WARREN BROWNE part 2. Russia begins. The government, the bribe ask, Switzerland, the Turkey plant

WARREN BROWNE - PART 2 - AUDIO

Sun, 2/14 5:36PM • 1:01:57

SUMMARY KEYWORDS

general motors, petersburg, russia, build, car, moscow, people, plant, business, meeting, big, gm, bribes, vehicles, russians, turkey, ultimately, pepsi, proliferation, day

SPEAKERS

Jeff Sterns

00:00

guy who was in charge of the infrastructure of St. Petersburg, found out that I was at the airport and called someone to see if I could delay my flight by one flight, you know that he is now in charge of like all the industrial projects for Russia. I mean, he got he got a big time job. The vice governor actually had the office that was Lennon's and Putin's. Never underestimate the technical capabilities of Russians. Mr. Brown. Welcome to St. Petersburg. I just have one question for you. Do you have the authority to negotiate the deal for this plant, figuring that I would get flustered and I just looked up and said, Governor, I am General Motors in Russia. They didn't like it when I said you have to decision, you can clear those under the normal process. Or you can dump those parts in the Baltic Sea. Because if you're telling me that I've got to pay extra to get those parts out of customs, I will be fired. If I pay you. I will be promoted. If I don't pay you. Your call. I'd rather die choke here was the chairman of Pepsi, Russia trying to get the chairman of Coca Cola worldwide. To drink a Pepsi. I knew that the end was near. And I actually promised Janet was Canada was only going to be for four years. But at the end, my boss came in, said we want you to stay another four years. I started from scratch and I'm building 250,000 vehicles in Kaliningrad, and buying 70,000 units out of Kiev gric wants to build a manufacturing facility in Turkey. And he wants you to organize it. And by the way, we don't have any money, your job, fly to Amsterdam, and negotiate back when we gave away, which was the distribution rights for Corvette Cadillac and Hummer fall of Europe. I get like three people running over to me. What are you doing? Are you talking about smoking my cigar. It's just oh, you could smoke all the marijuana you want in here. But we don't allow cigar smoke in this place. unbeknownst to me, it was the closest I've ever gotten to a company going bankrupt. And me being directly involved in managing the cash only to find out good after I retired three months after I retired general motors went broke my days of skiing or done my double vision acquired in Switzerland probably influence that. Let's just do one more run. And the one more run you crack your head open.

03:06

Jeff Sterns connected through Guys, if they're big wigs, we'll have him on the show. And yes, we'll talk about cars and everything else. Here he is now, Jeff Sterns

03:25

Wagner comes into me, he said, I need to move I need somebody to go to Russia. And I said, Well, why are you talking to me? He said, Russia is complex. And I need somebody who I can trust. And that's you. Well, that says a lot about you. So I went home one more time. Jan, I need a favor. Here's what we're gonna do more. You're gonna move to Russia. And here's what you're going to ask him for. We keep the house in Germany, we go to Moscow, and we rent you a great apartment. And then we can travel back and forth. But I'm not moving to Russia. Is that all you need? Well, no, but I'm not moving. I want to keep this house in Germany. I have friends in Germany, a British friends in Germany. I ain't moving again. So I went to Wagner keeping house in Germany. And it was the best job I ever had. I had a full time driver, which was fantastic. I had the only white escalate in Russia. And why did I have a white escalate? Because every one of the cops in Moscow, after two months, I knew Oh, that's the guy who's not gonna pay us a bribe.

Jeff Sterns  04:35

And by the way, this is a sidebar about Russian culture. I spent some time in Eastern Europe. That joke. How much is a speeding ticket in Russia? I don't know how much you got on Yeah.

04:48

Well, that the Russians would laugh at that joke. Russians are good storytellers. Excellent storytellers. It was on the weekends when my wife wasn't there. I have my driver. Take me out. Moscow Country Club and spend the whole day playing golf, smoking cigars and playing cards. It was pretty good.

Jeff Sterns  05:05

Well, there's not a lot of months in Moscow, you're playing golf.

