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Chs 13-24

A continuation of comments on bullet points, quotes and queries on Vlasic, Bill (2011). Once Upon a Car: The Fall and Resurrection of America’s Big Three Automakers–GM, Ford, and Chrysler. William Morrow.

Chapter 13: Peter Wittwer

  • GM’s market share is going down, their market share is projected to decrease from 24% to 20% within the next five years, they are also being forced to buy out employee contracts and pensions, which is costing them billions of dollars.
  • – Jerry York is campaigning for the removal of Wagoner his criticisms of GM include no fire or passion in the engineering process, engineers and employees at GM aren’t excited about the production of cars. He also criticizes GM for trying to prevent bankruptcy and make changes when 3/4 of the damage was already done to their company, and he believes GM’s strategy of unloading excess inventory by selling cars at a discounted price to rental companies is like putting a band-aid on a fatal wound.
  • Wagoner is carrying out “the plan,” a strategy developed by the best and brightest GM employees to avoid bankruptcy and start to grow again. “The plan,” is to shrink North American operations, improve and diversify the product lineup, and start to grow overseas.
  • In 2005, GM was racing to file their annual report with the SEC. Cash flow numbers from the GMAC mortgage business had been misclassified and GM was forced to get an extension. GM management came under a lot of criticism from the board and the media for looking unprepared and foolish. Wagoner’s credibility was brought into question since he was on a business trip to Asia during a time when he should have been in Detroit to deal with the crisis.
  • Wagoner decides to approach the board giving them an ultimatum, either give them his support or he will resign. The board minus a few detractors such as Jerry York vote in favor of keeping Wagoner as the CEO and shortly thereafter Wagoner successfully orchestrates the sale of 51% of the share of the GMAC Commercial Real Estate Unit.

Discussion Questions

  • York and Wagoner represent the two extremes of management, who do you think has a more successful approach, the more passive Wagoner who is taking a long term approach to the turnaround of GM, or the aggressive York who only cares about the bottom line and immediate results?
  • Was the extension needed on the annual report as big a deal as the board and media made it out to be? Did Wagoner deserve to be put on the hot seat due to such a trivial mistake


  • “Now the company was hurting, but Wagoner was convinced it was on the right path. GM would not turn around overnight. It required patience and persistence— something York just did not appear to have.”
  • “He described Wagoner as a good guy who sweated the details but too often missed the big picture. ‘It’s basically what’s been wrong with GM for the past thirty years,’ Lutz said. ‘It’s all analytical, businesslike and risk avoidance— keep everything on an even keel at all costs.'”

Chapter 14: Peter Wittwer

  • March 31, 2006 Delphi in bankruptcy court, they want to close 21/29 factories in the U.S., cut 1/4 of their workers, freeze pensions, and void all labor agreements. Delphi felt their future was in Brazil, India, and China.
  • Gettelfinger and the UAW threaten to fight back with strikes, if Delphi goes under GM will go under, if UAW strikes GM will be crippled and nearly bankrupt.
  • Auto manufacturers and the UAW managed to workout a deal. Ford and GM were both allowed to engage in buyout deals with employees, since Gettelfinger realized they were inevitable. However Daimlerchrysler was not given the same break on healthcare since they were turning a profit.
  • Jerry York wanted to merge GM with Renault-Nissan and have Carlos Ghosn be the new CEO. The GM-Renault-Nissan merger would have created a three headed monster that could almost monopolize the auto industry and eliminate the growing and serious competition from the Japanese powerhouse Toyota.
  • The merger was met with serious hesitation from Wagoner and the rest of the board, which caused Kerkorian and York to go public with the possibility of the merger, which increased the GM stock by 9%.

Discussion Questions

  • Do you think the merger between GM and Renault-Nissan would be beneficial for both parties?
  • Would Renault-Nissan benefit disproportionally by gaining one of the largest manufacturers in the auto industry? – Should GM stick with their plans for long term growth and see if they can recover? Or should they execute the merger and hope Ghosn can restore GM to its former self?


  • “The news hit Ron Gettelfinger like a kick in the teeth. ‘This is a travesty, and a concern for every American ,’ he said. It didn’t take long for the UAW to threaten a counterattack. If its labor contract was canceled, the union said it would be ‘impossible to avoid a long strike.’”
  • “As Detroit got weaker, the union’s muscle withered along with it. The best Gettelfinger could do was extract as much money as possible from the companies to buy out some workers so that jobs would be left for others.”
  • “Paul Ballew, GM’s top market analyst, concluded that GM’s current 24 percent share would fall to 20 percent within five years. It was a disturbing decline considering the company had lots of new products coming.”

