“Captain, stay your hand. I know you are trying to decide whether we will really throw out the oars and all die rather than let you kill some of us now and maybe the rest later. I have a better proposition for us all”
“We all want to live. We all want economic security for ourselves and our families that we left back home. We don’t have enough rations to all make it. We need at least 10 days of 6 strong rowers and 1 bailer to make it back. Here is my proposition.”
“First, we agree to share the treasure equally. Second, we select the 7 strongest rowers/bailers among the crew and the officers. They will take full rations for 10 days. You captain will take half rations, still above subsistence, so that you can navigate for the remainder of the trip. The remaining 6 of us among the officers and crew will take one sixth of the rations brought by that accursed dolphin, this will be below subsistence. We will all take a blood oath that if any get back alive they will deliver the treasure share of each of those that died to the deceased’s family, swearing in the name of God may their own family die of the plague if they break this oath. We six will lie down and conserve our strength, hoping that another ship shows up or some other miracle occurs, knowing that rather than die senselessly, we are at least laying down our lives for the good of our loved ones”
Lifeboat Big Three
There is still enough remaining value in each of the big three automakers that a similar strategy is potentially feasible. The value of the brands plus the design, production, supply chain, distribution system capabilities is large, just not as large as that of the debt accumulated by their owners. If the debt burden is resolved through the courts in the usual way, someone will acquire the bulk of the assets in pieces and make again profitable businesses from them. If the passengers can’t agree on a solution, someone will track down the drifting or sunk lifeboat after they all die and recover what is left of the treasure.
It still may be possible to avoid the looming outcomes and align incentives for all constituencies to win or lose together based on the future value of the company.
1) Define a new business plan that will make the company competitive again if the payroll, healthcare and legacy costs could be resolved. Such a plan will certainly need to dismantle the elements of the adversarial union/management work rules and job descriptions as well as significantly reduce the ratio of management pay to worker pay. Compensation plans for all will need to be tied heavily to meaningful long term enterprise value metrics. The plan must be sufficiently persuasive to win support of the management, the union, the board, the creditors and vendor base as well as of Congress.
2) Calculate the reductions in payroll and legacy costs needed to make the company sufficiently cash flow positive to fund the investments needed in the business plan. Hopefully focusing whatever the congressional hybrid dolphin is willing to disgorge on design/retooling and infrastructure requirements needed to convert to electric and other viable fuel system vehicle production.
3) Convert sufficient legacy costs and RIF payments and the NPV of payroll reductions to equity proxies of some kind in order to enable funding the business plan.
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