05:08

No. But I would say people say, Well, what was Moscow like? And I would say, well, you're a you're a Floridian. So it's a to Detroit ORS. It's a lot like Detroit, but when it snows, it doesn't snow an inch it snows. And Russians have the most extensive and fastest snow removal that you'll ever see in your whole life. Here's the thing at 2004 it's a little different than today, in that the Russians were very, very jealous of the Chinese in terms of their industrial expansion, the size of their economy, etc. And they were jealous, because, you know, I mean, Russia is pretty much a mineral economy. It's either oil or, you know, rare materials, etc. They wanted to expand their manufacturing base to make things I once had the governor of St. Petersburg, tell me, Mr. Brown, we want to make St. Petersburg just like Detroit, and I told her governor, be careful, you may get what you wish for. And she, you know, she would look at me posing. And I say no, with that comes, you know, labor issues and pollution and everything. But she says no, no, I want General Electric in General Motors here. So the real piece was the opportunity to negotiate deals when Russia wanted to expand when they wanted to grow the manufacturing base, and the investment base, etc. and here was General Motors. This is a vehicle that they wanted, so I got to see everybody. I got, you know, invited to the St. Petersburg economic conference to sit, you know, right behind Putin, you know, all that stuff was just, it was just, it's just flowery stuff, but you got to do it. So if I was a big fish in Poland, I was a bigger fish in in Russia. But the thing was, they wanted to grow. And they would bend over backwards to cultivate investment. And Jeff, I think that's, that's been lost now. I mean, at one time, they thought that the Russian market was going to be 5 million units. And this year, I think it'll be a million and a half. Now. That's, that's COVID related, obviously, but it'll be a million and a half this year, you know, 5 million units. Everybody was coming forward was there. We built Toyota built Suzuki, everybody, Volkswagen BMW was already assembling vehicles in Kaliningrad, so they wanted to expand and therefore you were in an environment that the government was on board with expansion. There was a hot market for vehicles, and all I had to do is execute. Okay, so when I got there, as a sales guy, you'll appreciate this. When I got there, who we were selling 16,000 vehicles a year. When I left, four years later, we were selling 400,000 vehicles a year. And I couldn't keep up. I had to go down to Kiev, and source vehicles from the Ukraine. And I had just to get an assembler in Kaliningrad, right next to the BMW plant. I had a joint venture with orthologues in tolyatti, talk about going back to the Soviet Union, going to totally odd he was, you know, was taking a step back in time. And, you know, negotiated the whole plant for St. Petersburg, who's busy time. Those things made it the best job I ever had.

Jeff Sterns  08:53

Why do you think I'm sorry to take you out of trouble? What do you think St. Petersburg, I mean, when I think of St. Petersburg and Russia? That's kind of more of the arts and music and theater, city,

09:04

port city and the Baltic.

Jeff Sterns  09:06

So geography are commodities materials,

09:10

right second largest city in Moscow

Jeff Sterns  09:12

just doesn't strike me as a factory town as an ex Detroiter?

09:15

No, I think somewhere along the way, in the early days of probably 1995, somebody convinced Ford to build a plant in St. Petersburg, they were the first we followed up not building a plant, but we followed up with a joint venture with both of us the big, big elephant of Russia, and built a joint venture with them down until Yachty. So we were second, but somebody convinced Ford to go to St. Petersburg and I really don't know the story behind it. But because Ford was there and they saw what it did to absorb the labor and to increase the wage. They got a taste for that in their mouth. So yes, St. Petersburg is you know, very, you know, culturally reminiscent of the Soviet Union and before, but once they got the taste of the wage and the labor absorption, once they got the taste for that, they just put the accelerator down. Once they found out that I was considering St. Petersburg as a site, they could not do enough to bring me up there and show me land. Explain the layout of the city, they rolled out the red carpet. St. Petersburg wasn't necessarily our first choice, we had two other sites, ultimately, the three bidders story, what's going to have the best access when you build a plan? You want to know three things? What's my access to water? plants use a lot of water, what's my access to electricity? What's my x access to natural gas? And what's the cost? What's the cost? And what's the supply? You get to those questions pretty quick during the negotiations, right? How much is it gonna cost per square meter for the property. So we had more than one site, we ended up in St. Petersburg, but they couldn't do enough. And the the negotiations were kicked off. The guy that approached me, I was visiting St. Peter dealer in St. Petersburg, a couple of big dealers in St. Petersburg. So I was I was visiting St. Petersburg, and the guy who was in charge of the infrastructure of St. Petersburg, found out that I was at the airport and call someone to see if I could delay my flight by one flight, he wanted to come and talk to me about building a plant in St. Petersburg. You know, it's a little too early for that. But my planning assistant said, you know, stay, well, we'll probably learn something. So as it turns out, he didn't speak English. But guess who spoke English, his wife, the female, his wife. So he brought his wife along. And we went back and forth, and I got this name is blank, I got to like him very much. Long story short, or blank did in St. Petersburg to build up automotive investment, because he was in charge of it all, you know that he is now in charge of like all the industrial projects for Russia. I mean, he got he got a big time job, right, heavy, heavy. And I you know, I kind of got to like him. And he said, you know, just tell me what I can do to make the pitch for St. Petersburg, I'm at your disposal. You know, I'll do anything that you want. And I said, Well, you know what, okay, I'm still gathering information. I always like to gather information before I make a decision. Why don't we just why don't you set something up with, with the government in St. Petersburg, and fly out to you know, in a week or so. And we'll sit down and have a discussion, which we did. When my first meeting was actually, in lennons, I believe, I believe I had this correct. The vice governor actually had the office that was Lennon's and Putin's, when they were in St. Petersburg, I know for sure was Putin's I may be confusing the length. But so we met like kind of at the junior level and went out for for dinner and talked nice guy, competent group. Never underestimate the technical capabilities of Russians. The people that I had working for me at the plant, were some of the most capable, a technically that I've ever seen. And unfortunately, they had to forget everything their fathers told them. And were like sponges when it came to absorbing what the West had to teach. But, you know, the very competent group. So ultimately, I had my meeting with Governor met Bianca, who was in charge of all of the region of St. Petersburg and the region, not only the city. And so what I want you to imagine is a huge conference room table long. And I want you to imagine and in pure Soviet elegance, 10 people at the table, and 10 people 20 people behind sitting in the chairs with notepads, and one MPC directly across from me still empty, right? It's empty, right. And here I am sitting with my planning manager waiting. And Governor matvienko walks in and I get up and shake hands, nice to meet you. Nice to meet you, etc. She comes across around the table and sits down and I sit down. A couple of people come in buzzin or ear but

14:48

he said what is the most important question that you can ever ask in my view? In a negotiating session, he said Mr. Brown Welcome to St. Petersburg. I just have one question for you. Do you have the authority to negotiate the deal for this planet?

