Saab Gets One Step Closer to Death

January 11, 2010

Normally I wouldn’t get too bent out of shape seeing a press release spelling out that an automaker’s days were very short. I must admit, however, that reading yesterday’s notice that Saab’s Board of Directors voted in favor of liquidating the corporation’s assets I was actually kind of sad.

The weird part is that I have never owned a Saab, nor have I ever even come close to considered buying one. For the most part, I’ve never really even liked Saabs. I’ve consulted with plenty of people in the last decade where I’ve specifically told them to avoid buying a car from this manufacturer that claimed so many specialty mechanics around the country also telling Saab drivers that later products were overpriced and too prone to catastrophic failures.

For me, the last great Saab with mass-market appeal was the 9000 from the 1980s. The 9000 was not only a hot car by period standards, but also one of the first stick shift cars I’d ever driven. (At this point in my life, I can’t remember if I drove the 9000 before or after the Nissan Pulsar.)

What hits me in the soft spot is that Saab has such a long history of doing things totally different. In a world of automotive monkey-see-monkey-do, for decades Saabs were quirky. Quirky might not be for everyone, but Saab did provide options for those engineers, college professors and mathematicians who were convinced that two-strokes, front wheel drive, or bathtub design were better for humanity.

GM killed Saab’s value by emasculating the marque’s individuality. With platform and parts sharing with the likes of Subaru, Saab lost the quirky practicality image of the 1960s and 1970s, and Swedish sport-luxury image of the 1980s and early 1990s.

The company had such amazing competition history with the legendary likes of Erik “On The Roof” Carlsson piloting Saab 92, 93, 95, and 96 models to great rally finishes. Ironically, it is because of competitive failure — against Volvo, Lexus, not to mention the hoard of SUVs and crossovers that Saab’s demise is rapidly approaching.

When a company ceases to provide reliable, cost-effective and differentiated products, the options are few. GM simply didn’t see a large enough market to invest large sums reinventing Saab, something with which I totally agree. A company could have bought the line and focused on producing modern interpretations of classic Saab design ethos, but as Koenigsegg found out, that strategy is ripe with labor, dealer, supplier, and warranty pitfalls.

Although GM still claims they are looking for a buyer, the long and short of it is that the world won’t stop the presses to save a company that only sold 8,680 cars in the US during 2009 (and only 124,438 vehicles worldwide in the glory days of in 2007). Just don’t be amazed when some out there continue to speculate and miss what might have been if the company had remained just a little quirkier.


A Press Release That Sends The Wrong Message

December 10, 2009

It seems that GM is back to its old ways again — showing it is as out of touch as it is plain bad at this whole PR thing.

The company just sent a press release titled “CEO Ed Whitacre Visits Flint Assembly Plant”. Now slap me silly if I’m wrong, but it’s really bad to have a marketing message indicating that either a) the CEO (who might be new to the position, but has been the Chairman of the Board for plenty of time) has never visited one of the corporation’s larger facilities, or b) it is really uncommon in terms of the prevailing corporate culture to have a sitting CEO or Chairman actually set foot in one of its manufacturing plants.

Now I might not be GM’s type of marketing or PR professional, (which is to say I have both marketing and automobile market experience — a degree from an actual major university in Business with a concentraion in Marketing (Dean’s List thank you very much), product and corporate marketing leadership positions, and a decade of automotive journalism), but I’d suggest to the PR team that creating releases pinpointing that it has taken corporate executives far too long to witness how the company actually produces its products is a really, really bad tactic. If Whitacre had visited Flint the week after taking over as Chairman, it would be one thing, but many weeks after firing the last CEO and assuming the role himself???

Just for giggles, here’s the whole release:

CEO Ed Whitacre Visits Flint Assembly Plant

Saying he just wanted to “see what’s here,” Chairman and CEO Ed Whitacre spent four hours this week walking the line, visiting and talking with employees at the Flint Assembly Plant.

Whitacre, wearing faded jeans and casual brown pullover, could have passed for a member of the Flint Assembly team. However, the plant received 24 hours notice that Whitacre was coming.

