General Motors’ board of directors has wisely rejected a management pitch in favor of Magna’s bid for Opel and will take some time to assess Opel’s future. It’s the right decision. GM’s management was being railroaded by the German political and labor union establishment into accepting a bid from Magna and its Russian partners, including Sberbank. The Germans preferred Magna, as so many politicians and union leaders were more than happy to say publicly, because the bidder pledged to preserve Opel jobs. This despite the fact that Opel – like just about every auto maker in the world operating in a lousy economic environment – would surely need flexibility to trim jobs if that would contribute to its long-term survival. But the Germans had leverage – no Magna, no government financial assistance. I haven’t taken sides in the bidding war between Magna and private equity rival RHJ International. Without being privy to details of each party’s offer or, for that matter, Opel’s internal finances, few would be able to determine which group would be the European car maker’s better custodian. But I’ve long felt, and have previously written, that the terms of the Opel-sale debate in Germany – jobs, jobs, jobs – were spurious and unhealthy for Opel and its workers, whose employment hinges on the company’s longevity. It’s back to the drawing board for GM’s post-bankruptcy board, Opel and Germany. That’s a good thing. And if Magna prevails in the long run, one can now reasonably hope it will follow a more considered process and public discussion. By the way, WSJ colleague John Stoll reports that the board’s decision runs counter to the pro-Magna recommendation of CEO Frederick “Fritz” Henderson and his management team. It’s a sign of the “new” GM that the board has the wherewithal to say “no” to its CEO – and it bodes well for the auto maker’s future under 61% U.S. government ownership. In its previous, stodgy incarnation, GM’s board seemed to march in lockstep with management, even when the CEO and his team could have benefited from some push-back from savvy directors. As frustrating as the prolonged Opel sale process is, this particular bump along the road toward a lighter-weight GM without some of its overseas assets is heartening.
Archive for August 21st, 2009
Auto Industry, Germany, Mergers & Acquisitions, Russia / 9 Comments
The above chart represents the sales trends at Ann Taylor Stores Corp. for the past year. The trends tell you two things – it appears sales hit a bottom in the 1st quarter of this year. And that the core Ann Taylor store business continues to suffer. So much, that for the first time, sales at its factory stores and those off the internet were greater than at the core Ann Taylor stores.
Central Banks, Credit Crisis, Credit Markets, Economy, Federal Reserve, U.S. Treasurys, Uncategorized, United States / Comments Off
Federal Reserve Chairman Ben Bernanke’s almost poetically titled “Reflections on a Year of Crisis,” delivered at the annual gathering of economic gurus in majestic Jackson Hole, Wyo., can be read as an understated resume quietly recommending his reappointment to head the central bank.
The central banker’s bottom line is not new. He described a victory over crisis and panic that could have had significantly more devastating economic consequences if the Fed, fellow central bankers and politicians hadn’t flooded the zone with quick antidotes.
But as the days tick toward a decision from the Obama administration about whether to reappoint Bernanke (his term ends in January), each such summation, especially at a high profile gathering such as the annual economic symposium hosted by the Federal Reserve Bank of Kansas City, takes on the air of a campaign speech. A dignified and entirely proper variant on the campaign speech, no doubt.
I went to visit my dentist earlier this week for my six-month checkup and like I do with most businesses I visit these days, I ask about the business. When I was there in February, I mentioned on Twitter that my dentist was experiencing a dead-tooth bounce. Seems that people at that time were feeling they couldn’t put work off any longer and were scheduling appointments. The economic worries were what was holding them back
“Pretty dead,” is how he described business. The issue today is unemployment. As more and more people are without jobs, it means they don’t have the insurance to pay for dental work. So, unless they are in excruciating pain, they don’t schedule checkups and certainly don’t do cosmetic work. No big ticket items.
“It’s been months” since someone asked him about teeth whitening.