General Motors Chairman Daniel Akerson tells Newsmax that both President Obama and former President George W. Bush should share credit for the successful bailout of the auto industry.
Akerson also flatly denies allegations that the federal government — which still owns nearly 30 percent of General Motors stock — has been involved in the day-to-day running of the company.
And he warns that while he sees a positive outlook for GM over the next several years, he believes the economy has not fully recovered due to a weak housing market which he predicts won’t bottom out for another “couple of years.”
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Akerson joined GM’s board of directors in 2009 as a representative of the U.S. Treasury, which then owned 61 percent of the company. He previously served as managing director of the Carlyle Group, an asset management company. Akerson became CEO of GM in September 2010, and chairman in January 2011.
During his first year as chairman, the company had record profits of $7.6 billion on $150 billion in sales, regaining the title of the world’s largest automaker, lost briefly to Toyota during the financial crisis.
In an exclusive interview with Newsmax TV, Akerson addressed President Obama’s claim that he saved General Motors and one million U.S. jobs.
“Everything in the world seems to boil down to politics,” he says. “It’s like in the Middle Ages, everything was seen through a theological prism, and everything today is seen through a political prism.
“Let me state a fact: The first $13 billion that was put in the company, George Bush, a Republican, put it in. The second [payment] came in with President Obama. So we had two administrations, two presidents of reasonably disparate points of view politically, economically, philosophically, decide that this is in the best interest of the American economy and American jobs.
“Now President Obama had the obligation to decide whether [the company] would go through bankruptcy or not, and therefore he was more involved in the restructuring of it. But in fact there were two separate efforts to make sure the company survived.”
Critics have charged that because of the bailout the Obama administration has dictated how General Motors conducts business. Akerson says it’s not true, countering: “There is no factual basis in what the critics say. It’s just speculation.
“There’s been more air time on the subject than there has been board time. It just isn’t true. They’ve never been in the board room. They’ve never involved themselves in the operation of the business. In fact I know there have been two or three decisions we’ve made that have really alienated the U.S. government.
“I’ve been on the board since we exited bankruptcy, and other than their control of the top 25 [GM executives’] pay, they do not involve themselves in the day-to-day running of the business or the strategy of the business.”
One of the decisions that irked the administration came when German Chancellor Angela Merkel was visiting President Obama in the fall of 2009 and the GM board reversed an earlier decision to sell its Opel unit, Akerson recalls.
“We made a decision to keep the subsidiary, and the German government was a proponent of General Motors selling the unit to a European/Canadian buyer. The board reversed the decision without any forewarning or request for permission. It was a surprise.
“My understanding is the chancellor wasn’t terribly pleased about that.”
The U.S. Treasury Department still owns nearly one-third of GM stock as a result of the 2009 bailout that kept the company alive during its bankruptcy reorganization. Akerson was asked how long he believes the government will hold on to its stake.
“Many of our large shareholders are concerned about such a concentration of one holding,” he tells Newsmax.
“The fear is, what is the government going to do. Could they articulate a disposition strategy? Could they say over the next eight quarters we’ll sell one eighth of our holdings? What are they going to do?
“If you listen to one candidate, Gov. Romney, he says if he wins he’ll just drop the shares. That would be, termed mildly, a market dislocation, [although] the stock would recover.
“President Obama, if he were to win, I presume there would be a more measured response.”
Akerson did say that the Treasury Department’s restraints over executive pay, including freezing the salaries of top executives at GM, does impede his company’s ability to compete.
“It makes it difficult but not impossible for us to run the company, because we have to compete in the marketplace for the most scarce resource and that is human talent,” he said.
“When I try to recruit someone I tell them this is not the typical company. We’re trying to save and restore an iconic American company that [otherwise] would have cost, by many different centers of thought, at least a million jobs. Why would you do that?
“We saved a million jobs. We’ve added 17,000. We’ve invested almost $50 billion in infrastructure, and instead of the auto industry being an anchor in the progress of the recovery we’ve had the wind at our sails.
“This is the first time in over a generation that all three major auto manufacturers are profitable. A million jobs. How many households does that make? How many children can go to college? How many people aren’t unemployed, aren’t standing in bread lines. And there are bread lines in Detroit. It’s tough.”
Akerson likened taxpayers’ support for Detroit and the auto industry to aid for victims of natural disasters: “It would be an embarrassment to bring a friend from overseas to Detroit. Joplin, Missouri, had a really disastrous tornado, New Orleans had a hurricane. That’s the way the American people are — we rush to help our fellow citizens.
“This industry is the basis for American industrial infrastructure. It was too important to cede that to foreign competitors, in my opinion. And I speak as a Republican when I say that. I’m proud to be part of the recovery and proud that we’re adding jobs. . .
“I think the American people long-term will benefit from that decision.”
Akerson was asked for his take on the economic recovery and what Washington needs to do to improve it.
“I fundamentally don’t believe that politicians have as much to do with the economy as they think they do,” he responds.
“The big issue in the economy today is unemployment. I don’t think fixes around the edges will do,” he said, noting that the housing sector was the main culprit.
“I think the recovery has been moderate to weak, and in order to get it to moderate to robust the housing industry has to bottom and ultimately recover. I don’t think it’ll happen in the next year. I think it will take a couple of more years.”
Akerson believes General Motors stock, which is down about 25 percent over the last year, is undervalued and will rebound as the company continues to “unwind from the difficulties we went through” and gets through “the post-bankruptcy recovery period, which I think General Motors is still in. It will take us a couple of years.”
He says he does worry about high oil prices and their impact on the auto industry, but points out that “General Motors is the first auto manufacturer to produce 100,000 cars that get 30 miles or more per gallon. So we have retooled and resized our portfolio.”
In his exclusive Newsmax TV interview, Akerson also:
See other exclusive excerpts from the Daniel Akerson interview:
- Touts the virtues of the oft-maligned Chevy Volt, which he has driven 3,000 miles on a single gallon of gas, and tells the real story behind reports that the Volt’s battery caught fire following a crash test.
- Discloses GM’s plans for a huge expansion of auto sales and production in China.
- Predicts that pent-up demand for new vehicles will lead to improved sales for the auto industry this year.
- Reveals GM’s “top secret” plans for a revamped muscle car — the Chevy Corvette.
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