Happy Belated Birthday to my niece Rosie. She's 8. I'm going to try not to miss peoples' birthdays anymore. David Brooks probably has a secretary that does that for him.
The Quagmire Ahead
On Jan. 21, 1988, a General Motors executive named Elmer Johnson wrote a brave and prophetic memo. Its main point was contained in this sentence: “We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute.”
Well, Mr. Photo-stuck-from-nineteen-mid-eighties, I don't necessarily believe your analysis that the brave new prophetic memo you refer to was thrust mainly thus so as you say in this sentence: "We have vastly underestimated how deeply ingrained are the organizational and cultural rigidities that hamper our ability to execute." I've seen office space enough times to know that the "company" doesn't always "execute" in such a way that the organizational and cultural rigidities (also known as "people") respond so well. Perhaps you should "enact" or "lead" where "executing" seems to have caused hampering.
Oh, and some perspective on the quotee here, from NYTimes in 1987: About a year after Mr. Johnson joined G.M., he was given the added responsibility of managing personnel operations, a position he still holds today as head of both the operating and the public affairs staffs. In that role, he has overseen the company's critical effort to thin its white-collar ranks by 25 percent by 1990.
So he was Roger's henchman for downsizing around the time computers and e-mails started filling many formerly human niches. Not saying this process was unnecessary, just remember that's who we're talking about here: Corporate Lawyer, handpicked of Mr. Job-exported-thank-you-very-fuck-you-much-Roger B. Smith. So maybe he's a little bit more into wall street than labor unions.
On Jan. 26, 2009, exactly 21 years and five days later, which is significant... uhhmm,,,Rob Kleinbaum, a former G.M. employee and consultant, wrote his own memo. Kleinbaum’s argument was eerily similar: “It is apparent that unless G.M.’s culture is fundamentally changed, especially in North America, its true heart, G.M. will likely be back at the public trough again and again.”
eerie that both CEO's used the word CULTURE, and that both were in charge of G.M. in a time when the companies were undergoing huge cost cutting pushes from the shareholders. Oh, wait, this second guy wasn't a CEO, he was just a former employee and consultant. Oh, I get it, you're just using these two quotes to get at the heart of what you're about to tell us about - DAVID BROOKS's ETERNAL THESIS: LABOR UNIONS = BAD, AND GOVERNMENT = BAD.
These two memos, written by men devoted to the company, get to the heart of G.M.’s problems. Bureaucratic restructuring won’t fix the company. Clever financing schemes won’t fix the company. G.M.’s core problem is its corporate and workplace culture — the unquantifiable but essential attitudes, mind-sets and relationship patterns that are passed down, year after year.
No one suggested that bureaucratic restructuring alone will solve any problems, though for any comprehensive plan, bureaucratic restructuring would have to be the first step - unless we intervened just to keep everything the same (but you argue against that later, so I guess we'll just move on). Clever financing schemes won't fix the company, but clever financing schemes from executive branch clever financing squads may be able to save the taxpayers money, and since that is your cheif complaint of Government, I'd think you'd be more on board with the clever financing schemes we can apply to G.M. - isn't that what all you business types want out of life anyway? Clever financing schemes that increase the wealth gap? Oh, nevermind, we're talking about middle class jobs here, so I guess that's...yeah, that's just social welfare really. Funny how only the rich seem to be immune from social welfare, and yet their entire historically unprecedented richness comes from all the rest of society. Weird.
G.M.'s core problem is: competetive imports, health care costs, a long tradition of fucking it's employees (which of course we have Michael Moore to thank for showing us that freak show), a lobbying arm which has thrown uncounted billions into the U.S. government to buy: i) easier emmissions standards, ii) tax breaks for S.U.V.'s, iii) deregulation and corporate welfare wherever possible, and iv) the kicker: trade deals like NAFTA which really make the Unions look bad since the company can now pay a legion of less than minimum wages in lieu of putting blue collar families into G.M. auto lots and those same car driving kids to college.
Over the last five decades, this company has progressively lost touch with car buyers, especially the educated car buyers who flock to European and Japanese brands. Over five decades, this company has tolerated labor practices that seem insane to outsiders. Over these decades, it has tolerated bureaucratic structures that repel top talent. It has evaded the relentless quality focus that has helped companies like Toyota prosper.
