In Defense of GM's Rick Wagoner

US News & World Report:

It's been a bad year for CEOs, and Rick Wagoner, the head of General Motors, seems poised to join an ignominious crowd: Corporate leaders who have resigned after their firms sought federal help. Key members of Congress have said that Wagoner should step down before GM gets a big chunk of a $15 billion automaker aid package, and incoming President Barack Obama has said that GM's leadership "has to move on." It's hard to imagine Wagoner staying on, in defiance of his new lords in Washington.

But even if he leaves, Wagoner doesn't fit the mold of the rapacious CEO. Like his Motor City colleagues -- Alan Mulally of Ford and Bob Nardelli of Chrysler -- Wagoner showed poor judgment by flying a corporate jet when he came to Washington in November to ask for aid. And his insistence that "bankruptcy isn't an option" for GM has seemed presumptuous -- as if the feds are obligated to rescue his company.

Read the whole story: US News & World Report

Comments

[Oxonian2001]

I think the problems with the Big 3 date back much further. First of all, they've always been in cahoots with big oil. So why bother to build more fuel efficient cars? Secondly, they've only cared about profits; and here the car-buying public is at fault. Back in the 70s, and 80s and even recently, no one wanted to buy smaller cars because they wanted to keep up with the Joneses. So of course, the Big 3 was going to continue manufacturing their running behemoths. Thirdly, few cared about research and development: ever notice that the scientists and engineers almost always get paid less than the marketers and their managers? As such, they couldn't keep up with new technological developments. Fourthly, the general quality also started to slip even more, although this has to do partly with the fact that unlike the Japanese, American automakers were designing cars to last a max of 5 years so people could go out and buy more frequently.

In the meantime, while they were slowly losing the race, the CEOs became even greedier and began to outsource. (Although to be fair, this is what Honda and Toyota were doing too when they built plants here in the US). The Big 3 only have their CEOs from the last 30 years to blame.

[KillTheMessenger]

Wagoner had eight years to stop the bleeding. He didn't. He only managed to make a gushing cut to a festering wound which has not changed to a life threatening condition. GM after Wagoner is as dead as it was before him. It does not matter that he did not use the job to get wealthy beyond belief. Who cares?

What matters is that he did not make GM into a facility that can compete against Toyota and Honda. Quality alone (and even that claim is questionable) means nothing if the company keeps losing thousands of dollars per vehicle. The goal should have been to make money on every sale. Instead Wagoner opted to keep market share high. The method he used was partially successful: make the numbers by giving customers large rebates. GM's sales machinery excels in the size and frequency of its fire sales where dealers clear the lot of old vehicles by giving them away under cost. But that is not how low margin business works and Mr. Wagoner failed to figure it out for the full length of his tenure.

It's time for him to become a case study for the Harvard business school.

[ReasonIsMyReligion]

Top drawer as usual.
What, no occurrence of the letters S, U, and V in combination?

[KillTheMessenger]

I have a strong feeling that to prove poor performance as a CEO one does not have to resort to picking out any vehicle class. The mistakes made were probably the same across the board.

[vippy]

First of all I want to remind you that Rick Wagoner helped put this country back on its feet after 9/11.
We have short memories! Second I want to point out why are we holding the CEOs of the BIG 3
accountable when we failed to do so with AIG and Goldman Sachs??? Do you remember the $ 440,000 spa treatment right after they received the federal funds, then asked for more money and not
one blink of the eye of our politicians who now want to exercise their muscle? And who was so proud
of their last energy bill with 35 mpgs by the Year 2020? And who dictated the CAFE STANDARDS to
the BIG 3? And who offered a tax write-down for any vehicle over 5000 lbs in 2005??????
Maybe we have to put the blame where it belongs.

[KillTheMessenger]

Good trolling. Now, may I remind you that the big three are chiefly responsible for lobbying the country into $500 billion of oil imports in 2008 alone? If you want to find a culprit for the fundamental problems for the US, Detroit is not a bad place to start searching.

