CEO of GM Answers Questions Ahead of Earnings Announcement

Thursday, May 03, 2012

Transcript

Workers install doors on Chevrolet Malibu and Buick LaCross vehicles April 21, 2010 at the General Motors plant in Fairfax, Kansas. (Steve Fecht/General Motors/Getty)

Today, General Motors announces its first quarter earnings. Celeste interviews the CEO and chairman of General Motors, Dan Akerson, about how the company has fared since it was restructured by the federal government in 2009.

Dan Akerman, chairman and CEO of General Motors: This is not the first time that the American government has injected themselves into the American economy. If I asked you who is the biggest owner of commercial property in the United States 1990s, you wouldn't say the United States but it was. Savings and Loans crisis, they pumping in $394 billion dollars. Call it around $400 billion doll dollars. Not $50. $400 billion.
So it's not unusual to see governments for a short period of time inject themselves into a marketplace to stabilize it. The analogy I like to make, you remember last year when Joplin, MO had the terrible tornado or Katrina: It's in the basic DNA of Americans. We don't walk to help our fellow citizens, we sprint. This part of the country, the arsenal of democracy saved this country in many respects along with many soldiers, marines, coastguard's man. But it built the arsenal that saved Western Democracies.
And then what did we do. In the interest of international economy, international trade, we lowered our trade barriers. We lowered them in Japan, we lowered them in Germany, our mortal enemies. And they built export economies to the detriment of this part of the country. It didn't happen overnight with a hurricane or tornado: It happened over 30 years. So a million jobs were saved, that's what I say.
$150 billion it's been reported in terms of total tax revenues that would've gone by the boards had the company not been saved. And all the supply chain that would've gone with us. And then if you back off and you say, at the time we went under, or we went into bankruptcy, we had about a $25 billion pension deficit. We were the largest pension fund in the world. $134 billion. It was about $25 billion. Just in my tenure we've gotten it down to $12. Good progress but $12 billion, that's still a big number.
Celeste Headlee, host of The Takeaway: That's still a lot.
DA: But think back if we'd gone into bankruptcy and liquidated in '09. That $25 billion would've gone into the PBGC, Pension Benefit Guarantee Corporation, which is government sponsored. Footnote to that comment is, $25 billion would've bankrupted PBGC. And whose dime would that've been on? It'd have been on the taxpayers dime. That's never in the calculus. So, you know I know this is a political year and everybody wants to argue for tactical and political advantage. Again, I don't have the luxury to do that. I'm not making a political statement. I would say, let's be pragmatic about it: It worked.
And so, I think as a government, we the people — by the way, I'm a Republican.
CH: I know, it's on your Wikipedia page.
DA: I think the government does have an obligation to step up and help its people. This wasn't a giveaway. It was an investment. It was an investment from the American people.
CH: I wanted to read you a comment that Mitch Daniels, governor of Indiana, made in an interview with the BBC. He says, "Let me just make this point: The reason I remain uncomfortable [with the bailout] is because we lost more jobs in the recreational vehicle industry, for example, in this state than were threatened at GM and Chrysler. No one offered to spend hundreds of thousands per worker on them. How was I to tell those people, 'your job is not worth as much because you're not as politically connected as the people at those two companies.'" How do you respond to that?
DA: I don't want to debate that with the governor because maybe they should have. I won't argue that. But I know there were a million people at stake here across many state lines, including Indiana. We have plants in Indiana too. And it would've, at a time when the country was coming, potentially to an ugly outcome — think of the timeframe, '09, there was no money, there was no money put at risk. So when people say, it should've been saved in another way, it should've gone through a bankruptcy controlled bankruptcy. I was in private equity. I was managing many buyouts, where you do a big buyout of corporations with a portfolio of $50-$100 billion. There was no way you could've gotten me to put a billion dollars into this thing without the restructuring that was really mandated by the government. I don't want to get into the politics of comparing my situation to somoene else's. This was good. 
CH: And yet you're stuck in politics. Just recently Joe Biden said, "GM is alive, bin Laden is dead." Your company has become part of the politic discourse and it will probably be moreso as we get closer to the presidential election. Does that hurt or help GM? 
DA: I don't know, I think most people have gotten past it. OF course it's a political year, it's come up. Gee, wasn't there a time when Chrysler was saved back in the 80s? I don't remember things being quite as divisive as they were now. Again, I'm not a politician. I'm not that quick, smart, on an interview like this. But I will say, I know it worked. I know jobs were saved. And I'll tell you what. Go back to the arsenal of democracy? Great coutnries do 2 things really well. They make things. They manufacture and create value. They also grow things. This country's blessed with a great manufacturing base and a great agricultural base. To have forgone it by years of mismanagement, maybe by management or the union or both? Now we've got a 2nd chance. We don't deserve a 3rd. We've got to get it right this time or we don't get it in my opinion.
And it's been saved. It's controversial. But you know, I've got a hand, I picked up a hand, this management team picked up a hand and we could've failed and we're not gonna fail. 
CH: Dan Akerson, chairman and CEO of General Motors, thank you.
DA: Thank you.

