GM Cleaning Up Its Act

May 21, 2010

For years, it was constantly cited as the best example of what was wrong with corporate thinking in America.

“What’s good for General Motors is good for the country,” Charles E. “Engine Charlie” Wilson supposedly said during his confirmation hearings to be secretary of defense, back in 1953. Oddly enough, there were indications on two fronts this week that there may be some truth to that today…even though Engine Charlie never actually said his now-immortal line.

To flash back: Charlie’s moment in the spotlight came nearly a lifetime ago, in 1953, when President-elect Dwight D. Eisenhower decided Wilson, then CEO of General Motors, was the man to run the nation’s military establishment.

That made a certain amount of sense. The Pentagon was by far the biggest part of the federal government, and sprawling, wealthy General Motors was the world’s biggest corporation.

Like other auto barons before and since, Charles Wilson’s political skills didn’t always match his automotive know-how. Though, in truth, he didn’t exactly say the legendary line, everything indicates he would have agreed with it.

What he really said was that he could not imagine a situation where America’s interests would be at odds with those of GM, “because for years I thought that what was good for the country was good for General Motors, and vice versa.”

People laughed at that, even then. But less than two years ago, both Presidents George W. Bush and Barack Obama argued pretty much the same thing. They said that for the good of the country, the nation needed to prevent General Motors from collapsing.

They managed to prevail on both an emergency bailout and then a “soft landing” bankruptcy, despite bitter opposition from GOP members of the U.S. Senate. (Was Engine Charlie, a staunch Republican himself, spinning in his suburban Detroit grave?)

And this week, there was evidence on two fronts that — this time anyway — helping the General was good for the country.

There was good news from Detroit, where GM reported its first quarterly profit in years, and also good news from Washington, where the Obama administration announced that it and GM were about to go to work to clean up the environment at scores of now-abandoned factories and facilities all across the nation.

General Motors’ profit statement — the company made $836 million in the first quarter of this year — was welcome news in itself, especially after GM lost more than $88 billion over the last five years.

But the way in which the profits were made was equally encouraging. GM actually made more than a billion dollars selling cars and trucks in North America, and was able to reduce incentives as demand for its cars increased.

In recent pre-bankruptcy years, the automaker sometimes lost money in its core market, even when it posted overall profits. General Motors also was in the black in Asia in the first quarter of 2010, though it lost half a billion in financially jittery Europe.

The day after the earnings news, President Obama announced that the federal government and GM were teaming up to establish an $836 million-dollar-trust fund for environmental cleanup at the 89 now-closed General Motors sites across the country.

Most of those sites are in Michigan, and the announcement was especially welcome news in hard-hit Flint. The city desperately wants to develop the sprawling and now-vacant Buick City complex, but has been prevented from doing so because of contamination.

Now, more than 400 acres of Buick City are scheduled to be the first target of the cleanup effort. That will be followed by demolition and cleanup efforts at sites in Pontiac, Saginaw, the sprawling Willow Run complex near Ypsilanti, and Detroit.

Budget hawks have little cause to complain; this doesn’t involve any new federal dollars. Nor, by the way is the GM involved in this cleanup the same post-bankruptcy company that makes vehicles.

Instead, this is a soon-to-be defunct entity called Motors Liquidation, Inc., the corporation established during bankruptcy proceedings to liquidate the unwanted and bad parts of the old General Motors, such as abandoned factories.

Washington set aside $1.2 billion for Dependent Motors to close up shop, and this money would come from that.

General Motors still faces many problems, and its long-term survival is far from a sure thing. Charlie Wilson’s GM sold more than half of all the cars and trucks produced in this country.

Today, even a healthy GM may never again have even one-fifth of the market. General Motors is now mostly owned by the government, something Engine Charlie probably would have interpreted as the final victory of Communism.

The post-bankruptcy GM still needs to develop a plan and a timetable to return to the private sector, selling itself to investors so that the taxpayers can eventually recover at least some of their massive (and involuntary) investment.

This week’s news was not, to paraphrase Winston Churchill, the end of General Motors’ troubles. But it just might be the start of a badly needed new beginning.

Veteran journalist and national Emmy Award winner Jack Lessenberry teaches at Wayne State University, serves as Michigan Radio’s senior political analyst and writes regularly for several publications. He also serves as The Toledo Blade’s writing coach and ombudsman and is host of the weekly television show Deadline Now on WGTE-TV in Toledo.