The writer, a Los Angeles freelancer and former Detroit News business reporter, writes a blog, Starkman Approved.
By Eric Starkman
Dan Gilbert and Mary Barra
Among my fascinations with GM under the leadership of CEO Mary Barra is the brigade of PR folks she continues to employ, while firing some 1,600 salaried workers at the company’s tech center in Warren, including a 38-year-old veteran with a Harvard MBA and an engineering degree from MIT. Barra’s “strategic” communications specialists at times seemingly don’t have enough to do because I recall a Detroit Free Press story quoting two GM spokespersons in the same article.
I wonder how auto writers know which GM communications specialist to call.
GM’s head of communications, Lin-Hua Wu, is based in the Bay area, Shenan Reed, the company’s global chief media officer, is based in suburban New York City, and I’ve seen numerous other names spinning for Barra in news reports. Perhaps that’s why GM has difficulty keeping its messaging straight.
When GM and billionaire real estate developer Dan Gilbert first unveiled their secret deal to redevelop the Renaissance Center, they fashioned themselves as altruistic do-gooders engaged in civic “philanthropy” looking to beautify Detroit’s waterfront and saving the city from an abandoned eyesore. Having run up against some resistance for the $250 million in taxpayer monies required for GM’s and Gilbert’s feigned charitable activities, GM has admitted it stands to profit from the deal after all.
Donate Future Profits
The Detroit News Friday reported that GM is offering to donate any future profits it makes from the partial demolition and redevelopment of the Renaissance Center to not-for-profit educational organizations in Detroit. The proposal is part of more than a decade of “quiet planning” GM claims to have conducted “to find an appropriate solution or a credible buyer” for the RenCen, which has been GM's global headquarters in Detroit since 1996.
“Our partnership with (Dan Gilbert’s) Bedrock resulted in a visionary plan that would benefit the city and the state and position the building and the riverfront well into the future,” GM spokeswoman Tara Stewart Kuhnen told the News. “To underscore our commitment, GM will donate any potential return on its investment to local education-focused nonprofits in Detroit.”
I’m heartened that Stewart Kuhnen’s LinkedIn profile says she’s located in West Bloomfield, and presumably she knows how to correctly pronounce Gratiot.
Dave Massaron
Dave Massaron, GM's vice president of infrastructure and corporate citizenship, insisted last week that GM’s and Gilbert’s RenCen redevelopment deal was philanthropy, declaring absolutely, positively, there was "no hope of anywhere near a market return."
"In fact, a return at all will be difficult to achieve," Massaron told the Detroit News.
Kofi Bonner, who oversees Gilbert’s real estate ventures, said the redevelopment of the three remaining RenCen towers would create "low market returns."
Gilbert's chief lobbyist, Jared Fleisher, later said it would be "essentially philanthropy" — one that would be made for the "greater good" — when it comes to a potential return on investment for his boss.
"It's not a business proposition," Fleisher told the News. "It's a civic commitment."
Unified Message?
Massaron, Bonner, Fleisher, and GM’s spokespersons might want to get together and develop a unified message. Perhaps Lin-Hua and Reed could Zoom into the meeting from their homes in the Bay area and suburban New York.
Even if GM stands to profit from its secret arrangements with Gilbert, the company could easily structure the deal to show a loss. Financial hocus pocus is something that GM excels at. The company disclosed earlier this week that it was taking a $5 billion “restructuring charge” relating to its money losing China operations but emphasized the loss was only on paper, not a loss of $5 billion in cash.
GM says its deal with Gilbert is the culmination of a ten years of “quiet planning” focused on its abandonment of its RenCen headquarters, which once was home to thousands of GM workers. GM in recent years moved most of those employees to its Warren tech center, thanks to Gov. Gretchen Whitmer relieving GM of its commitment to maintain 4,000 workers in Detroit in exchange for $3.5 billion in Michigan tax credits.
