In Magazine Ad, GM Atones for Mistakes

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By Kendra Marr
Washington Post Staff Writer
Tuesday, December 9, 2008

Step one on the road to recovery: Admit you have a problem.

General Motors, the world's largest automaker, yesterday candidly confessed to the blunders that has led it to near-collapse in a full-page advertisement in Automotive News.

"While we're still the U.S. sales leader, we acknowledge we have disappointed you," the company said in the magazine ad. "At times we violated your trust by letting our quality fall below industry standards and our designs become lackluster. We have proliferated our brands and dealer network to the point where we lost adequate focus on our core U.S. market. We also biased our product mix toward pick-up trucks and SUVs. And, we made commitments to compensation plans that have proven to be unsustainable in today's globally competitive industry."

The letter, titled "GM's Commitment to the American People," appeared just as the House finished drafting a bill for federal aid yesterday. The company laid out the reasons why it needs an $18 billion government bailout and vowed to turn around its business.

"It's addressing what Congress wants to hear, but they do realize they've made mistakes," said industry consultant Laurie Harbour-Felax.

Maryann Keller, a longtime industry analyst who has written two books on GM, found it strange that the automotive giant would offer its appeal in a niche industry trade publication.

"I find it bizarre," she said. "Why are you spending money on this? What a pointless exercise."

Still, the confession marks a turning point for GM. Just a few weeks ago the chief executives of the Detroit automakers were caught off guard by the tough questions they received from Washington lawmakers. They offered vague responses when asked whether they would take pay cuts and seemed sheepish about why they had traveled to the hearings by corporate jet. They appeared to blame their firms' problems solely on the current economic decline.

"What exposes us to failure now is not our product lineup, or our business plan or our long-term strategy," GM's chairman and chief executive G. Richard Wagoner Jr. said in his initial testimony to Congress. "What exposes us to failure now is the global financial crisis which has severely restricted credit availability and reduced industry sales to the lowest per capita level since World War II."

Apologizing isn't an easy feat for corporate America, said Gene Grabowski, chair of the crisis and litigation practice at Levick Strategic Communications.

"When you're a publicly held corporation, every utterance you make is scrutinized by Wall Street and has consequences in the marketplace," he said. "It's no wonder they're careful, especially with something so important as an apology. But they're also human beings. Sometimes it's human nature to resist giving an apology. A certain amount of pride has to be swallowed."

Former Chrysler chief executive Lee Iacocca played it right when he humbly asked Congress to bail out Chrysler in 1979, management analysts said.


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© 2008 The Washington Post Company

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