Floyd Norris
Saturday, May 30, offered the kind of warm, sunny afternoon that rain-soaked New Yorkers had longed for all spring. In the theatre district, crowds were gathering to catch a glimpse of Barack and Michelle Obama, who were planning to attend a Broadway show so the President could fulfill his campaign promise to his wife of a date night in Manhattan.
Fourteen blocks north, high up in a boardroom at 767 Fifth Avenue, Fritz Henderson was about to make the toughest decision of his life, and one that Obama and his advisers had seemingly foisted upon him.
As the clock ticked toward 6 pm, Henderson told directors of General Motors that management believed the struggling auto company?s only path was into Chapter 11 bankruptcy protection.
?I?d been at GM 25 years, I?d been the CEO 60 days, and here I was, recommending that GM file for bankruptcy,? Henderson said in an interview last week.
Henderson, Obama and the scores of lawyers, financial experts and restructuring advisers whose careers were at stake were guiding GM along a financial, political and emotional tightrope a few months ago, and their decisions shaped what GM has become today. And it is not yet clear whether the risks they took, and the government?s enormous investment, will pay off.
A successful GM turnaround could rank as one of the greatest restructuring efforts in business history, said Michael Useem, a professor of management at the University of Pennsylvania.
But if GM?s bureaucratic culture and consumers? lack of interest continue to plague the company, the long days, intense negotiations and legal maneuvering ? not to mention tens of billions in taxpayer money ? will have been for naught. ?The stakes are about as big as they?ve ever been for a company?s remake,? Useem said.
The responsibility for keeping GM on track falls to its new board, led by the former AT&T chief Edward Whitacre Jr. The new directors include executives and financial advisers schooled in aviation, transportation and telecommunications.
Henderson, meanwhile, shook up GM?s senior ranks last week. As a flock of longtime executives announced their retirements, a single executive committee was named to run the entire company, replacing various regional fiefs.
There is little time to waste. In just the few short weeks since GM emerged from bankruptcy on July 10, Washington?s stance toward Detroit has shifted.
Steven Rattner, who led the president?s automotive task force at the Treasury Department, left his post on Friday, as New York state and the Securities and Exchange Commission step up an investigation into pension fund management involving his investment firm.
Hundreds of car dealers, angry at plans to eliminate their franchises, have started lobbying on Capitol Hill for legislation aimed at reversing those decisions ? a step that both GM and Chrysler say could undermine their restructurings.
Obama, meanwhile, has moved on to his next sticky political challenge ? promoting his health care package ? after emphasising that Detroit has received all the federal aid he is willing to grant.
?We have been as clear as we could possibly be that we have zero intention of providing any more money to either of these companies,? said Brian Deese, a special assistant to the President for economic policy who was the White House?s point person on the auto industry bailout.
While Obama may be tightening the federal purse strings, he made a fundamental decision, even before taking office, that his administration would build on the lifeline extended by George W Bush at the end of his presidency to assure that GM and Chrysler remained in business.