The government’s game of managing General Motors took another odd turn today as Ed Whitacre, the former CEO of AT&T (T), a man who know about phone lines but not assembly lines was named has chairman of the New GM, the company that the government hopes can emerge from Chapter 11.
For reasons not clear, Kent Kresa, the former CEO of Northrup Grumman (NOC), will step down.
The remainder of the board will be current members Philip Laskawy, Kathryn Marinello, Erroll Davis Jr, E. Neville Isdell and Chief Executive Officer Fritz Henderson. Ms. Marinello is head of Ceridian Corporation. Davis is the chancellor of the University System of Georgia. Isdell is the chairman of Coca-Cola (KO). In other words, none of them belong on the board of a car company and not one of them has experience with a turnaround.
Now that the Treasury has anointed these few to oversee the company, the question becomes how much money the taxpayers will have to pour into GM. Even with all of its cost cuts and reduction in debt, if the American car market continues to produce ten million sales a year, it will be hard for the No.1 US auto firm to make money.
With gas approaching $3, GM is in for another hard year.
Douglas A. McIntyre
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