http://www.nytimes.com/2011/10/02/busin ... wanted=all
Published: October 1, 2011
Bill Vlasic also wrote "Taken For A Ride", a book documenting how Chrysler eagerly handed itself over to DaimlerBenz and sent both companies into a decade-long tailspin.If General Motors were any other company, it would probably be dead by now. In the summer of 2008, nearly a year before G.M. filed for bankruptcy, its executives were growing desperate. Rick Wagoner, its chief executive, secretly proposed a merger with Ford, while Bill Ford courted the future president, Barack Obama, in an attempt to safeguard his company. This article is adapted from “Once Upon a Car: The Fall and Resurrection of America’s Big Three Automakers — G.M., Ford and Chrysler” by Bill Vlasic, the Detroit bureau chief of The New York Times. The book, to be published Tuesday by William Morrow, reveals new details of the chaos at the Big Three. Conversations recounted in the book were based on more than 100 interviews.
The biggest revelation: GM and Ford flirted with a merger.
Excerpt:
Bill Ford didn’t like the sound of it. G.M. must be in serious trouble if its executives were coming to Ford for help or answers. The idea of a merger nauseated him. The U.A.W. would go nuts.
Mr. Ford spoke with his C.E.O., Alan R. Mulally, and they agreed that they had to talk to G.M., if only to find out what was going on. Mr. Wagoner’s approach was out of character. Maybe G.M. was in even worse shape than it was letting on.
The meeting that followed would profoundly affect the course of both automakers. Mr. Wagoner and Mr. Henderson arrived with Ray Young, G.M.’s chief financial officer. Don Leclair, Ford’s C.F.O., joined, too.
Mr. Wagoner began. G.M. and Ford should merge, he said. The synergies would be phenomenal. Savings would be huge. The possibilities were endless.
Bill Ford was shocked. G.M. was serious. Who, he asked, would run this new company? As bad as Ford’s stock price was, Ford still had a higher market value than G.M.
Mr. Wagoner noted that G.M. was bigger in terms of sales. So, by all rights, it should probably be in charge. But maybe they could share management, or discuss it later, he suggested.
Mr. Mulally mostly listened. He wanted to know more about G.M.’s true state. He surely didn’t want any part of any merger. As far as he was concerned, G.M. was a roaring five-alarm fire. Why, he asked, was it coming to Ford now?
Mr. Wagoner and Mr. Henderson explained that G.M. was running low on cash and was having trouble borrowing money. By merging with Ford, it could go back to Wall Street.
So that’s what this is about. G.M. is going broke, Bill Ford realized. Ford had $30 billion in the bank, and that’s what G.M. really wanted. It wasn’t about Ford at all. It was about saving G.M. Mr. Ford didn’t need to hear any more. “No thanks,” he said. “This would never work out. “
Mr. Henderson jumped in, reiterating how good a marriage could be. “Don and I did a lot of work on this earlier,” he said. “I know G.M. inside and out, and Don knows Ford inside and out. Between the two of us we could figure it out pretty quickly.”
Mr. Leclair kept his mouth shut. Mr. Ford was doing the talking.
“No,” Mr. Ford said. “No, thanks.”
Mr. Wagoner understood. This wasn’t happening. “Well if you don’t do it with us,” he said, “we’re going to look elsewhere.” With that, the G.M. execs left.
At first, Mr. Ford was angry. G.M. could be so arrogant. But the overture was disturbing. If G.M. went bankrupt, a big part of the automotive supply chain could collapse. That would hurt the entire industry, including Ford. Bill Ford respected G.M.’s power and mass as no one else at Ford could. After all, he is a great-grandson of Henry Ford.
“I grew up in this town, and G.M. was the giant,” he later recalled. “That was just the reality of life for me from childhood.”
Mr. Mulally was amazed at G.M.’s desperation. From the day he came to Ford, he wanted to beat G.M., and to beat it badly. So if G.M. was going belly-up or merging with someone, he wanted to know. But Ford was on its own road, and he wasn’t turning over the wheel to Rick Wagoner or anyone else.
