GM culture: a problem that cash can't fix?

DETROIT (Reuters) - America's largest automaker has been left dependent on the kindness of strangers -- its fate in the hands of bureaucrats as much as car buyers.

But as the Obama administration weighs whether and how to proceed with a request from General Motors Corp for up to $30 billion in federal aid, some experts and even consultants who have worked for the automaker, say a massive cash injection now may not cure everything that ails GM.

What GM needs, they say, is a radical shake-up of an inward-looking century-old corporate culture dominated by financial executives focused on chasing the next deal in a failed effort to reverse the automaker's decades-long decline.

Many middle managers and other salaried workers, they say, have been too comfortably cocooned for too long.

GM has developed a lot of bright people but it has also bred insularity, said Harley Shaiken, a professor at the University of California, Berkeley and an expert on labor-management issues in the auto industry.

GM for much of its history was so large that it thought it was a proxy for the world. It is not, he said.

Through $82 billion in losses over the past years and a close brush with bankruptcy, GM's board has remained firm in its backing of Chief Executive Rick Wagoner.

Now, even some former critics have come around to the view that Wagoner should stay on to guide the company through its cash crunch, but others also say the time is right to begin thinking about what kind of GM emerges from this crisis.

There are people who are saying, let's fire the coach, but that's not the answer, said University of Maryland economist Peter Morici. This is the fourth game of the World Series and you have to play with the team you've got.

GM has already taken $13.4 billion in emergency government funding, and the autos task force assembled by President Barack Obama will have to decide how much more it needs and where to draw the line as the political and fiscal toll of bailouts of the banking and auto sectors mount.

But nothing in GM's 117-page turnaround plan submitted to the U.S. Treasury discusses how it plans to reinvent itself or change decision-making at a one-time industrial powerhouse credited with pioneering professional management under its legendary Chairman Alfred Sloan in the late 1930s.

LIFE OR DEATH?

My contention is that a lot of the changes they are facing now could have been made five years ago, said Brad Coulter, a restructuring adviser at O'Keefe & Associates near Detroit. They had the opportunity to act while markets were strong. Now we're facing a life or death situation.

Case in point: In 2006, Jerry York, a GM board member and adviser to billionaire investor Kirk Kerkorian, had urged the automaker to unload Saab and Hummer. GM resisted.

Now Saab is in court-supervised reorganization in Sweden and Hummer could be shut down in the coming weeks if a buyer is not found at a fire-sale price.

Other GM deals in the eight years under Wagoner have fallen short of promise or plain backfired.

In 2005, just as its U.S. operations began to face deeper trouble, GM agreed to pay Fiat SpA $2 billion to avoid having to take over all of the Italian automaker.

That was on top of the $2.4-billion in GM stock paid to Fiat in 2000 to get access to its small-car technology.

Now Fiat is ready to move on GM's home turf as the potential suitor for Chrysler LLC after a proposed GM merger with Chrysler was dropped by the larger automaker.

Fiat stands to get 35 percent of Chrysler without putting up any cash by offering access to the same kind of technology GM had once sought.

Critics cite examples such as those as evidence that any new GM will have to reach outside of its ranks for senior talent and drive home a message at every level of the sprawling company of responsibility when things go off plan.

There is no accountability, said Rob Klienbaum, a former GM executive and a longtime consultant for the automaker. The company has always drawn from the same pool of talent forever and a day -- sometimes to disastrous results.

Klienbaum said he expects to lose all of his business with GM after posting a critique of GM's corporate culture at the University of Michigan's Transportation Research Institute -- http:www.umtri.umich.edu/content/RetoolingGM.pdf.

His verdict: GM's culture shows little tolerance for dissent, little appetite for making hard decisions and an insularity that has made it seem sometimes tone deaf to broader societal concerns like the environment.

GM has promised profound and fundamental changes to the taxpayers, Klienbaum said. But there is little evidence that they are addressing the fundamental cultural issues that have driven so much poor decision making.

Klienbaum said his adult children have warned him to be ready for a Jerry Maguire-like backlash from his decision to go public with his long-brewing concerns about GM, but he says he believes he had to do just that.

If they don't make these changes, they aren't going to be around at the end of the day, he said.

(Editing by Peter Bohan and Maureen Bavdek)