GM's last stand
Without government aid, the automaker says it will be broke by New Year's. But does its restructuring plan go far enough?
NEW YORK (Fortune) -- General Motors wasn't doing any sugarcoating when it presented its restructuring plan to Congress Tuesday.
The company said that it will be out of business by the end of the year unless it gets an immediate $4 billion loan. And it needs another $6 billion to keep its doors open through the first quarter.
The company warned that "a failure by GM will likely trigger catastrophic damage to the U.S. economy."
Essentially, what the restructuring plan promises is that GM (GM, Fortune 500) will begin to do things better. Not differently, better:
- Shift its model mix to smaller cars and crossovers and invest in alternative fuels. That process has been going on for months and will take four years or more to complete. Every automaker in turnaround wants to revamp its product line, but by definition that work is the opposite of a quick fix.
- Focus its marketing and distribution on four core brands - Chevrolet, Cadillac, Buick and GMC. An overdue move that leaves probably one more brand than GM needs, but it has spent a lot of money creating a new dealer channel for Buick, GMC and Pontiac and doesn't want to see it wasted.
- Pontiac becomes a "specialty brand." Some would say that with only five car models on sale, one of them shared with Toyota, it already is.
- Sell Saab and consider other options for Saturn. Both brands have been consistently unprofitable for GM. It is hard to understand the hesitancy in dealing with these festering problems.
- Accelerate the shrinkage of manufacturing and fixed costs. GM has been working on that for two decades.
Aside from some window-dressing items like reducing executive compensation and selling its corporate planes, there wasn't much said in Tuesday's plan about new ways of doing business. GM promised to get leaner, make more fuel-efficient, trouble-free cars, and keep cutting away at compensation - as it has been doing for years. But despite many rounds of cost cutting, GM hasn't become more competitive because its revenue shrinks faster than its costs.
The prospect of a hanging is said to focus the attention, but GM seems focused only on getting government money to keep it alive this year.
Here are some additional items that Chairman and CEO Rick Wagoner may want to propose when he goes before Congress again:
- Effective immediately, we are changing the name of the corporation to Chevrolet Motors. For years, we have supported a corporate advertising campaign promoting the name "General Motors," but we sell no cars under that brand. That puts us at odds with every other car company in the world. Renaming the company would end the confusion and put a tiger in Chevy's tank.
- Effective immediately, I am resigning as CEO and appointing president and COO Fritz Henderson as my successor. I've been doing this job for eight and a half years and I'm tired of it. Besides, we've lost more than $70 billion in the past four years, and it is time for some fresh thinking. Fritz is younger, is great with numbers, and has sharper elbows than I do.
- Effective immediately, I am reorganizing the corporation as a holding company. We make lots of money in Asia, the Middle East and Latin America and I think we can still save Europe, even though we've lost money there for the past three years. With a holding company structure, we can isolate the problems of North America -- just in case it has to go bankrupt.
Making GM competitive has been like trying to melt an iceberg. It just can't slough off old ways fast enough to get up to the speed of competitors like Toyota (TM) and Honda (HMC). As the world's largest automaker and longtime U.S. market leader, radical change has been anathema to GM. Now is the time to start. 
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