Phil G. Busey Sr.
EDMOND — Did you dream we would own a part of GM as American taxpayers? The bankruptcy of GM, the largest in corporate history, marks an end of a dynastic era and the beginning of one we have no chart to navigate. The ink hadn’t dried on the petition when the spin began.
Filing for bankruptcy, GM claims it will emerge as a leaner, stronger, more competitive company in 60-90 days. This is claimed mainly by the same guys who, at the helm, ran it aground, raking up $172 billion in debt. Now they are struck by a miraculous vision to change to a course that was before them for years. This is too optimistic. It is hard to be confident.
The best guess is we won’t know for years if this whole debacle will end well. The spiral downward for GM that really began well more than 10 years ago has ended and we, the taxpayers, own 60 percent of what’s left of this once proud company. Will we be paid back? No one can say. I wouldn’t count on it yet. The president may have just bet his presidency on this bailout. He has brought new hope in leadership. However, this seems a big risk.
For certain, 20,000 more Americans are losing their jobs at GM. The losses to come in the mammoth supply chain jobs that fed GM’s assembly lines are incalculable. While some are singing praises that Chrysler is on the road back, I wouldn’t call a fire sale of assets to Fiat a real plus. In the cloud of swirling spin, the one true automaker that survived on its own is the one to really be hailed: Ford.
Unfortunately, these events ultimately may drag Ford into this mess caused by Inept Management 101. Where are American ingenuity, strength and courage in business? What message is it that if you receive enough in loans you are too big to go down, regardless? Remember the old saying, “If you owe the bank $1,000, the bank owns you. If you owe the bank $1 million you own the bank.” Sound familiar, banker?
An additional $30 billion is being pumped in to “enable” this icon to reorganize. Good money after bad? I am trying to understand the arguments we have to save the American automobile industry at any price. GM should not be the responsibility of every taxpayer. We should not reward inept management. The economic failure hastened GM’s failure, but it did not cause it. GM has been in a death spiral for decades from institutionalism and failures to recognize future market shifts. Management of GM clung to short-term views (fueled by compensation) that big cars will sell in America for a long time. Even after foreign manufacturers cut into market share, the board of GM still believed their own rhetoric, guided primarily by short-term profits. Only during the last energy crisis with gasoline over $4 per gallon did the light bulbs begin to go on.
GM’s failure was compounded by huge legacy costs and the inability to adapt quickly, instill efficiencies in production and focus on fuel economies. In the end GM was outmanaged and outperformed. GM failed because of GM. Now to save an industry, we are all reluctant investors. The question is, after all the bailout monies, are the executives that brought this giant down, while still collecting huge bonuses, going to be in the unemployment lines too? Or, will they be saved by huge golden parachutes or left to “craft a new company?”
As business owners know too well there is no bailout money for others. We are on our own. But isn’t that as it really should be? The billions spent on GM would sure save a lot of jobs lost because of other business’ having to lock their doors. But our system is built on successes and failures. It seems the rules are not evenly applied between big and small. Some too big to fail are saved by the government. Yet are they? And should it?
I better understand saving AIG because of its vast critical reach into global financial markets. However, a new GM will be a shadow of itself. Lost jobs will not return. It will not be a dominant company. It is too late. Can it really compete? GM has been restructuring and eliminating jobs for the past decade — 100,000 in Michigan alone. Lacking was the corporate resolve to change and innovate. GM died by its own designs. GM had years to remake itself. It is on borrowed, but expensive, time. Will it survive? It is a big risk, possibly one too big to take.
PHIL G. BUSEY SR., an Edmond resident, is chairman and CEO of The Busey Group of Companies.
