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?”

Top 10 Marketing Blunders of 2008

Yeah, there’s a lot more than 10 here. What can I say? It was a very good year for very bad things.

(PS: If you liked this would you mind going here and voting for it on Digg?)

GRAND PRIZE FOR SUSTAINED ORGANIZATIONAL EFFORT

(tie)

The John McCain Presidential Campaign

• “Our economy, I think, is still — the fundamentals of our economy are strong.”
• Has no idea how many houses he (or his wife) owns.
• Picks Sara Palin, the Broad to Nowhere who couldn’t find Russia or Africa on a map.
• Campaign adviser and former HP CEO Carly Fiorina says Palin couldn’t run a major corporation.
• Campaign adviser and former senator Phil Gramm says Americans are whiners about economic problems.
• “Shutting down” his campaign to fix the bailout.
• “Lipstick on a pig”
• Egregious attack on Dungeons & Dragons that clearly cost him the election. (OK, maybe not so much the last one).

GM

• June: with gas heading to $4-a-gallon, company announces it is trying to sell the Hummer brand. As of today, sale is still pending.
• August: with gas at $4-a-gallon, company announces it will take the bold move of investing “$500 million to build a new fuel-efficient, small car the automaker says will show it can make money in head-to-head competition with its Japanese rivals as it fights to return to profitability.”
• October: Asks Treasury Dept. for $10 billion to pay for proposed merger with Chrysler
• Early November: car company that already isn’t selling cars argues it can’t file for bankruptcy because “people won’t buy cars from a bankrupt car company.”
• Late November: leads troika of Detroit CEOs to DC to ask for taxpayer money to balance the books. Each flies in on wings of attitude and three separate corporate jets.
• December: runs weasel-word mea culpa in Automotive News: “While we’re still the U.S. sales leader, we acknowledge we have disappointed you. At times we violated your trust by letting our quality fall below industry standards and our designs become lackluster. We have proliferated our brands and dealer network to the point where we lost adequate focus on our core U.S. market. We also biased our product mix toward pick-up trucks and SUVs. And, we made commitments to compensation plans that have proven to be unsustainable in today’s globally competitive industry.“

Runners Up

1. Ford features “Space Oddity” — a song about astronaut suicide — in new car campaign.
2. Framingham State College  uses the word blah 137 times in a 312-word fundraising letter.
3. Disney (multiple entries): Bans kids from DisneyWorld restaurant; Changes “It’s A Small World” to “A Salute to All Nations, But Mostly America”; and Sells “High School Musical” panties for tween girls with the phrase “Dive In” on them.
4. Woolworths (UK) launches Lolita brand of beds for young girl
5. JetBlue lives up to Southwest’s parody ad by charging for pillows.
6. Russia uses smiling kids in tourism ad for war zone
7. Residents of Lesbos sue those other lesbians over brand name
8. Motrin gets headache from viral moms video
9. Butcher’s ads feature “Meat Products, Fresh Service” on naked woman
10. Hershey asks if you’ve found Mr. Goodbar

Special Jury Awards

Co-Branding That Shouldn’t Have Been

• Windows Vista toilet paper
• The Muppets appear on DVD for Law & Order: SVU
  
• Barbie® Rice Krispies® Treats
• P&G starts hip-hop record label (Bounce® and Beyonce? Jay Z and Oral B®? 50 Cent and Febreze®? Snoop Dogg and Eukanuba®? Ghostface Killah and Ghost®? Lil Wayne & Pampers®?)

The Alpha & Omega of Over-reaching

• God’s chosen racing team loses at the Indy 500
• “Pope’s Cologne Provides Solace to Grieving Widow”
• “Can Batman Teach Spiritual Truth?”
• Email service lets you taunt friends after The Rapture
• McDonalds compares Ray Kroc to Martin Luther King Jr.

Product Failure

• LifeLock ID protection service fails to protect CEO’s identity
• Anti-shark device found to attract sharks

The Penguins Of Irony “Oh NO You Din’t” Awards

• Publisher says bankruptcy puts magazine chain in “a position poised for wonderful growth
• WaMu continues to send credit card offers after going out of business

Previous years’ lists

• Top 10 from 2007
• Dozen Dumbest Press Releases from 2006
• 10 Dumbest Business Quotes from 2006

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.

GM argument against bankruptcy is a car wreck

The astoundingly badly run car maker says it won’t declare chapter 11 because “people won’t buy cars from a bankrupt company.” Given that GM’s sales have dropped 45 percent over the last year, how would this be any different from the current situation?

Not surprisingly the “it’s not our fault” argument is echoed by UAW President Ron Gettelfinger: “We’re here not because of what the auto industry has done. We’re here because of what has happened to the economy.”

This would be more believable if GM had been doing well before the credit markets went to hell. Let’s remember that we’re talking about GM here and what it’s track record is like. This is a company that even when it gets a good idea goes out of its way to kill it.

Quoth this great article from the WSJ:

This situation doesn’t stem from the recent meltdown in banking and the markets. GM, Ford and Chrysler have been losing billions since 2005, when the U.S. economy was still healthy. The financial crisis does, however, greatly exacerbate Detroit’s woes. As car sales plunge — both in the U.S. and in Detroit’s once-booming overseas markets — it’s becoming nearly impossible for the companies to cut costs fast enough to keep pace with the evaporation of their revenue.

In all this lies a tale of hubris, missed opportunities, disastrous decisions and flawed leadership of almost biblical proportions. In fact, for the last 30 years Detroit has gone astray, repented, gone astray and repented again in a cycle not unlike the Israelites in the Book of Exodus.

Remember Saturn? GM started an authentically different company that attained a beloved cult-like status and then all but killed it by not letting it put out new models. Don’t even get me started about the electric car and where the company would be today if they’d kept developing that program they killed after putting $1 billion into it. And then there’s the decades of lobbying against improving mileage standards that — had they been in effect — would have also saved their asses.

GM is also arguing that it’s basically under new management and that the guys who made all those stupid decisions have been replaced. Even if this is true, then let’s hold them accountable for the stupidity just since Rick Waggoner became CEO. For the last seven years their strategy has been, “we’re going to bet it all on the short-term profits to be made from SUVs.” Thus they launched Hummer et al. I’m supposed to trust a bunch of guys who couldn’t figure out that the price of gas fluctuates? Who couldn’t figure out that there was a difference between short-term profits and long-term viability?

Let’s make one thing clear — the term “US automakers” is a misnomer. When someone says they want to “bailout the US automakers” they really mean GM. Ford has said repeatedly that they have enough credit to get through and Chrysler is no more or less a US company than Honda or Toyota. The Big Three is in fact the Incompetent One.

Wait, I will bow to the Journal on this one: they’re going with “The Detroit Three” and that works for me.

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.)