As a leader, you should be able to influence others to want to do what you believe needs to be done. In this respect, GM and Chrysler are failing, once again, to show leadership in the automotive industry.

GM and Chrysler have failed for years - even decades - to convince the American public that they are leaders in energy efficiency, styling, safety or quality. Now, again, they are asking the American public to fund their inability to make a profit, even after begging for money as recently as the first week in December.

Should the American taxpayer give them another $21.6 billion, as they are requesting? Or have they failed to keep their eyes on the American goal of getting our economy going, without rewarding negligence or incompetence (didn’t we do enough of that with Paulson’s bailout of the Big Banks?)?

It appears to me that the two automakers have focused on a different goal, which was to buy time with the first bailout to put together another plan that will simply buy more time without having a fairly certain likelihood of creating profits. I believe plans that have a high likelihood of creating a profit within 18 nmonths are what are needed - based on fairly pessimistic projections of where our economy will be twelve months from now.

I like the Obama administration’s first response through Robert Gibbs: “more will be required from everyone involved — creditors, suppliers, dealers, labor and auto executives themselves — to ensure the viability of these companies.”

Leadership is about being authentic and communicating a message that people can believe. I don’t see that quality in their requests.

I stand by what I said in my old blog on December 4, 2008 (reprinted below), that we need to focus on our economic goal and not any goal of keeping an American badge on the front of automobiles. In the short run, we need to protect jobs our economy, but not if those jobs are more expensive to the taxpayer and create less economic benefit than cutting deeper into GM and Chrysler. What really disturbs me, is to see auto industry experts saying that the plans don’t go deep enough to return GM and Chrysler to profitablity.

Let’s hope these plans change over the next month and become more realistic. Let’s hope these corporate leaders, Congress and the administration keep working toward the American economic goal. That will require these companies become leaders again in the automotive field.

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December 4, 2008 Post - originally at the Proficient Leader blog

The CEOs of the three US automakers are back in Washington, looking for federal support to stave off cash-flow problems. They’ve come with more humility and plans in hand, outlining how they plan to use the loan as a means to turn around their businesses and start producing more competitive products. Yet it’s not clear that Congress or the American people will buy their plans. Polls are showing that the majority of taxpayers would rather not bailout companies and executives that are seen as inept.

“Not only should bankruptcy be an option for domestic automakers, but it is considered by most experts to be the best option,” — Representative Jeff Flake,
Republican of Arizona (1).

Really? Who are these experts and what are their fields of expertise? Is their expertise relevant to the situation we have before us? Would an experienced leader listen to them?

It’s easy to be dazzled by experts, yet it is critically important to focus on what is our situation, then determine who is expert in handling that situation. Hopefully, there is someone.

What is our situation today (12/04/08)? Is our primary concern that three automakers might fail – or that our whole economy is teetering in the edge of a precipice? I believe it is the latter, that we could slide into a depression. Truth be told, I don’t care about three companies that act like dinosaurs. I do care, however, about our economy sinking into a depression.

What about these experts mentioned by Rep. Flake? Are they experts on corporate reorganization or on avoiding or recovering from national or international economic depression? My bet is that Rep. Flake has listened to experts on corporate reorganization, people who most likely should be viewed as skilled incompetents (2) when addressing economic depression. Remember the saying that “to a boy with a hammer, everything looks like a nail”? That is an expression of skilled incompetence.

We just learned this week that we’ve been in a recession since December 2007. Apparently, it took seven expert economists nearly a year to figure out what the man in the street had figured out months ago. To be fair to them, they had to work with a formal and rigid definition of recession. In a similar manner, we may learn some months in the future that we are now sitting in the midst of a depression.

Let’s don’t become too narrowly focused on how to reorganize the automakers. Let’s remember that we are experiencing gale-force winds in our economy and we don’t have the forecasting tools to know whether those winds are going to hit us with chaotic hurricane force. Let’s protect our country and our own interests by assuming that hurricane force economic winds may happen. And if that is true, let’s realize that taxpayer financed repairs to these three big businesses are much cheaper than picking up the pieces, should the economic hurricane become real.

Now is not the time for us to listen to “most experts.” Now is the time for us to listen to the economic experts, not the corporate reorganization experts.

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References

Vlasic, B. (2008). U.A.W. Makes Concessions to Help Automakers. New York Times, December 4, 2008. Retrieved at http://www.nytimes.com/2008/12/04/business/04auto.html?_r=1&th=&emc=th&adxnnlx=1228414608-lpW/Ej%209kpFqkp5GIL858w&pagewanted=print on December 4, 2008.
Stacey, R. (1992) Managing the Unknowable: strategic boundaries between order and chaos in organizations. San Francisco: Jossey-Bass. (pg. 102).