web analytics
Your Independent Alternative!

Rising From the Wreckage, Looking to the Future

After decades wed to an industry that delivered comfort and security for sweat and smarts, thousands of people in Michigan have been forced to find a new path.

From the wreckage of a collapse that culminated in the bankruptcy of General Motors and Chrysler, a few flickers of hope have emerged. For the first time in two years, more people are finding work than losing it in Michigan. And entrepreneurial sparks are starting to fly from new ideas as the state seeks to boost alternative energy, advanced technology and movie making.

It's a deep trench to fill. Michigan has led the nation in unemployment since May 2004. In the past 18 months, the ranks of the officially unemployed have swelled by 310,000 to 713,000, and a larger number have stopped looking for work. Food banks and homeless shelters in the Detroit area report record numbers of people seeking help for the first time.

The state's auto industry still employs 120,000 workers, a level that's held steady since June thanks to the sales boom fed by the government's Cash for Clunkers program. But it's also down 42,000 jobs from a year ago.

Many people are still searching for a future or figuring out how to make their own opportunities after years of receiving steady paychecks and good benefits.

Just as Michigan led the nation in prosperity for much of the last century, it has led the states in economic collapse this decade. If Michigan wants to lead the nation out of the unthinkable with new technology and old-fashioned effort, the job is there for the taking.

'America will be OK' @

"Team Auto," as the Obama administration's task force called itself, is off the clock.

With the automakers through bankruptcy, most of the people on the task force have filtered back to their lives in Wall Street and elsewhere, watching the results of their work from afar.

Harry Wilson, who led the dive into the finances of GM and Chrysler, is spending his time on charity work and considering a turn in politics. He's also thought of offering his services to Detroit Mayor Dave Bing to help do for city government what the task force did for GM.

"I've never seen a company where people work as hard as they do, yet have such little success," Wilson said of the GM crew. "Partly because they were working on the wrong things, and working in the wrong direction."

Steven Rattner, the task force chairman who was forced to step down in July because of an investigation of his former Wall Street firm, has a temporary office in, of all places, the GM building on Fifth Avenue in New York.

Rattner has spoken publicly about his work in the administration, and plans to write a book, saying the final results of rescuing GM and Chrysler will take time, but that the companies were set in the right direction. He had bought a $4.35 million house in Washington in May, only to put it on the market after he stepped down in July. The D.C. house is no longer for sale.

"I can sleep at night about this because we did what we said we were going to do," he told the Free Press in an interview.

Since July, Ron Bloom has been in charge of overseeing the government's investments in the industry, along with a broader charge - figuring out how to boost all American manufacturing.

A former Wall Street banker and adviser to the United Steelworkers union, Bloom lobbied hard for a role with the task force, even though it meant leaving his family in Pittsburgh and working 20-hour days for six months.

"I've been training for this job for 25 years," he told the Free Press.

The political pressures have ebbed little. Through 11 months, President Barack Obama's decision to rescue Detroit's auto industry ranks as the least popular thing he's done. Government auditors have told the administration that it needs better ways of monitoring its stakes in GM and Chrysler.

With $81 billion spent, the auditors expect the government to lose $30.4 billion on its investments in Detroit, a figure the administration doesn't dispute.

The task force has interviewed outside consultants asking for an easy way to spot any blip early.

Bloom contends Obama could have let GM and Chrysler go, or just as easily written a check to cover all their debts. Instead, he forced them to reckon with their broken promises.

"In the end, people in America will be OK with that," Bloom said. "At the moment, it's pretty tough, but I think history will judge this as an extraordinary show in courage."

Executive change part of the mix @

Many of the executives running GM and Chrysler have seen time run out on their careers, just as it did for thousands of blue- and white-collar workers the companies shed in bankruptcy.

At Chrysler, former Chairman Bob Nardelli went back to Cerberus Capital Management. Vice Chairman Tom LaSorda is enjoying an extended break from the industry.

Chrysler's other holdover, Vice Chairman Jim Press, has been less fortunate. Hailed when brought in by Cerberus following a long career at Toyota, Press took most of the heat for Chrysler's dealer cull and sluggish sales. While new Chrysler chief executive Sergio Marchionne gave him the title of deputy CEO, the role was temporary.

The U.S. Treasury official overseeing compensation for top executives at rescued companies shut off Press' $2.6 million pay in October - the only executive at any firm who suffered such a fate. He left Chrysler quietly at the end of November.

At GM, Fritz Henderson vowed to move quickly for change as CEO. He installed new heads of sales and marketing, while launching a search for a new chief financial officer, and promised quick decisions.

"Having a culture built around a fast GM, which is not what we're known for, is important," Henderson said in a Nov. 24 interview with the Free Press. "We can do it. We have done it. We've shown we can do it."

GM's board disagreed.

When Obama task force members chose retired AT&T executive Ed Whitacre to be GM's chairman, they also restocked GM's board of directors with high-octane executives from Wall Street, such as David Bonderman, a turnaround expert and private capital investor. The UAW chose Stephen Girsky, a former Wall Street analyst and critic of GM who knew the company inside and out.

That group found Henderson's efforts wanting. In a surprise move, it forced Henderson out on Dec. 1, nine months after he took over for Rick Wagoner, and installed Whitacre as temporary CEO. Change had come to GM, whether GM was ready or not.

Of the three Detroit executives who flew to Congress to rescue the industry last year, only Ford's Alan Mulally remains, the most experienced chief with three years on the job.

Comments are closed.