By on September 25, 2008

During the Civil War, General George McClellan headed the largest army in the North. McClellan was an astounding capable soldier– except for the part about fighting and winning a war. He was also insubordinate, rude and a potential political rival for President Lincoln. The president’s Cabinet recommended McClellan’s dismissal. “Who should replace him?” Lincoln asked. “Anybody!” they replied. “I can’t give the job to ‘anybody,’” Lincoln argued. “It will have to be a “somebody.” In the same sense, who can replace GM CEO Rick Wagoner?

It’s true: Rick Wagoner’s career is toast. And not a moment too late. By any metric you can name– profits, market share, market capitalization, debt load, brand strength, anything– Wagoner’s administration has been an unmitigated disaster. In fact, the feds missed an important opportunity to eject Wagoner in exchange for bailout billions. Never mind; his day is done.

But replacing CEO Rick Wagoner won’t be easy. Using a more modern comparison, securing a new General Manager for a professional football team is a walk in the park. There are perhaps fifty candidates who are more-or-less qualified to run an NFL team. Anyone who is anyone in the business knows who they are. Finding someone with the experience to run a global automaker– with millions of sales, dozens of factories and worldwide reach– is a relative bitch.

There are far less international automakers than NFL franchisees.The pool of available managerial talent for GM is a lot smaller than, say, The Detroit Lions. While football teams play with one set of rules using more-than-not similar strategies, carmakers must build hideously complex products (on a five-year timeline) that compete for different customers, subject to thousands of rules, all of which are subject to constant change. Finding someone who fully understands the game, never mind how to win it, is “challenging.”

Worse, GM is a closed society. There are fiefdoms within fiefdoms within fiefdoms. Employees have national, brand, departmental and personal loyalties (to name a few). It’s not for nothing that one of today’s blogs revealed that the man in charge of GM’s Strasbourg plant holds a Harvard MBA– just like his CEO and COO. And if you think intra-mural talent is the answer, look at ex-Toyota exec Jim Press’ progress at Chrysler.

Not only would it be hard for an outsider to get accurate information about what’s going on at GM’s sharp end (or filter what info he or she gets), it would be even harder to ensure that necessary changes are implemented.

Mulally at Ford? Nardelli at Chrysler? Apples and oranges. The Ford family owns enough special stock give Mulally the authority he needs. Same goes for private equity group Cerberus and Nardelli. GM has no single shareholder or directors’ block. Anyone who managed to displace GM’s existing mob would need the support of the board and, realistically, the division heads.

Bottom line: unless the GM board was displaced and company’s current infrastructure destroyed, any replacement boss would “have to be” one of GM’s lower bosses. Not that it matters.

Two years after his Cabinet called for McClellan’s head, Lincoln found his “someone.” General Grant discovered that his new/old army was nowhere near the smooth-running machine he’d had out West. One of Grant’s staff offered a simple solution: get Eli Parker (the judge advocate) drunk on the worst whiskey available, give him a knife and tell him to bring back ten major-general’s scalps. Grant was intrigued, “which ones?”

Wrong answer. Grant’s problem wasn’t so much the individual major-generals as the fact there were too damn many of them.

And so it is with GM. Once again, the root of all evil is logistical inertia, or lack thereof. General Motors North America is hamstrung by its surplus of brands; hence products, dealers, marketing and mandarins. Even with GM’s new “four channel” internal and external realignment– HUMMER, Cadillac, Saab; Buick, Pontiac, GMC; Saturn and Chevy– there still are too many hungry mouths too feed. And execs feeding them.

GM’s size was once its main advantage. It’s now its greatest weakness. With the U.S. market shrinking and share dropping, all that once-impressive industrial might just means more to cut. Worse, the sheer size of the company makes it very hard to cut effectively. Every cut must be filtered through the demands of four or more “lines” and double that number of brands. Worse, each change disrupts the balance of power between the divisions within the company and on the market.

Finding another “someone” to create effective regime change at GM, someone who can act decisively then track and balance the progress of his or her changes, could well be impossible. But it’s worth a try. As for the current administration at GM, let’s give “Honest Abe” the last word. “Stand with anybody that stands right, stand with him while he is right and part with him when he goes wrong.”

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66 Comments on “General Motors Death Watch 200: Granted...”


  • avatar
    AKM

    the man in charge of GM’s Strasbourg plant holds a Harvard MBA

    As an MBA who works with operations every day, I can tell you right there that MBAs don’t prepare students to work in operations, the same that engineering degrees don’t prepare for management.
    And yet, both cases happen all the time.

    As for your analogy, I doubt that the GM board is anywhere close to Abe when it comes to taking hard decisions….

  • avatar
    USAFMech

    As a native Illinoisian and hobby historian, I like the analogy.

    You could have also mentioned that RickyBobby was a book cooker before he was CEO. But really, is there really enough time left that this is a concern? GM is almost past C11 and headed for C7. Won’t they just end up in recievership?

  • avatar
    tomaxhawk

    When I worked for a Tier 1 supplier for GM in the 90′s, there was never a shortage of ‘just promoted’ project manager engineers from GM who could not calculate the net difference of their ass from a hole in the ground. And if they had been in the position long enough to finally make that distinction, they were soon promoted to the next level. At the level I dealt with, the Peter Principal was a fully functioning daily way of life for GM. I can only imagine the same thing existed within upper management. Is it any wonder that the former chief book flambe’r has now successfully dashed the mighty ship onto rocks and let the waves tear it to shreds.

  • avatar
    guyincognito

    I disagree with this analysis. Running an automotive company is not brain surgery. You don’t have to be an expert in everything, you just have to know how to ask the right questions and have good business sense. There are tons of people out there who could do the job much more effectively than Wagoner. I’m not saying they should hire some untested community organizer with no management experience whatsoever to come in and run the whole company, but anyone with experience running a manufacturing company, large or small is qualified, IMHO.

  • avatar
    Aegea

    As an ex-Secretary of Defense was fond of saying “A’s hire A’s, B’s hire C’s.” GM has been run by B’s (or worse) for along time, so I suspect the whole management structure is incompetent and self-serving, not just the top few layers.
    Changing just the top man would be ineffectual.

