Thursday, July 6, 2006

A Pig is Worth More After It’s Butchered

The French and the Japanese are about to barbecue General Motors and they’re calling it a three-way alliance. Which is pretty much the same as calling the eating of pork chops an alliance with the pig.


KirkkerkorianKirk Kerkorian is the third entity pulling up to the table and tucking in his bib. We all know how much Kirk values the American car industry, or anything for that matter with potential in its stripped value. Kerkorian runs a corporate chop-shop. Cars are worth more as parts, ergo car companies are worth more as their parts.


An elegant kind of corporate truth, if you value earnings maximization over pride and use of product.


So, the raid will obscure itself behind the rhetoric of ‘alliancing’ GM up the ramp to the abattoir, where it will be dismembered, swung up on hooks, stripped of its brisket and loins and roasts, shrink-wrapped in plastic and put back on the market.


CadillacemblemAll of which makes excellent sense. Which is why the Gm Board has been zipping by corporate jet to Tokyo and Paris while there still is a corporate jet.


By and large, these are the same board members who fed the GM pig and petted it and encouraged its porcine ways until it was ready for no other practical fate than the slaughter-house. CEO Rick Wagoner is done. When GM’s only hope was an outsider and a hatchet, they turned to an insider and gave him too little, too late.


RickwagonerWagoner paid his dues, coming to the company with a shiny MBA from Harvard. I have said many times that Harvard University has probably destroyed more of corporate America with its MBA program than any union or stretch of economic recession. Initially an analyst in the treasurer’s office, Rick can be forgiven for thinking GM’s problems were financial. But they were not. GM suffered the double-whammy of giving away the store to the unions in good times and never understanding that the tail-fin era was gone forever.


Consider Wagoner’s curriculum vitae and by that, come to understand the company’s demise


  • Treasurer, Brazil

  • Managing Director, Brazil

  • Corporate Chief Financial Officer

  • Executive VP

  • President and COO

  • President and CEO

  • Chairman

There isn’t a single stop at that GM stations-of-the-cross that allows even a faint breeze from the real world. It’s corporate-cocooning as art-form. The 14th Floor at General Motors Headquarters was the problem at GM and could never produce a savior. It just wasn’t on the horizon of their corporate culture. These guys wore brown and white wing-tips and dreamed of the next big-engined, big-bodied, big-profit land-cruisers, twenty years after that horse had left the barn.


Then they played eighteen holes and attended one another’s daughter’s coming-out parties.


It’s infuriating to see Kerkorian turn out to be the last man on his feet and yet, there he is, the turd in the punch-bowl that upper-crust Bloomfield Hills GM execs can no longer ignore. Like Death showing up at an anniversary gala, there’s Kirk, over there in the corner with a scythe and a grin. Like Death, Kerkorian has become inevitable.


CarlosghosnDescribed as ‘charismatic,’ Carlos Ghosn, CEO of the Nissan-Renault combine is Kerkorian’s pick to dismember and thereby maximize the profit to be had for shareholders (read that 10% Kirk). If (and only if) the GM Board approves the purchase, the combine will buy up 20% of the staggering beast that is GM. Along with Kirk’s 10%, they can safely sledgehammer it between the eyes and carve up the choice cuts.


Judging by the contrails spewing behind the GM jet, its board is slathering to approve.


And why not? Carlos Ghosn is someone who can truly bring consensus to a company that has made a lifework out of dream-sequences. In addition to Nissan and Renault, he sits on the boards of Sony and Alcoa. Called by some “the perfect example of a corporate executive working in today's multinational market whose multicultural experiences have taught him the importance of combining various cultural perspectives to do business globally.” He took Nissan, which at the time faced bankruptcy, in seven short years to preening itself as Japan’s #2 automaker. He's a national hero in that country.


Ghosn was born in Brazil. So, that’s what it’s come to. Rick Wagoner cut his corporate teeth in Brazil for GM and now a Brazialian vaquero has come riding up from behind to knock him off his horse.


A full circle for which we have to credit corporate raider, Kirk Kerkorian.
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