William J. Holstein

The Myth of a Good GM vs. a Bad GM
April 1--It's not clear who's idea this is, but we are reading that the Obama administration is considering splitting General Motors into two parts, one a Good GM including Cadillac and Chevrolet and the other a "bad GM" that would be liquidated.

I think this must be coming from investment bankers and bankruptcy lawyers because it reflects complete ignorance of how GM is organized.

One of the most important things that Rick Wagoner achieved was unifying the company's engineering, design, procurement, manufacturing engineering and many other functions. The oldl model created by Billy Durant and Alfred Sloan of essentially separate divisions doing their own engineering, design, manufacturing and everything else was smashed under Wagoner's tenure. The different brand names now consist of a relative handful of people who are in charge of marketing the vehicles. But all other functions have been centralized.

So to talk about splitting up the company flies in the face of all logic. I had this argument last night on the Donny Deutsch show on CNBC--how do you go to a factory like the Fairfax plant in Kansas City, Kansas, where they make both the Chevrolet Malibu and Saturn Aura, and split the plant in half? The cars are going down the same assembly line. If you were to rip out Saturn, supposedly a bad part of GM, the economics and practical aspects of making the Malibu would disintegrate.

My word of advice to all of you following this issue: don't believe a word that bankruptcy lawyers say about GM. For them, pushing GM into Chapter 11 is like a wet dream--there would be hundreds of millions of dollars of fees over a period of years. The results would be devastating for GM.