Options are Severely Limited for GM, Chrysler

General Motors CEO Fritz Henderson seems to interpret his marching orders from the president’s auto task force as a mandate to restructure more or less along the lines GM is already doing, only deeper and faster.

In the short run, he may be right, even though GM is taking some heat for not thinking out of the box.

“The administration has made it clear that it expects GM to expand and accelerate its restructuring efforts … I want the American people to know that we understand and accept this guidance,” Henderson said in a written statement on March 30, shortly after the task force shot down GM’s “viability plan” and forced then-CEO Rick Wagoner to walk the plank.

Leave it to the guys at “The Truth About Cars” blog to come up with a snickering, Beavis and Butt-Head-worthy headline for that (which I think is funny): “GM CEO: Deeper, Faster, Oh Baby!”

My limited point here is that because of the “faster” part of “deeper and faster,” deeper and faster cuts are just about the only option available to GM. The only thing GM can do quickly is shrink – by cutting deeper and faster.

Similarly, the auto task force made it clear that Chrysler needs a partner, and fast. If that’s not Fiat – and Fiat seems to be keeping its options open – then Chrysler as we know it is probably toast.

Sure, the U.S. car companies also need more fuel-efficient fleets; they need to switch out of trucks and into cars and crossovers; they need more common global platforms, to save costs; they need more flexible factories, so they can respond quicker in the future when gas prices, driving behavior and consumer tastes change. But all those things take too long.
 
Ironically, the car companies are going to end up doing a lot of what they said they were going to do, when they took their disastrous first trip to Washington last fall, in the notorious corporate jets: cut production and jobs, close plants, sell non-core brands, and shrink enough to be profitable with much smaller revenues. The longer-term stuff is going to have to wait, maybe for new ownership and new management.

Substituting GM lifer Henderson for GM lifer Wagoner has gotten the president’s task some grief that they don’t “get it.” I agree that GM eventually needs some out-of-the-box thinking, but if “deeper, faster,” is the only option right now, especially “faster,” then GM needs somebody in charge like Henderson, who knows their way around GM.