GM Has Only Itself to Blame for Government Intervention

An Ad Age Editorial

Published on .

In this very space in April of 2005, we wrote an open letter to General Motors Corp. CEO Rick Wagoner, applauding his decision to assume day-to-day control of GM's American operations and having the marketing leadership report to him directly.

"GM's real problems are not going to be solved by hands-on management," we wrote, "but rather by some tough strategic decision-making by the company's leadership. ... You must define what each brand in that enormous GM portfolio stands for in meaningful terms that resonate with the consumer. ... GM doesn't need you to prowl the halls. It needs you to have the courage to make some tough decisions."

We take no pleasure in knowing we were right. And if we'd known then what we know now, we might have added: "And never, under any circumstances, take bailout money from the government."

We are not at all comfortable with government making decisions that companies should have made for themselves, but it's amazing that GM -- and Chrysler -- couldn't act on what it must surely have known. In the years since 2005, neither GM nor Chrysler seemed able -- or willing -- to cut brands, restructure contracts, wean themselves off of gas guzzlers and match imports on quality and gas mileage.

They were limping along in good times, so they were completely unprepared when things really got bad.

What's even more amazing is that when the bottom did drop out, they still refused to make the necessary tough decisions. Instead of declaring bankruptcy, they went hat in hand to Washington and "borrowed" billions of dollars. And for what? To have bankruptcy declared for them?

What the government's role in GM and Chrysler will mean for the marketers remains to be seen. Ironically, this might work out in the interest of both automakers. Driven to bankruptcy they may renegotiate contracts and come out in a better position than Ford -- a company playing by the old rules of capitalism and one that's been doing everything we thought GM should do back in 2005.

Whatever the case, a government-mandated bankruptcy that results in a leaner, viable GM would give new context to the famous quote from GM's then-president in 1953: "What was good for the country was good for General Motors and vice versa."

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