 

 

Dan Akerson, chairman and CEO of General Motors: This is not the first time that the American government has injected themselves into the American economy. If I asked you who is the biggest owner of commercial property in the United States 1990s, you wouldn't say the United States but it was. Savings and Loans crisis, they pumping in $394 billion dollars. Call it around $400 billion doll dollars. Not $50. $400 billion.

So it's not unusual to see governments for a short period of time inject themselves into a marketplace to stabilize it. The analogy I like to make, you remember last year when Joplin, MO had the terrible tornado or Katrina: It's in the basic DNA of Americans. We don't walk to help our fellow citizens, we sprint. This part of the country, the arsenal of democracy saved this country in many respects along with many soldiers, marines, coastguard's man. But it built the arsenal that saved Western Democracies.

And then what did we do. In the interest of international economy, international trade, we lowered our trade barriers. We lowered them in Japan, we lowered them in Germany, our mortal enemies. And they built export economies to the detriment of this part of the country. It didn't happen overnight with a hurricane or tornado: It happened over 30 years. So a million jobs were saved, that's what I say.

$150 billion it's been reported in terms of total tax revenues that would've gone by the boards had the company not been saved. And all the supply chain that would've gone with us. And then if you back off and you say, at the time we went under, or we went into bankruptcy, we had about a $25 billion pension deficit. We were the largest pension fund in the world. $134 billion. It was about $25 billion. Just in my tenure we've gotten it down to $12. Good progress but $12 billion, that's still a big number.

Celeste Headlee, host of The Takeaway: That's still a lot.

But think back if we'd gone into bankruptcy and liquidated in '09. That $25 billion would've gone into the PBGC, Pension Benefit Guarantee Corporation, which is government sponsored. Footnote to that comment is, $25 billion would've bankrupted PBGC. And whose dime would that've been on? It'd have been on the taxpayers dime. That's never in the calculus. So, you know I know this is a political year and everybody wants to argue for tactical and political advantage. Again, I don't have the luxury to do that. I'm not making a political statement. I would say, let's be pragmatic about it: It worked.

And so, I think as a government, we the people — by the way, I'm a Republican.

I know, it's on your Wikipedia page.

I think the government does have an obligation to step up and help its people. This wasn't a giveaway. It was an investment. It was an investment from the American people.

I wanted to read you a comment that Mitch Daniels, governor of Indiana, made in an interview with the BBC. He says, "Let me just make this point: The reason I remain uncomfortable [with the bailout] is because we lost more jobs in the recreational vehicle industry, for example, in this state than were threatened at GM and Chrysler. No one offered to spend hundreds of thousands per worker on them. How was I to tell those people, 'your job is not worth as much because you're not as politically connected as the people at those two companies.'" How do you respond to that?

I don't want to debate that with the governor because maybe they should have. I won't argue that. But I know there were a million people at stake here across many state lines, including Indiana. We have plants in Indiana too. And it would've, at a time when the country was coming, potentially to an ugly outcome — think of the timeframe, '09, there was no money, there was no money put at risk. So when people say, it should've been saved in another way, it should've gone through a bankruptcy controlled bankruptcy. I was in private equity. I was managing many buyouts, where you do a big buyout of corporations with a portfolio of $50-$100 billion. There was no way you could've gotten me to put a billion dollars into this thing without the restructuring that was really mandated by the government. I don't want to get into the politics of comparing my situation to somoene else's. This was good.

And yet you're stuck in politics. Just recently Joe Biden said, "GM is alive, bin Laden is dead." Your company has become part of the politic discourse and it will probably be moreso as we get closer to the presidential election. Does that hurt or help GM?

I don't know, I think most people have gotten past it. Of course it's a political year, it's come up. Gee, wasn't there a time when Chrysler was saved back in the 80s? I don't remember things being quite as divisive as they were now. Again, I'm not a politician. I'm not that quick, smart, on an interview like this. But I will say, I know it worked. I know jobs were saved. And I'll tell you what. Go back to the arsenal of democracy? Great countries do two things really well. They make things. They manufacture and create value. They also grow things. This country's blessed with a great manufacturing base and a great agricultural base. To have forgone it by years of mismanagement, maybe by management or the union or both? Now we've got a 2nd chance. We don't deserve a 3rd. We've got to get it right this time or we don't get it in my opinion.

And it's been saved. It's controversial. But you know, I've got a hand, I picked up a hand, this management team picked up a hand and we could've failed and we're not gonna fail.

Dan Akerson, chairman and CEO of General Motors, thank you.

Thank you.

 

 

Guests:

Dan Akerson

Produced by:

Jillian Weinberger

Comments [6]

Charles

We should be careful about our claims, Claire. I never claimed that "killing Obama was a Republican idea." As of September 12, 2001, I think every American had the idea of killing bin Laden. But as former CIA director Michael Mukasey has pointed out, the process of finding bin Laden to kill him was a long one, involving many hardworking and self-sacrificing Americans in all sectors of national security.

My point was that in campaigning for the Presidency, Barack Obama and his fellow Democrats regarded the Bush Administration's conduct of the war on terror as having been quasi-criminal. The fact was, however, that Obama relied on the same Executive power to order special forces operators to put a bullet through the head of bin Laden, as had the Bush Administration to use harsh interrogation techniques against bin Laden's senior lieutenants, in order to find him in the first place.

