One thing about flying to Europe is that it affords plenty of time for catching up on reading.
One book I finished was Steve Rattner’s “Overhaul.”
With a book like this reader always has to recognize the writer is “spinning “ history. So you would expect the Auto Task team to be portrayed as hard working brilliant whiz kids and the auto industry executives as dolts who didn’t get it.
This is true enough with Overhaul, but it does not get in the way of what turned out to be a good read.
To be sure, Sergio often comes across having the tantrums of a two year old. (Although, on balance Steve seems to admire his decisiveness and drive.) And Sheila Blair (head of the FDIC) comes across as self serving and obdurate—even by Washington standards.
Rick Wagner is portrayed as particularly out of touch. Knowing Rick just a bit, I can say this was not the case. He was an incrementalist. Having first hand experience with the devastating consequences of a strike, he really didn’t have much choice. And he would have been the first to acknowledge that GM’s culture was a huge problem. (It was Rick who brought in Bob Lutz as a visible change agent.) I do think that Rick underestimated how resistant to change the rank and file at GM were—and still are. And of course, his incremental approach was completely overwhelmed by the 2008 sales collapse.
Rick was notably opposed to bankruptcy. He—and almost everyone else in the industry assumed that a bankruptcy would be devastating.
It is not that everyone was wrong. The Auto Task force completely reframed the question. The bankruptcies of Chrysler and GM were unique in U.S. history. If the question was: “Could GM survive a presidentially backed bankruptcy, supported by the U.S. Treasury and using a novel—and aggressive—clause in the bankruptcy code” the answers might well have been quite different.
Steve is obviously very proud of the work of he and his team. On balance, I view the efforts as a success as well, but really as the best of bad answers. Steve points out he—by tapping into TARP funds—was allowed to operate outside the usual constraints of government. It gives me pause that rearranging the hierarchy of creditors, the rule of law was contorted. Plus, was this really what congress had in mind when they included the 363 clauses in U.S. bankruptcy code?
On the plus side, both GM and Chrysler were able to fundamentally restructure in a way that would have never have been possible otherwise—the results of which we are already seeing. (Although Chrysler is still a TBD.)
There are some technical misses in the book. Toyota has three brands, not two. (Toyota, Lexus and Scion.) And there is no such thing as an annual SAAR. It is a monthly sales rate. By yearend, the number is what it is.
Steve also glibly states that “every industry expert” agrees that GM and Chrysler would be more profitable with fewer dealers. This is not a point of agreement at all. Just because Toyota has fewer dealer and is profitable does not mean it is profitable because it has fewer dealers. The truth is far more complicated.
Still, the book is worth reading. Edmunds was kept busy during the period it covers with requests for background and commentary. It was interesting to read about events from the inside looking out.
Incedentally, we have an interview with Steve posted today on AutoObserver.