PeppercomBlog

Go With The Bank

Posted by Matt Purdue

During this, the Great Recession, media and pundits have thrown around the phrase, “Not since the Great Depression…” It’s become a horrible cliché. But today we’re facing a situation where this tone might be appropriate. The federal government’s response to the problems in the U.S. auto industry are certainly unprecedented in recent times. Just for review, the Obama administration’s intervention hit a high (or low, depending on your political leanings) point late last week when it decided to ask GM CEO Rick Wagoner to resign.

Think about this: The government has essentially told the head of a publicly held company to take a hike. Not the shareholders, not the board, not even Congress--but the President of the United States. What kind of precedent does this set? In today’s era of cut-throat media, CEOs always get too much credit for organizational success and too much blame for failure. Certainly Wagoner should take the heat for stubbornly pushing GM’s ruinous reliance on SUVs and trucks over the past decade. But, in a way, Wagoner is being made the ultimate scapegoat. In this case, at least, it looks like many GM board members will also get the axe. At least six of them will be resigning. 

Cue Thelma and Louise

Guest blogger Rodger Low is a marketing and communications strategist with 15 years of automotive industry experience. Based in Los Angeles, he has worked with manufacturers such as Honda, Toyota and Subaru.

As we do with everything at this time of year, let’s take a moment to reflect upon the nation’s biggest manufacturing industry and at the same time its biggest head-scratcher. Just how did we get to the point where the US-based automotive industry seems on the brink of extinction.  The Once-Big-Three have now become the corporate equivalent of the Salvation Army – ringing its bell at every threshold in Washington, DC, and beyond to get whatever “bailout” funds it can get its hands on just to get through the short term.

But let’s take a closer look at the situation, and what has led us down this path to automotive irrelevance. Did this really come out of nowhere, born out of the recent credit crunch? Or were there signs over the past few years that might have prevented any or all of this?  If you listened to the corporate heads plead their case on Capitol Hill recently, they had no way of knowing that this sales slide was going to be so drastic and so prolonged, and that their cash reserves were so low.