  • avatar
    Samuel L. Bronkowitz

    It’s kinda like being the President of the United States: by definition anyone that could do the job well wouldn’t want it and anyone that wants the job is probably vain, power hungry, and greedy.

    Having said that, I really thought the Cerberus purchase of Dodge/Chrysler/Whatever would be the template for how to strip down and fix a car company – a bunch of outsiders come in, slice off the bureaucratic flab, and build it back from the ground up. Instead, they seem to have fallen under the same spell-of-stupidity that has paralyzed GM and the rest of Detroit.

    I was a Chevy guy growing up. I have fond memories of some of their great cars, and I still love the Corvette and the Silverado. But at this point I think GM will simply flail about until they reach C7.

  • avatar
    jl1280

    And the CEO/President really doesn’t matter anymore except as a delivery boy who ultimately will take the Chapter 11 papers to the Board.

  • avatar
    Stingray

    This business is stupid complex. Really. Just to homolagate a car to run in this country, it’s necessary to supply about 50 tests and documents.

    To that, add, in a big market: emissions regulations, crash regulations, myriad safety regulations, lightning regs, etc… Then you start with taxes, foreign commerce, accounting…

    I almost forgot internal standards… which every automotive manufacturer has. For almost every detail in the vehicle: paint, bolts, rust protection, the list goes on…

    After you kind of finish with that… multiply that for 120+ countries were your company has a brach.

    Yeap, the CEO must have at least a notion of what’s going on.

    I would put my bets, just for a change… debunk the beancounters from CEO, and put an engineer with some beancounting abilities and sound product/business/opportunity/politic (internal not the other) habilities.

    Also, since that person is going to face a tough war… bring in the baddest mother fucker you can find. It will need the baddest stick to do the job and chop all the heads needed in the carnage.

  • avatar
    Robert Schwartz

    Grass will grow from your cheeks and GM will be run by Rabid Rick or somebody just like him.

  • avatar
    eh_political

    Is Ron Zarella available?

  • avatar
    Martin Schwoerer

    I have no doubt that Carl-Peter Forster would be tremendously better than Wagoner from day one. He understands brand, he understands product, he’s international, he knows GM.

  • avatar
    mykeliam

    Stingray :
    I would put my bets, just for a change… debunk the beancounters from CEO, and put an engineer with some beancounting abilities and sound product/business/opportunity/politic (internal not the other) habilities.

    Isn’t that what Ford did?

    since that person is going to face a tough war… bring in the baddest mother fucker you can find. It will need the baddest stick to do the job and chop all the heads needed in the carnage.

    Isn’t that what Cereberus did?

  • avatar
    Raskolnikov

    Like I said before, GM needs a revolutionary leader, not an evolutionary (slow and plodding)leader like Rick.
    Someone that will come in and make the tough choices to get America’s once-proud industrial powerhouse on track to profitability.

    I vote Farago. I’ve come to believe he’s got GM’s core problems diagnosed and actually has a decent plan (sans bankruptcy part) to fix it. Maybe then we could begin reading a GM RebirthWatch on TTAC.

  • avatar
    netrun

    Too bad DeLorean is gone. That’d have been a hoot to watch.

    Iacocca is too old and deranged.

    I say get Kerkorian back in along with his sidekick York and let them run the show for a while. Say one year.

    After that one year (when GM will be half it’s current size and making a profit) the show gets turned over to whoever the board picks.

  • avatar
    blindfaith

    The major change in direction of the American buyer is to look for a car that has good gas mileage.

    How is this done improve engine efficiency, reduce weight, and reduce power to weight ratio.

    Now where is this being done?

    How come it is not being done?

    How much time does it take to reduce the power of an engine and then implement change?

    They need to fire somebody.

    “Too bad DeLorean is gone. That’d have been a hoot to watch.”

    Delorean personal baby from beginning to end was the VEGA, rust out one year and engine that didn’t last 40,000 miles at 12 mpg. What a loser.

  • avatar
    TireGuy

    I would propose to appoint Manfred Wennemer, who has run the German Tire Maker Continental AG for about 7 years until the company was taken over by Schaeffler last month. He turned a loss making company into a highly profitable automobile parts maker, taking on labor unions without fear, making tough changes and cutdowns. The perfect man, although certainly no GM insider – but we don’t want one either, or?

  • avatar

    The other problem here is that whoever replaced Snorin’ Rick would essentially be taking command of a sinking ship. Some really aggressive execs relish a challenge if it seems like a resume-builder, but if the new CEO is in charge for Chapter 11 and/or Chapter 7, s/he is gonna share a disproportionate amount of the blame. I’d think twice about that.

    As for the question of qualifications, I think Michael makes a compelling point here — the effectiveness of whoever ends up in charge is going to be directly dependent on how willing the General’s many squabbling fiefdoms are to cooperate.

    I highly recommend De Lorean’s book with J. Patrick Wright, On a Clear Day You Can See General Motors. De Lorean’s self-promotion and self-aggrandizement aside, it’s an instructive portrait of GM’s internal politics, which I don’t think have changed much since then. His five-year tenure at Chevrolet amounted to being brought in to salvage other people’s messes by superior who didn’t want him there and colleagues who were thoroughly determined to see him fail, spinning everything he did or tried to do into a black mark against him. Even if you dismiss half of it as De Lorean’s ego working overtime, it’s a pretty dour picture, and it seems like that would be the situation into which any new, non-insider CEO would be walking. It’ll be like firemen going into a burning building full of snipers.

  • avatar
    tomaxhawk

    hetrun,

    i agree! Kevorkian should be brought in; he’s no longer incarcerated. Oh wait, you said Kerkorian… never mind..

  • avatar
    menno

    François Castaing, who’d come from Chrysler from AMC (and before that, Renault) might be a good choice for GM’s COO.

    Here’s what Wikipedia says about AMC and how the purchase of AMC actually saved Chrysler: “According to Robert Lutz, former President of Chrysler, the AMC acquisition was a big and risky undertaking. The purchase was part of Chrysler’s strategic “retreat-cum-diversification” plan that he states did not have the right focus. Initially the goal was to obtain the world-renowned Jeep brand. However, Lutz discovered that the decision to buy AMC turned out to be a gold mine for Chrysler. At that time, Chrysler’s management was attempting to find a model to improve structure and operations, “something that would help get our minds unstuck and thinking beyond the old paradigms that we were so familiar with”. In this transformation, “Chrysler’s acquisition of AMC was one of the all-time great moments in corporate serendipity” according to Lutz “that most definitely played a key role in demonstrating how to accomplish change”.

