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Monday, June 1, 2009

An Interesting and Revealing Piece from the NY Times

Today's New York Times features a story about 31 year old Brian Deese. It's called "The 31 Year Old In Charge of Dismantling GM". Deese is not an employee of General Motors. In fact, less than a year ago, he was still in law school at Yale. Now, he's the point man on the bankruptcy of General Motors.

How did this happen? Deese, with no experience in the auto industry, became one of the first people chosen to head the President's auto task force.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — “he’s got this beard that appears and disappears,” says Steven Rattner, one of the leaders of President Obama’s automotive task force — Mr. Deese was thrown into the auto industry’s maelstrom as soon the election-night parties ended.

“There was a time between Nov. 4 and mid-February when I was the only full-time member of the auto task force,” Mr. Deese, a special assistant to the president for economic policy, acknowledged recently as he hurried between his desk at the White House and the Treasury building next door. “It was a little scary.”

This piece is a relative puff piece. It's tone is rather positive toward Deese. It goes into the difficult decisions he has made and how he has grown into the role. Frankly, I am sure that Deese is both a patriot and has tremendous intellect.

What is missing in this piece is any context about just what it means to have a 31 year old bureaucrat making day to day decisions for the automakers. There is another piece from another person who did something similar at a similar age that should add context.

When the Romanian dictator Nicolae Ceausescu decided in the mid-1960s that he wanted to have a car industry, he chose me to start the project rolling. In the land of the blind, the one-eyed man is king. I knew nothing about manufacturing cars, but neither did anyone else among Ceausescu's top men. However, my father had spent most of his life running the service department of the General Motors affiliate in Bucharest.

My job at the time was as head of the Romanian industrial espionage program. Ceausescu tasked me to mediate the purchase of a minimum, basic license for a small car from a major Western manufacturer, and then to steal everything else needed to produce the car.


Ceausescu, undaunted, was determined to see Romanian cars running around in every country in the world. He tasked me to buy another Western license, this time to produce a car tailored for export. Oltcit was the name of the new car -- an amalgam made from the words Oltenia, Ceausescu's native province, and the French car maker Citroen, which owned 49% of the shares. Oltcit was projected to produce between 90,000 and 150,000 compact cars designed by Citroen.

Ceausescu micromanaged Oltcit, but he didn't even know how to drive a car, much less run a car industry. To save the foreign currency he coveted, he decreed that the components for the Oltcit were to be manufactured at 166 existing Romanian factories. Coordinating 166 plants to have them deliver all the parts on time would be a monumental job even for an experienced car producer. It proved impossible for the Romanian bureaucracy, which pretended to work and was paid accordingly. The Oltcit factory could produce only 1% to 1.5% of its intended capacity owing to the lack of the parts that those 166 companies were supposed to furnish simultaneously. The Oltcit project lost billions.

This particular piece was written by Ion Pescapo, who at roughly the same age as Deese, with roughly the same experience in autos, was given the job of "car czar" by then Romanian dictator, Nicolae Ceausescu. As Pecapo illustrates, that, along with many other instances, was a disaster in the public sector trying to run automobiles.

It is scary that we currently have bureaucrats making decisions for automakers like who owns what, which company buys out which, and even daily marketing strategies. What is even more scary is the MSM's collective yawn at all of this. It's as though the government running the auto industry is perfectly natural and without the slightest bit of potential problems.

The fact is that the government running the automakers is nothing short of a disaster waiting to happen, and the Obama administration continues to mischaracterize their role.

"We are acting as a reluctant shareholder because this is the only way to help GM succeed,” Obama said in nationally televised remarks delivered in the White House’s Grand Foyer He called the new effort “a credible plan that is full of promise.”

“Our goal is to get GM back on its feet, take a hands off approach and get out quickly,” the president said.

It was only a month ago that President Obama famously said that he didn't want to run the auto makers. He has in the last month proceeded to engineer two bankruptcy and take a majority stake in and a significant stake in the other. Now, he's claiming he's a reluctant shareholder. That's totally disingenuous. He's a shareholder only because that's the deal he orchestrated.

Yet, rather than pointing out the dangerous road we have found ourselves on, the media is writing puff pieces about the career opportunities this has created for young bureaucrats.


Christopher Calandro said...

Cogent arguments as per usual, Mike. Thanks.

new orleans personal trainer said...

I watched a PBS special on the Kennedys. One of Jack's aids made the comment that they believed that there wasn't a problem they could not solve. Dean "Mr. Edsel" Macnamara was part of that group. The same arrogance exists in BHO's administration.

Anonymous said...

But you're missing the most salient point: for all the talk about how tough it will be for Obama et. al. to run the auto industry, he can't possibly be as bad as guys like Roger Smith and Rick Wagoner, the guys who ran GM into the ground in the first place.

And Toyota of North America isn't exactly the brightest, either. Its widely believed that Jim Press left Toyota to work for Chrysler for no other reason than Toyota doesn't overpay its executives.

On the other hand, Alan Mullaly has done an excellent job running Ford since coming over from Boeing. Granted, Mullaly has engineering experience while Obama's czars are mainly finance guys.

Come to think of it, Roger Smith, Rick Wagoner, and now Fritz Henderson are all finance guys, too. So maybe Obama should stop looking to wall street for advice. That's something both the left and the right can agree upon!

mike volpe said...

That's a misdirection. Whatever you think of GM management, it is their job to run the company. It isn't the president's job to run the auto companies. Second, they were using their own money. Now, they are using government money.

Obama may be able to run the company well if that's what he focuses on. Unfortunately, he is president as well. Now that he is running the auto company, how does that bode for his actual delineated responsibilities.

Anonymous said...

I posted this on the New York Times' website as a response to the "Deese/GM" article:

Mr. Deese’s story about his “prophetic” nap at the Lordstown plant doesn’t quite ring true to me. If he was driving I-80/76 (Ohio Turnpike), he paid a toll to get off the expressway, just happened upon GM’s Lordstown plant, and convinced a plant guard to let him take a nap.

And, there’s almost a total dearth of traveler conveniences at this exit. There is, however, a plaza east of Lordstown where he would have had the opportunity to take care of his and his dog’s “personal needs.”

If this guy cannot craft a reasonable and supportable “prophetic” tale, this weakness along with his clearly edacious political career asperations will set him on the road to historical footnotedom and a career in retail; not to mention the potential to further crater the US vehicle manufacturing industry.