Grandpa and Rick Wagoner agree: the feds control GM's fate

CEO Rick Wagoner’s position that General Motors might not survive without government action takes me back to what my grandfather used to say.

As a child, I can remember my grandfather’s enormous pride in being part of General Motors. At the time, the 1950s, you could reasonably argue it was the most successful company in the world.

And as the manager of a bustling GM parts plant in Saginaw, Mich., grandpa Burns felt good. After the 1930s -- my mother recalls her sadness watching him walk toward the train station, a bag of die-making tools over his shoulder, on a Depression-era quest for work -- and World War II, he cherished prosperity.

I remember listening as he told my dad that his biggest fear was that the government would break GM into smaller pieces on anti-trust grounds. My grandfather’s theory was that GM could easily capture most of the U.S. market, but didn’t to avoid being broken into separate companies.

In the mid-1950s, GM’s U.S. market share hovered just over 50 percent. My grandfather’s General Motors was enormously profitable, hugely influential, virtually an icon of post-war American wealth.

And grandpa had a point. In 1956 the U.S. Justice Department started investigating how to break up GM. Eleven years later, the feds abandoned the effort, concluding that GM was too integrated to split up without damaging the general economy.

A half-century later, Wagoner’s GM is vastly different. A workforce once three-quarters of a million strong has been whittled down by decades of automation and greater competition. GM’s U.S. market share last month was 19.7 percent. Far from being the biggest single U.S. taxpayer, GM is hemorrhaging red ink in North America, though it is strong and growing most other places in the world.

But the irony is for all the separation in time and circumstance between my grandfather and Rick Wagoner, they are both right on a critical point.

The U.S. government controls the fate of General Motors.

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