    According to Lutz (1993), while AMC had its share of problems, it was far from being a bunch of “brain-dead losers”. He describes the “troops” at AMC as more like the Wake Island Marines in battle, “with almost no resources, and fighting a vastly superior enemy, they were able to roll out an impressive succession of new products”. To further solidify the organizational competencies held by AMC, Lee Iacocca agreed to retain former AMC units, such as engineering, completely intact. In addition, AMC’s lead engineer, François Castaing, was made head of all engineering at Chrysler. In an unthinkable strategic move, Castaing completely dismantled the entrenched Chrysler groups. In their place AMC’s “platform team” were implemented. These were close-knit cross-functional groups responsible for the whole vehicle, as contrasted with Chrysler’s highly functional structure. In this capacity, Castaing’s strategy was to eliminate the corporate administrative overhead bureaucracy. This move shifted corporate culture and agitated veteran executives who believed that Chrysler’s reputation as “the engineering company” was being destroyed. Yet, according to the popular press, by the 1980s Chrysler’s reputation was totally shot, and by Lutz’s view only dramatic action was going to change that. In summary, Chrysler’s purchase of AMC laid the critical foundation to help re-establish a strategy for its revival in the 1990s.”

    Anyone know of Mr. Castaing is still alive? Having a SUCCESSFUL automotive engineer actually in charge of General Motors day to day automotive operations – wow. What a novel idea, eh?

    Gerald C. Meyers, CEO of American Motors until 1982, is I think teaching university in Southern Michigan. I wonder if he’d be willing to take on the CEO post of General Motors?

    The problems of running current-day GM are much the same as he had 26-27 years ago at AMC. Lack of money (an understatement!), a shrinking market share, old factories, union demands… he’s seen it all. He was pretty much “pulled” from the job because by 1982, AMC had to go hat in hand to Renault for more money (i.e. Renault bought up more of AMC/Jeep and put their own executives in charge). Kind of like now – with the Government bailing out GM – but not putting any new executives in charge.

    Then with the Meyers / Castaing team in place, clear out the deadwood from the GM executive ranks (which is probably 80% of it), downsize to suit, cut down to two worldwide “automotive groups” – Chevrolet (aka GMDaewoo in South Korea) and Saturn–Buick-Opel (Saturn in NA, Buick in China and NA, Opel elsewhere in the world), with Cadillac, and GMC-Pontiac “sub-brands” under the SBO Group for NA. Sell SAAB.

    How about it, GM board of bystanders?

  • avatar
    NickR

    Wasn’t that about the time where Abe sent a memo to one of those generals saying something like ‘You have an army you don’t appear to be using, might I borrow it?’ Classic line I have always loved, but never knew the veracity of it.

  • avatar
    Stingray

    mykeliam :

    Isn’t that what Ford did?

    Maybe yes. But Mullaly was an “alien” to this industry when he started. Talented? of course, nobody discuss that

    Isn’t that what Cereberus did?

    Ummm, I don’t think so. Nardelly maybe a bad mofo, but he’s not the right guy to run Chrysler.

    Now if you add the qualities as I stated…

  • avatar
    menno

    BTW, re: my crazy ideas about the auto industry?

    I wrote to American Motors (then being an AMC fan) when I was in the military, stuck in England, in 1976.

    Said – “why don’t you get a license for this car which JUST went out of production, and maybe even the tools & dies – and build it in Kenosha?”

    The car? Already an unwanted step-child. But well engineered and already having had all the bugs worked out from 1970-1975.

    http://web.telia.com/~u31614134/eK70.html

    But can you imagine what AMC could have done with a thoroughly MODERN, slightly reskinned (and maybe lowered a tad) version of this car, brought up to US specs? Could have been introduced as early as 1977, for the 1978 model year. The year that Chrysler’s successful Omni-Horizon front drive cars came out.

    Front wheel drive. Four cylinders. All independent suspension. Triple brake circuits. Crush zones. Roomy interior. Huge trunk. Boxy shape (perfect for the late 1970′s and early 1980′s “style” until the aero-design era of mid 1980′s).

    Interestingly enough AMC DID end up with a VW product. They bought the ex-Audi 4 cylinder engines and design rights for the Audi 100 2 litre OHC engine (also used in the original Porsche 924) and installed them in some 1979-1981 AMC Spirits and Concords. I’ve always wondered if my letter was the catalyst? I’ll never know.

  • avatar
    mikeolan

    “By any metric you can name– profits, market share, market capitalization, debt load, brand strength, anything– Wagoner’s administration has been an unmitigated disaster.”

    Wrong. Wagoner’s tenure hasn’t been a success, but I’d hesitate to call it a failure, let alone a disaster. In many ways, he’s the “right guy wrong time.” GM needed its current leadership 15 years ago while it was royally screwing up in the 90′s.

    The GM of today is, unlike the GM of the past 20 years, a competitive car company, and did so under steady improvement over the past model cycles (like Hyundai) instead of radical new products (like Nissan.) So in regards to at least one metric- the actual product- GM has been success.

    The temptation for a lot of armchair enthusiasts is to say GM needs a radical change like that of Chrysler or Nissan in previous generations. (cutting, major shake ups, etc.) Chrysler and Nissan are both plagued by the quality demons from their respective ‘transitions.’ GM needs to stay focused and keep building improving (and right now they’re one of the FEW manufacturers who are improving… Honda and Toyota decided to go the wrong way). It’s going to take awhile, but eventually people will start trusting them again (and it’s not going to happen overnight.)

  • avatar
    DIYer

    Is Carlos Goshn happy over a Renault/Nissan? If he wants another career challenge, he can come stateside and clean the General’s house. This guy is one of the few at the top actually worth his keep.

  • avatar
    Stingray

    Menno you brought Castaing and AMC… bright.

    A bunch of people with no money or resources… who made the XJ.

    LONG LIVE TO THE UNDERDOG!!!