“I’ve been confined to the office,” he said at the start of the visit. “I just wanted to come up to Flint and see what’s here.”

Passing on a formal business update, Whitacre chose instead to mingle and chat with the people. “If you don’t know me and I don’t know you, it’s not good. We’re in this together.”

He listened attentively as employees talked about some of the challenges and opportunities facing GM. In response, he challenged people to “step up” and take risks. “Nothing is going to happen if you don’t do the right thing.”

Questions about the viability of the company were met with another challenge. “We’re sitting in a pretty good position to pull this (recovery) off,” Whitacre said. “Not many companies get a second chance. If people are not optimistic, we will not get it done.”

Finally, couldn’t the company have edited Whitacre’s quotes? Come on now — “to come up to Flint and see what’s here” is right out of the Admiral Stockdale “Who Am I And Why Am I Here” Book of Lines That Don’t Inspire Confidence! What did he think was up there — a magic hat out which popped cars with Chevy emblems?

Meet The New Chairman, Same As The Old Chairman

June 9, 2009

General Motors just announced that Edward Whitacre, Jr. will be the company’s new Chairman upon the launch of a revised GM company this summer. Kent Kresa has been serving as interim Chairman.
Six board members will be “retiring”. Whitacre will join current interim Chairman Kent Kresa, Philip A. Laskawy, Kathryn V. Marinello, Erroll B. Davis, Jr., E. Neville Isdell and President and Chief Executive Officer Frederick A. Henderson as the core of the board.

At first glance, it might seem like GM is following Ford’s lead by going outside the inbred automotive manufacturing community for its grand poobah. The 67-year-old Whitacre served as CEO of AT&T and Southwestern Bell from 1990 to 2007, which at first glance brings up comparisons to Ford’s selection of former Boeing executive Alan Mullally to be CEO of its company. The primary difference here is that Mullally had significant organizational and line operations experience when he was hired to be the hands-on leader. Whitacre’s experience is mostly in turning entrenched, old-school technology companies into larger companies by purchasing new technology companies. Plus, Whitacre’s position as Chairman is more of an advisory role.

Whitacre also serves on the boards of ExxonMobil and Burlington Northern Santa Fe, which leads one to ask: is it possible to find a guy who has been involved in more old technology / old white-men’s culture companies which have seen their market share shrink due to ignoring shifts?

In other words, it seems GM went out of the auto sector to find a Chairman who is most like a brother from another mother.

This being said, we wish Whitacre luck in his role and hope he surprises the world by working with Fritz Henderson to successfully reinvent GM.

Don’t Blame The UAW — Update

May 29, 2009

It appears that when GM engages the UAW in an effort to work together to promote their common interests (such as: “survival”) good things happen. GM and UAW announced today a new agreement:

DETROIT, Mich. – General Motors today confirmed that its UAW-represented employees have ratified the modifications to the GM-UAW 2007 National Labor Agreement. The amended agreement covers approximately 54,000 hourly employees located in 46 U.S. facilities.

“The leadership demonstrated by UAW president Ron Gettelfinger and UAW vice president Cal Rapson, and the hard work from the members of the GM and UAW negotiating teams, resulted in an innovative agreement that will enable GM to be fully competitive and has eliminated the gap with our competitors,” said Diana Tremblay, vice president of GM’s Labor Relations. “We very much appreciate the support of our employees and retirees. Their shared sacrifices will enable GM to become a stronger, more viable company that will continue to deliver world-class cars and trucks.”

Key highlights under the modified agreement include attainment of cost and cash savings comprehended in the GM Viability Plan that will enable the company to eliminate the wage and benefit gap with its competitors. It also includes changes to the agreements regarding the Voluntary Employee Beneficiary Association (VEBA) trust for retiree healthcare. The agreement also highlights GM’s plan to utilize an idled assembly and stamping facility for future production of a compact/small car in the United States to meet future fuel efficiency regulations.

In other words, in exchange for a healthy cut in overall compensation (wages, health insurance coverage/retirement benefits) GM agreed to use UAW workers to build the cars instrumental to its survival, including the Volt.

This is a good move by both sides.

