy expertise, The General has launched a guerilla war to stop people like us telling people like you that people like Wagoner are running the company into the ground. As revealed by The Detroit News, GM's so-called "Arlington project" will deploy some 50 GM flacklings throughout 16 US cities. It's part of what the News called "attempts to secure favorable news coverage." Even discounting the recent bribery attempt by a GM PR firm on former US Labor Secretary Robert Reich (to ensure positive coverage of GM's worker buyout plan), this program smells of cowardice, desperation and dirty tricks.
For one thing, "Arlington" refers to The McGinn Group's home base. For those of you without a scorecard, The McGinn Group is GM PR Chief Steve Harris' old company. Presumably, financial self-interest had nothing to do with his choice of partners for this under-the-radar PR campaign. Presumably, Harris simply wanted to work with people he could trust-- to keep their mouths shut. Anyway, there's another shadow over the project: Harris chose the 16 cities because they're "dominated by local media rather than national outlets that have hammered GM in recent months for its sales and financial losses." In other words, they're soft targets.
So, this is the tenor of the times inside Wagoner's GM: do whatever it takes to maintain the status quo. If it means being subservient to the President, so be it. If it means cooking the books behind closed doors, let's retire the people who did the dirty work (with a nice payout and full pensions) and hire a bankruptcy expert (not to mention a former SEC chief) to help us plead out with the feds. If it means doing an end-run around the national press, let's send our agents to corrupt local media mavens. Instead of confronting GM's issues head-on, Wagoner's mob are taking the path of least resistance.
When GM's bankruptcy plays out, we may eventually know the truth about the final days of Rick Wagoner's regime. Right now, there's only one man who knows the full behind-the-scenes story, perhaps more comprehensively than Rick Wagoner himself. And Jay Alix is not talking.