Brian Deese, the 31-year-old Yale Law School dropout charged with restructuring General Motors, takes a lot of flak for his inexperience. Atlhough a think tank researcher with zero business experience might be an unusual choice for such a big job, GM desperately needs a break from the past. Deese, a novice in an insular industry full of seen-it-all-before veterans, may be uniquely qualified to look beyond what "everyone knows" is possible and bring America's largest automaker into the future.
With a number of powerful lobbies sitting at the negotiation table, Deese is having to cut through the clutter and acknowledge the major structural problems facing GM. The truth is that GM's crisis is the product of decades of gross mismanagement by its own executives and the equally-powerful leaders of the United Auto Workers.
In March of this year, GM President Rick Wagoner was forced to resign at the insistence of the Obama administration. That Ron Gettelfinger, Wagoner's counterpart at the UAW, has clung to his own position is an injustice, but one that could easily be remedied with some pressure from Deese. Continuing to invite Gettelfinger to the table for restructuring talks makes as much sense as tapping Bernie Madoff to reform the Securities and Exchange Commission.
Gettelfinger oversaw the implementation of a UAW contract that runs to more than 1,110 pages, nearly five times larger than the nimble non-union contract Toyota works with. While GM bled $70 billion during the past two years, Gettelfinger resisted all significant cost-savings measures while loudly trumpeting trivial concessions like eliminating Viagra from the UAW health plan and giving up the Easter Monday holiday. And last year, even as GM's financial meltdown threatened his members' pocketbooks, Gettelfinger OK'd a lavish $100,000 union meeting at the Doral Desert Princess Resort in Palm Springs. If flying to D.C. on a private jet was bad optics, the UAW was clearly tone deaf themselves.
Gettelfinger had his chance, but it's time to go.
With Gettelfinger out of the picture, Deese's next move should be helping dissatisfied GM employees decertify the United Auto Workers union. The UAW claims to represent the interests of its 400,000+ members, but this catastrophic failure of leadership calls for a reevaluation of that relationship. GM's remaining employees deserve the chance for a secret-ballot vote on firing their union, just like all workers deserve a vote on whether to be represented in the first place.
Winning majority support for decertification shouldn't be a problem:
GM's workforce has seen countless layoffs and plant closures caused by deep-rooted union legacy costs and head-in-the-sand denial. When GM made a last-ditch attempt at viability by trying to restructure in 2007, the union instigated a futile 41-hour "shot across the bow" strike that in many ways sealed the automaker's fate. And it's certainly safe to say that few of these employees are getting their money's worth from of the $33 million Black Lake golf resort their union owns and operates.
The UAW had a good run, but it's time to go.
Private investors and bondholders wouldn't be the only ones celebrating the UAW's decertification. A recent study from the National Bureau of Economic Research showed that non-unionized companies' stock prices fare significantly better than their unionized counterparts. For UAW members whose ailing pensions depend on GM shares that have plummeted 95% in the past year, freeing the automaker of union entanglements could be the ticket to an actual retirement.
The UAW has failed its members, and GM will never be competitive with the UAW's noose around its neck. The American public is set to become 60 percent shareholders, so we've all got a stake in Brian Deese's performance. We the shareholders can only hope that President Obama's fledgling car czar will exceed expectations, make the tough call, and sever the union cord for good.