GM CEO quits. Does that count as job creation?

Fritz Henderson, the man with the 2nd least desirable job in the US*, has quit or been pushed after failing to turn around the troubled automaker in less than 6 months.

What? I don’t really know. He or an underling managed to screw up the sale of Opal, Saab, Saturn and any other part of the company vaguely attractive enough for someone to spend money on. Plus, lets face it, Fritz is not a really marketable name.

Company officials described the decision for Henderson to resign at "mutual." I have to wonder if some of that mutuality had to do with Fritz screaming, “Free at last! Free at last! God almighty I’m free at last.” as he left the office today.

It is worth noting that the people who hired Henderson did so with very real doubts. Speaking last month Steven Rattner, head of the Obama auto task force, had this piece of high praise for Henderson “He’s shown that he can manage.” In what has to be one of the least surprising opinions ever offered on the auto industry, Rattner said GM and Chrysler “were some of the worst-run companies I’ve ever seen in my life.”

 

*1 = US President

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US nationalizes Chrysler, GM auto warranties

From The Wall Street Journal:

To assure consumers reluctant to buy GM or Chrysler cars, the government plans to take the unusual step of guaranteeing all warrantees on new cars from either company. These guarantees would lapse back to the companies once they return to health.

• For those of you on the conservative side of things: Can you imagine what it will take to get your warrantee covered by the Feds?
• For the liberals: They’ll pay to repair the car but not the owner?

Coming next: “Free bailout with every purchase!”

Steve Hartley nails it: “GM = Government Motors. What could go wrong?”

Chrysler discussing merger with Ronco

They are the only remaining partner for the car maker should recent talks with Fiat fall through. There is ABSOLUTELY no truth to the rumor that Chrysler’s owners turned to Fiat only after discovering Yugo is no longer in business.

I am putting together a takeover offer involving one (but not all) of the following:

• A handful of magic beans OR one (1) cow
• Controlling interest in Circuit City
• $24 in colored glass beads
• The player to be named later
• A check, to be put in the mail
• Deed to the Brooklyn Bridge
• All of Merril Lynch’s mortgage holdings
• Prime Arizona waterfront property
• As much Lehman Bros. stock as will fit in a PT Cruiser
• IOU from Bernie Madoff

Detroit car cos. as bad at PR as they are at business

The CEOs of GM and Ford have announced they will drive from Detroit to DC for the next round of begging from Congress. Clearly this was supposed to make us forget that the Detroit Three had flown in separate private jets the last time they tried to explain why their companies were running out of money.

Instead all it has done is reminded us of this. Apparently you can’t answer a cheap shot with a cheap stunt. I particularly like the fact that the two CEOs are coming in separate cars. No car pooling for these two.

Better move would have been to simply taken a commercial flight. Or walked. I hope the press will tail both men all the way during their drive. Otherwise we might get a Rosie Ruiz situation. (Ms. Ruiz was named winner of the 1980 Boston Marathon, until it was discovered she had only run .2 of the 26.2 mile course.)

Will Chrysler CEO Robert Nardelli also indulge in a little stunt driving? Unknown. What is known is that he “will not travel by corporate jet. A spokeswoman says his travel plans will remain secret for security reasons.” I have no doubt this is utter and total bullshit, but it certainly plays better than what the other two are doing.

When branding goes too far: car crashes into car-themed diner

A Mercedes and a Honda collided outside Hubcaps Diner at the corner of Bonanza and Locust streets in downtown Walnut Creek, CA. The collision sent the Honda onto the sidewalk and through the glass doors of the popular breakfast spot, which is decorated with framed photographs of classic automobiles.