True. False. True (with caveats). True. The false is the "labor practices that seem insane to outsiders" which is oddly the most specific arguement (and I would argue is certainly the between-the-lines thesis of this whole article). I'm not up on G.M. labor history, but I'm pretty sure the outsiders Mr. Brooks-Square-Pants is referring to are people who think that organized labor is the sole cause of everything profit-taking. In some sense they're right: unions to reduce profits for corporations. This is why corporations do everything they can pay for legally (and sometimes not so much) to restrict unions. David Brooks is obviously implying that organized labor has become it's own downfall. I'd say this is a grandiose thesis to defend, and even if it were true, I'd say: if the citizens of the midwest saw fit to prevent conditions they experienced in dangerous, exploitive factories where children were burned to keep their mothers warm while working through the night (I made that last part up to exersice recipricol negative imagry counteracting Mr. Brooks' hyperbole), then so be it. I understand that the logical conclusion of the bean counter is that if labor does anything to make itself more expensive, then the mighty capitalist nation suffers. In rebuttal: if organized labor hadn't intervened, we'd all be working on Sunday instead of reading the NYTimes, let alone having the ability to find a bit of stability in this world. Villainizing the unions just keeps people looking in the wrong direction for real solutions.
As a result, G.M. has steadily lost U.S. market share, from 54 to 19 percent. Consumer Reports now recommends 70 percent of Ford’s vehicles, but only 19 percent of G.M.’s.
And that's the union's fault how? Doesn't Ford have one of those union thingy's too?
The problems have not gone unrecognized and heroic measures have been undertaken, but technocratic reforms from within have not changed the culture. Technocratic reforms from Washington won’t either. For the elemental facts about the Obama restructuring plan are these: Bureaucratically, the plan is smart. Financially, it is tough-minded. But when it comes to the corporate culture that is at the core of G.M.’s woes, the Obama approach is strangely oblivious. The Obama plan won’t revolutionize G.M.’s corporate culture. It could make things worse.
Well, since I didn't buy your "culture is the problem" opinion from before, I'll just say to this: what I'd like G.M. to do is make good affordable cars that people want to buy, whether the culture changes or not is immaterial. If by "culture" you mean the corporate culture that has kept G.M. thinking only of Wall Street and abso-stinkin'-nothing about Main Street for the past few decades, well then, I'd say restructuring the bureacracy and finances of G.M. is probably the best place to start. Next we'll get the retirees and current employees national healthcare (sticker prices drop a couple thou.) and then we'll get what factories are left in the U.S. to buy domestic products (keeping other critical American industries afloat in hard times so we don't lose them forever) to produce cars that Americans want to buy and drive (affordable, reliable, easy to repair, and maybe not 20% bigger than the model from five years ago, as a start). Oh, and G.M. gets to quit being involved in high-profile racing and sporting events, focus on long-term sustainable investments, and the best part is, they'll be a car company again, instead of a derivative trading credit giant! Hooray for the U.S. auto industry!
First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors. But the Obama plan rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure.
First, the Obama plan will increase the influence of patriotic and progressive thinking insiders. I know insider is kind of a dirty word, but in this case, insiders means people who actually do the car making, the policymakers of the most powerful country on the planet (oft-villainized bureaucrats), and executive consultation of the highest caliber. The best place for fresh thinking, contrary to your statement is not going to come from outside Wall Street investors. When the air is tainted with the heavy breathing of derivative traders and outsourcers, it's just not so fresh, m'kay? G.M. is a pariah on Wall Street because Wall Street is lined like a rich uterine wall with bloodthirsty capitalists who've found strong footholds in the G.O.P. and Democratic party alike for busting unions and increasing the percentage of profits they get to keep every year. If G.M. is a pariah at an Ebenezer Scrooge convention, I'm not too worried. Say farewell to a potentially powerful source of external commercial pressure to turn a U.S. auto company into a multinational auto company brought to you by Dubai, Mexico Maquilladoras, and South East Asian Parts Suppliers. I'm not xenophobic, but I draw the line at the Corvette.
Second, the Obama plan entrenches the ancien régime. The old C.E.O. is gone, but he’s been replaced by a veteran insider and similar executive coterie. Meanwhile, the U.A.W. has been given a bigger leadership role. This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50. This is not an organization that represents fundamental cultural change.
If Obama had brought in a whole bushel of new management, you'd be screaming about that instead. Meanwhile, the U.A.W. has nearly collapsed and is putting all their eggs in the basket of this dying company to pin their hopes and homes and dreams on. If this union can really get job banks where employees get paid for doing nothing, then I bet they have the ability to champion retirement at 55 or 60 (now that people are living longer, unlike when the union championed that right - which police officers, military personell, and a whole lot of other industries offer - if you start young, you only need so many years in before you can collect and I get it, maybe this is one of the union's least favorable ideas during an economic recession - it sure looked great when everything was booming though didn't it). This is not an organization that represents fundamental cultural change - this is an organization that represents it's fundamental culture to enact changes that keep auto workers employed and livin' the dream.
Third, the Obama approach reduces the fear that impels change. The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.
