How to Sell Cars and Handle Politicians
Those mealy-mouthed Detroit CEOs need an old-school PR lesson.
What’s interesting about public perception is how Wilson’s quote is viewed today. To begin with you’ve probably heard it, or rather, probably heard something like it. It’s more frequently misquoted than quoted accurately, enough to be in books about frequent misquotations. “What’s good for General Motors is good for the country,” is a part of lore, not quite urban legend, but based enough on reality to circulate without challenge. I started using Google as an admittedly rough tool to examine how people perceive GM today. “What’s good for General Motors is good for the country” yields 3,030 hits. Not only is that a misquotation but it’s not very favorable to GM, making it seem like he is putting GM before country rather than, well, vice versa. “What’s good for the country is good for General Motors,” another misquote, though more accurate and less negative about GM (or big business in general), yields only 742 hits. “What was good for the country was good for General Motors,” accurate but favorable to GM, yields 1,190 hits. “What was good for the country was good for General Motors and vice versa,” accurate but fully in context and balanced, gave 969 hits. As a rough estimate of people’s perception of GM today, that’s 2,901 hits on more or less accurate accounts of the former GM CEO’s statement that are favorable or balanced with regard to GM vs 3,030 misquotations whose language place GM in a poor light.
Now I didn’t check to see the exact context in which Wilson’s words were quoted or misquoted, but I did a search for “General Motors,” “good for,” and America. There were 795,000 hits. The first page of results on Google were all quotations, misquotations, or paraphrases of Charlie Wilson’s remarks before Congress. Looking at the first few results, only two citations out of 14 accurately quoted Wilson. Four references were in what I judged to be a “GM neutral” context, five were positive, and six were negative. These results pretty much confirm impressions from the search on the actual quotation. It’s often misquoted and more often than not given a negative spin about General Motors. To give you an idea of the flavor of some idea how negative, the title of two of the items were:
What´s Good for General Motors is Bad for America
and
What’s Good for General Motors Is Killing America
Okay, so that last one is from The Progressive. I wouldn’t expect a left-wing publication to be nice to a major corporation, but that’s what most people see when they use things like Google for information. The way Wilson is misquoted to GM’s detriment doesn’t seem fair to “Engine” Charlie, who was a great American who helped us win three global conflicts and was a key figure in establishing global industrial dominance by the U.S.
Maybe Rick Wagoner really knows how angry Americans are at Detroit and he just doesn’t know how to deal gracefully and artfully with both Congress and the American people. Maybe he’s completely clueless. Or maybe he’s so committed to his vision that he’s the Rod Marinelli of corporate America, not willing to quit in the face of strong evidence of failure.
In any case, he doesn’t seem to have anywhere near Charlie Wilson’s capacity for gauging how both politicians and the public would perceive his words. GM was the biggest company in the world in 1953 and under “Engine” Charlie they sold a lot of cars. Despite how people view his words today, senators knew how his words would be perceived by the American people and they confirmed him by a vote of 77 to 6.
Perhaps as they revisit Washington, Wagoner and the other Detroit CEOs should take a page from Charlie Wilson’s book and not be afraid to use the hearings to challenge the demagogues, make a forceful defense of the domestic automakers, and appeal directly to the American people. A case can be made that a healthy domestic auto industry is in the nation’s best interest. Wilson was able to make that case. The question remains if the current Detroit CEOs are up to that task.
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Ronnie Schreiber opines about cars at Motorobilia and other automotive web sites.
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20 Comments
1. Eagle Eye:The government needs a refresher course on the Constitution and how it work’s. Everytime they stick their noses in something the yellow brick road turns to crap.
Dec 3, 2008 - 5:09 am 2. Cybergeezer:Bottom line: Congress doesn’t want Datsun Limousines.
Dec 3, 2008 - 6:21 am 3. seven:It would make sense if the money is not a gift. Is there a use for the US buying some trucks out of inventory for the Park or other services? Help clear out inventory?
Dec 3, 2008 - 6:31 am 4. jerryofva:How about a ford Escort so Pelosi could drive to work from California instead of dumping 12,000 pounds per hour of waste flying her personal plane.
While I am opposed to a bailout of the auto industry I recognize their domestic problems stem from an obsolete labor model and in large part to the way the CAFE requirements are applied to the Big 2.5.
