As an auto analyst, I have seen GM slowly going bankrupt for years and yet under Wagoner given the contraints he had to deal with fix the company until it was too late. This is automotive and cash goes out the window FAST when production stops which is what happened in 2008.

Within reason, Wagoner’s only real option was to fix the company without pulling the trigger and filing for bankruptcy which would have cleaned up its balance sheet. The way I see it, you are trolling on message boards, taking credit for the job Wagoner did for you. If Wagoner did not get the reorg of the company going starting in the early 2000s, bringing in Lutz to get the product in the pipeline, and the 2007 contract settled to lower the labor cost GM would look like Chrysler right now. GM blew through billions in cash during the reorg because they bought out almost all their UAW staff. The $80b lost under Wagoner is over blown because app. 50% off the top of my head was on paper.

What save GM post bankruptcy was product. Is GM a better company today because of the balance sheet clean up – YES. But cleaning up the balance sheet is the easy part and that is what you did. The hard part was done before you walked into the situation – everything else. GM had a good team running the company. The balance sheet is cleaned up but what talent was lost?

In my opinion, I think GM will make money for the government and ultimately BK was the right move. But, I am calling your contribution to GM’s restructuing as overblown.

http://nycpublicschoolparents.blogspot.com/2010/10/comptroller-di-napoli-and-harry-wilson.html

A couple of weeks ago, Bloomberg and Sulzberger were the two co-hosts of Rattner’s book party, which was attended by the financial and power elite of NYC, including the head of Goldman Sachs, JP Morgan, Joel Klein etc. This very public celebration of Rattner and his accomplishments occurred just as Rattner was pleading guilty to a “pay to play” kick-back scheme of bribing the former State Comptroller to grant Quadrangle, Rattner’s investment company, millions in state pension funds to invest in 2004 when Hevesi was Comptroller.

Rattner paid $1.1 million in finder fees to Henry “Hank” Morris, Hevesi’s former chief political consultant, and he also agreed that Quadrangle would help finance a B-movie made by the brother of the pension fund manager. Rattner first claimed he had nothing to do with this B-movie deal, but emails apparently reveal that he helped put it together. As a result, he has agreed to pay a fine of $5 million and accept a ban from the securities industry for at least five years. He could also face perjury charges for lying about his involvement in the bribery scheme.

I agree with some of this but remember that all labor costs — including health care — only amount to 7% of the cost of a car.

Healthcare is not a part of the cost of labor.

Healthcare is accounted as a fixed expense.

Bob Williamson, an expert in manufacturing capacity-planning says labor accounts for 10% of the cost of manufacturing an automobile, and that healthcare is on top of that.

What about labor cost? Industry experts estimate that the labor cost accounts for about 10% of the cost of manufacturing and about 5% of the manufacturer’s suggested retail sales price (MSRP) of a vehicle. Roughly speaking, here, per industry insiders, are the auto manufacturing cost contributors to MSRP, highest to lowest: The number one cost is materials. Fixed costs (depreciation, R&D, pensions, health care, advertising and overhead) rank second. The third highest cost—dealer markup—is followed by number four—assembly labor and manufacturing costs. Fifth in line is price discounts and promotions. Sixth is transportation and warranty, followed by profit per vehicle at seventh.

You say 7%, which includes healthcare.

When I have the choice between the numbers offered by an industry expert, and those quoted by a financial guru from the media empire, the choice is easy.

Why would anybody appoint a big media finance guy to oversee the bailout of the auto industry?

Maybe because Washington though it might just take the whole of big media to sell such a colossal piece of BS to the American people.

The auto industry, like the financial industry, got off the reservation so to speak, GM management under funded it’s contractual obligations to employee’s healthcare fund and it lied about it’s tax bill in order to report higher profits and so ‘earn’ higher bonuses.

GM management, like any number of embezzlers, either thought they’d just pay back the healthcare fund and the taxman next year and it would be just fine, or they did not care.

Or maybe they thought they might find a generous sugar daddy to loan them $52 billion someday soon?

What do you do with an asset like GM’s manufacturing system when it’s out lived its purpose and you plan to replace it anyway with new plants overseas?

A certain kind of people leverage it to the hilt, loot it, and burn it down just prior to leaving town for good.

Sorry if this sounds harsh.

Suitably matched, host & guest, as always Bev, just superb.