Jeff Sterns  15:12

All of us in a negotiation always hope that we're talking to a decision maker or a Czech writer, absolutely.

15:18

figuring that I would get flustered. And I just looked up and said, Governor, I am General Motors in Russia. You're talking to the right person. And she got this huge smile on her face. And huge frowns from the cast of quovadis. That was in the back of the meeting room thinking that they were going to stump the stars. And she said, Good, then we can proceed. And I must tell you, she broke through every wall. She says if you from bribes to whatever, if you ever have a problem, if you want to come to St Petersburg, the people that are sitting at this table, she didn't talk about the Casta covad is behind her. But the people who are sitting at this table will get it done. Now, what

Jeff Sterns  16:11

was she talking about? You mentioned bribes while you're driving your white escalate. Now, you mentioned bribes? This comes up now. I mean, so what's going on there culturally, and I'm assuming it's from communism, and people not having enough. So it's a little bit of a culture too, you know, side gig bribes. So I know it was ingrained in that culture a little bit. And that's not a judgmental statement. I just know that. But it came up again. So where could that impact you

16:39

what it said to me, and the message that I communicated back to my management was, she openly acknowledged that it could exist, she didn't try to keep it behind the curtain. And I said, therefore, I think that, if we run into trouble, have given that she said that and set it to the top 10 people that I'll have to deal with over the next 18 months. I would say that, that struck me as positive in terms of the approach that we could get in the St. Petersburg region, versus what we're doing in a couple of the other regions. Did that win the day? No. Cost won the day, the access to the port? When the day

Jeff Sterns  17:26

where could bribery or that kind of thing? Where can that come in? Could that come in? supplies always need to go through us? Water always needs to go through like mafia type credit? Or

17:37

Oh, no, no, um, we can have a facilitate the hooking up of the lines and all of that, if you go through the app, you know, we can always have it donated to a charity, if that would be your preference. So it doesn't appear to be, you know, anything conspicuous by the charities controlled by the end, did

Jeff Sterns  18:04

you end up in that? Just curious sidebar, no human enters, you never ended up in a situation? Oh,

18:09

you're the best thing that happened to me is that I worked for a zero tolerance company. What does that mean? Let me tell you what it means. It means that we had an ethical code of conduct that would punish me if I would ever even consider doing something like that, and reward me if I ever told them. No, we don't do business that way. Once they understood that General Motors was a zero tolerance company, cleared the path for me completely. And so when they would call me about enabling and facilitating my parts through customs, if I did x evaded like it when I said you have to decision, you can clear those under the normal process. Or you can dump those parts in the Baltic Sea. Because if you're telling me that I've got to pay extra to get those parts on the customs. I will be fired. If I pay you. I will be promoted. If I don't pay you. Your call. I got those parts the next

Jeff Sterns  19:26

next couple of days. Very interesting about the meeting in New York.

19:33

Okay, lesson learned is no all the players on the chessboard. Otherwise, you're not playing the game. Russians love to travel. And we had a thing called the US Russia Business Council that was made up of you know, 50% Russians 50% Americans slash internationals. The two notable people that would be on that committee, Rex Tillerson, Former Secretary of State who was the head of Exxon Mobil at the time, and Neville isdell, who was the chairman of Coca Cola. I was like the piano the group, right? But I was General Motors in Russia. So I got to I got to rub elbows with, we would have one meeting in Moscow, every six months. And one meeting in New York every six months, we was fed good places, Russians like to stay good places. So we would always stay at great places. And I was smoking cigars at the time. In New York, you cannot smoke a cigar on the inside of a building. Well, it was a lunch break. And I'm going to smoke a cigar. And so I'm outside smoking a cigar up halfway through, and a guy walks up to me is in blue jeans and a blue button down shirt. He's grabbed my arm, said, Are you worn Brown? And being the sarcastic caustic person that I am? said, What do you want to know? He said, No, no, no, I was in the meeting. Your your Warren brown from General Motors, right? I said, Yeah, I am. And he's doing this in perfect English with a Russian accent. And he grabs me by the elbow, and he starts to pull me across the street. He says, Come on, I want to take you and I want to have a coffee with you. And I want to talk about building a car with General Motors. And I said, Yeah, everybody does. He's looked at me. He's pulling me by the elbow saying no, no. I want to build the car with General Motors. And he said, Look, we got 30 minutes for lunch. I'm out here smoking a cigar. I'm not going across the street where you'd have a cup of coffee. Do you work in Moscow? He says, Yes, I have an office in Moscow. This is good. Why don't you give me your business card. If you have a office in Moscow. When I get back to Moscow, we'll sit down and have a meeting. And you can talk about your car program. that fair? And he didn't like the answer. But he knew I was gonna sit outside smoke that cigar because I had no idea who he was. And he takes out his wallet, pulls out a business card and hands it to me two hands. My name is Oleg Deripaska. And I want to build a car with General Motors. I said Good. Good. Nice to meet you. You know who I am. I gave my car and said, when I get back to Moscow, we'll have a meeting. Oh, meetings done, but an extra day in New York fly back to Moscow and have my staff meeting. said okay, I want to give you an update of what happened at the Russia Business Council blah, blah, blah, see what happened. And I said, the first here's the first one. This is the one I care about. Anybody know, a guy by the name of Ollie Deripaska. He was a pain in the ass. And my chief accountant, because you met Oleg Deripaska said Yeah. tried to get me to go across the street in New York for coffee. He says he can build a car with General Motors, chief accountant. Warren, he's the richest guy in Russia. Just kidding. She said no, he's got more money than anybody in Russia. So I treated him like crap. He could have said at the time, you know, screw General Motors, I'm moving on to somewhere else. Long story short, I ended up having the meeting in his office, where my driver pulls in is like going to meet Goldfinger. My driver drives into the garage, door shuts behind. The elevator comes down and opens up and you just hear a voice say, get into the elevator. And you'll go upstairs, thinking, Wait a minute here. I mean, I've seen too many double Oh, seven movies.

