D.F.

Krause

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February 18, 2008

GM Loses $38 Billion: How Pleasing!

What would you say if your company lost $38 billion last year, setting an all-time record for losses in your industry?

How about, “We’re pleased”?

Welcome to the auto industry, and by all means, look on the bright side. I have a $20 bill in my pocket that GM hasn’t lost yet. So you see? It could be worse.

In fairness to GM, a lot of this loss was an accounting technicality – owing to unused tax credits I guess they’ve decided not to use. Because when you’re losing money hand over foot, why bother using your tax credits?

Remember the “Seinfeld” episode where Kramer explains to Jerry that it doesn’t bother corporations when they lose money, because they just write it off? He admits he has no idea what that means, and from the looks of things, he may be running GM.

Actually, Chairman and CEO Rick Wagoner is running GM, and here is a statement he made to accompany the pleasing news: “We're pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow.”

No matter how much public companies and their executives like to put on a happy face, I’m not sure a statement from your CEO containing the word “pleased” is quite the tonic for your credibility when you just lost $38.7 billion.

They did announce that they are offering an employee buyout plan, which prompts the question: Aren’t they always doing that? They have some employees making $28 an hour, and if they can just pay these people to stop working for them, they think they can hire some new employees for half that much – which means they’re admitting they negotiated labor deals to pay twice the market value of their workers.

These are true geniuses. If you gave me all of GM’s money and a shovel, and told me to start shoveling the money into a hole as fast as I could, I don’t think I could lose as much money as these guys do.

People do give you points for honesty, though. If I were writing Wagoner’s statement, it would have sounded a little different. Let’s see . . .

Well, today I’m here to announce that we lost $38.7 billion last year.

Wow. Are we a horrible company or what? And me – I must be the worst CEO in the history of business.

There is some good news, though. This should get us into the Guinness Book of World Records. You know all those people who stand around in France kissing strangers to try to get in there? At least we don’t have to do that. I mean, a lot of those women have armpit hair. That’s just gross.

Anyway, you probably want to know what we’re going to do about this. I haven’t the foggiest idea. I had this statement prepared to talk about how we anticipate really good results in two or three years. But seriously, I’m sure I said something just like that two or three years ago, and now look. We lost $38 billion. So why make myself look stupid again? We’ll probably lose even more next year, and more still the year after that.

We’re screwed.

Right now we’re trying to pay people to stop working here. Now you might wonder, how will that help? Why pay people not to work? Because, sillies, every time we sell a car, we lose money. So if they don’t make any cars, we won’t lose as much.

I’m going to start with myself. I make a lot, but look at the result of all my decisions. So starting now, I’m going to stop running the company. I’ll still take my salary of course – a guy’s gotta eat – but I’m done making decisions. I suck at it. From now on, everyone can just do whatever they want. What’s the worst that can happen? We lose $1 trillion? At some point you reach the stage where you just sit there clipping your toenails and figuring it’s ceased to matter how much you’re losing.

Maybe that’s why Howard Hughes ended up so weird. What was I talking about?

That’s what I would say. You may be calling the insane asylum right about now to see if they’ll take me, but they’re booked up. They just gave the last spot to the guy who told Wagoner to say he is “pleased.”

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