(FORTUNE Magazine) - GM: The Readers Weigh In
The real tragedy of General Motors, says reader A.J. Buttacavoli of Oakland, is that "somewhere along the way Detroit lost its passion for cars. Toyota, Honda, Nissan, and BMW have passion. You can see it in every line of every car they build. But Detroit's glory days are over. Passion once gone can never be recovered." That's the most poetic of the hundreds of responses from investors, journalists, industry veterans and insiders, and just plain drivers to Carol Loomis's report "The Tragedy of GM" (Feb. 20). Management and labor shared blame, but many letters faulted the vehicles and the dealers who sell and service them. Some writers say they will never buy another GM product. Others hope that GM can make it. A very few accuse Loomis of bias, but the vast majority praise her work, one going so far as to call the story "absolutely the best ever written by anyone, anywhere, about GM." Below, a joint response from GM and its union, the UAW, followed by a sampling of FORTUNE readers' views.
GM and the UAW Respond
We want to speak with one voice in response to your cover story. In our respective labor and management roles, we often have differing views. But we are hardly complacent in our efforts to return GM to profitability. Here are four examples of our progress:
*** Global 2005 GM vehicle sales were the second highest in history. Chevy was the top-selling brand in the world's largest market, the U.S. Hummer had record sales and became the industry's fastest-growing brand, and Cadillac sales were the best since 1990.
*** We have agreed to restructure health benefits to reduce GM's post-employment liabilities by $15 billion. GM has also capped health benefits for salaried employees, reduced senior executive compensation, and cut the dividend in half, and will restructure its salaried pension program--tough decisions reflecting urgency and fairness.
*** Great design is again exploding from GM studios: The Pontiac Solstice is a hit with critics and consumers, outselling the Mazda Miata by almost two to one in January. The all-new Cadillac Escalade sets a new design standard for luxury SUVs, and the Chevrolet Camaro was voted best in show at the recent North American International Auto Show in Detroit.
*** Independent analysts say GM vehicles are the best ever. In this year's J.D. Power Initial Quality Study, five GM models were best in segment, and 12 were in the top three of their respective segments.
We accept the responsibility of becoming more competitive. At the same time, our country must face up to soaring health-care costs, unfair trading practices, exchange-rate manipulation, and other issues affecting American businesses and unions. We believe GM's outlook is considerably more positive than FORTUNE portrayed.
Chairman, General Motors
President, United Auto Workers
Editor's note: Gettelfinger refused repeatedly to be interviewed for the GM article.
GM: Reader Opinions
Years ago when I was at the Sloan School, GM management was already a byword for boneheaded complacency. That its executives may have rolled over in the face of union blackmail does not exonerate them for incompetence at reading the market, assessing competition from overseas suppliers, design--the list is long. I doubt that many of those now retired managers have seen the attack on their expectations of retired union members. You talk about the heavy weight of health-care guarantees. Is this the fault of the unions? The high cost and inefficiency of the health industry is largely responsible.
What if the auto industry follows the example of the steelmakers and airlines and offloads its obligations onto Medicaid and the Pension Benefit Guaranty Corp.? I suppose we'd have to conclude that in the postwar era--when capitalism supposedly reigned--the unionized private sector in the U.S. built up liabilities that ultimately became the obligations of the welfare state. So maybe the U.S. really was a larger version of Canada all along (without its income taxes, eh?)!
Cedar Rock Capital
Enron's Defense Attacks
I am writing about FORTUNE's indefensible choice of Peter Elkind and Bethany McLean to cover the trial here in Houston of my client Jeff Skilling and his co-defendant Ken Lay. No one has cashed in as handsomely from the public's rush to judgment of Mr. Skilling and Mr. Lay--and of other innocent men--as these two. Indeed, to no small degree Elkind and McLean helped precipitate that rush.
It is ironic that so much of Elkind and McLean's criticism of Enron has been based on their claimed outrage about a conflict of interest at Enron. These two have an obvious financial interest in having the trial--or at least the public's perception of the trial--turn out consistent with the one-sided and ultimately cartoonish depiction of Enron and my client in their book [The Smartest Guys in the Room] and in the so-called documentary to which they have lent their names and other support. There is simply no way that FORTUNE can reasonably expect Elkind and McLean to satisfy, even superficially, their ethical responsibilities as journalists to provide fair, comprehensive, thorough, and honest accounts of my client's trial.
Consider a few examples of FORTUNE's poor choice from Elkind and McLean's "Judgment Day" (First, Jan. 11). There they write that "in truth, Ken Lay and Jeff Skilling never much cared for one another" and of "Enron's betrayal of its investors, employees, and customers." These statements are false, but at a minimum a responsible journalist--and one without a conflict of interest--would have properly qualified such statements as, say, being "alleged." Perhaps more transparent is Elkind and McLean's attempt to leave as little room as possible for a version of the facts to emerge that is different from their own. Thus, they write in this same article that "the verdict will send a clear message about the accountability--or lack thereof--of those at the very top of a company" and that the Enron Task Force's failure to obtain any convictions in last summer's broadband case illustrates "how commonsense reality may be hard to explain in the courtroom."
In the interest of fairness, something to which I presume FORTUNE considers itself to be committed, I strongly suggest that reporters without the obvious conflict of interest that Elkind and McLean have be assigned to cover this very important trial.
DANIEL M. PETROCELLI
O'Melveny & Myers
Editor's note: Peter Elkind and Bethany McLean are journalists of the highest reputation, as well known for their integrity as they are for their knowledge of Enron. While they have certainly chronicled the failings of the company and its management, they have neither a rooting interest nor a financial interest in the outcome of the trial.
LETTERS TO THE EDITOR
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