There has been some gallingly naked partisanship surounding the killing of bin Laden; that partisanship has manifested itself in the Obama Campaign's organized publicity extravaganza: an interview with Brian Williams in the Situation Room; leaks of operational details to Time magazine; a shameless campaign ad; Joe Biden debuting the new slogan; et cetera, et cetera.

And about a health care mandate, Claire: I think it is clearly within the power of states to have such a mandate. And that it is clearly not within the "commerce clause" power of the federal government to enforce such a mandate. Because the Democrats knew that they could never pass ObamaCare as a "Tax," they played fast and loose with the Constitution, adn tried to pretend it was something else. Which is bad for the country, and bad for the Constitution.

The really nice thing about state-level health care reform is that states like Massachusetts can't spend money that they don't have. Which is an awfully good way to think about health care expenditures.

May. 03 2012 09:40 AM
claire from Detroit

Very interesting interview. It was helpful to hear the current CEO's take on the underpinnings of why it was justified for americans to help his company out of dire financial problems. My take is that they were just too big to fail and their was a possibility in a government structured bailout for GM to make cars as if americas future mattered to them. So far the jury is still out on whether we taxpayers will get a company that cares about the social fabric of our country or just go back to making poor quality cars that hurt the long term economy and the environment. Obama's approach has worked so far, though it is too early to claim it as a total success. interesting that some claim this success is like the Bin Laden killing, implementing a Republican idea. I suppose it is like Obama's big accomplishment in health care reform, the individual mandate is indisputably a Republican idea and one the Mitt Romney supported.

May. 03 2012 08:45 AM

Ms. Headlee doesn't ask those kinds of questions. Mr. Akerson is a weasel- to start prating on about 'the arsenal of democracy' is nauseating. At the same time-'...governments inject themselves...'- Taking away our freedoms!! Chrysler's bailout IS #2. The taxpayer paid, for example, for the Humvees, #1, then (smaller) #2, then the Mini (girlie-man) model- what a great investment! And commenter 'Charles' ? Thanks for the Republican boiler-plate- we'll look for you and Joe the Plumber over at Schwarzenegger's coop- he did such a great Republican job in Cali. What you people don't have the guts to admit is- you lied and screwed up The Money and the wars (that you started- in your Humvees). Now GM celebrates, with Akerson leading the parade, selling record amounts of American junk to the soon-to-be-polluted-out-of-existence, car-jammed Chinese. We bailed out GM so they can sell Buicks to China. This is Mitt (my-grandad-moved-to-Mexico-for-that-Celestial-pubescent-fuzzlove) Romney's "advice"- his Plan. Disgraceful.

May. 03 2012 08:26 AM
kimi from nj

What is mr. Akerson talking about? We as americans sprint to those in need? How could he possibly use the example of the victims of hurricane katrina? And how did ms. Hedley not point out the strangeness of using this as an example of a time when the govt *sprinted* to the assistance of americans?

May. 03 2012 08:23 AM
Charles

Some better questions, that Celeste Headlee didn't ask:

~ Long before GM's bankruptcy filing in mid-2010, Michigan's then-governor Jennifer Granholm stood with the President of the UAW and several Democrat members of the Michigan Congressional delegation, and told the nation that a bankrupt automaker could never survive. She was wrong, of course, as we now clearly know. How was the bankruptcy process essential to GM's survival?

~ Chevy Volt production is currently shut down. While the vehicle itself has earned praise, the market is clearly not welcoming the vehicle. What lesson(s) is GM taking away from the current production shutdown?

~ The Obama Administration has set some new CAFE standards for implementation around 2025. Do you agree with those standards? If so, can you say that GM will meet them? If so, how? What sort of vehicle choices can GM offer to its customers in a CAFE-compliant fleet? And what will those vehicles cost? Did you suggest different CAFE standards to the Obama Administration, and was your advice accepted?

May. 03 2012 07:49 AM
Charles

Akerson says: "But think back if we'd gone into bankruptcy and liquidated in '09."

Who, in 2009, seriously suggested liquidating GM in a bankruptcy? Certainly not Mitt Romney, who rather specifically outlined using bankruptcy to restructure the company.

Which is precisely what happened in mid-2010.

Mr. Akerson, you say you are a Republican; whatever. Know this; you are being used. You are being used to promote Part Two of this week's Obama Reelection Tour. The theme is "bin Laden is dead, and GM is alive." And it is such a perverse, corrupt theme. Bin Laden is dead because Barack Obama agreed to the plan to assasinate him. And I distinctly recall Obama running for office on the notion that his administration would end waterboarding!

GM is alive. At least the new, post-bankruptcy GM is alive. Because, again, the Obama Administration accepted what had been the good advice of Mitt Romney from 2009; to take GM through a managed bankruptcy.

There are very few successes from the first four years of Obama. The two exceptions -- the assassination of bin Laden and the managed bankruptcy of GM -- occurred because Obama pursued policies that Republicans had advocated before he took office.

May. 03 2012 07:33 AM

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