An Anti-Union Guy Says: Don’t Blame the UAW

May 27, 2009

I’ll start by making it crystal clear: I don’t like unions. Most unions, in my humble opinion, penalize the best workers and deliver unjustified compensation to the worst. As a guy who loves to negotiate on my own, I’d only join a union as a last-resort.

That being said, America’s infatuation with demonizing the United Auto Workers is DEAD WRONG. Almost everything you’ve heard or believe about the UAW is not accurate, because the UAW is different from most unions.

Myth number one is the UAW, like all unions, exists only because it makes the leaders rich off of union dues. Guess what? Ron Gettelfinger, the President of the UAW, made $156,000 in 2007 and just under $160,000 in 2008. It might sound like a lot of money, but consider that this most powerful union boss in the world makes less than almost any regional union chief. For instance, the Service Employees International Union (SEIU) Local 32B-32J chapter in New York was paying its president $530,000 each year.

Even better, a person with no experience and no education can get a base of $80,000 if he is lucky enough to get a Longshoreman’s union entry-level job.

In comparison, Rick Wagoner, former President of GM, had a 2008 salary of $2.2 million. Bob Lutz, GM’s former high-profile VP, saw $1.56 million in 2008. Gettelfinger, the demonized head of this so-called greedy union in actuality makes less money than the average GM low-level department director.

Myth number two is that the UAW has no interest in the survivability of the auto companies and has never been interested in anything other than better pay and benefits. This is totally untrue. Indeed, in 1949, UAW President Walter Reuther oversaw the publication of a position paper called “A Small Car Named Desire”, which urged The Big Three to start producing smaller, more fuel efficient cars, because that is exactly what the UAW perceived the American public would want. The Big Three’s top brass told Reuther to stick to negotiating contracts, rather than tell them how to run their businesses.

Throughout the 1960s and 1970s, the UAW was regulated by the Big Three to being concerned only about protecting members’ benefits. By the late 1970s, the UAW started to see the foreign competition as a legitimate threat to the US auto industry, even when Big Three SWAT (strengths, weaknesses, opportunities, and threats) analyses focused solely on one another in each segment.

The UAW urged foreign automakers to build their cars here in the USA. Unfortunately for them, right-to-work states did better jobs of lobbying, so most foreign-owned shops became non-union.

Interestingly, though, the Japanese-owned factories seemed to offer fair compensation for work. So what does that say about the Big Three? To me it says they were…and still are greedy, shortsighted, too inbred, and insulated to see that it was their own damn fault, not the UAW’s, for the domestic auto industry’s collapse.

Pontiac to be taken out behind the woodshed in 2010

April 27, 2009

Bye bye Mr. Pontiac guy. Drove my Chevy to the levy, because nobody has driven a Pontiac since 1979…

Today GM announced its worst kept secret since the Corvette ZR1 – that it is killing Pontiac. I wonder, however, if you can really kill something that has been dead for years. The announcement has caused a steep decline in stock price of body cladding and steering wheel-mounted button suppliers, as well as caused panic among the lower quartile of automotive design soon-to-be graduates, who now will have one fewer opportunity for employment.

Just a number of months ago GM announced that Pontiac was destined to become a niche brand. Since Pontiac has offered no clear segment leaders…or any platform leaders, for that matter, the nameplate has been operating functionally as a niche brand since the Trans Am ceased to be an image and sales success (yet still lagging behind Camaro in total units) back in the “Smokey and the Bandit” era.

In all honesty, this a smart move that is a long time coming. With the exception of the GTO (1964-1972), Trans Am (1969-1979), Bonneville (1957-1959), and possibly the Catalina Sport Coupe 421ci (1961 until it was eclipsed by the GTO in ‘64), Pontiac really has never been a really impressive auto builder. Seeing that it started as a lower-priced alternative to Oakland, it was always too close to Chevy. Calling it the “performance division” was really nothing more than marketing spin.

As for the rest of GM’s death row: Hummer, Saturn, Saab, only time will tell if these will be purchased or just shut-down. Saturn dealers are dropping like flies, making it less desirable to companies like Fiat, which could use the distributors to sell their fuel-efficient cars if and when a deal with Chrysler falls through.