  • avatar
    Potemkin

    Running any large corporation is not any great mystery. You have to understand that your customer comes first for without him/her you don’t have a business. Next you have to delegate. Give assignments to your underlings and if they let you down fire their asses out the door. Paying off severance is better and cheaper in the long run. If you encounter resistance from those with fiefdoms to protect tell them either get on board or get out. The problem today is that CEO’s have no loyalty to their companies only to their paycheques, why else would they demand golden parachutes. The captain should go down with his ship, then he has a vested interest in keeping it afloat. GM desperately needs the baddest mother.

  • avatar
    netrun

    @mikeolan: not sure if you’ve been paying attention the past eight years, but GM’s marketshare (38% to 20%) and their market value ($50B to $6B) has dropped like rocks.

    That doesn’t happen by accident. It’s called value destruction.

    In business, the name of the game is value creation. So to say that GM should keep doing what they’re doing is akin to saying: “Despite several failed attempts at suicide, I think they’re on the right track.”

  • avatar
    Geotpf

    mikeolan :
    September 25th, 2008 at 1:21 pm

    “By any metric you can name– profits, market share, market capitalization, debt load, brand strength, anything– Wagoner’s administration has been an unmitigated disaster.”

    Wrong. Wagoner’s tenure hasn’t been a success, but I’d hesitate to call it a failure, let alone a disaster. In many ways, he’s the “right guy wrong time.” GM needed its current leadership 15 years ago while it was royally screwing up in the 90’s.

    The GM of today is, unlike the GM of the past 20 years, a competitive car company, and did so under steady improvement over the past model cycles (like Hyundai) instead of radical new products (like Nissan.) So in regards to at least one metric- the actual product- GM has been success.

    GM’s domestic sales are falling like a rock. Sales in all non-emerging foreign markets (that is, places like Canada, Australia, New Zealand, and Western Europe) are doing the same. Their sales are only increasing in areas where most of the population is buying their first car, and therefore have little history with the company and are not nearly as picky as the customers in the more developed nations are.

    Now, some of this may be the fault of previous management’s decision to build shit, amoung other factors outside GM’s control, but the fact is, that under the current management’s watch, GM has gone from bad to worse, in terms of it’s chances at surviving as a going concern.

  • avatar
    Samir

    This move shifted corporate culture and agitated veteran executives who believed that Chrysler’s reputation as “the engineering company”

    Wow. That must have been a looooooooong time ago. By the time I came into the world, Chrysler was the K-Car company.

  • avatar
    jolo

    argentla wrote:

    The other problem here is that whoever replaced Snorin’ Rick would essentially be taking command of a sinking ship. Some really aggressive execs relish a challenge if it seems like a resume-builder, but if the new CEO is in charge for Chapter 11 and/or Chapter 7, s/he is gonna share a disproportionate amount of the blame. I’d think twice about that.

    That’s what Delphi did with Steve Miller. His claim to fame was he was a turnaround guy. That got shot to hell. There are those out there that will take a company through chapter 11/7. That’s who GM needs to find. Even though they have their own bankruptcy lawyers on staff, they need a leader. One way or another…

  • avatar
    BostonTeaParty

    I’ve been thinking about a new leader for GM for a while now, one name that keeps popping up for some reason is Richard Branson. Energetic passionate knows how to run big multinationals. Could really get the company and the people going now with his enthusiasm. Definately somone from outside the company, somone who can think outside the GM box. Either that or the fella that turned around Ford of Europe.

  • avatar
    menno

    Stingray, what made me think about it were comments I’d read in historical papers written by Studebaker-Packard and AMC executives back in the dark ages of the 1950′s when neither one were likely to survive ’til next week. (I’m the “unofficial automotive historian” in TTAC’s B&B – an actual member of the Society of Automotive Historians group, in fact).

    A synopsis of the comments I had in mind would go something like this: “We hired some talent from GM (or Ford) and they couldn’t cope with the pressure. The job was too tough for them.”

    Obviously all of the S-P executives are long dead but a few ex-AMC guys still are around. Not to mention the fact that AMC was the #4 of the BIG FOUR in 1961, and Studebaker had died by Christmas 1963 (with the siamese twin – tied to the rotting brother – dying in Canada by spring 1966).

    AMC “succeeded” in that if it weren’t for AMC, Chrysler would not have made it THIS far. In fact, I would say that it was DAIMLER which helped to kill Chrysler.

  • avatar
    eh_political

    Has anyone mentioned the possibility of Ron Zarella taking the helm?

  • avatar
    Stingray

    Menno:

    I agree with you in this… among other things in this discussion

    AMC “succeeded” in that if it weren’t for AMC, Chrysler would not have made it THIS far. In fact, I would say that it was DAIMLER which helped to kill Chrysler.

    And as a matter of fact… they did.

    I have read a lot in allpar (not enough chrysler reading) and one of the very bright spots I found was the Neon development.

    But then… after you see the daimler “good influence”… read Caliber/Liberty/Commander/Sebring… I can only say they screwed it big time.

  • avatar
    James2

    Has anyone mentioned the possibility of Ron Zarella taking the helm?

    Yes, exactly. It’s clear the Board of Bystanders need new contact lenses. Ron’s the perfect man for the job. He’ll “market” GM to new levels of success (read: complete the deathmarch of the Deathmarches).

  • avatar
    Dynamic88

    I nominate myself. GM can’t survive long term w/o CH 11 reorganization. I’d pull the C-11 switch faster than a cat can lick his ass.

  • avatar
    menno

    Made ME laugh, Dynamic…. I don’t have a cat, but I have a 110 pound (50 kilo) Newfoundland – and – um how can I put this? Sometimes you hear the most DISGUSTING snorting snuffing and licking noises as she “cleans herself”. We just say “SNOWDONIA! That’s not very ladylike!”

    She then just looks at us and gives us a big Newfy dog-grin. (Mind you, if she later decides it’s time for a sloppy kiss on daddy, I always refuse! “Ewwwwwww! Where’s that nose and tongue been recently, Snowy?!”)

  • avatar
    63CorvairSpyder

    “My Dad was a Prophet”

    As a kid growing up in Michigan in the 50s and early 60s I can still recall my late Dad(he was a GM Exec VP) coming home from management conferences after being away for several days. He would rail at the(his words) blow hards, yes men, brown noses and do nothings he would encounter at those conferences. You see my Dad was a hands on, get it right, work your ass off kind of guy and he was eaten alive inside by the ineptitude at the executive management level at GM even 50 years ago. It was an insurmountable tidal wave even then. Too many inside cliques and fiefdoms as was previosly stated.