GM and Ford are everywhere profitable except here at home. They are burdened by excessive labor costs that prevent them from selling small cars at a profit. Make no mistake about it, nobody, not Honda, not Toyota, not Nissan likes selling low profit margin econoboxes. The difference between the Japanese and Detroit is that the foreigner’s labor costs are sufficiently low that they can generally make a small profit on high mileage cars while the domestics can’t.
The CAFE standards actually prevent Ford and GM from importing their profitable high mileage cars because they don’t count towards CAFE requirements. Importing high mileage cars actually hurts the fleet average and would result in fines. The deck in stacked against them.
GM and Ford no longer produce the junk that they did 25 years ago. Their quality is as good as the Japanese and better the Europeans so please don’t tell me your horror stories from when you bought a Ford Pinto in 1976.
The real corporate solution is for Chrysler to go out of business and for GM and Ford to divest themselves of US operations and reincorporate in the UK or the Netherlands. They can then concentrate on building cars for profitable markets. The irony is that under these conditions Ford and GM would probably increase their American market share. That they don’t do this is a sign that both companies want to be good corporate citizens. They still hold to Charlie Wilson’s words but perhaps he is words no longer apply.
Dec 3, 2008 - 6:52 am 5. Saltherring:Any government “bailout” of the U.S. auto industry must include major concessions from greedy unions, who have marched lockstep with GM, Ford and Chrysler executives down the road to bankruptcy. I have worked in union controlled shops where worker incompetence and indolence is tolerated, and sometimes even encouraged by union officials. There is no way Detroit can regain a share of the market without major union concessions. General Motors has often been referred to as “Generous Motors” by its employees. Managers must regain the right to discipline or remove the lazy and disruptive and employee benefits must be negotiated back into the realm of reality.
Dec 3, 2008 - 6:53 am 6. Thinking Person:Saltherring, you make a wonderful valid point! I’m afraid that Obama and Pelosi et al are now beholden to the unions who helped them get into power. They already have their minions out on the airwaves telling us that if the automakers fail it’ll affect everyone from the glassmakers to the snack shop down the road from the factories. The unions have a stranglehold on that industry and until that can be rememdied (which seems impossible now that Pelosi is pushing for the card check act which will cause more unions to form in a myriad of new industries) we are going to be paying out the nose for these fatcats. I, for one, am doing my part by not driving any of their vehicles. Insignificant to them of course, but feels ever so good to me.
Dec 3, 2008 - 9:45 am 7. Ronnie Schreiber:I’m no fan of organized labor, it’s a necessary evil of the capitalist system at best, like stock markets, but please stop using the UAW as a whipping boy. They’ve made huge concessions already and Ron Gettlefinger just had a press conference where the UAW council announced that they’re going to negotiate the end to the Job Banks and agree to let the domestic auto companies delay payments into the VEBA that replaces their health plan.
People are outraged about the 150,000 or so UAW autoworkers whose base pay maxes out at about $67,000 a year. Nobody notices, though, the 1,800,000 civilian non-postal federal employees who average $66,500 in salary, about 50% more than the average private sector worker, and they have lavish benefits simply not available in the private sector. The average federal worker gets over $100,000 in pay and benefits, about twice what private sector workers earn. And nobody acts as entitled as public employees. Many of the more than 50,000 GS-15s (who start at $107K in salary) make so much that they’ve reached the congressionally mandated ceiling of $149,000 in salary) and they actually have the nerve to complain that they are “losing” thousands of dollars in COLA adjustments. Boo freaking hoo.
Only 400 out of those 1.8 million fat cat feds were denied in-grade pay bumps. When 0.02% of employees don’t get a raise, it’s obvious that merit and job performance have nothing to do with raises. They get awards, bonuses and time off with pay at a rate that far exceeds that in the private sector. Promotions are close to automatic. They even are eligible for “retention fees”, i.e. a 25% bonus if they threaten to work in the private sector or another federal agency.
Public employees are the problem. The states in the industrial midwest (and California, and New Jersey) get less than a dollar in federal spending for every dollar of taxes paid. Michigan alone has had over $200 billion looted from our economy by the federal government. For the industrial midwest the total is close to a trillion, with a T, dollars. That money went to the south, sunbelt and the DC area. Some went for projects and earmarks, and ironically helped subsidize Sen. Shelby’s Mercedes, Hyundai and Honda plants, but much of it went to pay for the bloated federal workforce. Because of all the fat cat feds, Maryland is now the wealthiest state, per capita, in the country and MD and VA have 9 of the 20 wealthiest counties.
It’s not just at the federal level. California’s fiscal problems are directly due to the generous pay and lavish pensions for state employees.