The so-called surviving brands, Chevy, Buick, Caddy, and GMC still have a long way to go. GMC could just as easily be killed, since most GMC are shared products with Chevy. Buick is only popular in China and in US retirement home parking lots, so it could eventually become a Far East-only brand.

Caddy and Chevy are safe, because when inferior cars to Lexus, BMW, Toyota, and Honda are built, Chevy and Cadillac will build them…with “more horsepower” as the sole reason the company will cite for the products being better.

With three out of my last four new cars coming from GM (two Corvettes and an Oldsmobile Intrigue) one might accuse me of utilizing humor to hide my frustration.

If They Can’t Sell The Cars, How Do They Expect To Sell The Car Companies?

December 5, 2008

The Big Three CEOs are back in front of Congress to again ask for money. This time, the boys left their jets at home and drove in cars. They also brought the plans for returning to profitability that Members asked them to supply.

Pluck me bald and call me Telly, but what the executives are shoveling doesn’t seem to be nearly enough fertilizer to make this garden grow again.

Central in plans from each company is the sale of at least one brand. Ford wants to sell Volvo, GM admits Saturn, Saab and Hummer are on the block, and Chrysler is waving Jeep in the wind. Now I’m not an automotive executive…and I didn’t even stay at a Holiday Inn Express last night, but I’d like someone to explain to me how if none of these brands are successfully selling individual cars to consumers, then how do the Big Three execs expect to sell the freaking brands themselves?

Let’s break it down: Volvo is on track to sell roughly 72,000 cars. Ford sold-off Volvo trucks many years ago, so the value of the brand is based only on consumer vehicles. Over at the General’s place, Hummer is on pace for just under 45,000 vehicles, Saab at 90,000 and Saturn at 230,000 cars. Jeep is the largest contributor of any of the brands, looking to deliver in 2008 for Chrysler just under a half-million vehicles.

Nobody in their right mind will buy Hummer. Its place in a 2015 35 mpg CAFE America is non-existent. Some Arab prince might buy it on a whim, but no automaker wants that brand hanging on its CAFE results like an anchor.

Saturn is like Mazda, just not as sporty. It is possible that a BMW or Porsche could buy them for their mpg and stand-alone dealership network. Don’t expect them to pay too much.

Saab and Volvo might as well look to the Korea, Malaysia or India for a buyer. No German, French or Italian company will touch these quirky Swedes.

Jeep is a more interesting play, because it’s a respected niche brand without the horrible CAFE strain of Hummer. Some company will make a play for Jeep.

In the near term, though, selling these companies creates costs for the Big Three. GM, Ford and Chrysler have traditionally spent way too much money in concessions to dealers after selling or closing brands. Also, don’t expect any companies to pay much for these brands when it is well known that a) the brands are for sale and b) nobody else is bidding on them. Despite skipping all those economics lectures in college, I do remember the whole supply and demand concept.

Obviously there is much, much, much more the Big Three’s plans for profitability than just selling these brands. Labor union concessions, plant closings, pay reductions, job cuts, supplier contract renegotiations, and dealer closings (why is it when you ask about dealer quality, Big Three executives always are quick to point out that dealers are independent, and it’s impossible to better control service and sales capabilities, but when dealers are a part of larger plan for money, they are no longer seen as rogue entities?) are all part of the deal.

Maybe the Big Three will offer “Zero Down, Zero Percent Financing”, “Factory-to-Dealer Rebates” and “Employee Pricing” for any company interested in buying Saturn, Saab, Hummer, Jeep, or Volvo?

With now $34 billion in bailout (call it loans, investment, or whatever – it’s a bailout) requested, and now talks about “government managed restructuring” which sounds way too much like British Leyland version 2008, Americans should be screaming to let the companies sink or swim on their own. If it really is as easy to sell brands, lower labor and supplier costs, and most importantly – create new cars that people will actually buy over the competition as the Big Three claim it will be with the funds Congress provides, then certainly these companies should be able to do it without getting involved with inefficient government red tape that will come with any bailout money.