The Devil His Due
Is this the change we have been waiting for?
In what can only be described as the nationalization of what was once American private industry the President of the United States has seen fit to relieve the CEO of General Motors of his job. And he did it in a most gutless and cowardly way.
While the president once again sat before the adoring news media television cameras he had his aides announce the sentence and carry out corporate beheading. As Obama sat with CBS newsman Bob Schieffer discussing his discontent with the progress automakers have made in reconfiguring their union controlled business, “administration officials” met with Rick Wagoner and informed him he would need to step down if GM was to receive any more financial assistance from Uncle Sam Obama.
This action can certainly be interpreted as change and is also another addition to the long list of historic firsts. It makes it abundantly clear why Ford CEO Alan Mulally has gone to such great lengths to avoid accepting government handouts. General Motors made a deal with the devil and now the devil wants his due. Where is Daniel Webster when we need him?
Regardless of what you think of Rick Wagoner, his past job performance, his experience or his abilities going forward, it is beyond chilling to witness the federal government’s usurpation of the General Motors board of directors and the share holders voting rights.
Wagoner accepted the sword offered him and dutifully fell upon it having been unable to negotiate a financial tourniquet with the autoworkers union. Union officials saw no reason to use their old methods of strong-arm tactics or negotiate in earnest with the major auto manufacturers now that they have their hit man in the White House.
During his tenure at the helm of GM Wagoner made some serious mistakes as far as new car designs and the public’s fickle love-hate relationship with big cars and trucks. But in his limited defense Wagoner was playing poker with a pinochle deck from the start. It was under his leadership that GM began to make small but significant steps in renegotiating union contracts that his predecessors had agreed to in an effort to keep labor peace. While the actions taken under Wagoner’s leadership were not sufficient to allow GM to become globally competitive in labor costs they did paint a bulls-eye on him, with the union only waiting for the right marksman to take the shot. They got exactly what they were looking for in this past presidential election and it only took him 60 days to pull the trigger.
The Obama administration is going to great lengths to appear to be playing hardball with the GM and Chrysler management. The reason behind this is apparent only if you look beyond the current rhetoric to the likely outcome.
In his speech the day after Wagoner got the axe, Obama made it clear where his allegiance lies. “The pain being felt in places that rely on our auto industry is not the fault of our workers… And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations… Rather, it is a failure of leadership.” I agree with the president. But the failure of leadership was in their inability to successfully negotiate labor contracts that allowed the company to maintain profitability against the headwinds of a global marketplace.
This new tact taken by the Obama administration will have the exact opposite result of what the rank and file is looking for. It is unlikely that any legally constrained restructuring of these companies will allow them to continue to carry the oppressive legacy costs and unrealistic union pay scales and health insurance. But with the actions and comments made today this president of hope and change is laying the groundwork for the blame game to follow. He hopes to change the attention from what he promised on the campaign trail to blame the automakers management for the outcome.
The decision the board needs to make seems clearer now than ever. GM must free itself of the old union contracts that are bleeding them dry and it must also free itself of the parasitic federal government. The only way to do that is through the bankruptcy court. There will never be any security, independence or meaningful growth at this or any company as long as nearly every business decision is debated in the inept halls of congress and second guessed by a man who has never held a private sector job in his adult life.
Let this be a valuable lesson for all companies in the future. Beware the politics of liberal socialism.