Those public employees want you to be angry at the UAW because it distracts taxpayers from the real parasites on the economy. UAW workers actually make things and turn raw materials into real products that people buy. What productive labor do most public employees do? They contribute not a penny to GDP.
I’m sure that this comment will provoke public employees to tell us how hard they work, how they earned the “right” to retire with no age penalties on a full pension after 20 years, how grateful we should all be for their selfless public service. Tell it to the Marines.
In addition to writing about cars I operate a small business and ship things. I’m one of those people who defends the US Postal Service because though they are subsidized by taxpayers, they actually provide outstanding service at very reasonable prices. Postal carriers, and most in the defense department (civilian and military) at least actually do things for the country. Most of the other public employees are parasitic.
The UAW openly admits that it can’t continue getting unsustainable wages and benefits. Will any public employees, many of whom are unionized themselves and make bribes, er, campaign contributions to the politicians who negotiate their contracts, make any concessions?
Perhaps the cadre of public employees will be too embarrassed to try to rebut these words, but I doubt it. They are shameless in their greed and scorn for those who pay them lavishly.
Dec 3, 2008 - 10:30 am 8. jerryofva:Ronnie:
I won’t dispute what you say about most public employees but I think your defense of the UAW is misguided. The UAW is giving back wages and benefits under duress. They should have been more realistic 20 years ago. They are operating on an obsolete labor model that denies the reality of the modern market place.
If the government wants to bailout the Unions, and that is what this is all about, then perhaps the best use of the inevitable bailout money is to loan enough money to the UAW so they can buy up the domestic auto industry and operate it the way they see fit. For years the UAW has effectively set company policy and objectives without baring any responsibility for the resulting disaster. The UAW is the organization that lobbied for and got the domestic content provision into the CAFE standards.
Dec 3, 2008 - 10:50 am 9. Air2air:If they go under, the successful auto manufacturers with plants in the US (Toyota, Honda, MBZ, BMW etc) will have jobs available for them. And with these advantages:
1. The workers won’t be forced into unions.
Dec 3, 2008 - 11:18 am 10. Thinking Person:2. Job security improves because they will be building cars that people want, and are currently buying.
3. They will learn from exposure to these more efficient and productive manufacturers, in the same way the Japanese learned from us.
Air2air….Your points are all valid except for #1 – that the workers won’t be forced into unions. If Pelosi and Obama ramrod their card check act through, unions will spread like a cancer.
Dec 3, 2008 - 11:47 am 11. myth buster:GM workers don’t max out at $67,000 per year. Combined salary and benefits works out to around $70/hr, or about $150,000/year. For comparison, this is about the same as a submariner in the US Navy with ten years experience as an officer. That job requires five years of schooling and entails being completely cut off from the rest of the world for three months at a time or more. GM line workers get to go home every night and a lot of the jobs on the assembly line don’t require a college education, either.
Dec 3, 2008 - 11:51 am 12. Thinking Person:Ronnie….I have to disagree that unions are a necessary evil. They served their purpose and now are an albatross around the neck of American business. Notice I didn’t say UAW? I’ll be willing to step out and say ALL unions are without merit. True, there was a time and place and need for unionization. Now with so much government regulation their sole purpose is to put a stranglehold around the very neck that feeds them. The only power that a union holds is to strike and collect dues. Whenever workers wake up and realize that they are paying dues to fatten up the union boss for that and only that, they will realize they have been duped. True, they have been bending the American auto companies over for quite some time and have gotten pretty darn good retirement packages but at the company’s expense. They are to blame for bringing these companies to their knees right now. Don’t even get me started on the teacher’s unions. My kids and probably everyone posting here’s kids have paid a dear price for the demands of the teacher’s unions. So many examples….
Dec 3, 2008 - 11:55 am 13. Ronnie Schreiber:“If the government wants to bailout the Unions, and that is what this is all about, then perhaps the best use of the inevitable bailout money is to loan enough money to the UAW so they can buy up the domestic auto industry and operate it the way they see fit.”
JerryofVA, like I said, I’m no fan of unions but the reality is that the UAW has been making concessions for years. This isn’t about bailing out the unions, though, or rewarding bad management decisions, it’s about avoiding economic devastation in places far removed from Detroit. Silicon Valley? Do you have any ideas how many ICs and chips are imbedded in modern cars and how big a customer Detroit is for Silicon Valley? Do you know how many computers and how much software Detroit buys for their business and engineering operations? Do you like police and fire protection? Did you know that domestic car dealers are the single biggest source of sales tax across the country? Do you like the men and women of our armed forces having sophisticated weapons to defends us and keep them safe? Well, without the supply chain that supports the domestic car industry we won’t be able to make F-22s and Patriot anti-missile systems.