Jeff Sterns  23:38

This is a hit.

23:41

went upstairs. And windows conference room finally understood who he was. So I was treating him with a little more respect than I had on the streets in New York. And we talked for a long time. And at the end of the meeting, typical of him. He says okay, now we've had the meeting now. Well, I'm going to get my driver and we're going to go out we're going to take my private jet out to Nizhny Novgorod, I want you to see my plant. This is what today she says. Yeah, right now we can go we can be there in an hour. I'll just get the call up the jet, by the way to Boeing 737 identical with Swiss cruise. I said, I can't go tonight. This is well, I will get hotels. Don't worry. We have hotel. I'm thinking okay, I didn't knock me off an elevator ride, right? But I'm getting buried east of the URL mountains.

Jeff Sterns  24:37

You're going for a long ride

24:40

before the nights over. And I said once again, oh, like, I promise you. If you give me a day or two to organize my stuff, I'll go out with you but which ultimately we did go out. So as planned in what he wanted to do, and I will say this and the very first meeting that I had with him you You said I'm going to build a $10,000 car for Russia. And I said, Oh, that's impossible. You're not going to build a $10,000 car? Oh, no, I will ask I'll once is this done? I will build up a pulley. You're building vans today, and they're very old man's in building a car. A modern car is not the same cetera. But I'll learn, I'll learn I'll get people. I'll get people to do it, I'll learn. I says, No, I know that you will. But it's the cost 10,000 bucks, it's not gonna make it just can't. Because I walk it down. The dealers got to make money, the suppliers got to make money and time yet and all up you're not going to get you're not going to build a car in Russia for 500 bucks. It's not gonna happen. I will prove you wrong. So long story short, we worked at this thing for probably 14 months. And we didn't get there. So it never happened. What year is this? This is 2007.

Jeff Sterns  26:00

Okay, so I'm looking at Forbes right now. And in Oh, eight. He was the richest person in Russia ninth richest in the world before nearly losing it all due to crashing markets and heavy debt. Although today he's worth 3 billion, and he's up 17 million over last trading day. What was that Wednesday, maybe?

26:23

You You can't walk out to a private jet way. And see to 730 sevens, whether their own crew and not know that he's got a couple of bucks, but he never, ever put that on, ever. You'd never know. And I think that much like in Brazil, where you don't want to show your wealth when you're walking around the street. I think that that was kind of his his kind of style of not showing what he was in terms of external wealth. The only other good story that happened with the US Russia Business Council is a lesson learned in branding, or in Washington DC, having our every six month meeting. And at that meeting were and I don't remember their names were like the head of Pepsi, head of Boeing, the head of Exxon Mobil, which was Rex Tillerson, you know, the head of the big accounting firms. And Neville isdell, who was the chairman of Coca Cola at the time was chairman of the group. The meeting starts while coke ran the meeting. Pepsi was also at the meeting. So on the Dyess in the back for refreshments. There was always Pepsi and Coke and Coke and Pepsi products and water. Okay, well, now they'll start the meeting. In about two minutes into his opening, he starts to cough. And the costs getting worse and he's kind of choking and cough is getting worse. And the guy the head of Pepsi, Russia, is sitting right next to him. And he opens a can of Pepsi. And he hands it to nevel. And Neville says, I'd rather die choke.