    He had his first heart attack at 50 and thankfully lived till 60. To this day I still believe it was GM that killed him. He graduated from General Motors Institute in Flint and worked his entire career for GM, never had another job. He loved that damn company.

    His words still echo, “someday this will all implode”.

    “My Dad was a Prophet”

  • avatar
    phargophil

    I realize that I may step on toes when I say this, but am I the only one that thinks that along with too many lawyers there are too many MBAs? Several of these Masters run companies and I have to believe some of the management crew at GM has this “qualification.”

    With that said, just imagine the number of MBAs that are involved in finance and credit markets.

    I feel more comfortable about things knowing this.

  • avatar
    blindfaith

    The CVT (new Transmission) problem was a known problem within the CVT engineering team. They stated to management flat out do not put the CVT (new transmission) into production it will fail.

    The management team stated we needed to sell it we will sell it. They sold it and the CVT failed.

    This problems should have lead to the termination of every management team member and staff that allowed this to happen. The engineers should have been repremimanded because they did not send a letter to the CEO. The CEO should be terminated for not having this process in place.

    This is what is wrong with GM

  • avatar
    SherbornSean

    Menno,
    Great idea, suggesting Gerry Meyers. The last couple of decades, he’s been a professor at Carnegie-Mellon (now retired) and Michigan and has been running a crisis management consultancy . He is a great leader, and I was very fortunate to have learned under him at CMU’s business school.

    Unfortunately, Professor Meyer is no spring chicken — I doubt his health is up to the task of the greatest turnaround in the history of the auto industry.

    Whoever is chosen, I suggest someone young. This is a fight that will take 10+ years to fight — guys like Captain Kirk, Lutz and Iacocca are just too old to sustain the battle for that long.

  • avatar
    Dave

    BostonTeaParty – it wasn’t a fella that turned round Ford Europe – it was their top management acting as a Team – you know, like how Toyota operate. And pulling them to GM now would be a blow to Ford Europe, and then to Ford US…. with no guarentee of saving the General. If there’s little or no chance that all of them will make it, we want at least one of the D3 to survive, don’t we?

    I suspect even now there’s a team from the glass house in the air aiming to ‘lame’ their European colleagues just like villages lamed their blacksmiths in medival times to stop them leaving.

  • avatar
    CarnotCycle

    I think Ford did a good job hiring Mulally. He had experience in putting together massive multi-national efforts to assemble incredibly complex machines (Boeing airliners) for real customers on real schedules, for a profit. I have no idea why Chrysler hired Nardelli – he was already a poster-boy for overpayed incompetence from his Home Depot days. But unlike Ford or Chrysler when they brought in outsiders, GM actually has some islands of excellence amid the toxic ocean of their North American ops.

    If I were the Chairman of the Board (Rick would now be in the trunk of a J-body at the bottom of the Detroit River, a fitting end) and had to hire someone to run GM, I would probably not look outside the box of GM, ironically. I would take a look at those islands of success within GM and find out who was responsible. Pockets of success at GM are admittedly rare, but there are some gems in the rough. The Corvette is one, the re-birth of Cadillac (barring the obvious badge-engineering) is another. The GMT-900’s are a masterpiece of both engineering and bad timing, but nonetheless they are all organizational successes that make iron their respective markets have a demand for (even if the demand is shrinking, a’la GMT-900).

    I don’t know who those people are, but in their respective authorities within the Mothership they fought the battle and won somehow. That’s a heck of a reference to run the whole company. I am guessing that these people probably have a chip on their shoulder regarding the competition and the upper-management of GM itself, and would love some revenge so-to-speak. This would also be a good thing.

    So, I would get that pool of people together somehow and begin to fill the ranks of suddenly open positions that I would be creating on the other side of the ledger. Instead of picking someone who likes a good corporate fight to be CEO (fighting like that, no matter how good you are at it, wastes precious, precious time and attention from more important things), I would also equip the CEO with a ruthless SOB hatchet-man to do his dirty work for him. Washington had Hamilton, FDR had Harry Hopkins…shit, even Stalin had Beria to use some other historical analogies.

  • avatar
    John

    As a group, TTAC’s B&B, in their haste to nominate a new GM CEO, have forgotten that, as it stands, the group who will make that decision is the group that has been patiently tolerating the existing CEO all this time. Maybe we should redirect our torches and pitchforks toward the board of directors. Who are these guys and what are their qualifications? Are they corporate has-been’s, coasting on their accomplishments of 30 years ago? How long have they served? When will they go home?

    Last week, when the first official pictures of the Volt appeared, several knowledgeable people remarked that the car in the photo was probably a clay facsimile. But even if you hate that car in the photos, you have to admit that making a pile of dirt look exactly like a highly finished metallic/plastic/rubber/glass assembly is a real talent indeed. Now, suppose GM’s internal staff perverted that talent into making a clay facsimile of a board of directors. Forget about “feet of clay”. This board has arms, legs, heads and torsos of clay as well. And when angry customers, stockholders, legislators, suppliers, and employees write in wondering if you EVEN HAVE a BOD, just send them a picture…

  • avatar
    CarnotCycle

    John,

    Nice observation on the BoD. Perhaps they are manufactured in the same factory that made Al Gore?

  • avatar
    Ken Elias

    GM needs a complete outsider, beholden to no one within the corporate structure, that will demand personal accountability and revamp the matrix. Unfortunately, this was needed many years ago and now it’s just too late given the crush of its capital structure on negative earnings/cash flow from North America.

  • avatar
    eh_political

    @phargophil & @James2

    Precisely why Zarella is the ticket. No MBA. There was a minor clerical error leading people to believe he had obtained one from NYU, but in fact he was too cool for school. He must have been wearing competitors lenses when he jotted his resume on a cocktail napkin.

    In the first hundred days of a Zarella stewardship, the General could create a few new brands, add cladding to the lower stories of the Ren Cen and launch some patriotic new ads.

    Problem solved. Crisis averted.