Third, the Obama does not use the dark side of the force to bring change to the Republic! If it is political suicide to pull the plug on the company, then really most of that damage has been done already - and Obama's still popular! So guess what - nngghaa! Wrong. The U.S. government, if it attaches by vein into G.M.'s plug, will likely reserve the right to liquidate any current managers who seem to be really screwing up. If anything I thought you'd argue that fear of losing their jobs would keep whatever you define as "top talent" from ever working for G.M. and thereby guaranteeing it's mediocrity. There have always been federal subsidies for the auto industry; it's just when people started listening to David Brooks and company did the government start giving tax breaks to horrifically gas guzzling S.U.V.'s to drive up the domestic price of gas that federal subsidies became truly destructive.
Fourth, the Obama plan dilutes the company’s focus. Instead of thinking obsessively about profitability and quality, G.M. will also have to meet the administration’s environmental goals. There is no evidence G.M. is good at building the sort of small cars the administration demands. There is no evidence that there is a large American market for these cars. But G.M. now has to serve two masters, the market and the administration’s policy goals.
What does that mean - "dilutes the company's focus"? WTF?! The administration isn't going to pump green technologies into G.M. turning it into some Cap-and-Trade Frankenstein! G.M. has a bunch of small cars, and big cars, and every single one of them would sell better if they used less gasoline. Less gasoline = better environmental quality = profitability. I understand that business isn't that simple, but it isn't a whole lot more complicated than that either. They don't just have to make the electric Obamaton Scooter model. They could still make Camero's for Highway patrol offices, and all kinds of GM fleet and commercial vehicles. Maybe they could serve one less master than before: the stockholders that pushed leadership to create a failed company.
Fifth, G.M.’s executives and unions now have an incentive to see Washington as a prime revenue center. Already, the union has successfully lobbied to move production centers back from overseas. Already, the company has successfully sought to restrict the import of cars that might compete with G.M. brands. In the years ahead, G.M.’s management will have a strong incentive to spend time in Washington, urging the company’s owner, the federal government, to issue laws to help it against Ford and Honda.
Fifth, every company has incentive to try and get money from the Government and that will never change. Company's care about profit, and really this point is designed to make you forget that companies pay lobbyists to get money from the government, not the other way around. If Obama has one lick of sense, he'll begin sweeping lobbying reform in his second year by using G.M. as a model; get the money out of Washington and back into the heartland for god's sake. Production centers back to U.S. - good. Restrict imports, also good, although it would be nice to see all those desirable eco-friendly G.M. cars that are already sold in Europe to be also sold here. And, in closing, if the U.S. government ever makes a law to help G.M. over Ford, I'll eat my hat. You've crossed the line this time Mr. Brooks-n-Beans - I'm takin' you for a one way trip on the fallacy-train buddy! This last statement about Ford and Honda is so silly, I worry I may spill red ink on my keyboard while laughing!
Sixth, the new plan will create an ever-thickening set of relationships between G.M.’s new owners — in government, management and unions. These thickening bonds between public and private bureaucrats will fundamentally alter the corporate culture, and not for the better. Members of Congress are also getting more involved in the company they own, and will have their own quaint impact.
Sixth, creating relationships between formerly robotic institutions is one of the innovative ways that Mr. Obama has set about solving some of our problems. These thickening bonds between public and private stakeholders (who happen to work in offices much of the time) will fundamentally alter the corporate culture, and they certainly can't do any worse than putting auto-factories in foreign countries, losing market share and consumer confidence while doing nothing substantial about it, and going bankrupt, just when the American Dream and our American Identity could have used a little old fashioned Chevy dependability.
The end result is that Mr. Brooks has become more like unsuccessful intellectuals. If G.M. is to become more like Toyota, I heartily disagree that creating partnerships between Government, Workers, and Stockholders will block that coup (coupe?). Instead, America's method of ballsy investment and go-getting-never-give-up-ness will hopefully prevail. An overconfident government does throw itself into a sometimes dysfunctional culture it doesn't really understand - fortunately the U.A.W. is a soft forgiving mistress who has substantial staying power, so once the Government gets the rhythm right, she should be churning out cars, wages, and profits again in no time. There doesn't need to be an exit strategy Mr.End-it-blandly-Brooks; this is our freaking country and we're not planning on exiting it any time soon (to counter your rhetorical thrust there), and furthermore (to address your literal concerns) I'd be happy to see a U.S. government owned school bus, mail truck, light-rail car, and public service and utility vehicle factory. If all our other industries fail because of poor management like your heavily conservative croney buddies advocated for (and still are), it would be nice to know our kids can still get to school - even if we have to switch to natural gas next year because of revolutions in the Middle East (which we would have helped cause, if history is any indicator).
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