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Restructuring By Example: The Banks Show the Automakers How To Do It

General Motors and Chrysler should follow the example being set by Citibank and Morgan Stanley on the matter of how to properly restructure a failed business model. (I know, the car companies are old news and won't be back for more TARP money until after the inauguration, but there is a lesson here.)

When a financial institution is restructured one of the means by which this is accomplished is to publish a professionally written, thoroughly referenced and financially cogent document that gets to the point very quickly. Bess Levin (one of the funniest and wittiest financial bloggers around) at Dealbreaker hilariously noted that Citibank, in order to show itself worthy of being restructured, shouted (in effect):

"Check Out How Much Money We'll Save When We Fire An Asston Of Employees"

Citibank is the largest financial institution in the world (today). Consider that this venerable institution, made of the vision of the great Walter Wriston, had to prostrate itself like Blanche DuBois in the presence of potential buyers before they decided if the bank deserved to wake up tomorrow for the opportunity to live at the mercy of strangers.

Can you imagine the CEO of a domestic automaker doing the same? Perhaps UAW boss Ron Gettelfinger signing off on such a scheme? Not a chance. It should be noted that the massive unemployment anticipated by the continuing restructuring of the world's largest banks is not directed at the wealthy bank officers but rather the millions of service personnel that will be eliminated from jobs that pay substantially less than the legacy UAW wage.

When will the newly restructured (unemployed) financial industry minions take note of the call by Orwell's Squealer in Animal Farm and demand to know why some animals (auto workers) are more equal than others?


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Comments (7)

When pigs fly, that's when.... (Below threshold)

When pigs fly, that's when.

....that train, it is steam... (Below threshold)

....that train, it is steaming down the track...
it is way beyond unavoidable that the uaw is going to be steamrolled.
best kept secret of '09/'10.
......ridin' that train .....watch your speed.
Goodnight uaw.

Another big difficulty for ... (Below threshold)

Another big difficulty for the carmakers is that they actually have to produce products that are new, attractive, innovative and that keep up with new technology, unlike banks where reasonable customer service or a new coat of paint is often enough to continue operation from year to year. Even Toyota has experienced it's first operational financial losses in 71 years of operation due to this deep worldwide recession. Is Toyota doing business wrong? Likely not. It's simply the bad economy. And the American automakers are doing about as well as they can despite this serious crisis, where a large part of their blame is likely unplaced, despite a few obvious problems. Once the world wide economy rebounds it should be like a rising tide that will help to float all boats, including Toyota and GM.

General Motors and Chrysler... (Below threshold)

General Motors and Chrysler should follow the example being set by companies that have kept their affairs in order and don't need anybody's bailout.

The car companies HAVE been... (Below threshold)

The car companies HAVE been undergoing retructuring, they HAVE been laying off people and shuttering plants. What's killing them now is the economic collapse caused by the federal government, which caused the bottom to fall out of the car market, and their inability to borrow money on their own.

They've been bleeding $billions for several years now, but it's neither a slow nor simple thing to first, determine what's necessary to move forward, then to downsize to the extent necessary, considering how the union contracts hamper this effort.

Sure, it's easy to just point a finger and spout accusations, but it's not quite that simple.

Weegie, the U.S. auto indus... (Below threshold)

Weegie, the U.S. auto industry has been 'sick' for years. What's happened is that the economic down turn made staying 'just alive enough to stay sick' impossible.

When things are going well, you can do a lot wrong and still get by. It's when things are not going well, that you get quick feedback on how 'well' you are.... call it the process 'financial selection'.

Let them follow Wells Fargo... (Below threshold)

Let them follow Wells Fargo who said no to the Bailout and then bought another Bank with their own Money.
Citigroup grew to it current size through merges and accusations through organic growth. They are in a lot of markets but continue to make cultural and leg mistakes. They were kicked out Japan for few years because of some of these.
Paul, it takes more than paint to run a large Bank. It takes quite a diverse pool of people to run all the back office operations as well as many thousands of people who depend on the banks existence for their employment. They all contribute to providing services that people want to use otherwise they can take their business to another bank or credit union. Just like people can buy a cars that meet their needs.






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