SPECULATION ON THE WAGONER SURVIVAL STRATEGY

www.autoextremist.com 's Peter M. DeLorenzo takes a second shot at the "Renault Alliance" proposed by billionaire minority shareholder Kirk Kerkorian and his Tricinda Corporation. See, http://www.autoextremist.com/page2.shtml#Rant.

The rhetoric this week is substantially less dramatic, but it's still consistent with the parochial "old Detroit" line opposing the alliance-partnership between GM, Nissan and Renault.

DeLorenzo's speculation boils down to a guess that Rick Wagoner and his friendly board members will try to keep Carlos Ghosn out of the Ren Cen executive suite while placating Kerkorian and his industry-expert Jerry York with linkages that smell a lot like an "alliance-partnership."

DeLorenzo speculates GM's board might go for "limited arrangements" such as a "joint-venture on an engine manufacturing facility . . . [a]n agreement to build a parts facility [begging the question as to what spinning off Delphi was all about if GM was going stay in the parts business] . . . [a] joint purchasing agreement on steel and other manufacturing essentials . . . . [a]nd even investigating shared platforms down the road."

Hmmm? Maybe Kerkorian and York DO have a point about the potential for "synergies" from the "Renault Alliance?"

A better, albeit more risky defensive suggestion, however, comes from Automotive News International Editor Charles Child. Child suggests that Rick Wagoner make the bold move of copying one thing Ghosn did when he took on Nissan:

"Ghosn stood tall at Nissan by spelling out specific sales and financial goals after he took command of the troubled Japanese automaker in 1999. Under his first three-year program, called the Nissan Revival Plan, he said he would cut debt in half, return to the black and achieve operating profits equal to 4.5 percent of sales. Moreover, he announced the goals publicly. If he fell short, he promised to resign. In a word, he was accountable."

Accountability? What a novel concept . . . .

If time permits, Kerkorian could use these sorts of defensive moves against the Wagoner regime. Agreeing to obvious "limited arrangements" (suitably stabilized by substantial cross-investments, of course) and forcing Wagoner's bunch to "put up or shut up" by specifying hard targets for GM's turnaround, might be enough to put the "Renault Allliance" on an upward trajectory and grease the skids on Wagoner's bunch if they cannot produce competitive results.

If Kerkorian facilitates Wagoner being "hoist on his own petar[d]," and has used the time to secure additional tie-ups between GM and Ghosn's companies, then Tricinda will be in a stronger postion to demand Wagoner's successor be Ghosn.

However, Edward Lapham thinks Kerkorian doesn't have much time before he has to "cash out" for life (see yesterday's entry).

And DeLorenzo doubts Ghosn has time to wait either. He argues that recent Nissan weakness is, at least in part, due to Ghosn's "disruptive" corporate move to Nashville and the chaos of new product introductions. The assertion is that Ghosn has to move on now to avoid losing his "golden boy" reputation.

[DeLorenzo's thesis is somewhat odd, considering that virtually every automaker (including GM) is trying to cut employees (although not as elegantly as Ghosn's slick move from California) and that such RIFs inherently create disruptions.]

DeLorenzo's take on Ghosn is kind of a simplistic and "misunderestimated" way to look at someone who "bet the farm" on being able to hit specific targets with a near-morbund automaker in only three years.

But DeLorenzo's correct on one thing . . . It will get interesting.