Summary
The US car makers ,especially GM and Chrysler, have caused self inflicting injuries on their operations and other orgnizations that work with them and for them. , I have written in the fall of 2008 about the ultimate need for GM and Chrysler to file for chapter 11 and reorganize under the supervision of the court and have then explained the merits of filing and how fitting these companies' circumstances to such filing. My article was not that popluar at the time ,because I think the auto industry insiders are and still in denial with the arrogance that how could it be possible that GM is in Bankruptcy ? well it is possible and if this was done early on, we the tax payers would not have to throw good money after bad money , and also the bleeding would perhaps have stopped ..sort off.Chapter 11 to flush out the old GM and Chrysler and emerge as a new, strong, leaner and perhaps smaller companies is the answer, of course with a different management team that know the real world.
Analysis
As I mentioned in previous articles, the problem with the automakers in Detroit is arrogance and know it all attitude. They have refused to get advise, inject new blood in their leadership ranks from outside the industry, did not listen to their customers and the market they serve and remained traditional in their design and manufacturing of cars producing ineffecient vehicles , not very durable and not friendly to the environment. Now second guess is easy, but I have worked with these companies and know their mind set and how difficult it was to wrestle and 9 ton guerilla, let alone the need to break up old habits and mindset and restructure with the same leadership that was part of the problem and not the solution. Some articles appeared on this site also critisizing Cerberus ans stating that they have nothing to lose for letting go of Chrysler and the deal with Fiat has no merits . I was the first to predict that Mr. Nardelli will not suceed in turning around Chrysler with a GE mentality that failed at Home Depot and is a management style that is not fitting for a distressed situation. I am a turnaround and transformation Chief Executive and know when a restructuring plan will succeed and when it does not based on its elements and the track record of the leadership team in execution. Mr. Nardelli did not have that, but to be fair to him to, he was not given the chance for any implementation as he was hit with the market downturn from the onset. As to Cerberus, I have plenty of respect to their accomplishments in the industrial and automotive space. Frankly, Cerberus would have been a much better operator of Chrysler and have the smart people that know how to turn around a company in much better way than a German style Board of management of Unions on the Board and clash of cultures in every corner of Chrysler operations in America.And yes Cerberus has a lot to lose, it has its reputation at stake as one of the premiere distressed asset investor and its ability to achieve the upside potential to its investors and the billions of dollars that Cerberus paid for a company that had nothing to show for. Daimler did not do justice to the US automotive industry and Chrysler. Now all is water under the bridge, I believe that GM should restructure under court supervision, must emerge as a new company with a strong leadership team, clean balance sheet, advanced car making technologies and efficient production and end product for the consumer. Get rid of the dinasours, introduct Hybrid, own the Energy technology, and product more durable and sexy cars under fewer brand names. As to Chrysler, while Fiat now seems to be the only game in town and it may well be , but I believe cultural clashes will be renewed and Fiat distribution of its cars will be the priority of the deal until the Chrysler brand disappear. There is plenty of money standing on the side lines at Private Equity and and other financial sponsors. I believe if Chrysler is to survive, it is better off to remain in investors hands and be acquired in a 363 pre-packaged transaction, rather than being owned or merged with a foreign competitor that is only interested in accessing the US market. I have plenty of confidence in our US worker, desingers and engineers, if led and resturcturing plans are executed properly both companies will come out of all this as stronger and more competitive automakers as long as emotions and sentiments for the good old days are restraint and contained.
