Ford CEO Alan Mulally: GM Bailout Was “The Right Thing To Do”20
Earlier this week, Ford CEO Alan Mulally told The Daily Ticker of Yahoo Finance that the federal government’s emergency financial rescue of GM (and Chrysler) was “the rig thing to do” and that he would support the moves again.
Back in November of 2008, Mulally testified before the Senate Banking Committee in support for his two U.S.-based competitors. The CEO, who was the highest-paid automotive CEO in 2011, said that the bailouts helped Ford sine a failure of GM (and Chrysler) would have impaired the supply network for the auto industry and thrown the United States into a depression.
But the noble words came at a price, in the form of sublime jabs at the bailed out automakers: “I’m very proud Ford was able to do it without a bailout,” Mulally said. “Everybody watching the hearings could see GM and Chrysler were bankrupt… But they also saw Ford was not and then they started checking out Ford. They started seeing all these new vehicles, best in class.”
The GM Authority Take
Best in class? Perhaps in some segments… but not for long!
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That was very nice of him to say that 🙂
Being from Michigan and one who still lives here, I am a huge advocate of the big 3. While I don’t care to much for Chrysler because of their lack of quality, I prefer my local brands. Those who said that they should have been allowed to go bankrupt are STUPID and have no idea of the effects that would have happened to people in all kinds of positions in the auto field.
@Kiel, I don’t think that’s very nice to call people that do not agree with you “STUPID”. If they had filed for Chapter 7 and the company was liquidated the viable parts of the company would have been acquired. The bad parts would have been discarded without a cost to the taxpayers. Personally I am glad they bailed them out because I like GM. 🙂
They are a tad stupid for letting ignorance of “I think therefore I am” get in the way of rationell. There are so many people that believe their intelligence is great than the sum of their parts and truly just don’t understand.
The fallout of either or both GM and Chrysler (let’s just speak for GM since it was and is a giant compared to ChryCo) going bankrupt would have crippled both domestic and foreign markets, and not just automotive.
I’m not going to pull stats out of my ass, but as things stand a great deal of auto suppliers and manufacturers throughout the chain have closed up shop.
The time to reorganize a company like GM during a full out bankruptcy would have halted production across the board. The ripple effect would have echoed right down to steel ingots.
Most supplies had basically no diversity, automotive was their bread and butter, and they didnt just work for GM or Ford or Toyota, they worked for everyone. You loose all business from two huge companies and the rest can’t sustain the business.
The Bush Administration didn’t have time to solve the problem, their second term was up and they weren’t in a position to put together a bailout. So they did the only thing they could, put a bandaid on a large, complicated, bullet wound. They gave just enough for the companies to survive until Obama’s new government could do what was actually needed.
@andrew, i completely agree with your first paragraph about everyone believing they know what’s right. It’s very difficult to say, “i’m right and you’re wrong” when the person whose supposive position never took place and therefore will never know how it could’ve turned out. Opportunity Cost for ya, but i digress.
With that said i don’t know if GM having gone bankrupt and then sold off would’ve been as bad as we think it would’ve. I think foreign automakers and even Ford as the only domestic automaker that wasn’t in this much trouble, would’ve picked up those “good parts” and incorporated them into their own operations. That could be said as well for the plants and, of course the workers. Look at Daewoo – when they collapsed they were the second largest company in South Korea (For Perspective Purposes General Electric is the US’ 2nd largest), larger than LG and Samsung. Now we all know Samsung is a big player in the world stage, but they were behind LG, who was even behind Daewoo. I’m just trying to set the stage so you can see how big Daewoo was for the Korean economy.
Anywho, they went bankrupt to make a long story short they were taken over by General Motors and their workers (not all, of course) found employment under GM. The Korean economy survived. In fact it grew!
A few of the reasons cited for their failure was the workers protesting all the time, poor management, crappy production.
With all that being said, the way GM was “managed” during bankruptcy did allow them to come out as a stronger company. They needed to have done it for a while, and the Great Recession proved enough to allow it. So either way you look at it – liquidated, or managed bankruptcy, they were going to go in one of those directions.
I’m fine with how they are now even though i was against their bailout. 🙂
Correct me if i’m wrong, but didn’t they (Chrysler and GM) go into bankruptcy?
Election year and he is BFFs with Obama.
Yes ChryCo and GM received bailout and loans. But governments, including the US, threw money out to Toyota and BMW as well. And Ford, basically just months prior to the financial collapse, took massive ($25billion) loans to restructure. They got lucky and that’s all there is to it. Chrysler was closer to closing it’s doors than GM was, it spent years getting passed around like a $1 bill from owner to owner, platforms and engines suffered for it. But, Ford would have been just as bad off had Mullaly not pulled that save out of his ass.
wasn’t Ford on other kind of Bailouts? If they didn’t get these “other kind of bailout” they would of been in chapter 7 bankruptcy
look at my post right above yours
I wouldn’t say Ford is lucky. Or they shouldn’t even say that at all in the first place because they still have $25 billion restructure loans. It might be not as bad as the bankrupt title but still. If you didn’t get the loan you’re S.O.L.
The problem for me is that I’m not seeing a difference in behavior post-bankruptcy. GM streamlined the product offerings to cover only what’s mass market, leaving gaping holes. But is the organization, especially all of the bureaucracy, streamlined to the same level as the product line? I don’t see it. I see the marketing but not the creative engineering (beyond what a small group can produce in the niche Volt).