28:06

And the whole place just exploded in laughter. Here Here was the chairman of Pepsi, Russia, trying to get the chairman of Coca Cola worldwide to drink a Pepsi and there were photographers in the room. So that's my, that's my Coke, Pepsi branding story. Once you're inside their cocoons, you can drink anything else. So there was a waiter in the back that ran up and gave him a Coca Cola to drink and always well with the meeting and is choking and we moved on. I knew that the end was near. And I actually promised Janet was Canada was only going to be for four years. But at the end, my boss came in, said we want you to stay another four years. And I said, You know, I think that I'm rushing out a GM plant approved. The joint venture is the most profitable division we have in Europe. I started from scratch and I'm building 250,000 vehicles in Kaliningrad, and buying 70,000 units out of Kiev. You know, I've been working here. I think that I'm kind of like mascot out. Well, you know, Rick wants you to stay, we want you to stay blah, blah, blah, blah. Okay, let's cut. Let's cut to what, you make me a corporate vice president. And I'll stay otherwise, I'm gone. Well, where would you go? I have no idea. But it won't be here. So my boss, who was a thorn in my side, came back to me said, I'm not going to propose that you have to do something else. And I know you know, Rick, and I know you can call Rick etc. Nope. You decide. You have to tell Rick, that you weren't going to do that. Me. Well, we don't do that here. So okay. Okay. You're You're moving to Switzerland. This is where Janet comes in. Oh, we're moving to Switzerland. Right? Well, here's what we're gonna do. We're keeping the house in Germany. And we're gonna rent you a real nice apartment in downtown, sir. And we can take the train back and forth between Frankfort sir. But I ain't moving. Because you know why? Because you're not going to be there for a long period of time. And I'm going to have to hold and all of everything, and then you're going to move somewhere else. I'm staying in Germany. Tell them that. That was the Rick conversation, right? Okay, fine. Fine. We'll just switch one. Janet stayed in Germany. And we traveled back and forth. So that was the that was Jim's input on that. And I'm glad that Zurich was my last international assignment. Because if you've got the money, Zurich is a marvelous city centre. Switzerland is a marvelous country to live expect. Living in downtown Zurich, right? Right on the river was beautiful. And in my kids would come and they, they, they wanted to come to Switzerland. And, you know, we went up to the place where they shot the James Bond V in the shuttle horn, and we traveled all all over Switzerland, this beautiful country, you think that I never worked, but the lesson is never burn a business card. And I've got a box, because I land in Zurich, and I don't have a job. I'm the executive director of new business development and screen door repair. Okay. I mean, I knew my days were numbered, right? The minute I told them no in Russia. So I arrived in Switzerland, my boss calls me into his office and says, Okay, I'm, this is your assignment. Rick wants to build a manufacturing facility in Turkey. And he wants you to organize it. And by the way, we don't have any money. This is circa late 2008. Remember, General Motors went bankrupt in July 2009. Here's your task, you need to find somebody to build the car, you need somebody that's willing to inject money and become our partner in Turkey. And you need to find a location. But Warren, look, at the time, truth be known. General Motors, Europe is swimming in capacity. We've got excess capacity coming out of our ears.

Jeff Sterns  32:37

Okay, so for the audience, not in the car business capacity means you got all kinds of inventory.

32:43

And the some of the abilities,

Jeff Sterns  32:46

I'm sorry, go, right,

32:47

the ability to assemble, right. So if you're selling a million, and you've got 2 million units of capacity, you have excess capacity, your

Jeff Sterns  32:57

plants not utilized, it's idling, the workers aren't working, you're spending money without building.

33:03

The last thing that we need. It was a plant in Turkey. But Rick wanted to have one, or rightfully so, because it was in Turkey, or it was in Turkey. turkeys are relatively good market. And one of the great things about Turkey, which is not really known, the engineers, the Turkish engineers can actually take a look at a print and actually build a prototype from print, as opposed to from another prototype. So the the competence of the engineers in Turkey was well known to us at the time. So Turkey was a site that he wanted to explore. So my boss says to me, without winking, as I, you know, or take six months, go to Turkey, figure out what we need. Come back and give us a report. Take your time. Now, this is the guy that told me he wasn't going to make me a corporate vice president. But guess what happened to the next guy who took my job. They finally ran out of people and ultimately had to offer the person the Vice President, because nobody would go. So I'm going to extract my pound of flesh. And to fast forward. The best look on his face was the day that he handed me my retirement papers. Okay, so take your time when I was in Moscow, I had developed a whole slew of people that in the commercial end of the embassy and when I was in Poland and the commercial end of the embassy that were well connected, all Crusher. I call the embassy in Moscow and said you need to hook me with the charge the affairs and commercial attache in Ankara. I need to go and find out who in turkeys got money, who in turkeys got land and who would like to be a partner with General Motors in the autumn Can you set that up for me? Okay, I get that done where are you know was Where are you now? Oh, I'm in Zurich Oh, oh, the good life, you know that one of those things? I said, Yeah, you know, I mean, I'm still missing Russian vodka and all that stuff but but I'm living a good life but I got to go to Ankara, big hooked me up. I went to Ankara sat down, said this is what I need, wants to be in the car business. Who's got money? She's okay, we can hook you up. And they did they gave me a list. This is but here's your guy right here. He's He's in Istanbul. He's desperate to get into the garb business. And he's got money. Okay. And we'll set the dinner up for you. Is tomorrow night in Istanbul. Okay, so, I flew from Ankara to stumble. So I'm sitting at dinner with him playing it out as well, you notice what we're trying to do? I'm not making any promises. I'm exploring. Having a good dinner getting some good Turkish wine? Heaven, good lamb? Is that first, do you want to be in the car business check? Well, without being too personal, to $100 million dollars scare you. And he said, Mr. Brown, I just bought all the papers in Turkey for a billion dollars. No $100 million, doesn't scare me. So if I came back to you, we could sit and negotiate what percent that 100 million would get you have a JV with General Motors. You know, I remember him saying I'm Turkish, I'm always interested in negotiating something. So there's a guy that owns all the newspapers in Turkey, four days, from a call to Moscow to stumble. Next day, I fly to Graz, Austria, and meet with magma, who's a big auto supplier in a big Canadian auto supplier, and a big oil supplier in Europe. And I said, I need something that's got horsepower, to if I find a building, to come in and assemble a car for me in Turkey, probably northern stumbled, does that scare you? That No, we do this net this net, okay. But if I come back to you, in a week, be willing to assign a program manager so that we can work with GM engineering to do all the specs of this program. No problem, we'd love to be able to assemble a car for General Motors, six days, a flyback deserve to get down on my computer. And I say, have found the money. I found the engineering group. And I found somebody that wants to be a partner with General Motors, I'm now prepared to come to the strategy board and make my presentation. And that was my way of taking a big spear and running it up his rear end.

