HOW HE SEES IT GM beware: All Kerkorian wants to make is money

By WARREN BROWN
WASHINGTON POST
I've been trying to keep an open mind on Kirk Kerkorian and Jerome York, the gentlemen from Tracinda Corp., the privately held Beverly Hills, Calif., investment firm controlled by Kerkorian.
Tracinda owns a 9.9 percent share of General Motors Corp., the world's largest automobile manufacturer. GM makes cars and trucks. Tracinda, named after Kerkorian's daughters, Tracy and Linda, makes nothing except money. And it does that largely through buying positions in companies that actually make and sell things, maximizing the value of its holdings, and selling its corporate booty to the highest bidder.
There is nothing wrong with that, per se. Indeed, it is the modus operandi of raw capitalism -- making money by buying into a company and doing whatever you have to do to boost your share value, even if that means destroying the company you bought into and selling off the parts.
A money maker
It's typical corporate grazing, and both Kerkorian and York, who represents Tracinda on GM's board of directors, have grown rich doing it.
That is what bothers me about the Tracinda initiative to force GM into an alliance with French automaker Renault SA and its Japanese cousin, Nissan Motor Co.
On the surface, it appears to be an opportunistic move for corporate regime change. Let's face it, GM has had more than its share of woes of late -- declining North American sales and market share; the burden of bailing out Delphi Corp., its bankrupt auto parts supplier; and all of the opprobrium, manifested in pitiful credit ratings, that one would expect to come from Wall Street in response to such developments.
So, naturally, when such things happen, there is a hue and cry among many investors and members of the media to throw the bums out. That approach is especially attractive when the prospective replacement -- in this case, Carlos Ghosn, the Napoleon of the global automobile industry who heads Nissan and Renault -- has a certain amount of heroic cachet.
Ghosn quite properly is credited with saving Nissan from financial ruin. He has turned around the company's once-dismal fortunes in North America and the world. He gets respect, more at the moment than many members of the media or Kerkorian or York are willing to give to Rick Wagoner, GM's chairman and chief executive.
Successes overlooked
It matters not that, after much angst and error, Wagoner and his team are making laudable progress in GM's troubled North American operations. Nor does it seem to matter that, despite his many achievements, Ghosn also has accumulated an equally interesting collection of flops, most notably in his so-far ill-fated bid to take on GM directly in the U.S. market for big trucks with the Nissan Titan pickup and the aptly named, poorly executed Nissan Armada SUV.
Nor does it seem to matter that Ghosn's Renault, not exactly a paragon of automotive quality, has failed miserably in its attempts to make a go of it in the United States -- compared with GM's successful runs in Europe and now in China and South America.
Regime change, or what passes for it, has its own drumbeat, its own rhythm -- a frenzied noise that climaxes with the much-storied removal of the troubled leader and the installment of the new, and the accompanying transient rise in stock value that is sure to delight investors such as Kerkorian and York, whose various corporate histories prove that they have no qualms whatsoever about selling when they think the time is right.
Who profits?
What any of that might do for GM or the future of America's industrial competitiveness is anybody's guess. But my hunch is that it won't do much good for anyone or anything except Kerkorian, York and the gamblers at Tracinda, a company rooted in the betting life of Las Vegas, where Kerkorian made billions buying and selling hotels and casinos.
But the evidence is that not many people, other than those directly affected by the Kerkorian-York ploy, really care about what happens to GM in particular or to American competitiveness in general.
That much was made clear to me by a seemingly innocent query addressed to Wagoner by a colleague of mine at a Washington Post editorial lunch last week.
The colleague asked: "Why is it so important that GM remain an independent American company?"
Wagoner offered the predictable response, pointing out the need for a strong America that makes and sells as many things as it buys and borrows.
I privately shook my head, wondering how the colleague would feel if someone asked: "Why should The Washington Post remain an independent American newspaper?"
Worth asking
Odd question perhaps, but asking it of Kerkorian and York might illuminate their thinking about GM. These guys have a myopic, unemotional view of the American corporation: They see it only as an instrument of stockholder wealth. Workers, customers, a company's values, the community in which the company operates -- considering any of them has the potential to negatively influence the value of the share. Pride of product? History? Irrelevant.
On second thought, forget what I said about keeping an open mind about Kerkorian and York. Their legacy of corporate buying and cashing out when it suits them has made it up for me.