Via The Obscure Store & Reading Room

And speaking of car crashes, I was ecstatic to see The Treasury Department said NO! to GM’s request for up to $10 billion to finance its merger with Chrysler. They wanted you and me to pay for this idiot idea? If they can’t even afford to do the merger why do it in the first place? There is nothing about that merger that makes any sense. There will be no economies of scale — GM is already too big. It will bring nothing to the marketplace — GM is already suffering from having way too many brands that stand for absolutely nothing. I wouldn’t trust the top management of either firm to run a lemonade stand. I’d consider funding it only if they fired everyone at the top of both firms.

GM merging with Chrysler: Dumb and dumberer

What part of two wrongs don’t make a right do these people not understand?

Isn’t the idea of a merger to combine strengths? What is it that these companies combined would be able to do that they can’t do by themselves? GM already has too many brands. So it wants to add more? The nice thing about having these two merge is that it will bring together a lot of bad management and keep it away from other companies.

Further proof that irrational exuberance walks among us: General Motors Corp. and Ford Motor Co. shares were up more than 24% each on Monday. Ford’s stock is up apparently because it had previously held merger discussions with GM. The only reason this should be a boost for Ford is the realization that it was smart enough not to merge with GM. It is astounding to see what has happened to what was once the largest and best-run company in the world.

Chrysler gambling with sales incentive that helps pay for gas

Not sure if this is brilliant or depressing. Or both.

Chrysler announced Monday an offer that caps the price of gasoline at $2.99 a gallon for three years for people who buy or lease new vehicles from Wednesday through June 2. The offer is based on 12,000 miles of driving per year at the vehicle’s rated fuel economy. Customers will get a card for buying gas that is linked to their own charge account, Chrysler said. The customer will be billed $2.99 a gallon, and Chrysler will pay the rest.

I’m sure the honchos in Auburn Hills did their math on this (and when was the last time a US car company didn’t correctly anticipate fuel costs?) but to me it looks like this could get pretty expensive.

The story goes on to point out that at the current $3.61 a gallon average gas price, someone who buys a new PT Cruiser (est. 21 MPG) would only cost the company $1075 per car. That seems a bit much but not ridiculous for a car with an MSRP of $15,285.

However let us take the radical notion that gas prices have not yet peaked. If the price of gas hits $5 a gallon (and I wish that were unthinkable) the total cost to the company hits $3300*. Even if the price “only” hits $4.50 per, the company is on the hook for $2580 per car. Suddenly that PT Cruiser is costing Chrysler a lot.

All of this, btw, assumes something we all know to be false: That there is a relationship between the advertised MPG and what you actually get. If the car actually gets 18 MPG then Chrysler has to pick up the actual difference. At today’s prices that means a mere $150 increase over three years. However at $4.50 it’s about $500 more — which means Chrysler is in essence selling the PT Cruiser for about $12K. For the consumer it’s a great anti-inflation move, for the shareholders though? Well, for gas company share holders it’s great.

The other thing that will contribute to Chrysler’s costs is the fact that consumers will probably buy more expensive grades of gas. Why not always get super premium if it only costs me $2.99?

Here is my own personal indicator of the impact of the price of gas: I am now driving at or below the speed limit. This news so shocked Mrs. CollateralDamage that she briefly put down the latest guide to Disney.

*(In case you’re wondering here’s the formula I used 12000[miles] / 21 [MPG] = total gallons consumed [which I’ll call G]. G * price = total cost / (G * price – 2.99) = annual cost to Chrysler * 3 = total cost to Chrysler. Given my legendary inability to do anything beyond basic math I put this out there so that someone can and will correct me.)

Consumerists’ 10 Worst Marketing Mistakes (sort of)

As insomniacs and other long-time readers now, I am a big fan of Consumerist.com. The site does a great job of reporting on consumers’ (mostly but not always) unhappy experiences with companies. If you’re a marketer it’s a must read so at the very least you learn what not to do. All that said, I was dissappointed to read their list of the Top 10 Worst Marketing Gaffes, Blunders & Disasters:

1. Hindenberg
2. Edison electrocutes an elephant
3. Ford Edsel
4. Tylenol Cyanide Scare
5. Beatles Yesterday & Today album art
6. Microsoft Blue Screen of Death press conference
7. Calvin Klein amateur porno-style ads
8. Honda robot falls down stairs
9. New Coke
10. McDonald’s I’d Hit It

I can come up with a bunch just in the last couple of years that are worse than anything on this list.