Jeff Sterns  37:58

So I thought they were putting you out to pasture.

38:01

So I write the guy who's in charge, you always got to know the guy who's in charge of the agenda. Call the guy know, I told you to take six months? Because I don't need six months. Do I need to call rapping? Tell him that we're dragging our feet on this? Again, my experience. But do we need to call the chairman tell them that we're dragging our feet. And knowing full well, that I'm just setting my neck ultimately on the chopping block. Right. I'm doing a Bruce Willis nakatomi Tower, soiree write that I know it's not going to work out. So I called the guy with EG, put it on the agenda. Without asking. I bought any agenda. This is still a bureaucracy. The agenda, the pre agenda gets circulated, you know, you think you were passing a bill through Congress to make sure that everything's on the agenda. It goes out for half a day. And I get a call from the Vice President of manufacturing in Europe, screaming at me what the hell he would he will What do you mean, you're, you're you're putting forward a program to ask for approval to negotiate a deal of putting a manufacturing facility in Turkey. Yeah. He said, What bleep bleep bleep gave you that project? The chairman. Well, Over my dead body. Is this coming to the strategy board or approval? Me in capacity here. I can't go back to the unions in Spain and in Germany, and tell them we're putting a plant that Turkey over mine Dead body not going to happen. Okay, well, you can tell Rick that no problem I did my job, I'm done. Needless to say, there must have been calls at the highest level. And Rick ultimately backed off the project. In nine months, they're bankrupt. So, what does Warren do? I'm not done with my spirit. I still got another foot left on my spear. So what am I gonna do? I'm gonna walk through the lobby every morning with my golf clubs.

Jeff Sterns  40:37

You'd have a character flaw, you know, I love you, but you have a character flaw

40:40

in take the train out to the course. And I'm gonna go and hit golf balls and play golf. My job's done here. Image goes on for about two weeks. And my phone rings. Or Fritz Henderson. Hey, Fred, how you doing? How are you doing? I'm doing great. So that sounds lovely. Or you gotta stop playing golf. This is the president of the company. effective immediately, you report to me and Brent Dewar, vice president of sales for Europe. And here's your assignment. We gave away the distribution for Cadillac Corvette and Hummer in Europe to a distributor, that distributor is going to go broke. And we need to get that distribution contract back inside of General Motors, your job, fly to Amsterdam, and negotiate back what we gave away, which was the distribution rights for Corvette Cadillac and Hummer fall of Europe. And that'll be,

Jeff Sterns  41:42

it'll be easy to get back

41:43

in the supplier and us kind of screwed up. As I ultimately did my work, I negotiated a deal for 10 of what the supplier what the distributor was asking for, because it did my homework. I literally sat in a conference room in Amsterdam. Remember, you're in the dealer business. So you'll understand this, there is 1500 cars at dealers, those 1500 cars are owned by GMC, to dealer credit, right? The floor

Jeff Sterns  42:13

plan, right? So the dealer for the audience, finances or inventory and does not pay it off until they sell it. And they're required to pay it off within X amount of hours of selling,

42:23

or get some break on the interest rate, depending on the extension. mean, you know that business far better than I do. Okay, so the fear that the dealer would convert the car, pay the distributor, and GMC, and general just never get the money because they're going broke. Ultimately, I got it back. The distributor did go broke. We settled for a 10th. But the trips back and forth to Amsterdam were fantastic. And I will close with this on one trip to Amsterdam, which is a lovely town. I'm still a cigar smoker. So I'm walking down one of the canals and I see coffee shop. So I'm going to go in, they smoke in a coffee shop. I know what they smoke in a coffee shop. Hell, I can go in and I can have a coffee, and I can smoke a cigar. And I can forget about all the BS that I've been through this past week. Sit down, order coffee, fire up my torch light my cigar. And you think that I had pulled a gun and was robbing the place? I get like three people running over to me. What are you doing? You're talking about smoking my cigar. It's just all you could smoke all the marijuana you want in here. But we don't love cigar smoke in this place. That's fine. So that was my last weekend in Amsterdam, and was very interesting, unbelievably interesting. You know that that's the closest that I had ever gotten. unbeknownst to me. It was the closest I've ever gotten to a company going bankrupt. And me being directly involved in managing the cash, only to find out good after I retired three months after I retired general motors went broke.

Jeff Sterns  44:21

Yeah, I mean, do you think it was the apartment in Moscow and the house in Germany that did it?

44:26

I think I think the company got a little over leveraged.

