A new book by White House auto czar Steven Rattner reveals that the White House was hands-on in day-to-day GM decision-making even as President Obama fibbed to the public that “our goal is to . . . take a hands-off approach, and get out quickly.”
The Washington meddling ran the gamut from personnel decisions to financing options to a veto of GM’s proposal to abandon its Detroit headquarters, Rattner discloses in Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry.
GM proposed moving out if its Detroit’s Renaissance Center HQ to its sprawling suburban tech center, arguing that the move would save money and would symbolize a commitment by top brass to be more involved in the company.
But the “hands-off” White House snuffed the idea, opting to protect Detroit — a key political constituency of the Democratic Party. “Are you out of your mind?” Rattner quoted Brian Deese, who has been heavily involved in auto policy, as saying. “Think what it would do to Detroit.”
The Detroit News has the details:
The White House even commissioned an outside analysis of the impact a move would have on Detroit property values, Rattner wrote. The answer: an estimated “double-digit hit on already deflated real estate prices.”
Leaving the RenCen “made a lot of strategic sense,” Rattner wrote. But Michigan native Gene Sperling, a U.S. Treasury Department official, was one of many who fought the idea.
“It’s over for Detroit if you do this,” Sperling yelled in a meeting, Rattner recalled. “Don’t do this to (Detroit Mayor) Dave Bing… He’s a good man trying to do a good thing.”
The request was passed up the chain to White House Chief of Staff Rahm Emanuel, “and word came down that the move would be a bridge too far,” Rattner wrote.
Another reason GM won't be making money anytime soon. Getting rid of the not very necessary HQ in Detroit would have saved some money. Fancy HQ's don't make sense in this business climate and when the company is owned by taxpayers. They just didn't like the symbolism of moving to the suburbs (like the rest of the company).
Reply to this commentLinkReport AbuseThe Fortune 100 company I work for (a storied brand named icon of the computer industry that I won't mention) has spent the better part of two decades divesting itself of properties and buildings acquired under the ancient ritual among corporate giants and conglomerates of owning "trophy real estate" because it understands that investing it's hard-earned capital into its core business functions and personnel has way more bang-for-the-buck than owning some stupid high-rise with a logo on top.
But hey, no worries, we have "government experts", aka people who have never run a business before, running GM who are hard at working learning management and business principles from 20 years ago...
Reply to this commentLinkReport AbuseI like the story, but the proof in the pudding will be whether GM does move out of Ren Cen after the dust has settled on the IPO, scheduled for November. My understanding of how the IPO is going to work is that GM will say to Uncle Sam, "Here's your 61% of the outstanding shares. Nice knowing you." In other words, once the US has received its shares, GM management will be under no further obligation whatsoever to the US. Therefore, if it really is true that GM management wants to move out of Ren Cen, it will be able to do so sometime in the near future.
I don't think this showed up on Planet Gore at the time, but in a rare spasm of objective reporting, the New York Times noted in an August 23 story that, in order for the U.S. to break even on the $43 billion outstanding balance of the GM bailout, the share price will need to be $114. Here's the link: External Link
. On the day that this story appeared, I looked up the share price of Ford Motor Company and it was about $7: about 1/16th of $114.
Reply to this commentLinkReport Abuse