  • avatar
    Redox

    I agree with an earlier poster that someone from the supplier base or a related industry might be qualified. I’ve been pondering this for a long time, and the person I keep thinking of is Roger Penske. He seems to know how to get things done.

  • avatar
    Captain Tungsten

    “several knowledgeable people remarked that the car in the photo was probably a clay facsimile”

    Any of them actually see the car? I did, up close, it wasn’t clay.

    On a related note, I hear Matt Millen is looking for a job…

  • avatar
    jnik

    Problem was, when Lincoln finally fired McClellan, he had to go through several other Generals who couldn’t fight (Hooker), were incompetent (Burnside), or wouldn’t press his advantage (Meade), before he found Grant.
    Does GM have enough time to go through a succession of failures before it finds its Grant?

  • avatar
    eh_political

    I think the BOD put out feelers to a number of candidates this summer and were rebuffed. There were a number of rumours prior to last quarter’s disastrous results that the axe would fall. It’s entirely possible that no one with the potential to make a difference is interested, or feels that a turnaround is possible. Alex Taylor III’s article in Fortune on Renault sweeping in does point to an entrenched senior executive rank defending their positions as well.

    Someone did mention Ron Zarella…..and his name conveniently rhymes with Cinderella.

  • avatar
    Dr Lemming

    Menno, my sense is that Meyers may have been a better teacher than an executive at AMC. If we were talking about George Romney I could point to numerous examples of executive brilliance under exceptionally difficult conditions. With Meyers? I understand that he had a hand in the creation of the Buyer Protection Plan, which was one of the company’s best steps in the 1970s. But besides that, what does Meyers have to show for himself during his tenure as a junior or senior exec?

    AMC was essentially run into the ground. Sure, its leadership made a few good calls, such as the purchase of Jeep, which almost single-handedly kept the company afloat for much of the 1970s. But otherwise AMC is a case study of consistently bad decisions bordering on reckless — not unlike GM today.

  • avatar
    unleashed

    But unlike Ford or Chrysler when they brought in outsiders, GM actually has some islands of excellence amid the toxic ocean of their North American ops

    The Ford’s Euro operations have multiple “islands of excellence” GM has never even dreamed of, excellence as in where it really matters – small cars.

  • avatar
    John Horner

    The problem with Boards of Directors is that in practice they are mostly chosen by the CEOs and not the other way around. The idea that the BoD represents the shareholders is mostly a quaint idea which is rarely lived up to in practice.

    Look how well the BoDs at Fannnie Mae, Freddie Mac, AIG, Merrill Lynch and WaMu looked after their shareholders, eh? All were paying their “Executive Leadership” teams ungodly amounts of money right up until the companies cratered. P.S. WaMu just cratered earlier today.

  • avatar
    Campisi

    GM Death Watch 200 has arrived. Hopefully, GM will survive at least long enough to make it past GM Death Watch 250.

    Personally, I’m in the “right guy, wrong time” group. The last few years have amounted to a perfect storm for the automotive industry (and the entirety of the U.S. economy, it seems), and I have my doubts that any CEO could have kept the GM they would have taken the helm of afloat without taking on at least a little water. If Rick Wagoner was a truly unfit executive then GM would have completely sank already.

  • avatar
    reclusive_in_nature

    I suggest GM hires a group of critics (especially the harshest ones) from the most influential car magazines and web sites to run the show. Incorporate them into every detail of making a vehicle. When the gm-employed critics complete their works and submit it to other critics one of two things will happen: The critics will give positive reviews for their GM-employed brethren OR they will give them bad reviews which would make their past criticism baseless. It’d be a win-win situation for GM. Most vehicle shoppers base their decisions on reviews from magazines and websites so it’d be perfect.

  • avatar
    menno

    “Dr Lemming :
    Menno, my sense is that Meyers may have been a better teacher than an executive at AMC. If we were talking about George Romney I could point to numerous examples of executive brilliance under exceptionally difficult conditions. With Meyers? I understand that he had a hand in the creation of the Buyer Protection Plan, which was one of the company’s best steps in the 1970s. But besides that, what does Meyers have to show for himself during his tenure as a junior or senior exec?

    AMC was essentially run into the ground. Sure, its leadership made a few good calls, such as the purchase of Jeep, which almost single-handedly kept the company afloat for much of the 1970s. But otherwise AMC is a case study of consistently bad decisions bordering on reckless — not unlike GM today.”

    Good points, but here’s the thing. Mr. Meyers himself was not responsible for running AMC into the ground.

    There is a difference between being behind the wheel of a car and recklessly driving it into a tree, and doing a competent job of driving and having other incompetent drivers smash your car.

    The latter is what happened to AMC. I can say that, because it started to fail after the Clinton administration when our economy very nearly failed completely (again, just like now) due to extremely poor decisions made about how to run the economy.

    In some ways, AMC was too small to succeed in the U.S. auto industry, but my point was this – despite ALL THE ODDS, AMC made it from 1954 through 1987 when Chrysler bought it up. Yes, being slammed into by the massive double whammy of far better Japanese cars AND an economy which totally sucked – really hurt them.

    In fact, by 1985, Honda passed AMC as the #4 automaker in the U.S. only 3 years after Honda started manufacturing cars.

    I suppose if we truly want to see the U.S. auto industry survive, they MUST take lessons from Dr. Demming seriously, first of all; they MUST take lessons from the George Romney school of management as you say (and yes, Mr. Romney leaving AMC to become Governor of Michigan was actually the beginning of its slow slide into oblivion).

    AMC out-sold the Plymouth brand of Chrysler Corporation – the “#3 low-priced brand” in 1961 (377,902 Ramblers -#3 vs. 356,257 Plymouths #4), and 1962 (442,346 Ramblers -#4 vs. 339,527 Plymouths – #8).

    1961 was the year that AMC really did the deed and outsold Plymouth fair and square – even against the overwhelming opposition of not only the new GM, Ford and Chrysler compacts introduced in 1961, but against the new “upscale” Buick, Pontiac and Oldsmobile compacts introduced for 1961.

    And, yes, 1962 was that bad of a year for Chrysler. Maybe George Romney should have stayed at the helm of AMC and offered to buy out Chrysler AND Kaiser Jeep at the same time, then skipped being Governor of Michigan – and run American Motors-Chrysler (still “AMC”, get it?).

