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If you think that all the Big 3 need is a few billion to tide them over, think again.

Chrysler is owned and run by influential Wall Street sharks who would toss their grandma off a bridge to make a buck.

GM is brain dead from decades of erratic and intermittent control by financial managers who established a grotesquely unrealistic business model: Never do anything new and innovative unless its a brainstorm of an innovative CEO then when he leaves cut the money off before you make a profit. Make sure almost every engineering decision on every design is controlled by a committee of cost cutters unless said CEO pushes it through, in which case wait and sabotage it in detail. This works because the CEO is likely to make unrealistic choices, like the insanely expensive Chevy Volt, then is ready to relinquish control to get it built in a watered down and unappetizing form.

December 6, 2008 NY Times
Chrysler’s Friends in High Places
In early November, as America’s automakers grasped for a lifeline from Washington, the Treasury secretary, Henry M. Paulson Jr., placed a call to his predecessor, John W. Snow. The topic: Chrysler L.L.C.

Chrysler is the smallest of the Big Three automakers, but it stands apart from its peers in another crucial respect. While General Motors and the Ford Motor Company are public corporations, Chrysler is controlled by one of the world’s richest and most secretive private investment companies.

That investment company is Mr. Snow’s employer, Cerberus Capital Management, which has used its wealth and deep connections in Washington to shape the debate over the foundering automakers to its advantage.

In recent weeks, Mr. Snow has personally lobbied Mr. Paulson and others for a federal rescue that would salvage Cerberus’s investments in Detroit. Cerberus has also deployed a corps of lobbyists and former government officials to secure a bailout and protect its interests.

Whether its efforts will work is unclear. But if they fail Cerberus and its partners could lose their daring bets on Detroit. Without a bailout Cerberus could lose about $2 billion and suffer a stinging blow to its reputation. With one it might eventually profit from its troubled deals.

Last year, Cerberus and about 100 co-investors bought 80.1 percent of Chrysler for $7.4 billion from the German carmaker Daimler. It also bought a controlling stake in GMAC, the finance arm of General Motors. Since then Chrysler has eliminated more than 30,000 jobs and struggled to keep itself afloat while its sales have plummeted. Cerberus is pressing to have Chrysler merge with G.M., but G.M. has said a tie-up is off the table. Chrysler is asking the government for $7 billion to get through the next few months.

Cerberus, named after the mythical three-headed dog that guards the gates of Hades, has a fierce reputation on Wall Street. Many bankers and investors are reluctant to talk openly about the company, which is renowned, even feared, for its hard-nosed deal-making.

But Cerberus is also pursuing its interests aggressively in Washington, where some lawmakers have questioned why the government should assist the privately owned Chrysler. In addition to Mr. Snow, the firm’s chairman, Cerberus’s Washington hands include Dan Quayle, the former vice president, and Billy J. Cooper, who has worked as partner at the lobbying firm Patton Boggs.

The firm has also hired Arnold I. Havens, a former general counsel of the Treasury Department; John B. Breaux, a former senator from Louisiana; David Hobbs, former assistant to President Bush for legislative affairs; and Christopher A. Smith, former chief of staff in the Treasury. So far this year, Cerberus has spent nearly $2 million on lobbying, while Chrysler has spent $5 million, according to Senate records. Ford has spent more than $5 million and G.M. $10 million......

December 6, 2008
At G.M., Innovation Sacrificed to Profits
General Motors did not apologize for anything in its first trip to Congress more than two weeks ago to plead for a federal rescue. The company’s only problem, it insisted, was the current financial crisis.

“What exposes us to failure now is not our product lineup, or our business plan, or our long-term strategy,” Rick Wagoner, G.M.’s chief executive, said in his testimony.

On its return visit to a skeptical Congress this week, however, General Motors bowed its head. “G.M. has made mistakes in the past,” Mr. Wagoner told Congress, and named three: agreeing to expensive union contracts, not investing enough in smaller cars and failing to convert its plants so they could build more than one type of vehicle.

It was an unusual concession from a company that has rarely felt the need to apologize for anything, given its bragging rights as the world’s largest automaker with operations in 35 countries, and as a company that has built 445 million vehicles and sat atop corporate America for much of its 100-year history.

But the mistakes Mr. Wagoner acknowledged do not begin to explain why General Motors finds itself on the brink of insolvency, begging Congress for financial help.

G.M.’s biggest failing, reflected in a clear pattern over recent decades, has been its inability to strike a balance between those inside the company who pushed for innovation ahead of the curve, and the finance executives who worried more about returns on investment.

The two views were rarely in sync — in effect, fighting over the steering wheel that controlled G.M.’s direction — and the internal battles distracted G.M. from spotting shifts in the marketplace.

Time and again over the last 30 years, G.M. has spent billions of dollars on innovative ideas like its Saturn small-car company in the 1980s and the EV1 electric vehicle in the 1990s, only to then deprive those projects of further financing because money was needed elsewhere or because they were not delivering enough profit.

The failure is frustrating to those who remember the high value placed on innovation by legendary company leaders like Alfred P. Sloan Jr. and Charles E. Wilson, who felt G.M. could sell cars to the masses by demonstrating it was out in front.

“Until the 1960s, innovation was part of G.M.’s DNA,” said John Casesa, a veteran industry analyst with the Casesa Shapiro Group. “Now, it’s a matter of trying to play catch-up.”

