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A Detroit "Orderly Bankruptcy" Would Require Monumental Marketing Effort To Work


Public relations done well is as much a key ingredient to marketing and brand management as advertising. And often, it is a greater, more important ingredient than the ad plan. At least it should be. But it often isn’t seen that way by people I will call “the honchos.”

Today, The Bush White House floated the idea of an “orderly bankruptcy” for General Motors and Chrysler. The “B” word. Yikes. The concept is a little fuzzy. But most experts think it would involve GM and Chrysler actually going to Bankruptcy Court to file Chapter 11, with the government providing either the Debtor In Possession (DIP)financing for the companies, or guarantees on the money after Treasury Secretary Paulsen twists the arms of some banks who have gotten upwards of a trillion dollars from Treasury and the Federal Reserve to loan the companies $15 billion-plus.

The automakers have been wanting to avoid actual bankruptcy for fear that customers will bolt when given the choice between a bankrupt brand or one that isn’t bankrupt. There are a few surveys out that seem to indicate that consumers wouldn’t bolt, especially if the Feds stood behind the companies.

A survey by CNW Marketing Research, for example, found that 48% of would-be buyers would consider models made by a bankrupt carmaker. Another survey by Merrill Lunch & Co. found 90% of the 500 respondents would consider a bankrupt company’s cars on their list if the company was “backed by U.S. government funding.”

Frankly, I think this kind of research is useless. But let’s take the CNW survey. Fifty-two percent of respondents said they would not consider buying a vehicle from a bankrupt car company. Today, the potential universe is 100%, and the Big Three have about 45% of the market. I don’t want to see how low their market share drops within year-one if the universe of buyers is cut in half. The drop in revenue would be too fast and drastic.

I don’t trust surveys of people when the question is seeking to get the consumer to say what they will, would or might do when its time to buy something and sign up for a four or five year loan.

I’d rather go by my instinct, which is that all but die-hard Big Three supporters will go to Ford (if it stays clear of Chap. 11) or the imports.

In order for an “orderly” bankruptcy to work, and not morph into Chapter 7 liquidation, the White House, President–elect Obama and the three companies would have to coordinate an extraordinary marketing, PR and promotion campaign designed to get the message across that the Big Three are viable and strong. It is an effort, however, that I am pretty sure is beyond the scope or creativity of the White House, Obama team and the auto companies themselves to think through properly, let alone execute.

I haven’t witnessed that kind of thoughtfulness or coordination in the last three months. These are the guys, you’ll recall, who flew three corporate jets to DC to beg for help. It seems the PR folks at the Big Three, and the Michigan Congressional delegation, neglected to tell the CEOs that there are around 60 members of the House who have to sleep in their offices and use the Capitol gym to shower because they can't afford to keep apartments in the Washington DC area. Such people don't take kindly to flying private and landing with a tin cup held out to men and women sleep on a pull-out couch most of the week.

Some of my ideas here are a little snarkey, but not by much. If you told me that 75% of the following ideas were implemented, I might give “orderly bankruptcy” a half a chance.

1. A one-hour press conference in prime time carried on all three networks plus Fox, CNN, CNBC, MSNBC and MTV: It’s a town hall with Bush, Obama, Speaker Nancy Pelosi and the Three CEOs talking about how vital the auto industry is to America, that the companies got to this place through a combination of some poor management judgments and a colossal abdication by Congress to pass healthcare and energy policy.

2. Sunday talk shows featuring Obama talking about how government helped the companies get to this bad place, and government is going to help them out just like the governments of Germany, France, Japan and China do with their auto industries.

3. Obama saying about 100 times in the first month after a plan is struck that buying cars built in North America car is not only good for the country, but cool.

4. Obama sending a personal plea to all his donors to buy a Detroit model the next time they need to buy a car, with everyone who does so entered into a lottery that will have 100 buyers picked at random stay a night in the Lincoln bedroom and get five minutes with Obama on any topic they want.

5. Double the tax on cars imported from outside the NAFTA free-trade zone.

6. $500 million in ads funded by the government and auto companies after they get the loan money explaining (in words that I will write) how the companies arrived at the financial bad place, and how they are going to get to the happy place.

7. Obama’s inauguration speech carries an actual plug for Detroit…he drives hybrids from Ford, GM and Chrysler down Pennsylvania Ave. to his swearing in…and has a Ford Fusion hybrid on the dais with him as he takes the oath.

7a. The poet laureate writes a poem about the Chevy Volt, which is read at the ceremony.

8. A $2,500 tax credit for buying a GM, Chrysler or Ford vehicle that gets over 30 mpg on highway for 2009 and 2010.

9. Require the top 100 executives at each financial institution receiving TARP funds to make their next car purchase a Detroit vehicle.

10. In exchange for Major League Baseball’s anti-trust exemption, require that every stadium use a Detroit vehicle to bring pitchers in from the bullpen, and that a block of seats are taken out of each park to showcase a different Detroit model at every home game. Every home run is “brought to you by [insert name of that game’s model].


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