Chapter 15: Peter Wittwer

  • Ford’s sales consistently decreasing, in the first half of 2006 they already had a net loss of $1.4 billion. The luxury brands under Ford such as Jaguar couldn’t compete with foreign luxury cars like Lexus, Mercedes, and BMW.
  • Two top tier executives, Mark Fields and Don Leclair were in a huge feud that was dividing the leadership team. They constantly fought over money and control.
  • Bill Ford was completely overwhelmed and decided to step down and hire a CEO, the top of the list was the Executive Vice President of Boeing Alan Mulally.
  • In meetings with Mulally Bill Ford explained the company needed to shift from trucks to greener cars, downsize North American operations, and needed to borrow billions of dollars to do it.
  • After a lot of convincing Mulally finally agreed to serve as the CEO of Ford in order to save such a huge industry from collapsing.

Discussion Questions

  • Why do you think Chrysler was able to escape the legacy payment issues that Ford an GM were facing?
  • Do you think the initiative to focus on greener cars is a good business move, or should Ford continue to focus on bigger cars?


  • “Some people think the United States can’t compete in the design and production of sophisticated products,” he said. “I personally think we can.”
  • “I want you to go to Seattle and don’t come back until you have him,” Bill said. “I mean it. Do not bring your ass back to Detroit without Mulally. And if you don’t come back with Mulally, don’t come back. I don’t care if you have to buy a house out there. Get him.”

Chapter 16: Moody Heard

  • Executives Renault-Nissan and GM continue discussion about potential merger of the two companies. Wagoner, Henderson and the board members of GM propose Ghosn and the rest of Renault-Nissan pay GM over $2 billion if they want cooperation.
  • GM executives and board members decide against the deal, leading to Jerry York’s resignation from the board.
  • UAW president Ron Gettelfinger rejects a health care deal that would have saved the struggling DaimlerChrysler $300 million. Dieter Zetsche “goes ballistic.”


  • “[Wagoner] said the two sides were just too far apart and the GM board had voted to cancel the alliance talks. When he offered that GM might be interested in doing an individual project or two with Renault-Nissan, Ghosn cut him off. ‘Let’s just end it,’ he said.” (166)
  • “After discussing it with Kerkorian, York decided to resign from the board immediately.”

Chapter 17: Moody Heard

  • Alan Mulally steps in soon after Ford crashes, noting inefficiency and inconsistency in production across the board, as well as bureaucracy and a general lack of communication.
  • Mulally meets with top executives regularly to discuss operation.
    • cut costs
    • standardize processes and parts
    • reduce number of models and brands
  • Mually gives compelling speech to potential investors outlining Ford’s turnaround plan. Banks agree to lend $23.5 billion.


  • “‘These three companies have been slowly going out of business for eighty years… They were insulated and had great success early on with 70, 80 percent of the market. But they were arrogant. They made fun of the Japanese. And then they made shoddy products, all of a sudden they had some competition , and their arrogance caught up with them.'” (170) – Mulally
  • “‘Why is everything so inconsistent?'” (171) – Mulally
  • “First and foremost, Ford had to cut costs, standardize processes and parts, and reduce the number of models and brands.” (173)

Chapter 18: Moody Heard

  • Zetsche and the rest of Daimler from DaimlerChrysler secretly planning to let Chrysler go.
  • Chrysler comes out with Chrysler 300, which turns out to be a huge success, but still not enough to save Chrysler
  • DaimlerChrysler CFO Bodo Uebber publicly comments on potential for Chrsyler to be dropped, infuriating Chrysler CEO Tom LaSorda
  • Rick Wagoner of GM and Jurgen Hubbert, representing Cerberus, both express interest in purchasing Chrysler.


  • “There’s an old saying in Detroit: ‘It’s your turn in the barrel.’ The point is that at least one of the Big Three is always hurting and drawing negative attention, while another is on the rise.” (184)
  • “Zetsche, however, had been planning in secret for months to sell off Chrysler.” (180)
  • “When one analyst asked whether there was any possibility of Chrysler being jettisoned, Uebber spoke up. ‘We don’t exclude anything here,’ he said.” (183)

Chapter 19: Jier Qiu

  • More international competitors started to appear in the US market during the 2007 Detroit auto show.
  • The competition between General Motors and Toyota was becoming bigger.
  • Bob Lutz decided to produce more fuel-friendly vehicles in GM and purchase Chrysler at a cheap price.
  • GM quited the purchase after two private equity firms, the Blackstone Group and Cerberus, joined in.
  • Daimler finally sold Chrysler to Cerberus.