Meanwhile, the banks are looting our life savings, backing their trucks up to the Treasury department, and letting retired executives fly for free on business jets.
Say what you will about the UAW and the domestic car companies but at least they make stuff. Leveraging capital to loan money doesn’t create wealth unless those loans are used to grow things, mine things, or turn raw materials into finished goods.
Dec 3, 2008 - 11:57 am 14. Ronnie Schreiber:mythbuster,
Navy submariners deserve every penny they are paid. I have a brother in law who is a Commander in the sub service and I’m well aware of the hardships the sub service deals with to protect us. My daughter has enlisted in the Navy and will most likely go to nuke school. They don’t put women on subs, so she’ll likely work on a carrier. If she puts in her 20 years and retires with a commission, she’ll have earned that. I stand in awe of our fighting men and women and have no problem with their compensation. Unlike most people on the public payroll they actually work hard and serve the public, deserve every penny they get and then some.
That $70/hr figure for UAW workers, though, is a red herring. It’s not wages and benefits but rather the total cost of the labor contract divided by the number of active employees. It includes the actual cost of retiree benefits, not just how much the company is putting aside for active employee pensions. It includes the cost of all pensions and health plans for current retirees. GM pays more pensions than anyone else in the US except for the government. That says something about their total labor costs, but it says more about our bloated and entitled public payroll. So the idea that UAW workers are making $150,000 a year in total compensation is a distortion at best and close to a lie. You’re upset about 150,000 autoworkers who make good money and benefits, and I’ll readily admit that before the current concessions the UAW contract was not sustainable. Compare those 150,000 autoworkers to the over 130,000 federal employees (civilian) who make $200,000 or more in actual wages and benefits. Federal employees get benefits that would make the UAW green with envy.
Does anyone think that government workers are more conscientious than union autoworkers?
Unions aren’t saints and have a role in Detroit’s crisis, but let’s not ignore the 800 pound gorilla on the public wage roll.
Dec 3, 2008 - 12:12 pm 15. Ronnie Schreiber:Thinking person,
We agree about teachers unions. There are huge differences, though, between private sector unions and public employee unions. To begin with, private sector unions are paid, ultimately, with voluntary purchases of their employers’ products. Public employee unions are paid with taxes coerced at the threat of going to jail. Privates sector unions have a vested interest in their employer turning a profit and will be out of a job if the contract makes their employer non-profitable. Public sector unions have no interest in cost containment or sustainability, their employers run deficits as a standard operating procedure. If you’re upset over unions telling employers to bend over and take it, what about public employees like policemen, firefighters and teachers who don’t just threaten to strike, they deprive us of vital services if they aren’t pleased with their guaranteed pensions and high wages. If a private sector union gave money to a company executive or manager, that would clearly be a corrupt conflict of interest. Yet public employee unions like SEIU and the NEA & AFT routinely give millions of dollars in campaign contributions to the politicians who negotiate and vote on their salaries.
For all the sins of private sector unions, they pale in comparison to how public employee unions are jobbing us all.
Dec 3, 2008 - 12:22 pm 16. jerryofva:Ronnie:
Cars will continue to be made in the United States and those supply chains will remain intact. The difference will be the nameplates. The Toyota Camry has the highest domestic content of any car “built” here. If the domestic industry folds then the slack will be taken up by others who find it cheaper to buy their parts here then ship them from elsewhere. Must of the automotive world buys the chips here anyway.
Nobody looted your life savings. You, me and everbody else made bad investment decisions. For every bank that made a subprime loan to a risky borrower there was borrower gambling that he could either turn the house over for profit before the rate went up or would be able to refinance at a fixed rate several years hence when the equity in his house grew.
Dec 3, 2008 - 12:26 pm 17. Ronnie Schreiber:jerryofva
The idea that Toyondissandai can take up the slack should domestic mfgs fold is based on utter ignorance of the automotive industry and its supply chain. To begin with, the transplants don’t have the capacity in their US operations to meet the current market level of roughly 10.5 million units per year, let alone a more normal market of 16+ million units. They can’t meet that capacity even including their offshore facilities because those facilities are currently set up to produce vehicles for other markets. Changing over their own plants, though they are flexible facilities will take time and money and even Toyota’s credit rating has been slashed. Buying plants from dead American companies and switching them over will take even more time and money. 40% of Americans won’t even consider an American car and you think that slapping a Toyota badge on a Malibu will change their minds (actually, the Malibu is probably a better car than the Camry)?