• The Tylenol thing was a PR disaster at first but once it became clear that the poison was the result of an outsider the public pretty much forgot about it, witness the brand’s success since then. The on-going Bausch & Lomb eye wash nightmare is far worse. Last year it was linked to an infection that caused blindness and another batch just cropped up today. This happened because of something in the manufacturing process and the PR response was a nightmare. This could actually destroy the brand.
• The Microsoft and Honda things were embarassing but no way are they in the 10 worst. I’d put Judy Regan’s OJ book fiasco way ahead of those two if for no other reason than it was a deliberate and planned effort, not just a mishap with the demo of a product.
• McDonald’s I’d Hit It? Yeah, everyone got a laugh over the misuse of slang for intercourse, but it’s hard to see that as a huge disaster. How about the Vioxx or Ambien stories? Ambien got bushwhacked with a PR problem when Patrick Kennedy blamed it for his renewed drug problem, which wound up being a big plus for rival drugs which could say they were non-addictive. Merck currently faces 27K lawsuits over Vioxx and even if they win every one the brand has suffered permanent damage.
• Yesterday and Today wasn’t even The Beatles worst PR disaster, let alone one of the top 10 of all time. The band’s worst was John’s comment about being more popular than Jesus.
• How about BP having its claim of being environmentally friendly blow up in its face when their Alaska pipeline started leaking like the Celtic’s defense?
• Or how about Enron or even JetBlue’s recent problems or GM/Ford/Chrysler continuing to push SUVs as gas hit $3 a gallon? Or NBC blowing rigging a Ford pickup truck to blow up? Or the great Ford Pinto fiasco?
• Or KFC and it’s rodent problem?

Kudos to Consumerist for getting historical with Edison and the Hindenberg, but they need to get up to date with their current marketing disasters. You guys are still one of the channels-of-choice for tracking business stupidity, let’s get this list right. Keep the top 3 and the always-wonderful new Coke disaster and replace the rest with some real disasters.

Great corporate weasel words: When in doubt blame ED or Elvis

1. Bob Dole's favorite malady, erectile dysfunction, is to blame for GM getting all limp. At least that's how I interprest the fact that GM decided to announce that it has to spend $17M a year on Viagra, Cialis and other erectile dysfunction drugs. While the company does cop to the fact that's a small fraction of GM's overall health care costs ($5B last year) "company executives often use the example to illustrate what they said are out-of-control health care costs," according to the AP. Best line in the story: "Ford Motor Co. declined to say how much it spends on erectile dysfunction drugs, and a spokesman for DaimlerChrysler AG's Chrysler Group could not provide figures." You can blame the ED or you can blame the fact that you've made a lot of crappy cars. You decide.
2. The King is blamed, long live the King. Execs as the UK bakery Kingsmill would like us to believe that an ad campaign — featuring Elvis Presley, no less — is why they lost a third of their market share. The campaign was a tongue-in-cheek one built around the fact that on his one brief stop in the UK, Elvis ate some the company's bread and therefore the bread is made "By Appointment To The King." Kinda clever actually. Best line of the story: "Analysts said that Kingsmill had lost about a third of its market share to Hovis and Warburtons because of the advert and production issues." AND: "The problems come after the loss of [parent company] Allied’s deal to supply Asda with own-label bread after a dispute with the supermarket group." While "critics" blasted the ads as some sort of sacrilegious thing, I think the only way a campaign could kill a third of your market share is if it made joking reference to Hitler. After all, Starbucks was recently endorsed by Chinese dictator, er, president Hu Jintao and it doesn't seem to have hurt them.