Former Automotive Task Force Head Says He Saw ‘GM Nod’ Firsthand1
Steven Rattner says he witnessed General Motors’ troubled internal culture firsthand while serving as the lead advisor to the presidential task force that oversaw the bailout of the automotive industry in 2009.
Rattner, who revealed his findings in a recent op-ed in The New York Times, said he saw the ‘GM Nod’ and ‘GM Salute’ while working alongside the automaker. The ‘GM Nod’ refers to an issue detailed in Anton Valukas’ investigative report in which executives or employees of the company would acknowledge a problem but wouldn’t act or take blame for the matter.
In his piece, Rattner compares GM’s flawed management culture to that of crosstown rival Ford. He said GM maintained its problems “were all the fault of external forces: its unions, oil prices, the credit crisis and competition from Japanese imports,” but Ford, faced with the same problems, managed to avoid bankruptcy, evidence of GM’s poor management.
“Looking under the hood of GM was the most stunningly disappointing dissection of a paid-up member of corporate America in my 30-year Wall Street career,” Rattner wrote.
Safety and crash victim advocates are now wondering why Rattner didn’t act when he noticed a clear problem with the company. He believes the GM management did not know of the ignition switch problem in certain small cars which has now been linked to 13 deaths, and noted “none of us on the auto task force had the slightest inkling.”
Former head of the National Highway Traffic Safety Administration, Joan Claybrook, told Automotive News that Rattner’s account of the issue is unclear presents a cloudy picture of the problem.
“[Rattner] sounds like a lawyer trying to have it both ways … they knew all this, but they didn’t know all this,” Claybrook said.
She also noted Rattner was involved with the decision to relieve post-bankruptcy GM of its responsibility for incidents that occurred prior to its reorganization.
“I don’t know why he didn’t raise the issue a long time ago,” Claybrook told AN. “…By taking away the company’s liability, he’s encouraging them to have a wink, a nod and a salute.”
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I am sure he saw the bumbling first hand as it was there.
But he is misleading in that the poor management culture alone was what doomed GM and Fixed Ford. The truth is Ford was in much poorer financial shape long before GM. Several years prior the Ford family almost lost control.
The fact is Ford went to the banks and leveraged their plants for many high value loans to bail them out. It was a great risk as they had to fix the product and it had to sell or they would be wiped out. Note at the time the banks were still giving large corporate loans.
GM ran out of money a few years later post banking failures and the loans that Ford got were not there hence the Government had to come in and bail them out.
One may want to note Ford was not happy GM got the loans and they were not offered the same money to pay off their loans. At the time they were very upset.
Today Ford is still paying off the loans and their car lines are good enough to give them the cash flow to do so.
So the reality is Ford had their own problems as they bumbled themselves much over the years and often when a Ford was in charge. In this case they were lucky enough to fail first when the bank money was available to not get the stigma of the government loans placed on them as some have. Now that is not to say they have gotten a fair share of government money over the years as they have taken their share.
I really believe he had not idea of the ignition issue. I hate this guy but in this case I think he is telling the truth. This was not a problem that would jump out at you and to those it did they either passed over it or did nothing because of the way the reporting in GM was set up. 13 deaths involving stalled car over 14 years and 3 million plus cars is not something that would jump out on a graph or chart.
I would expect someone may have not said something to cover their butts and these folks are the ones who got walking papers. There may have been others who with the way the system worked or did not work could not report to anyone who would do anything. GM screwed up things that they needed to get right for production and profit so why do we expect them to have done any better in a matter like this.
Either way things are changing and the sooner things get fixed we can move on and get back to building cars.