The end of Saturn

[tagryn]

* About ten years or so ago, I had ambitions to someday purchase a Saturn automobile; its still on my old hotlist as one of my favorite companies. The company was innovative and fresh, the antithesis of the U.S. auto industry. Unfortunately, GM slowly shaped it into just another GM division, and it was doomed by bad management. That was one lesson I took away from investing in Lucent: companies just can't overcome bad management (and there's more of that out there than not).

* It also sounds as though the auto industry is going to follow Eastern-European/Soviet-style management models:

The United Auto Workers (UAW) would own 39% of GM. The federal government would own 50%. The creditors will be shafted with just 10%. (In the Chrysler plan being discussed, labor would own 55%, making it effectively a subsidiary of the UAW.) The day after any such settlement is finalized, the clock will start ticking down to the next collective-bargaining session between a monopoly UAW and what remains of the Big Three -- though now the UAW would be sitting on both sides of the table...

In a real bankruptcy, which is the natural fate of companies unable to meet their obligations, Chrysler and GM would be run (or liquidated) for the benefit of their creditors, not their workers. But, here, "pattern bargaining" will remain the law of the Detroit jungle. The UAW will continue to use its unnaturally augmented clout to extract uncompetitive pay and benefits (it can do no other given its internal incentives). As it has for 40 years, Washington will pitch in with one improvisation after another, disguised as energy policy, trade policy, health-care policy or environmental policy, to stop the rivets from popping off. Politics, especially Democratic electoral politics, will play a more dominant role than ever. Look closely and the hidden subsidies to keep the dismal beast alive have already started flowing -- tax credits for UAW retirees to make up for reduced health-care benefits, loans to help Detroit "invest in green cars." And plenty more will be needed to sustain Obama Motors on life support, at least through the 2012 election.

Oh, that's just great. I'm sure the taxpayers will get their money's worth out of this investment, once the UAW leadership are running things. /sarcasm