In what seems to be a bit of an "about face," it has been reported that GM has actually asked Kirk Kerkorian's Tracinda Corp. rep. Jerry York to join the GM board. This comes as a bit of a shock to many while as recently as Tuesday General Motors still wasn't publicly acknowledging the proverbial "900 lbs. gorilla in the room."
With Kirk's Tracinda now calling roughly 56 million shares (9.9%) their own, and both Kerkorian and York very visibly interested in all GM developments, UAW, stock price-related or otherwise, it was simply a grace period to let Rick Wagoner circle the wagons.
So what exactly does the public announcement mean?
The timing is certainly interesting. GM has just also just announced the poaching from GM Europe, Fritz Henderson to act as new North American CFO, which in itself came on the heels of some fairly specific strategy plans (additional layoffs – plant closures) by Wagoner himself. All told, there is a lot going on down at Renaissance Center.
One has to question however, if the activity more resembles simple desperation and chaos or if it just might possess the underpinnings of a calculated (if unwritten) strategy.
Two things are immediately clear both at GM and Ford coincidentally. With a more united front in Washington, and the adoption of the most qualified people from around the globe, there are even more people interested in the domestic auto industry.
The possible problem here is that we have a couple of potentially opposing motivations. Everyone wants to see GM succeed, which 9 out of 10 times will equate directly with an increase in shareholder value through stock prices. Tracinda has already lost hundreds of millions through the subsequent decline of GM stock since the beginning of their stock piling in April and with 4% of Kerkorian's profits on the line, it is very clear where Jerry York will be coming from once he warms up his seat on the board.
Taking on York with little or no fight does signal a couple of other things. GM doesn't know how to "stop the bleeding" on their own. Even if GMAC could buy them some additional time, they may finally be resolved to the fact that listening to Bob Lutz (and his hope for lower gas prices), additional layoffs and closings, a small win against the UAW, on top of a couple of ok cars won't do it this time. It is going to take all of this and more, which may include much larger systemic political items such as Japan's currency policy and pensions/healthcare in US manufacturing.
The plot thickens, but be sure that by the time we have this little chat the same time in 2006, the fate of much more than a CEO will have been decided.
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