Jeff Sterns  44:31

So can I ask you about it? Thank you so much for the share. I mean just you know riveted I was riveted. What about Pontiac? I mean, like Saturn. I understand Saturn going away. I mean, completely not profitable. And who knows about brand equity I know there's I mean for sure some disciples of that made but what about Pontiac and Oldsmobile going away?

44:58

As early as I don't think anybody's told this story, even Bob Lutz, because I was in the room when it happened, because I was the clerk 1987 Jim McDonald was the president of the company. And we presented to Jim, a five year forecast that said, General Motors was going to be a 36%. company before the mid 90s 36%. market share, correct? market share at the time 43.

Jeff Sterns  45:35

And one point of market share is a big deal.

45:37

Yeah, these days, let's see. 10% is 1.7 million. So yeah, 200,000 plant, by today's standard by today is lean manufacturing standards, it'd be a plant,

Jeff Sterns  45:49

one point could cost shut down a plant,

45:52

after we presented our facts. And the three main drivers were the level of proliferation that the Asian manufacturers were going to bring into the market would not allow the company to hold a chair, the level of proliferation that the Asians were going to bring into the luxury market. Remember, Lexus wasn't here. Infinity wasn't here. Acura wasn't here yet. And we had basically, well, I worked with a lot of smart people, the level of sophistication that we that we did to do the market analysis inside of General Motors in 1986. I've never, ever seen repeated anywhere else. We forecasted every model in the market, not just GM. We had our Ford forecast for all the models, and the Toyota forecast for all the models by plant by product. That's what we did. So I told you, everybody's got an opinion. I was required to quantify mine. Right? Okay. So we told the GM, that the Japanese are going to build luxury cars, and they're going to come here, Japanese make motorcycles and little cars, they're not going to make luxury cars, your dream. McDonald basically said at the end of the meeting, guys, and he was speaking to our group, who, you know, I wasn't executive at the time, but that the executive said, Guys, you can tear down General Motors after I leave, but not as long as I'm here, or not going to use your numbers to plan our business. And one guy from the financial staff said, Well, Mr. McDonald, you realize that the financial staff has to use their numbers for the business plan. Yeah, but we're not going to use those things for the plants. We're so you could have taken that path, or use that information as a serious negotiating tool with the unions, which is what we

48:16

we didn't, you know, I don't say they I wasn't executive at the time, I share that responsibility for the detriment of the company. But they didn't. As a matter of fact, I think it was stemple. Who said, if you get laid off, you're going to get 95% of your pay. Remember those days? Yeah, right. There's a modal keep working? Oh, that's number one going on at the same time, is what I would call false component, II proliferation. Many, many were led to believe that the architecture underneath the vehicle, at General Motors, whether it was a Pontiac or an automobile was becoming or in more common, and therefore, the costs were getting thinner and thinner. Because those parts could be used on multiple multiple vehicles. I think it's safe to say that that wasn't true, not to the extent that it was portrayed. And therefore, at the end of the day, when you had declining share, and you didn't really get the proliferation. I mean, today today, it's true. I mean, General Motors and Ford, they've done a marvelous job of taking utility vehicles off of car platforms, and really doing the type of, of common architecture today that they only talked about back when in the era that I'm talking about. So you had this two factor Come together, you had the volume declining, and really without that kind of proliferate de proliferation that they were talking about, ultimately, to say that simply, you had too many mouths to feed, and something had to go. In the case of Saturn. They thought that they had great dealer party. Great, great locations, there's no better locations of the original Saturn dealerships that you can find anywhere. But what did they have two cars. They organized the organization hated Saturn, except the people in Saturn. So they starved Saturn. And at the end of the day, much too late. Chevrolet at the end of the 70s had more market share than General Motors has today. The proliferation and the competitive nature of the business, the globalization of the business, brought all of these models, the Japanese ultimately ended up building their models here. So there was no voluntary restraint that you could make them do. Heck, they built their models here, together that arguably is more American, then General Motors is based upon the number of plates they have here in the US.

Jeff Sterns  51:19

Right in percent of parts, etc.

51:22

So, um, the answer to your Saturn and Pontiac question, an automobile, too many miles know me, I would have kept Pontiac. Why, today, in hindsight, who needs a sporting division? But you could argue, well, a sporting division by today's standards could be an esport, the division never would have kept you. General Motors didn't need to luxury divisions are one that was pretending that they were a luxury division. But we had made serious investment in China. And Buick was the brand in China. losing face in cutting off Buick for America, probably weighed into the decision relative to the Chinese investments.

Jeff Sterns  52:11

Make sense? What are you driving now?

52:15

I drive a beautiful. Remember, I used to get a new car every three months for 20 years. So when I retired, I bought a 2009 Malibu out of California. And that baby still runs like a top today. That's great. I

Jeff Sterns  52:35

mean, with all of your jet setting background story. That's

52:45

Yeah, I take it to the golf course. I might as well buy a golf cart,

Jeff Sterns  52:50

or nine Malibu Are you guys sharing a car is there another car in the garage?