  • “Cars and be built anywhere by anybody and sold wherever people could afford them.”
  • “Bob Lutz…prove the company could make more than just gas-guzzling trucks and fast cars.”
  • “Wagoner, Lutz, and Fritz Henderson were studying a move that could keep GM on top for a long time to come: buying Chrysler.”
  • “(Steve Feinberg) told them how proud he was to buy Chrysler and to make it an American-owned company once again.”

Chapter 20: Jier Qiu

  • Allan Mulally decided to change Ford’s way to survive.
  • Ford could either go bankrupt or sell the company.
  • Toyota surpassed GM and became the number one player in the auto industry.
  • Gettelfinger’s UAW trying to fight against the Detroit Three.


  • “The Blue Oval was special, he said, and Ford had a unique place in automotive industry.”
  • “The Fords were at a serious crossroads.”
  • “The critical issue before them was whether to hire the bankers to investigate all available options, including a potential sale.”
  • “For the first time in more than seventy years, GM wasn’t number one anymore.”
  • “If the Big Three needed to close ‘the gap’ to survive, how could the union fight them?”

Chapter 21: Jier Qiu

  • Gettelfinger met with Feinberg to discuss the influence of Chrysler becoming privately owned on UAW labor contracts.
  • The new CEO of Chrysler Nardelli was appointed by Cerberus.
  • Nardelli’s former position in Home Depot was exposed and got much media attentions.
  • The Big Three and UAW started contract talks.
  • Gettelfinger had settled down with GM on a tentative agreement.


  • “The UAW president was deeply suspicious of what private ownership would mean for Chrysler.”
  • “They focused predictably on Nardelli’s messy exit from Home Depot, his gigantic severance package, and his shot for a comeback in Detroit.”
  • “the union and GM announced a tentative agreement on a new four-year contract.”

Chapters 22-24: Juan Cruz Mayol

  • GM agreed to keep paying for health care
  • Daimler sells Chrysler. It was making money with the Ram, but losing money with all the other models.
  • Nardelli starts closing down plants and eliminating models despite the opposition of the unions
  • Ford negotiated lower wages in exchange of not closing the factories.
  • There is great optimism for the Big Three despite the continues fall in the stock prices
  • Ford sold the luxury brands that kept losing money (Land Rover and Jaguar sold to Tata), to save Ford. They narrowed costs, and increased revenues. Mulally worked on the image of the company, standardized parts, and turned truck plants into car plants.
  • Ford tries to get their workers to take jobs at other companies. Decides to produce the new Fiesta kinetic in Mexico.
  • GM is still #1 in sales over Toyota by 3000 units.
  • Kerkorian starts buying a lot of Ford stocks.


    Chapter 22:

  • “I went from te best-managed company in the world to the worst in one day. And my instruction was, very simple, to make Chrysler make money.”-Nardelli.
  • “Twenty years ago, sure, we were the Big Three then. But we’re not big anymore”-Merlo Brooks, Chrysler worker.
    Chapter 23:

  • “While the Big Three muddled along, Toyota was smashing sales records and making more money than any car company in the world.”
  • “The staffs were suspicious, résumés were pouring out to other companies, and nobody knew whose head would roll if Chrysler crashed.”
    Chapter 24:

  • “For years, Ford’s finest engineers and hottest executives worked on trucks and SUVs…But Derrick Kuzak was changing that… Pickups made big money, but demand for small cars was exploding around the world.”
  • “After all the plant closings, job cuts, and labor negotiations, Detroit was still overproducing and needed to get smaller…There were job fairs at all the plants, and Ford mailed to every worker a special DVD titled Connecting with Your Future that extolled the promise of new careers beyond the assembly line.”


  • What would have been of the US auto industry without people like Farley and Nardelli?
  • How does the unification of the models help the businesses?
  • Why weren’t they doing it before?
  • Was it really necessary to sell the luxury brands? Could they have rearranged their structures to start making profits (as they currently are)?
  • Will Toyota and the other Japanese firms face the same structural problems as the American firms?
  • Why would Kerkorian now start buying Ford stocks? Would it be to get access to the board, or did he see potential in the comeback of the Big Three?

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