Sunday, July 09, 2006

We want to know, Kerkorian, what's your vision for GM?

Wednesday, July 05, 2006
Daniel Howes
We want to know, Kerkorian, what's your vision for GM?








Dear Mr. Kerkorian:

Once again you've lobbed a grenade at Detroit with your demand that General Motors Corp. consider a tie-up with Carlos Ghosn's Franco-Japanese Renault-Nissan alliance.

You don't explain what you're doing and why -- understandable, I suppose, for a billionaire Las Vegas mogul who owns 9.9 percent of GM, who 10 years ago tried to take over Chrysler Corp. and who isn't afraid to destroy companies or lose big-time verdicts in a Delaware court in the name of saving them and "enhancing shareholder value."

Yes, I know, this is capitalism by the "golden rule" -- he who has the gold rules. So forgive the little people who would be charged with realizing your vision, or paying the price for it, for having a few questions about what you and your deputy on GM's board, Jerry York, want to accomplish with this audacious gambit.

Answer me this

First, you two obviously don't think Chairman Rick Wagoner and his team are moving fast enough to restructure GM -- a debatable point given how much they've done over the past year. What should be done that hasn't been done?

Second, if one of your suggestions includes killing, say, Pontiac and Buick so GM can focus its U.S. resources on fewer brands, how does that help GM in the near-term if it brings a four-point slide in market share and a billion-dollar litigation war with enraged dealers?

Third, how would Carlos Ghosn be the savior of GM? His success at Nissan was turbo-charged by Nissan leaders who knew they couldn't get the job done on their own, by the compliance of in-house unions and the salaried work force and by the industrial logic of the deal. What makes you think that could be the case at GM?

Fourth, have you considered that the turmoil associated with your envisioned tie-up -- melding purchasing, engineering and product development -- could stall GM's North American turnaround and be an enormous distraction? How does that build shareholder value?

Time kills deals

Fifth, you're 89 years old. If the Daimler-Chrysler deal is any indication, it could take 10 years for a GM-Renault-Nissan alliance to realize its "synergies." Will you still own GM a decade from now? If you do, will you care? Or be alive?

Sixth, the conventional wisdom shaped by your minions last week is that this deal is mostly about what Ghosn and Renault-Nissan can do for GM. But there's a lot GM can offer them, such as market leadership in China and Latin America, world-class powertrain and an enviable position in the U.S. light truck market -- and your proposal would give them all that for roughly $3 billion. Is that a good deal for GM -- or is this all about you getting control of the boardroom?

Seventh, you had a front-row seat to the cultural war between the Germans of Daimler-Benz AG and the Midwestern Americans of Chrysler. Do you think one guy spanning three continents can manage all that and still compete with Toyota -- which has virtually none of it?

And if you're wrong, who will clean up the mess?

Daniel Howes' column appears Mondays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or dchowes@ detnews.com.






© Copyright 2006 The Detroit News. All rights reserved.


0 Comments:

Post a Comment

<< Home