  • avatar
    geeber

    menno: Good points, but here’s the thing. Mr. Meyers himself was not responsible for running AMC into the ground.

    Two key decisions sealed AMC’s fate.

    The first wrong decision was to spend a ton of money (by AMC’s standards, anyway), to restyle the Matador coupe for 1974 while leaving the sedans and wagons alone, except for a hideous nose job. The Matador coupe was ugly, and completely outside the styling mainstream at that time for intermediates.

    It’s one thing to offer a quirky car like the Gremlin to people who are considering an import or a Vega. Those people were more willing to go for something “different.”

    But the intermediate personal luxury market was different; buyers were more comformist (much like today’s SUV buyers), and what they wanted was something along the lines of the 1973 Chevrolet Monte Carlo or Oldsmobile Cutlass Supreme.

    The Matador coupe was ugly, and completely outside the styling mainstream for intermediate cars at that time. It experienced a modest sales increase for 1974, but sales nosedived for 1975, and kept declining. Within four years AMC couldn’t move 10,000 of them. Meanwhile, AMC had no money to restyle the outdated Matador sedans and wagons.

    The second big mistake was the Pacer. It was an unusual car, but its mechanical underpinnings didn’t match the futuristic styling. As Road Test magazine said, it had the body of Sophia Loren and the soul of a cleaning woman. It sold well for one year, and then sales nosedived, and, again, within four years it had trouble breaking the 10,000 mark.

    With those two moves, AMC blew through its development money, and had no money left to give the Gremlin and Hornet the thorough updating they really needed. By 1976, those two cars were hopelessly obsolete, and their sales were declining, too.

    How much influence Gerry Meyers had on these decisions I don’t know. Roy D. Chapin, Jr., was still the head of AMC during the early 1970s, if I recall correctly. But Mr. Meyers was part of the executive team that made these decisions.

    Chapin’s team made the right decisions in the late 1960s with the Javelin and AMX (which was a brilliant image-builder for not much money) and the Hornet and Gremlin. Their quirky ad campaigns during this time were quite good, too. Along with the Buyer Protection Plan, these moves brought AMC back in the market by 1972-73. Unfortunately, by 1974 the company was again making the wrong moves, starting with the introduction of the Matador coupe.

    In the GM of the last eight years I see echoes of AMC’s moves during the 1970s – questionable styling on key vehicles; flawed “halo” cars that don’t match up to the competition and end up appealing to virtually no one; and misallocation of scarce development dollars to pet projects while mainstream models languish.

    So perhaps Mr. Meyers isn’t what GM needs right now.

    menno: I suppose if we truly want to see the U.S. auto industry survive, they MUST take lessons from Dr. Demming seriously, first of all; they MUST take lessons from the George Romney school of management as you say (and yes, Mr. Romney leaving AMC to become Governor of Michigan was actually the beginning of its slow slide into oblivion).

    I think Romney left AMC just in time. The 1963 Ramblers were all his, and while sales set an all-time record for the company, AMC dropped several slots in the production standings. The market was growing faster. The 1964 product line was also all his, and sales began their steady decline, even with an all-new American.

    AMC succeeded when it had very little competition. The “standard” Rambler was really an intermediate, not a compact, and thus bigger than the Big Three compacts that debuted for 1960. The Corvair, Falcon and Valiant didn’t cause Rambler sales to decline, although they did stop its meteoric sales rise.

    But AMC cars had an Achilles’ heel – the company’s public image. It equated “small” with practical, dull and slow. When Romney was asked if he was worried about whether so many Rambler drivers were in the slow lane, he replied that he didn’t care, as long as there were a lot of them. That worked in 1960, but not in 1966. And Ramblers were hardly stylish, even though the 1963 standard Ramblers and 1964 American were much improved over their predecessors.

    Only problem was that by 1965, GM was in the intermediate market with the Chevelle, Tempest/LeMans, F-85/Cutlass and Special/Skylark. Ford had come out with the Mustang. Suddenly, small could also mean glamorous, sporty and sexy. Ramblers were dull by comparison.

    Meanwhile, the Dodge Dart and Plymouth Valiant were even more rugged than a comparable Rambler, and better looking and handling, too. They stole the Rambler market.

    And Rambler quality really started to decline after 1965. Contemporary road tests of Ramblers mention parts falling off of cars. And the interiors of the 1967 Rebels and Ambassadors were MUCH cheaper than the interiors of AMC’s comparable 1965-66 cars. By 1968, Rambler needed more than its image as the maker of cheap, practical and slow cars. I don’t know if Romney could have changed his script. He was the right man at the right time in 1955, but times – and the market – had changed by 1965.

  • avatar
    menno

    I agree with you, Geeber. What AMC needed was to start with a fresh sheet of paper. Even if it was someone else’s car design already on it! Hey, it “worked for awhile” in 1984 (with the Renault designed Alliance aka Appliance).

    And I knew that back in the day, see my above post September 25th, 2008 at 1:19 pm

    Their first mistake re: styling was to not promote Ed Anderson when he requested it, in the very early 1960′s. All he wanted was recognition that styling was important – so he left. Look at the frumpy dumpy 1965-1966 AMC cars compared to the clean and lean 1963-1964 cars and you’ll see what I mean.

    The next mistake was not continuing on with the automotive program as set out – and succeeded with – by George Romney. Moving to directly compete with the big 3 with a larger Ambassador was not smart at all. A smaller luxury car (there was no difference in the interior room between the 1964 and 1965 Ambassador) was a niche market only held by the Ambassador and possibly the top of the like Buick Skylark Custom.

    The next mistake was not building the Rambler Tarpon 2 door fastback on the basis of the small Rambler American, but building the car was oversized on the basis of the Classic line – the car was ALL WRONG and sold like fridge-freezers at the north pole. As for the AMC engineers whining that their heavy V8 would not work in the Tarpon (“too heavy!”, the marketing boys should have said “ok fine, then do us an aluminum block V8 – we have an aluminum block 6 – just do it!” Can you imagine how a 327 cubic inch (AMC) alloy block 270 horsepower V8 with Warner T-10 and front disc brakes would have been compared to the first half year of Mustang – 260 cubic inches and the first Barracuda 273 V8 cars with 235hp? The Tarpon would have eaten their lunches…. Plus the AMC V8 would have needed dual exhausts for the application in the Tarpon – 280hp? I know these 327′s had power – my first car was a 1966 Ambassador with that engine and factory Holley 4 barrel carb.