One such area is hybrid technology, an area where G.M. might be leading if it had encouraged the engineers who led its hybrid development as long ago as the 1970s, and continued building on expertise it gained with the EV1.

While Toyota has sold more than 600,000 Prius hybrids in the United States since 2000, General Motors will not start selling its Volt plug-in hybrid until 2010, when it hopes to sell 10,000 of them in the first year.

“We were late on hybrids,” George M. C. Fisher, the lead outside director on G.M.’s board, said in an interview this week. “Why were we late? We made a business decision as opposed to a marketing decision. That’s probably a mistake, in retrospect.”

Another, as Mr. Wagoner said last week, was its slow reaction to greater demand for smaller, more fuel-efficient vehicles. Although more are on the way, the only small car in its vast lineup of models to compete with the likes of the Honda Fit and the Toyota Yaris is the Chevrolet Aveo, a car made in Korea by G.M.’s Daewoo subsidiary.

General Motors has tried to answer the call for greater fuel efficiency in the short run by outfitting some of its pickups, big S.U.V.’s and larger cars with hybrid-electric engines, but they have not caught on with consumers.

In the early 1990s, the company lagged Chrysler’s Jeep and Ford by five years in bringing an S.U.V. to market with mass appeal. Once it had ramped up its offerings, G.M. was reluctant to shift from big profitable vehicles to building small, less profitable cars, even when gas prices spiked.

By contrast, Ford, which also minted profits on a lineup heavy with S.U.V.’s, shifted its lineup faster to cars, although it still does not have one that can compete directly with the Fit and Yaris.

“We would have been chastised the other way if we had missed that opportunity,” said Mr. Fisher, referring to its decision to focus so many resources on producing S.U.V.’s. “Giving consumers what they want is not a bad business decision.”

Indeed, that approach worked well for G.M. for decades.

Its strategy of offering consumers an array of brands and choices, like the 70 different models across eight separate brands that it sells now, was meant to fulfill the goal set by its legendary chairman, Alfred P. Sloan, to offer a “a car for every purse and purpose.”

(The idea was meant to contrast with Henry Ford’s quip that a consumer could have any color he wanted, “as long as it’s black.”)

G.M. executives have long defended the myriad choices as necessary to defend the company’s turf in a market crowded with competition both from across town as well as overseas. Likewise, its bet was always that G.M., with its enormous marketing and research and development budget, could afford to offer such options.

Only now, in its second plea to Congress, did it acknowledge what just about every industry analyst has said for years: that G.M. has too many brands, now that its market share has fallen by nearly two-thirds from its peak in 1960 to just 22 percent today.

G.M. said last week that it would focus on just four core brands — Chevrolet, Buick, GMC and Cadillac — and sell or play down Saturn, Pontiac, Saab and Hummer.

The goal, it said in its new plan, is “to focus available resources and growth strategies on the company’s profitable operations.”

That may sound like an obvious strategy for any car company, but the automobile industry, like the aviation business, involves bets of billions of dollars that may not pay off for years, if at all.

For those willing to gamble and to follow through on their bets — like Chrysler did with minivans, like Toyota did with Prius and as Honda has done with its focus on fuel efficiency even when gas was cheap — the payoff in sales and reputation can be enormous.

But G.M., despite its tradition of fostering innovation, has often been impatient for profits to emerge.

Mr. Casesa said that pattern stemmed from the fact that so many of the company’s top executives had a background in finance, not in engineering and designing cars and trucks.

For the last half-century, virtually all of G.M.’s chief executives, including Mr. Wagoner, have come from its financial side, which has judged most initiatives based on whether they will be profitable.

That “earn it” philosophy has led to the demise of some of G.M.’s most publicized efforts to try something new, like the EV1 electric car, which G.M. leased to owners from 1996 to 1999, before killing the program as too expensive.

It also led G.M. not to introduce any new Saturn models for five years during the 1990s, effectively starving the division of new products that might have lured in new customers.

By contrast, Toyota lost money for years on Prius, which never caught on in Japan until Toyota halved its price. Likewise, Prius might have remained a cult car in the United States had gas prices remained low. But Prius sold out once prices topped $3 a gallon, and gave Toyota political cover when it introduced the big Tundra pickup truck in 2007.

Worries over profits has also stifled innovation at G.M. Engineers actually started work on minivans a decade before Chrysler popularized them in the 1980s, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., and the son of a former G.M. president, who has advised G.M. for years. But G.M.’s finance staff refused to give the go-ahead.

“They looked at it and thought, ‘Why would people need minivans if they had station wagons?’ “ Mr. Cole said. After Chrysler’s vans were a big hit, G.M. tried to capture attention in the early 1990s with a series of slope-nosed vans derided as “Dustbusters” that failed to sell well. After other attempts, General Motors stopped selling minivans this year.

G.M.’s failure to press forward with its own hybrids was a deep disappointment to Robert C. Stempel, the former chief executive who gave the go-ahead to the EV1 program during his brief tenure in the early 1990s.

“I’m furious,” Mr. Stempel said in a 2003 interview. “G.M. had the technology. The lead was there. I know it.”

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The whole system of WS and DC are run by crooks. They really are in it just to make a quick buck and scam the system until it goes broke. Union thugs, investment bankers, stock-brokers, lobbyists, congressmen, etc., they could care less about the country.

The country has fallen into the hands of the worst of the worst of humanity.

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