Kerkorian Bad Fit, But GM Still Could Gain From Self Exam

Sometimes it’s all about the match-ups.

Championship sports teams often struggle to the beat also-rans at the bottom of the standings, simply because the match-ups aren’t favorable out on the field.

The same may be true for the auto industry and highly successful billionaire investor Kirk Kerkorian.

For Kerkorian it’s all about turning a fast buck on Wall Street, and that may not play well in an industrial sector struggling under the weight of a hundred years of history and finding it difficult to turn on a dime.

A decade ago, Kerkorian, who made his mark investing in Las Vegas casinos, tried to mount a takeover of Chrysler in an ill-fated scheme that would have returned former Chairman Lee Iacocca to the helm.

Now, for the past 15 months, an ever-impatient Kerkorian has had a tight grip on General Motors, where as its biggest single shareholder he once again has sparked high-level intrigue via a newly failed plot to force an alliance with Renault-Nissan.

His lieutenant, Jerome York, gave up his seat on the GM board in frustration last week after the proposed tie-up was rejected and directors refused to order an independent study of management’s findings, intimating not so subtly that GM’s board is being controlled by management, rather than the other way around.

York’s tirade in which he says he has not found “an environment in the boardroom that is very receptive to probing,” isn’t the first time an outside director has been frustrated with the pace of change.

Ross Perot, who joined GM’s board in the mid-1980s after his Electronic Data Systems operation was acquired, was equally exasperated, saying, “GM cannot win by continuing to do things the way they have been done in the past.”

Eventually, Perot was paid handsomely to go away, and no doubt insiders would like to see Kerkorian do the same.

GM management probably was right in rejecting the proposed alliance with Renault-Nissan. Any gains would have been long term, and it’s at least even-money GM will recover as well and as quickly on its own as with Renault-Nissan.

But bad fit or not, Kerkorian and York may have a point, just as Perot did some two decades ago.

Even if on the right track toward recovery – and that remains in doubt – GM management and its board could stand to benefit from the experience of an outsider like York.

The next few years will prove whether Kerkorian and York simply were frustrated by their failure to turn a quick profit or GM and its board were far too insular for their own good.

As usual, the truth probably lies somewhere in between.

And even if the auto maker is successful in killing the messenger and Kerkorian takes his money and runs, insiders may want to look past the hostile delivery and reconsider what York actually had to say – just to make sure they aren’t missing something.

After all, the last 30 years or so of history suggests GM doesn’t always get it right.

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