Jerry York's speech to the Society of Automotive Analysts in Detroit last week was on the mark. His list of things General Motors can do to generate a robust resurgence ought to be a preliminary checklist for GM management.
It's unusual for a stockholder to present such a detailed honey-do list to management. But York is no bomb-thrower. As an adviser to Kirk Kerkorian, whose Tracinda Corp. is one of GM's biggest shareholders, York has standing. He's no outsider, either. York is a car guy who knows the business and was part of two turnarounds, one at Chrysler Corp. that began in 1990 and another later at IBM Corp.
At the top of his list, York said GM must be realistic about market share and revenue expectations. But he gave the automaker credit for plans to close nine plants and remove 1 million units of capacity. If market share continues to slide, more may have to be closed.
York also suggested culling the product lineup to get rid of the dogs and eliminate overlap, especially in consolidated Pontiac-Buick-GMC stores.
One controversial idea is bound to be the suggestion to dispose of Saab and Hummer. But they may have to go as GM makes tough decisions to get rid of operations that aren't part of the core business or can't make money.
Clearly, GM must operate in crisis mode. It must establish clear goals for financial performance that give employees targets to hit and investors a way to judge the company's progress. That worked for Carlos Ghosn at Nissan, and it can work at GM.
York was right when he preached equality of sacrifice, which means every employee or director takes a pay cut, with lesser-paid workers bearing a proportionately smaller load while the top executives sacrifice more.
As far as shareholders are concerned, York said Kerkorian will support halving the company's annual $2 dividend, which will save $566 million a year. When the turnaround is successful, shareholder value will grow and executives will be rewarded with bonuses. But there also must be a way for the rank and file to profit from a turnaround.