Detroit's Big Bungle in D.C. and the PR Lessons Learned

After Near-Epic Backlash Carmakers Returned to Washington With Game Plan and Transparency

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NEW YORK ( -- After Congress told Detroit's Big Three CEOs to get back on their private jets and come back with a detailed plan the next time they came asking for a $25 billion loan, it was abundantly clear that GM, Ford and Chrysler had all terribly missed the mark from a PR and communications perspective. The near-epic backlash that resulted -- especially for the private-jet misstep -- from consumers, the media, bloggers and Congress set up perfectly a case study on how to rebound from a nationally covered PR blunder. But would the Big Three learn from their mistakes?

Big Three execs
Photo: Dennis Brack

Big Three bigs: (From l.) GM's Rick Wagoner, Chrysler's Robert Nardelli and Ford's Alan Mulally.

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"The fact is there wasn't a lot of clarity as to what was to be expected the last time," Tony Cervone, VP-global strategies and operations at GM, told Ad Age from the automaker's Washington offices on the eve of the congressional hearings last week. "The difference this time around is that there was absolute clarity and what the expectation was to come here and talk about. That made the assignment a lot easier, quite frankly."

Mr. Cervone said he's not asking that anyone give the industry a break for dropping the ball on their first trip, a fact he calls "abundantly obvious," but he pointed out there wasn't much in terms of a reference point for GM's Rick Wagoner and his fellow CEOs Robert Nardelli of Chrysler and Alan Mulally of Ford, other than the Troubled Asset Relief Program Congress passed for the financial institutions earlier this fall, which had "very little in terms of review and questioning." He said even if it had brought a plan to the table in November, GM wasn't prepared to outline that entire plan while sitting next to its competitors.

"I think a lot of people in Washington felt like they had a gun to their heads when TARP went through," Mr. Cervone said. "You have to look at the circumstance and if we did something fundamentally wrong from a communications standpoint, it's that we should have known the headwinds in front of us were going to be strong in terms of receptivity to any kind of support with how TARP was being interpreted. And I guess I'll take the heat for that one from a communications standpoint."

Equality of sacrifice
Not looking to blow its second chance, GM knew it would have to be as transparent as possible and address two of the congressional members' biggest concerns: How will the company protect the taxpayer and the equality of sacrifice it is willing to address. Mr. Cervone said he believes GM's plan speaks to both "at great lengths."

He said there's a history of restructuring that's been taking place within both the industry and GM that has resulted in a drop in employment costs and a rise in productivity quality. So when devising the plan it would present to Congress, GM laid out what would have to be done next and how quickly it could accelerate those trends, given that the market has deteriorated since the financial crisis started and liquidity has dried up. Fortunately for GM, it didn't have to devise this plan in two weeks' time. The plan also called for a $600 million cut in ad spending by 2012.

"It's not as if we came back from Washington and said, 'We have to put together a plan,'" Mr. Cervone said. "We've been on this journey for some time, and the economy has gotten worse, so accelerating the journey is completely legit to ask for, and that's what we put down on paper and presented."

Aside from the substantive action, GM also needed to make a symbolic gesture, and with the fleet of private jets still being mentioned in nearly every story on the auto giant, it wasn't hard to figure out what form that action would take. But like the restructuring, dumping the jets was something GM had been kicking around for a while.

"Clearly we didn't just put our planes up for sale," Mr. Cervone said. "We have had conversations to do that for a while, [but] it looks very conspicuous by its timing, and that's unfortunate. It's more serendipity than it is anything else."

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