I just spent an uncomfortable hour watching the CEOs of Ford, GM and Chrysler testify in front of the Senate Banking committee on C-SPAN. (I’m not normally a C-SPAN viewer, but extraordinary times call for extraordinary viewing.) As a CEO, I have spent my recent days in part engaged in battling the ramifications of the downturn. So it’s hard to listen to these three guys, with whom I share a title—if not the unfathomably large businesses—and not feel for them.
To listen to Robert Nardelli (Chrysler, formerly CEO of Home Depot), his company has minutes remaining. I’ve certainly expressed a sense of urgency before in my job when working to close a deal, but it’s impossible to listen to him and not sense something profound. Three of our great industrial giants are willing to speak publicly about endgame. Rick Wagoner (GM) seriously discussed a “pre-packed” Chapter 7 bankruptcy (surely a trial balloon alternative if ever I’ve heard one) by quoting marketing studies which show consumers are overwhelmingly unwilling to buy a car from a bankrupt company. When was the last time you heard the CEO of a major non-financial company speaking about such potential downsides alongside his competitors? Extraordinary times indeed.
But not extraordinary enough.
Towards the tail end, Alan Mullaley (Ford, formerly Boeing) was asked whether his company would exceed the new CAFE fuel economy standards. His response? That Ford would barely be able to make them, and would not be able to exceed them. The others agreed with him. That one response convinced me that any bailout of US automobile manufacturers should 1) be totally focused on saving jobs (millions of them, potentially), and 2) must be so severely punitive of the companies themselves that they don’t get out of jail free. These three companies have succeeded in lobbying their way out of innovation legislation (fuel economy, safety, public transport, etc.) for decades. Consumers have responded by choosing foreign manufacturers preferentially (e.g. Toyota who pushed hybrid technology as a differentiator). US manufacturers drop to the bottom of the list of consumer choices because of the manufacturers’ complacency, and then a contraction comes along and endangers the bottom of the barrel. Surprise, GM, Ford, Chrysler, you now inhabit the bottom of the barrel precisely because of your complacency!
A little capitalist Darwinism is in order here. If these guys had worked on fuel economy and alternative technologies 20 years ago, CAFE standards would be unnecessary now. For want of those prior investments, it is not the Government’s job to subsidize their lack of business skills. Do what we need to to save the jobs (lest we further endanger the economy), but otherwise I vote let these companies suffer the fate of others who stick their heads in the sand.
- Businessweek online, “Auto Execs in the Hot Seat” http://www.businessweek.com/bwdaily/dnflash/content/nov2008/db20081118_113319.htm?chan=rss_topStories_ssi_5 [↩]