GM "bailout" and the buggy whip syndrome...

Good God, what year is it? 1908?

GM is peddling fast to make a comeback from the brink of extinction. In the case of the auto manufacturer, the problem hasn’t necessarily been superior foreign competition. GM has been struggling out from under the weight of a “buggy-whip maker” syndrome, a syndrome that GM itself participated in at the turn of the century, when the auto industry began to displace entrenched, horse-drawn craft. When your product, no matter how good,is no longer found to be useful, it’s time to get off the track before the innovative express flattens you. If you’re a buggy-whip maker, you can have a legendary history (GM does) and a line of products unsurpassed by others (GM does), but excellence isn’t going to save car dealers.

You might have expected that the company that invented heavy-duty manufacturing and decentralized financial management, would have been faster to rethink,retool, and reinvent itself, but progress has been slow and more painful than expected. You can now choose from among a line of GM cars and trucks, with a few "experimental" flex fuel trinkets thrown in as an afterthought, OR choose a more robust car from Honda or Toyota (and others on the way) that offers the same (or better quality) for less cash, and straight-up H2 or electric vehicles already in the pipeline.

There already IS a bailout system in this country - it's called Chapter 11 bankruptcy. GM won't go away, and a draconian purge of the current (mis) management team wil be the kind of caustic medicine needed to kick the alternative energy revolution in the ass... and serve notice to the other automakers. Tom Friedman has got this right in his NYT op-ed: the Wall Street Journal said on Monday by Paul Ingrassia, a former Detroit bureau chief for that paper.

“In return for any direct government aid,” he wrote, “the board and the management [of G.M.] should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp G.M. with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company ... Giving G.M. a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake.”

I would add other conditions: Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol.

Let 'em die on the vine, then rise from the ashes.