It’s no secret that poor management led General Motors down the path to bankruptcy, but President Obama’s auto task force was “shocked” by the level of mismanagement found in Detroit. The auto task force headed up the restructuring and bankruptcy efforts at GM and Chrysler .
Speaking to Fortune magazine for the first time since leaving his post in July, Rattner revealed just how bad things were in Detroit when the auto task force arrived. “Everyone knew Detroit’s reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM,” Rattner said.
Rattner added that GM had the “weakest finance operation any of us had ever seen in a major company”, with equally kind things to say about Chrysler .
According to Rattner, the auto task force was split 50-50 on whether to save Chrysler. In fact, the task force only gave Chrysler a 51 percent survival chance beyond two years, even with the bailout loans. In the end, the Obama administration decided to move ahead with the loans as the liquidation of Chrysler would have resulted in about 300,000 job losses.
Although the downfall of GM was years in the making, Rattner put a significant chunk of the blame on former GM CEO Rick Wagoner, saying he “set a tone of friendly arrogance that seemed to permeate the organization.”
Rattner didn’t give a future outlook for either company, but it sounds as if both automaker are already light-years ahead of where they were just a few short months ago.