52:54

When I retired, we bought two cars, the 2009 traverse, which is a beautiful car, took it everywhere and a 2009 Malibu this year, because we are driving to Florida. I said you got to get a new car. And you know my wife, she does her research whenever you want. It's your car will just go off and get out of problem. So she went off for about three weeks came back to mourn. How much pain is it gonna cause if I don't buy a GM car, and I thought about that for 10 minutes, and I said, I could never make a decision not to buy a GM car for me. GM put my kids through school GM gave me a good living. GM showed me the world and made me a much better person than a pool player. It's gonna be GM car. You get what you want. Are you sure? and salutely to your car. So she came back said I want a Kia telluride. Okay. That's what we went out and bought. And I'm gonna tell you, it's fantastic. Very impressive. It's got I would say I'm sticking my neck out here as an auto analyst. Audi is renowned for their interiors. Correct. It's outtie. Like, it is fantastic.

Jeff Sterns  54:15

Get an update in 10 years on how that's holding up.

54:19

Sure. And you know, the warranty the 10 year warranty played a role in that etc. And it does have a lot of bells and whistles that yes, if the long term supplier quality isn't there. Yeah, I'm looking at a repair bill. But she's been through all of the key chat room groups and and that stuff looking just looking for something wrong, right. It's got four pension levels on MICHELIN 20 inch wheels. It writes. Really could we looked at the palisade the traverse as a benchmark. You know me I'm Learn I learned the purchasing techniques. You got to have three buddies in the stranger before that you can you can you can make the right decision on a purchase. So we looked at the palisade the traverse and the tirek because we wanted three rower for you know, still grandkids were still hauling around grandkids. Grandma grandma's car house is is the shuttle service for the school and all that stuff. So and I must tell you, the palisade was too rough. And I didn't, she didn't like the looks. Ultimately, we bought the vehicle for 45,000 all in meaning 1500 below sticker a six months ago, they were selling 4000 above sticker. So she negotiated a pretty good deal on it. And in order to get that equivalent technology, the shelf breaking the spacing with the cruise control on the highway, the six beers, the heated front and back seats, the two sunroofs the 12 inch screen that goes across the vehicle and the front etc to get all of that price between akia comparably equipped in a traverse $13,000 Whoa, now, yes. Is warranty still an issue? Sure it is. But you're closer to this than I am in your business. They're not like at the bottom quadrant of the JD Power, initial quality.

Jeff Sterns  56:34

And Matter of fact, I mean, when you talk about JD Power quality, I mean, there used to be a big spread from the most reliable or initial build quality and lowest I mean, now I mean, I think best to worse are all bunched up in the Upper 90s doesn't matter.

56:52

I don't really got the Italians to sell their vehicles. It's built South Carolina. Well, I'm

Jeff Sterns  56:57

gonna we'll stay in touch over that one. Let me shift gears on you. You've been all over the place. You could travel anywhere in the world, where would you go

57:05

to work or to travel, travel? I love Italy. I love Italian food. I love Italian wine. I love Italian clothes. I have not been to China, except I've been to Taiwan, I have not been to mainland China, I would love to go. I'd like to spend more time in Australia and hop over to New Zealand, I'd love to get on in Ottawa, and take the train to Vancouver across the trans trans Canadian railway system. So those boats would be at the top of my lists.

Jeff Sterns  57:41

Great choices. Can you share something nobody knows about Warren Brown?

57:46

Great question. Well, I don't I don't have any deep secrets. I got, I got a gaming computer for Christmas. And I am in the process of learning how to fly through Microsoft Flight Simulator. So my goal is to learn how to pilot an airplane on flight simulator, which is the latest wizzy wizzy wiziwig thing you can actually talk to air traffic control on somebody doesn't know about me, I could have been in a in a family of five boys. Three died. And I've always and I don't talk about that. And so I always try to imagine sometimes what it would be like to have four younger brothers as opposed to just one.

58:48

No, no, I

58:49

don't. I don't at that. 69 I don't think that I have I don't talk about that. As a matter of fact, I I spent last summer I don't even think Janet knows. I'm visiting my one of my brothers craze for the first time. Something like both folks never ever, ever talked about see my folks died when I was 33. Okay, so when my mom and my dad died, I was not working for General Motors. So they they had thought that I had lost my marbles. By the time they had died. They had thought that I had lost my marbles and left or motors. So not not too many people know that. And at the end of the day while I play myself as a sarcastic, caustic, and a tough guy. I have a very, very very big soft spot. But I tried to treat people with respect and teaching. Teaching has added more of that dimension for me in terms of more listening skills. To what students are asking for. I sometimes talk tough and I'm not.

Jeff Sterns  1:00:05

Well, I experienced you're what I would call it not sarcastic, caustic, other than, you know, from a humorous standpoint one sarcasm and you I mean, you are respectful to me unbelievable, you know, anytime I've ever interacted with you one final thing if you're up to it and if you don't answer don't answer because I mean, I can't even imagine what Warren brown could have left on his bucket list. Oh, really? Yeah,

1:00:35

I am going to fly that plane. I took the COVID time to learn how to play bridge. And I am fascinated by the game. And I want to at some point here, you know, enter a bridge competition, my days of skiing are done. My double vision acquired in Switzerland probably influenced that for for quite quite a period of time. That's the let's just do one more run. And the one more run you crack your head open, being a better father at 62 advice to my children are all grown professional and professional on their own right, that being a better father at 16 than I was at 29 if I come close to accomplishing that at all. That's enough of a bucket list for me.

1:01:46

This has been Jeff Sterns connected through cars