For all GM’s planning, Massaron didn’t join GM until earlier this year, and his background is worth noting. As reported by the Detroit News, Massaron previously served as budget director for the state of Michigan after having several roles with the city of Detroit, including chief financial officer, chief operating officer and senior counsel to Mayor Mike Duggan.
If anyone knows how best to work the system to mooch millions off Michigan and Detroit taxpayers, its Massaron. He had better pull it off or Massaron risks receiving an early morning email from Arden Hoffman, GM’s chief people officer, or one of her minions, advising him that he’s been fired.
It’s comical Massaron served on the board of directors for the Regional Transit Authority of Southeast Michigan and possibly still does. The reason Michigan has a poor regional transportation system is the major automakers vigorously fought mass transit in southeastern Michigan decades ago.
GM hasn’t disclosed what sort of deal the company has struck with Gilbert. Press reports say Gilbert has an option to buy the RenCen within a year, but what he got in return for that option isn’t clear. Perhaps it was baked into GM’s leasing deal to rent some floors in Gilbert’s heavily taxpayer subsidized Hudson’s complex, which supposedly was supposed to attract new businesses to the city.
GM relocated to Detroit from Flint in the 1920s.
Regardless, if it’s true that the RenCen’s redevelopment would generate little or no returns, Gilbert would still benefit because his plans include razing two of the towers, eliminating potential office space and thereby making his existing properties more valuable.
In considering GM’s and Gilbert’s demand for $250 million in taxpayer funds, here’s the only number Michigan’s legislature should consider: $16.5 billion. That’s what Barra has spent these past 12 months buying back her company’s stock, enriching herself and other GM shareholders.
A company that blows $16.5 billion on stock buybacks should blow its eligibility for government handouts.
Wall Street is always telling us that companies are run for the benefit of their shareholders, so why not let GM’s shareholders cough up the $250 million required for the redevelopment of the RenCen and let them keep the profits from the deal.
BTW: I’d wager that the lost taxes on Barra moving some 4,000 jobs to Warren from Detroit would exceed the profits the company would ultimately donate to Detroit’s nonprofit educational institutions.
In evaluating Barra’s and Gilbert’s demand for $250 million, Michigan’s should be mindful that GM no doubt is feeling emboldened getting off with a measly $500,000 fine to escape criminal prosecution for submitting a false report to influence a federal safety investigation. As for Gilbert’s civic philanthropy, his company recently notified the Detroit Free Press and Detroit News it wouldn’t extend their leases as they expected.
Barra has escaped media attention for some other disturbing news under her watch. Consumer Reports in its latest brand reliability survey declared that GM’s Mexican-made EV Chevy Blazer and the EV Cadillac Lyriq among the worst electric vehicles on the road. Barra previously vowed that GM by 2025 would be a formidable competitor to Tesla, selling more EVs than Elon Musk.
CR also ranked Cadillac, a brand once synonymous with excellence, second to last in terms of reliability. Barra’s decision to manufacture the EV Cadillac Optiq in Mexico will further diminish the brand’s reputation.
GM this week recalled more than 132,000 2024 models of certain Chevrolet Silverado HD 2500, 3500, and GMC Sierra HD 2500, 3500 vehicles equipped with power-unlatching tailgates. Water intrusion may cause the tailgate's electronic gate-release switch to short circuit, potentially resulting in unintended unlatching while the vehicle is in Park.
I suck at chemistry, and even I know that if water seeps into electronics, nasty things will happen. Notably, GM was forced to recall its EV Hummer because water was seeping into the battery.
If I had to wager, I’d bet that despite the obscenity of GM asking for $250 million in taxpayer handouts after spending $16.5 billion to buy back its stock, the Michigan legislature will still cough up the money. If that happens, I will no longer begrudge Barra the more than $25 million in annual compensation she earns.
Shaking down U.S., Michigan, and other state taxpayers for hundreds of millions of dollars is something Barra does very well. Given what GM offers in return and its accelerating downward trajectory, it’s not a skillset I’d be proud of.