[Social Construct]

" ... Since then, Wagoner has cut costs by $9 billion a year and shuttered 12 assembly plants. ... " US News & World Report.
Maybe putting all those people out of work is part of a larger systemic economic problem. Less people able to afford the products and services offered unless they have credit (which is quickly becoming harder to pay for) equals less real money from the middleclass to support the less-than-real money of Wall Street. An obfuscated pun intended.

[Samalabear]

One more comment. I hope that anyone who reads this article is again struck by the inequality, once again, between the treatment of the Big3 and the treatment of Wall Street. I was truly struck once again by the outrageous compensation of these CEOs and what they did to basically play with what turned out to be Monopoly money, and none of these companies or their CEOs (although Fuld is in the hot seat at the moment) have been held accountable or their activities scrutinized in return for the billions they have received.

The ratio of CEO pay should be max four times that of the lowest-paid worker, especially considering the times in which we live. We're in huge trouble in this country and apparently these executives still don't get it -- the party is over!

[gcallaghan]

If their firms avail themselves of the bailouts, CEO's and other executives from Sr VP up should be replaced - and not by those ousted at other firms. We have seen what their brand of thinking produces and it would be foolish to believe that if they only had more easy cash at their disposal, they'd have made better decisions. In tribal cultures, a leader whose decisions lead to ruin and hardship gets summarily replaced and in some cases eaten. Even that's too good for these fat cats.

[schatsie]

Still, when you watch Who Killed the Electric Car, you will see that billions went into the TAX CREDITS TO buy the SUVs and we have the repugs to thank for that....

[Bettysdad]

What could be more telling than this shot of Wagoner smiling in front of a Cadillac.

They don't get it.

[ReasonIsMyReligion]

I'd be quick to agree if it was an SUV of ANY GM name plate.

But it seems to be a Caddie performance sedan; good for GM for taking on MB, Audi, BMW with part of their line. The car mags would agree. (Not sure about the buyers. Yet.)

It's the Hummers and the SUVs.

[ErnestineBass]

Wagoner's "ideas" are stuck in the 20th century, and if GM is going to survive, it's going to need a leader with vision.

Wagoner, Lutz, Laneve and the fossilized GM Board of Directors should do the right thing and step aside.

[mec57]

And his insistence that "bankruptcy isn't an option" for GM has seemed presumptuous -- as if the feds are obligated to rescue his company.

Ernestine, I couldn't agree more...bankruptcy IS the option for the Big Three...and that's how it ought to be. Look at The Donald...declared bankruptcy and emerged unscathed...other companies can do it...the stigma Wagoner is trying to put on bankruptcy is just idiotic...sorry, no bailouts...but we know that since politicians are deeply in bed with the auto industry and the unions to boot, they will cave and put us even more in hock.

[Samalabear]

Yes, bankruptcy is a tough decision for anyone and any company, but sometimes it's necessary and it doesn't have to be the death knell. What is, in fact, choking innovation and creativity and entrepreneurship in this country has been the overall of the bankruptcy laws. There was a very, very interesting story about this on NPR last year. The right person under a Chapter 11 bankruptcy, with creativity and drive, can bring a company back from the ashes.

[robXdion]

There is no defense. If he had any decency like a Japanese businessman, he'd be already gone by his own volition.

[CaptainHowdy]

If he was a Chinese businessman he would have done the honorable thing and offed himself...

http://money.cnn.com/2007/08/13/news/international/bc.news.china.safety.mattel.dc.reut/index.htm

[mec57]

Never would happen...these CEOs have outsized egos and assume their value to society is far greater than they ever would be...I venture to say even a PLUMBER would be vastly more worth more than the likes of this worthless corporate clown.

[StellaDuBois]

If he were a Japanese businessman his government would have been benefitting his business all along with national health care and retirement benefits and low-to-zero interest loan availability.