The Accidental CEO
The way things are going these days, owning a car company is not the best way to win friends and earn trust. And owning a bankrupt General Motors is, to put it lightly, a bit of a political and economic risk. Which may be why President Obama this morning immediately cast himself as a reluctant owner who won't be micromanaging.
After an infusion of $50 billion in taxpayer money, the American people now have a 60 percent equity stake in the carmaker. Obama insisted that both the bankruptcy and the public stakes were necessary to restore GM to competitiveness and ensure the survival of the domestic auto industry.
Virtually every decision facing the behemoth company will adversely affect one important constituency or another. And many of Obama's priorities -- such as bringing the company back to profitability, treating workers fairly and dramatically improving fuel efficiency -- may be in conflict.
From his remarks:
What we are not doing -- what I have no interest in doing -- is running GM. GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They -- and not the government -- will call the shots and make the decisions about how to turn this company around. The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions. When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision.
In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly.
The Wall Street Journal editorial board this morning outlined the downsides:
Welcome to Obama Motors, and what is likely to be a long, expensive and unhappy exercise in political car making....
Every decision the feds have made since December suggests that nonpolitical management will be impossible....
The Administration promises to wield a light ownership hand, but it's only a matter of time before Congress starts to micromanage GM's business judgments. Every decision to close a plant will be second-guessed, much like a military base-closing....
Mr. Obama likes to say he's a pragmatist who only prefers a government solution when it will work. But in resurrecting an industrial auto policy that even the French long ago abandoned, the President has made himself GM's de facto CEO. Our guess is that he'll come to regret it as much as taxpayers will.
Quite significantly, the New York Times editorial board this morning shared many of the Journal's concerns, if in a more sympathetic way:
President Obama owes American taxpayers and voters a candid and detailed explanation of the government's goals and the levers it intends to use to achieve them....
The decisions of G.M.'s new managers should not become entangled with the government's other policy priorities — such as maximizing employment in the United States or reducing job losses in Michigan. And he should specify what is supposed to happen if the goals of profitability and fuel efficiency collide.
The old saying, "What's good for General Motors is good for America," has never seemed like such a double-edged sword. And Obama also clearly appreciates the symbolism.
I recognize that today's news carries a particular importance because it's not just any company we're talking about -- it's GM. It's a company that's not only been a source of income, but a source of pride for generations of autoworkers and generations of Americans. But while the GM of the future will be different from the GM of the past, I am absolutely confident that if well managed, a new GM will emerge that can provide a new generation of Americans with a chance to live out their dreams, that can out-compete automakers around the world, and that can once again be an integral part of America's economic future. And when that happens, we can truly say that what is good for General Motors and all who work there is good for the United States of America.
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