GM CEO: No Apologies For Accepting U.S. Bailout
Just a few years ago, America’s auto industry was on the verge of collapse. When President Obama took office, he had to decide whether to bail out General Motors or let it die. He chose to send them a lifeline, to the tune of $50 billion. In this week’s State of the Union speech, President Obama said that decision paid off.
“Today, General Motors is back on top as the world’s No. 1 automaker,” Obama said.
Good news on GM’s profits is expected next month. (Ford has already reported its best earnings since 1998, and all of the Big Three gained U.S. market share for the first time since 1988.)
Daniel Akerson, chairman and CEO of GM, has been reluctant to trumpet the good news about being the top seller.
“That wasn’t a goal we set out. It’s a metric, it’s a milestone toward a broader agenda,” Akerson tells weekends on All Things Considered host Guy Raz. “We want to produce the world’s best vehicles, improve our margins, cash flow and profitability, but we have a long, long road to walk.”
Akerson explains that he dislikes the term “government motors“ and believes it gives people the wrong impression.
“It implies that somehow the government is calling us on Monday and telling us that we’re going to paint models that are coming off the production lines a certain color, or that we’re going to develop or prioritize vehicle development differently than we would if we were a profit-oriented organization,” Akerson says. “The objective of the government was not to act as, if you will, a private equity firm and try to maximize returns.”
Akerson says the government’s objective was a broader agenda for the industrial policy of the United States and “for the well-being of its citizens, and that, I think, has been an unqualified success.”
To have uncertainty surrounding a company of this size and this magnitude for a long period of time I think would have been just devastating, and probably have condemned it to the heap.
He adds that he doesn’t believe it will be a long-term assist, and that the government will eventually sell its shares — about 26 percent of the company — when officials determine “their mission has been accomplished.”
“Sometimes people stylize the image of how the economy works because we have never been a truly 100 percent, unadulterated capitalist system,” Akerson says. “Otherwise, your mother, as she aged in time … and could not produce, you don’t kick ’em to the curb.”
Akerson says he believes the U.S. has a form of hybrid capitalism.
“There are times when government has a role, in my opinion, and there are times it should let the market ultimately determine winners and losers,” he says.
Akerson cites the real estate crisis of the late 1980s, when the government stepped in to stabilize the market and eventually withdrew. In the case of GM, he explains, to have let it go through a complete bankruptcy would have been disastrous.
“To have uncertainty surrounding a company of this size and this magnitude for a long period of time I think would have been just devastating, and probably have condemned it to the heap,” he says.
Defending The Volt
Akerson tells Raz that the Chevrolet Volt electric car is an important part of GM’s strategy.
“This is a critical decade or two for the transportation industry because of social needs,” Akerson says. “Do we want to leave an environment, a planet that’s better than the one we inherited from the prior generations? I have children and grandchildren, and indeed I want that.”
Akerson adds that GM has been spending $7.5 billion a year on advanced engineering and research on advanced propulsion.
“We never abated on that,” Akerson says. “And it’s all in an effort to prepare for the future where you are propelling different forms of transportation and there’s no carbon footprint.”
The government’s recent investigation on whether the Volt’s battery could catch fire was closed and cleared GM, but Akerson concedes it has affected the firm’s image.
“It did have some collateral damage because it was a situation that ran on for 45-60 days, and [there was] a lot of negative press,” Akerson says.
But he stresses that throughout the investigation, GM maintained the highest safety ratings possible.
Overall, Akerson says he thinks GM is doing well. It has sold 2.5 million vehicles in the U.S., and 9 million internationally.
“We are a great exporter of technology, we have good diversified operations around the world, and indeed I think we are producing, designing, building and selling some of the world’s best vehicles,” Akerson says.