Sunday, September 20, 2009

Another capitalist 'success story'...

Greetings good citizen,

In keeping with the theme of yesterday’s post, we are once again blessed to witness capitalism at its finest. It’s hard to tell what’s more disturbing here, how the advertising supported corporate media fawns over the ‘credentials’ of a former race car driver turned entrepreneur, or how this ‘hero’ plans to ‘off-shore’ the whole shebang once GM wraps up domestic production at the end of this model year…

What a ‘patriot’ huh?

Anyway, on to tonight’s offering

Detroit’s Mr. Fix-It Takes On Saturn

THEY call him The Captain at the racetrack, where his team has won the Indianapolis 500 a record 15 times. But at heart, Roger Penske has always been a consummate repairman, one who excelled at rebuilding used cars as a teenager and later deftly overhauled troubled businesses as an automotive entrepreneur.

Over the last 30 years, he’s also succeeded where corporate giants have failed. He turned around truck leasing for Hertz, revived General Motors’ diesel-engine operations, and gave new life to Daimler’s micro-car franchise, Smart. And when his struggling hometown, Detroit, had to make sure that Super Bowl XL went off without a hitch in 2006, the city turned to Mr. Penske to run it.

Now, at age 72, the silver-haired former race car driver is about to take on the ultimate problem child of the auto industry — G.M.’s Saturn division. [Saturn my not have been a ‘problem child’ before Penske got his hands on it but it sure has turned into one since the ‘hand-over’.]

Since its creation in 1985 as what G.M. anointed “a different kind of car company,” Saturn has been one of Detroit’s biggest disappointments. Instead of a shining example of G.M.’s foresight, it ended up epitomizing the slow, downward spiral of what was once the world’s dominant automaker. [Hmmn, high owner loyalty/satisfaction, er, are we talking about the same vehicle company here?]

Its early promise faded amid weak sales, years of bland cars and a marketing message that was lost in G.M.’s overstocked inventory of brands. G.M. threw money at Saturn, but never made a profit even during its best times. Analysts estimate that Saturn has lost as much as $20 billion over the last 24 years. [‘Analysts estimate’…wait a minute, aren’t these the same guys that keep telling us the economy is roaring back to life?]

“It may well be the biggest fiasco in automotive history since Ford brought out the Edsel,” said Jerome York, a former G.M. director and an aide to Kirk Kerkorian, the investor who has made and lost hefty sums investing in G.M., Chrysler and Ford. “Saturn has been a huge money loser for G.M. for a long, long time.” [Geez, GM sure did a great job of keeping that quiet (until now) didn’t they?]

In Mr. Penske’s view, however, Saturn is a potential jewel to be plucked from the scrap heap of G.M.’s bankruptcy. [Although he only saw fit to ‘pluck’ the name plate from the scrap pile while ‘rescuing’ none of the production facilities…he wasn’t getting ‘stuck’ with any UAW contracts!]

By early next month, his company, the Penske Automotive Group, is expected to complete its acquisition of Saturn from G.M. After that, it plans to try to reinvent the brand as an independent chain of dealerships. That experiment hinges on attracting a foreign car manufacturer that will supply Saturn with vehicles after G.M. stops producing its current line of Saturns in 2011.

The foray sets the stage for a classic business drama involving a self-made perfectionist who seldom tastes defeat and a tarnished brand that struggled to meet expectations under the heavy hand of a slow-moving and entrenched corporate behemoth. All of which has analysts, competitors and auto buffs placing bets on whether or not Mr. Penske met his match in Saturn.

[I suspect the public won’t be fooled by this ‘faux’ patriot and his planned ‘bait & switch’ scam.]

His efforts to restore Saturn’s credibility and improve its sales mirror, in a much smaller way, G.M.’s own uphill battle to come back — as a 60-percent-owned government entity backed by $50 billion in federal loans.

“My guess is that Penske has a shot at it,” says David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “But I’m not sure I could say that about anyone else except Roger.”

Mr. Penske, citing the pending deal with G.M., declined to comment on his plans for Saturn. People inside G.M. who have knowledge of the transaction — but who requested anonymity because the negotiations are confidential — say that the acquisition should close early next month and that G.M.’s new board of directors wants to move forward with the Saturn divestiture. Penske Automotive has already sent Saturn dealers two-year agreements to review and sign. [These contracts will be a bit tough to honor considering nobody will be making ‘real’ Saturns after the end of this year…]

A G.M. spokesman, Thomas J. Pyden, says the automaker is eager for the deal to close. “We certainly remain hopeful that the sale will proceed,” he says. “In terms of Penske, we don’t think you could find a better buyer for the brand.” [Hmmn, what else would a GM shill executive say?]

Indeed, G.M. has few other options for Saturn. The company has been forced to jettison huge chunks of its global organization to meet government conditions to become a smaller, more nimble competitor so it can ensure its longevity and earn enough money to repay the federal loans that have kept it afloat.

Members of G.M.’s sprawling corporate family like Saab, Hummer and Opel are slated to be sold to foreign buyers, and the venerable Pontiac division will shut down completely. Saturn too looked to become extinct until Mr. Penske surprised the auto industry by making his bid in early June, just two weeks after his race team took home the championship at the Indy 500.

Mr. Penske controls 40 percent of Penske Automotive’s stock, giving him a stake worth about $600 million. The company lost $403 million last year, on revenue of $11.6 billion, during a seismic downturn that slammed all sectors of the auto industry.

In earlier years, Penske Automotive was reliably profitable as it became one of the largest car dealers in the world, with 150 franchises in the United States and an additional 160 in international markets. Mr. Penske’s holdings also include several Toyota dealerships in California.

Um, this is not the ‘end’ of this particular piece, it goes on for, er, 3 more ‘pages’ such as that can be here online (this is just the first page and it comprises a 4 page ‘word’ document.)
Or would print out in 4 separate pages, were I to do so.

I cut it off here because I think we’ve seen enough. I actually ‘took heart’ when I heard Mr. Penske was buying the Saturn Division from GM. (Because I mistakenly believed he was buying the whole product line and not just the nameplate, as is now apparent.)

Now that we see he intends to ‘sell out’ the former employees, I’m no longer impressed with his ‘daring’ nor his ‘can do’ spirit.

The fact that the media is calling this a ‘challenge’ is an insult to our intelligence although one must admit, we can only wonder who will buy a Saturn once they aren’t made here in the US anymore?

Contrary to this article, most folks I know who own Saturns, love ‘em…but once the parts go away, there won’t be much point in trying to keep ‘em running.

Don’t you just love seeing a ‘successful capitalist’ at work?

Thanks for letting me inside your head,


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