GM’s Chairman Gets Tough

Tom Walsh wrote a great column that appears in yesterday’s Detroit Free Press about Ed Whitacre, Jr., the new chairman of GM. According to Walsh, Whitacre is making it clear to white collar workers throughout the government-owned entity that there had better be improved performance, pronto, or there will be even more people filling the roles of Michigan’s already overburdened Unemployment Insurance Agency.

One of the points that Walsh makes that’s worth noting about what the government-picked board is faced with: “But GM's board couldn't just jettison the entire management group. You can't go pluck saviors off the street for a business as complex as automobiles. And with the feds in charge, all executive pay must be approved by Uncle Sam's pay czar. So how could the board recruit an all-new management team right away if they couldn't even promise what salaries would be?” However, he’d also points out that many of the people in control right now “were all part of the team that lost $82 billion in the last four years of the old GM.” Somehow, I think that we’re seeing that the Obama Administration’s auto people are a little more savvy that people in Detroit had expected them to be and that they may very well have been able to recruit a slate of performers, knowing full well that they’d have to pay them. After all, $82-billion isn’t chump change, and owning over 60% of a company like that isn’t all that appealing, especially when you want to move it off your books.

Too many people—both white- and blue-collar—have lost their jobs, in part, because there hasn’t been a sufficient sense of urgency and a realistic sense of competitive reality at GM for too many years. This is not to paint with too broad a brush. There are those there who get it. But don’t image for a minute that the “New GM” is automatically different that the “Old GM” because of the bankruptcy laws.