General Motors: new and improved?

Amanda Carey Contributor
Font Size:

“I’m not saying show us some love,” said Greg Martin, director of policy and Washington communications at General Motors, “but recognize that we made the hard, difficult decisions both in the boardroom and on the assembly line to get this business on sound market principles to run it.”

Sitting in a coffee shop in downtown Washington, D.C. on a dreary, unseasonably cold spring day, Martin was talking about the $50 billion bailout GM received from the federal government in 2009 to “get our house in order.”

“We’re doing our best to pay it back,” he told The Daily Caller.

The difficult part will be convincing American taxpayers he’s serious.

When President Obama announced in March 2009, that his administration was effectively taking over GM, investing taxpayer dollars to prop up a company on the verge of bankruptcy, and simultaneously firing its chief executive, Rich Wagoner, conservatives howled at the breach of the free-market system.

GM became “Government Motors,” and an organic, national resistance of GM vehicles swept the nation, even causing one prominent figure to call on Americans to “just say no to Obamacars.”

Now it’s two years later and GM wants to remake its image and let consumers know it is, and has been, willing to atone for previous sins.

When the retail market for domestic cars was established in the post-World War II era, GM was the linchpin of American manufacturers. So what happened between the 1950s and today? According to Martin, it was a combination of contentious labor relationships that resulted in short-sighted contracts, gas crunches and the influx of foreign cars that were not only better made, but were also more fuel efficient.

“The labor relations were in such a sorry state that it really did manifest itself in the build quality of the cars,” Martin told TheDC. “And certainly having the shock of taking what are historically big vehicles and all of a sudden having to downsize within a short period to respond to the gas crisis certainly didn’t help.”

But it was the contracts GM signed with the United Auto Workers (UAW) union that Martin really zeroed in on. The last contract before the bailout, he pointed out, stated that if a GM employee worked for 30 years, he or she could retire with close to full pay and full benefits. “I mean, can you imagine that? A lot of these people joined GM out of high school!” exclaimed Martin.

Despite GM’s attempt at a drastic turnaround, many still believe that not only should the company have been allowed to go bankrupt in 2009, but should still be punished because recent business decisions aren’t passing basic sniff tests.

And for the most ardent critics, those failures start at the top with the Treasury Department’s pick of Daniel Akerson in 2010 to be the new CEO to help represent its 60 percent share of GM stock. Almost immediately, the choice was criticized. “New GM chief Daniel Akerson not usual ‘car guy,’” read one headline from a national newspaper.

“There’s a rap on Akerson and some others that somehow they’re not car guys,” said Martin. “We have car guys where they should be. We have car guys engineering our cars. We have car guys building our cars.”

More recently, a Washington Times report accused GM of lobbying for a second dose of the Cash for Clunker program by way of a bill introduced by Democratic Senator Debbie Stabenow from Michigan that would turn a $7,500 tax credit into an instant rebate.

“We don’t make apologies for the tax credit,” Martin told TheDC. “It’s the same tax credit that the [Nissan] Leaf gets.”

If the bill were to become law, though, instead of getting tax credits, Volt buyers would be given a direct rebate at the point of sale. With GM money that presumably came from taxpayers.

Aside from the tax credit, the Volt itself is a sticking point with many GM critics, who argue the battery-powered vehicle is too expensive and exists solely because of the good graces of those who run the Department of Energy’s (DOE) grant system and willing customers like General Electric. Okay, maybe just General Electric.

Moreover, the facts that President Obama is dead set on having 1 million electric cars on the road by 2015, and that a recent DOE report suggested GM could supply nearly half of those cars, are only adding fuel to fire.

But maybe those critics aren’t looking deep enough.

“That’s a pretty thorough and ambitious goal,” said Martin when asked if Obama’s goal is a realistic one. Does GM have a strategy to work with the administration to reach the 1 million mark? Again, a solid “No.”

At least as far as the Volt is concerned, explained Martin, its underwhelming sales numbers have a lot to do with the fact that it’s a new vehicle, there still is not an adequate infrastructure in place for the advanced battery, and the technology is only scalable to a certain point. That means that any GM-manufactured electric car will be a small car “with a technology that comes with a price.” Not exactly the apple of the soccer mom’s eye.

But these days, GM is all about moving forward. According to their own figures, the company is doing quite well. They brought in $135.6 billion net revenue in 2010, have had four consecutive quarters of profitability, recently had a $32.1 billion IPO, and is considered the fastest growing major and luxury auto brand in the U.S.

The company is still about 4 million units off their record number of units sold – 17 million –right before the financial collapse, but they’re on track. They’re also ready for the federal government to sell off its remaining 30 percent of shares, which will likely happen before the 2012 election.

And a rarely-discussed fact about GM’s leadership is that most of them are politically right of center. Akerson, in fact, was one of John McCain’s largest supporters in 2008. And Bob Ferguson, Vice President of Government Relations, is the former Chief of Staff of John Ashcroft.

I think that at the end of the day, they’re [US Treasury] going to get close to getting every dime back,” said Martin. “We want them to get every dime back. We’re running the business so they can get every dime back. We’re determined just to keep progress going.”

“It’s really been an interesting last couple of years,” he added.