You may think I’ve been ridiculous harping about armrests, but that is so symptomatic of the problem. It says a lot about the internal culture.
When I see marketing gimmicks in the press, a lack of creativity in the powertrains, stupid design flaws, and turf-protecting quotes (from Reuss), it tells me things are still not right, maybe even going in the wrong direction. I want a strong, smart GM and U.S. auto industry. Not this. I’m tired of sending money overseas.
Things take time. The internal decision making has gone from a 20 steps process to a 2. Product engineering and development, then tooling engineering and development takes years in most cases. They can’t go and refresh their entire lineup across every brand all at once then have nothing new for 5 years (midcycle refresh doesnt count) until the next gen is released.
If you were to just observe as a consumer, sure you make valid points, but get inside the industry and you see how they are a different company today.
The arm rest problem? It’s a small car designed primarily for the Euro and global market. Most cars of it’s nature dont have armrests at all. They can’t go and make a car 6inches wider just for the NA market, they would involve a complete redesign.
You want a Verano hatch in North America, well guess what, hatches don’t sell her, not enough to justify putting in a domestic production line and not enough to justify importing from Germany. The CTS wagon is an exception, it was done to be unique and could do so with it’s price tag. Cadillac only had to sell a handful to break even on the R&D costs. And I literally mean a handful, something like 8 sold and they recouped the design cost.
Just because a small segment of people like yourself want a Verano hatch doesnt mean shit to a global company. If they are going to make/import a low production model it’s going to be something worth doing, like the Chevy SS sedan.
GM might be an American based company, but it is a global corporation, sending money to expand in Russia (for example since it is recent news) is key to expand in those markets and better the entire company.
Where are the gaping holes? Any that I can possibly think of are pretty much going to be filled by 2013 or 2014MY
Honda (Fit), Mazda (2), and Hyundai (Accent) all offer center armrests. (They are options for the Honda and Mazda, but the optional designs are excellent.)
Again, it is the American companies that lag behind. Ford (Fiesta) started offering a center armrest for 2012 models but I am unsure if it is a true center “console” style, Pictures suggest it is wider than that for the Sonic. Some in GM would argue that the Sonic offers more (relative to the Asian brands) by making an armrest standard, but in reality more is less in this case. If you don’t like that cheap, skinny thing (and as I research this there are many who do hate it) then you’re left with the following (no need to widen the car) …
The problem is the eyesore that gets left where the stock armrest was on the side of the driver’s seat — and all the reupholstering necessary to cover it and make things match.
Side-mounted armrests have grown out of favor and for good reason. They break when people put weight on them (per my dealer), they’re comfortable only if you have narrow shoulders (like women and children), and since they are close without any adjustment, they’re ergonomically restrictive.
As I have contended, this is evidence of GM design teams looking in the rear view mirror – offering what they believe at the time to be competitive, but then falling behind by the time of the roll out. What has me scratching my head is that some of the GM concept cars have been truly amazing. The difference between these and what actually makes it to market is just plain depressing.
As for the hatch issue, here is some data on Ford sales that might change your view. Scroll down and read some of what people have to say …
This article is older but would have post-dated the period of GM’s decision-making regarding body styles for the Cruze and Verano.
If GM had trouble selling hatches in the past it’s only because they did not make a good product. Others have clearly been successful, even in cars that are more upscale. There are reasons for the trend toward hatches…. a topic for another day.
I noticed that I inserted the wrong thread into the response below. Here is a better discussion with more pictures …
Just to be complete and accurate, this is the “official” Mazda 2 armrest accessory. Apparently the one I listed previously is aftermarket. (There are so many of these and they look very similar.)
The people who said let GM and Chrysler go bankrupt are stupid, they have no idea of the effect that it would have had on Michigan and people who work for the parts suppliers to both GM and Chrysler. Think about it, more people would have been in the unemployment line, there would have been people losing their homes because they can’t afford their payments anymore, they loose their health care, ect. It was a win for everyone including local government and townships who obviously rely on tax revenue from home owners. Also, local businesses would have suffered, too. There is a bigger picture than just a corporation no longer being in the picture. It’s the heart beat of that company, the line workers, engineers, parts suppliers such as TRW, Lear Corporation, and many more than have large contracts with GM and Chrysler. If those contracts had been lost then many more people that didn’t even work for GM or Chrysler would have been out of a job, too. I dont know where you live but I live in South East Michigan. Had these two companies gone bankrupt and closed their doors, so many more people would have lost their homes, people would have to move, townships loose tax revenue, schools loose money, ect. That is why the people who say that GM and Chrysler should have never been bailed out are in fact stupid, they have no idea of what would have happend. With a minor in economics, I tend to think that I kind of know what I’m talking about here. I like GM, too. But that’s not why I am glad they were bailed out, I am glad they were bailed out because of the people who work for them.
Ford ran out of money years before GM and Chrysler and was able to get private loans. When money was still available. They went to Washington with GM and Mopar.I Think that’s when the Feds told them they would have to go bankrupt and reorganize. If they did that the Ford family would lose control of the company. So they came up with the story that Alan wasn’t going to give up his plane and went home to Dearborn.
A heart felt thank to all who work to push the bailout package through a world with G.M. or Chrysler would be a sad place to be
With out sorry