You mentioned the high US content of the Camry. That means that Toyota is buying components from the same supply chain as the domestic mfgs. If the domestics fold, so will most of their suppliers, making tremendous difficulties for Toyondissandai’s normal North American operations, let alone expanding those operations to meet market demands if the Detroit 3 go belly up. Automotive components take time to develop. Toyota, if it’s been buying parts from, let’s say, Delphi or AC Delco, can’t just pick up the phone to Denso and say “we need 250,000 alternators next month”. Car parts aren’t 2X4s. You can’t just go to Lowe’s or Home Depot like you can if the corner lumber yard goes out of business. Besides, Denso’s going to be scrambling to find cash to operate, having lost not only the business they have with the domestics, but will also take a direct hit on their accounts receivables as they take their place deep in the line of other creditors. I worked for DuPont for a long time and it’s about as diversified as a big company can get in terms of the various markets and industries it sells to, but people in Wilmington will lose their jobs because GM is still DuPont’s single biggest customer either directly or through tier 2 suppliers.
I’m not a supporter of government subsidies of business. I’m a reluctant supporter of bailing out Detroit at best and recognize the need for structured reorganizations for GM & Chrysler at least. Ford has done most of the heavy lifting and corporate culture changes it needs to do, now they just have to ride out the current credit mess and recession, well, if they have enough cash to do so. If GM files, though, Ford will have to go Ch 11 too as a matter of staying competitive. The best case scenario if all three survive bankruptcy will mean a loss of maybe 500,000 jobs. If they fold completely, the job loses will be in the millions.
You can fool yourself into thinking that there won’t be a massive impact on businesses seemingly far removed from the auto industry, but it doesn’t change reality. You can think that Toyondissandai will take up the slack, but they’ll be too busy dealing with their own survival because of impact to their supply chains.
So few people are involved in actually making things in this country anymore that they have no clue at all what’s involved in designing and building cars.
This is what the LA Times has to say about the impact of a collapse of the Detroit mfgs on the economy of southern California:
http://www.latimes.com/business/la-fi-dealers1-2008dec01,0,6804146.story
Here’s what the Mercury News says about Silicon Valley
http://www.mercurynews.com/ci_11082323?source=most_emailed
Neither one of those papers are cheerleaders for the domestic auto industry.
jerryofva, if I may ask, what do you do for a living? Have you ever made and sold a real product? Public or private sector? Finance or the real economy.
As for the banking crisis, I’ve been saying all along that everyone who took advantage of cheap credit for the past 15-20 years shares some of the blame. At the same time, had Fannie & Freddie and wall street not sold derivatives, mortgage based securities, credit default swaps, and tried to securitize risk while acting as though the statistically small risk of default would never actually happen, well, those subprime loans and refis to take out equity would never have posed a systemic risk.
Dec 3, 2008 - 2:07 pm 18. Cybergeezer:As a Detroit area employee and union member, I know how tight a hold the unions have on the gonads of the company they CONTROL.
Dec 3, 2008 - 2:28 pm 19. Cybergeezer:They are now trying to get ahold of the gonads of Congress.
Unions are leeches that prey on the workforce. Looking critically at the unions involvement with the auto industry will enlighten you in their responsibility of bringing the industry to its present condition.
Bottom line: The unions have to bow out or Congress has to bow out. Chapter 11 is the best solution. And Obama wants to tack on homeowner relief! GTFO!
Oh! I forgot! Auto makers also have to plead for money from Mexico, Brasil, the European Union; NO U.S. FUNDS LEAVE THE U.S.
Dec 3, 2008 - 3:10 pm 20. jerryofva:Heh! Heh! Heh!
Ronnie:
The physical plant and the skilled labor force will not evaporate into thin air if the domestics leave US shores. The foreign automakers will by up the viable components of GM, Ford and Chrysler. You can see this on Horizon. Nissan will not produce full sized trucks in the US anymore. They plan on selling re-badged Dodge Ram pickups. It is only a short step to buy up Dodge Truck and Jeep divisions and take over that market segment.
I believe VW has bought a domestic plant in Tennessee although I can’t remember which company. The domestic auto companies are going to sell off parts to foreigners soon bailout or not.
Your fears are way overblown.
Dec 3, 2008 - 5:04 pm