Outgoing General Motors CEO Dan Akerson said he does not hear the auto company referred to as “Government Motors” much anymore in a speech proclaiming the 2008 and 2009 bailout of the company a success.
Conservative critics of the federal governments infusion of $50 billion into the Detroit-based GM at the height of the 2008 and 2009 recession labeled the company “Government Motors” because the bailout involved the federal government buying a majority of its stock.
The Treasury Department announced last week that it had sold the last of its GM stocks — though the federal government lost $10 billion overall in the deal.
{mosads}Despite the losses, Akerson said in a speech at the National Press Club on Monday that the derisive moniker was no longer appropriate for GM.
“Someone asked me recently if the ‘Government Motors’ tag still hurts us. To be honest, we don’t hear it that much anymore,” he said.
“It reminds me of a comment Ronald Reagan once made,” Akerson continued. “He said he knew his economic plan was working ‘when they stopped calling it Reaganomics.’ Well, General Motors is working again.”
The day after it was announced that the federal government no longer owned stock in GM, the company announced Akerson was retiring and said it was appointing its first female CEO, Mary Barra.
Akerson said Barra will face challenges running the newly-liberated auto company, though he expressed confidence in her selection.
“On that day, for the first time in decades, all eyes at General Motors pointed toward the future,” Akerson said of Barra’s appointment.
“The end of the ‘Government Motors’ era has cleared the runway for the team to soar,” he continued. “And soar we will, because we are building a GM that America can be proud of. It has not been easy, and the path forward for Mary and her team will not be, either.”
The outgoing GM CEO reflected on his time as CEO, which began in 2010, when the company was still in the middle of attempting to pay back its bailout.
“The ‘New’ GM was, in a word, fragile,” he said. “We had emerged from a bankruptcy that lasted only 39 days. That was good, because it didn’t leave a damaging cloud over our brands. But a 39-day ‘quick rinse’ bankruptcy only gave us time to repair the balance sheet. Truly transforming our business would take much more. We had to remedy decades of poor decisions.”
Akerson said there were a lot of poor decisions before he got to GM.
“You could pick just about any point in time and find something to shake your head over,” he said. “For example, in 1978 GM paid almost as much in benefits as it earned in net income. Yet the very next year, it agreed to the largest pension increase in UAW history.
“Eventually, GM’s pensions plans — the largest private sector funds in the world — became chronically and dangerously underfunded despite tens of billions of dollars in cash and stock infusions,” he said. “That actually weakened the company because it treated the symptoms, not the disease, robbing precious dollars from product development.”
Akerson said GM has made a lot of strides, but he said the company still had a lot of work to do under Barra.
“All of this is good for our employees, our investors, our industry and our country,” Akerson said of GM’s recent accomplishments. “But none of it would matter much if we went back to business as usual.
“Good as this all sounds, the truth is we are still in the early chapters of our comeback story and we have a lot to prove, especially to people who left us for other brands,” he continued.