The author is a Los Angeles-based writer. For 25 years he was president of STARKMAN, a New York-based public and crisis communications firm. Earlier, he was a reporter with major newspapers in the U.S. and Canada, including the Detroit News.
By Eric Starkman
If you’re a working stiff at GM’s Hamtramck or Warren plants and wonder why Wall Street executives have millions while you need a union to protect your declining lifestyle, disgraced New York financier Steven Rattner has published a valuable primer. Pay close attention: GM CEO Mary Barra and her mostly retired board enablers subscribe to the same entitlement handbook.
Rattner, with an estimated net worth in excess of $600 million when he was President Obama’s auto czar, negotiated the terms of GM’s $50 billion government bailout, a rescue that was intended to save American jobs. So, one might expect Rattner to eat some humble pie in the wake of GM’s announcement that it will fire nearly 15,000 workers and shutter five plants. Rattner is no more embarrassed by GM’s announcement than he was contrite about having to pay $10 million in restitution to the State of New York for his role in the state’s public pension kickback scandal.
“All except $11.2 billion.”
“I might be expected to be critical of GM, which received more than $50-billion of government assistance. (All except $11.2 billion was ultimately repaid),” said Rattner in a commentary in the New York Times. “But I’m not.”
That’s not chump change, unless you believe that fleecing American taxpayers is no big deal. Rattner generously advocates “the American government should increase spending on education and training” and provide a “stronger social safety net” for workers too old for training or relocation.
He offers no proposals as to where the money should come from but calling on GM to repay its $11.2 billion debt apparently didn’t cross his mind. Rattner says GM’s “strategic decisions” are “commendable” and isn’t bothered that Barra, who earned $22 million last year, ranks as one of America’s most overpaid CEOS.
The tone and tenor of a news releases reveals a lot about a company and GM’s restructuring announcement last week reaffirmed it’s still a soulless company with its legacy cluelessness in PR, labor, and community relations.
It takes an incredibly insensitive management to inform factory workers their plants are being “unallocated” as part of a transformation to increase “long-term profit and cash generation potential.” The release also talks about improving the “competitiveness of wages and benefits,” signaling the company intends to curtail raises and healthcare support. (It doesn’t, of course, refer to making Barra’s compensation more competitive).
GM said it wants to capitalize on “the future of personal mobility,” an industry segment Google associates with wheelchairs and scooters. Compare GM’s corporate-speak release with the plain English release Ford issued on the same day. Jargon-filled news releases are often a sign that companies are looking to deceive.
Here’s an example: GM’s release noted that the company invested $6.6 billion in U.S. plants in the past four years. That might seem like a sizeable amount, but not when you consider that GM in the past five years has spent $25 billion on dividends and share repurchases. GM has spent considerably more money trying to goose its depressed stock price than it has expanding its business.
Nevertheless, the total value of GM’s stock has declined by about $20 billion during Barra’s five-year tenure and the company has continuously ranked among the most undervalued in the S&P 500. Some money managers have suggested that it’s Barra who should be “unallocated.”
President Trump has been a great boon to America’s elitist ruling class. Enragement about Trump’s election has distracted from pervasive and escalating corporate wrongdoing for which both political parties must bear responsibility.
GE and Tesla are under criminal investigation, a top Goldman Sachs executive pleaded guilty for his involvement in the biggest financial scam in history, and investment fraud is dramatically on the rise. Michael Moore was once a credible GM critic, but his disdain for Trump has clouded his judgment; Moore said GM “played” Trump and called the president a “fool.” If GM played anyone, it was President Obama.
GM fashions itself as an environmentally-friendly technology company focused on electric and self-driving cars. But it again wants American taxpayers to shoulder the risk: Barra earlier this year pressed Washington for a nationwide expansion of electric-vehicle tax credits to fuel sales.
For all of Barra’s lofty talk “to realize the safer, better and more sustainable world we want,” three quarters of the company’s sales in the U.S. come from more profitable gas guzzling trucks and SUVs. So much for GM’s code of ethics which states, “we must always act with integrity, take accountability for results, and do the right thing, even when the right thing is hard to do.”
Former GM president Charles Earl Wilson famously said, “for years I thought what was good for our country was good for General Motors, and vice versa.” With China being GM’s biggest market and the company looking for more taxpayer handouts to finance what some experts believe is a pipedream, that’s no longer the case.
It's my hope that the UAW, on behalf of its members and the country, will make things right.