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Ghosn Plans Could Be Derailed If GM Staffers Refuse to Buy in

Entrenched Bureaucracy Is Potential Alliance's Wild Card

By Published on .

There are a lot of reasons the proposed alliance involving General Motors, Renault and Nissan won't work. But the real one probably won't be mentioned.
Carlos Ghosn, chief executive of Renault SA of France and Nissan Motor Co., speaks at a Tokyo press conference last week about his hopes for an alliance with GM. | ALSO: Comment on this column in the 'Your Opinion' box below.
Carlos Ghosn, chief executive of Renault SA of France and Nissan Motor Co., speaks at a Tokyo press conference last week about his hopes for an alliance with GM. | ALSO: Comment on this column in the 'Your Opinion' box below.

Plants dance
As Automotive News headlined last week for its story explaining why the head of Renault and Nissan wants to get together with GM: "The dance is all about the plants."

Carlos Ghosn realizes that GM has excess capacity in North America. "Obviously it would be a benefit for the two parties," the Nissan and Renault CEO told CNBC. "One party does not have to make such a huge investment to build a new plant. And the other party does not have to spend so much money to close a plant and reduce the work force."

GM's previous failure
That's a pretty good reason the alliance would work, at least in Mr. Ghosn's view. But there are plenty of reasons why it won't work, most notably that GM has tried it before and failed miserably. The company paid $2 billion to get out of a deal with Fiat, for example.

Another reason is that GM executives fear that a hookup with outside forces could hamper the company's erratic turnaround. And if minions within the company don't want to do it, they can make it fail.

Look what happened to the AOL-Time Warner merger. The idea was for the content-producing units of Time Warner to provide material for AOL and for the components of the new amalgam to come together and sell giant ad packages to big advertisers. Neither of those things happened because the subsidiaries were loath to part with their content in ways they couldn't control, and the ad packages were difficult to structure to fit advertisers' needs.

Initial DaimlerChrysler disaster
The DaimlerChrysler merger was also a disaster, at least initially. Things didn't start to turn around until Dieter Zetsche (now known in commercials as "Dr. Z") took over the whole company.

When Wolfgang Bernhard joined Volkswagen, his big job was to get employees to think beyond their specific areas of expertise. To shake things up, he called more than 200 VW staffers together in an auditorium to figure out how to cut the price of the company's new sport utility vehicle by $2,500.

The employees met his target after four weeks, Mr. Bernhard told The Wall Street Journal. He said it was a "team effort," not a process in which "big decisions are delegated upwards and somebody behind closed doors makes some decision that gets thrown down on the organization." Mr. Bernhard was working on the premise that if middle managers don't buy into a program, it won't get done.

Ford's entrenched managers
Apparently that's what's happening at Ford Motor Co. The New York Times reported that Bill Ford "bowed early on to the wishes of entrenched managers and senior executives who wanted the company to keep churning out" SUVs.

Mr. Ford is taking on the jobs of chairman, CEO and de facto chief operating officer. He says he can't delegate to anybody because "controlling those jobs is how ... he can get his own way inside an unyielding corporate bureaucracy," according to The Times.

Even though his name is on the door, Mr. Ford feels he's been "stymied" in getting projects such as the Escape hybrid off the ground. It took six years to get it to market, and even then "he had to fight with marketing officials," The Times reported.

Power to scuttle deal
That's essentially the problem facing GM and its proposed alliance. If managers feel the outside project is getting in the way of their turnaround, they'll find ways to scuttle it.

What it boils down to is that Bill Ford and Rick Wagoner of GM aren't strong enough to build support for what they want to do within their own companies.

And Mr. Ghosn can't dictate changes from the outside looking in.
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