    This would have meant AMC could have had a Mustang and Barracuda competitor at virtually the same timeframe – April 1964. Even had it sold no better than the Barracuda, it’d have really lifted morale.

    Yes, AMC make a lot of mistakes. Just as GM, Ford and Chrysler have, too.

    With GMAC possibly going down the tubes soon, you have to wonder how long GM and Chrysler have left to live. (Cereberus owns 51% of GMAC as well as 80.1% of Chrysler).

  • avatar
    windswords

    Menno,

    Good points by you and Geeber. I wanted to set the record straight for those who are not as well steeped in auto history as you gentlemen:

    “The latter is what happened to AMC. I can say that, because it started to fail after the Clinton administration when our economy very nearly failed completely (again, just like now) due to extremely poor decisions made about how to run the economy.”

    I’m sure you meant Carter istead of Clinton since AMC had already been purchased by Chrysler before Clinton took office.

    “In fact, by 1985, Honda passed AMC as the #4 automaker in the U.S. only 3 years after Honda started manufacturing cars.”

    Did Honda sell more cars than AMC in 1985 or make more cars in the US in 1985 than AMC? If the latter did those numbers include the AMC/Renault cars made in Canada or just Kenosha and or Toledo? If it is only cars/Jeeps or cars just made in the US than that’s a testament to Honda’s quick rise in the American market.

    Geeber,
    “The second big mistake was the Pacer. It was an unusual car, but its mechanical underpinnings didn’t match the futuristic styling. As Road Test magazine said, it had the body of Sophia Loren and the soul of a cleaning woman.”

    Isn’t that because the Pacer had the mechanical underpinnings of the Hornet? I know that the Hornet, Gremlin, Concorde, Spirit, and Eagle all used the same platform because AMC did not have the money to produce an entire new one. The Hornet was AMC’s K-car.

  • avatar
    Dynamic88

    menno

    The latter is what happened to AMC. I can say that, because it started to fail after the Clinton administration when our economy very nearly failed completely (again, just like now) due to extremely poor decisions made about how to run the economy.

    Windswords

    I’m sure you meant Carter istead of Clinton since AMC had already been purchased by Chrysler before Clinton took office.

    I’m not sure what is meant. Carter was defeated in his bid for reelection in 1980. Reagan took office in Jan ’81. Reagan was reelected in 84, starting his second term in Jan ’85. It was during Reagan’s second term that AMC was bought by Chrysler. Reagan was succeeded by GHW Bush who took office in Jan ’89, and Clinton defeated him in the 92 election, and took office in Jan ’93.

  • avatar
    Yo mama

    GM RIP…

  • avatar
    63CorvairSpyder

    Menno and Geeber-

    Thanks for the trip down “Memory Lane”. Deems were the good old days.

  • avatar
    geeber

    63CorvairSpyder and windswords,

    Thanks…recalling the past is fun.

    menno: The latter is what happened to AMC. I can say that, because it started to fail after the Clinton administration when our economy very nearly failed completely (again, just like now) due to extremely poor decisions made about how to run the economy.

    Your posts are interesting and informative. Are you related to the former Old Cars & Parts historian who had the same first name as your screen name?

    AMC’s failure can’t be blamed on President Carter’s economic policies. The auto market started to recover in late 1975, and stayed strong through the spring of 1979.

    AMC started to falter in 1976, and was basically finished by 1977, even as sales for the industry as a whole were quite good.

    AMC was failing because its products were hopelessly outclassed by the Big Three and the imports, not because of how President Carter managed (or mismanaged) the economy.

  • avatar
    Dr Lemming

    Interesting discussion about AMC. Geeber, you make a number of particularly important points about how myopic management can kill a car company.

    You mention how the quality of AMC cars dropped off in the late 60s. Yup. AMC thought that it could follow in the Big Three’s footsteps and save a few bucks by decontenting its cars and letting slip what had been better-than-Detroit quality of manufacture. The problem with that strategy is that it undercut what had been an important Rambler selling point in the early 60s. The Japanese later proved that buyers still yearned for better quality products than what Detroit offered.

    You also mention that Chrysler’s compacts “stole” AMC sales. That strikes me as pivotal to AMC’s failure, because the core of its success had been in this market segment. Where I would differ is to suggest that Chrysler didn’t steal that market so much as AMC abandoned it. In the early 60s the senior Ramblers had functioned as the equivalent of the Dodge Dart: a high-end compact with the room and features of larger cars. It’s too bad AMC gave up on this market segment, because it proved highly profitable to Chrysler in the early 70s and to the rest of the Big Three once they all launched luxury compacts in the mid 70s.

    The Dart/Valiant of that era were very good cars, but Chrysler — much like the rest of the Big Three — treated its compacts as weak stepchildren. Only a limited range of body styles and models were offered, and compact platforms were milked for an unusually long time without major redesign. AMC could have continued to be a dominant player in this market if it had focused its attention here rather than vainly trying to compete across the board in the mid-sized, full-sized and even subcompact classes. By the early 70s AMC had spread itself so thin that it wasn’t terribly competitive in any class, and only an oil embargo offered a temporary spike in the sales of its smaller cars.

    In short, AMC lost its independence because its management had “GM envy” — they thought that the road to salvation was to slavishly copy GM rather than recognize that a small automaker had to be different. What’s particularly ironic is that AMC management actually said that they were committed to doing the latter. But as it turned out, they did so in only the most superficial ways, e.g., the odd styling of the Pacer. This powerfully illustrates the group think that has permeated the American auto industry for more than 40 years.

    Why does any of this matter now? Because in order for the No Longer Big Three to survive, they will need to learn how to compete like an underdog. Detroit could learn a few tricks from AMC, both by its successes and failures.

  • avatar
    blindfaith

    AMC failed because it’s cars were junk. I purchased a 1967 rebel and nothing in that car lasted. The dashboard electronic would start to fail and smoke would arise.

    It was a two door. So the seats that fold forward the hinges failed when I was driving.

    The windows failed to roll up. The brakes needed to be replaced every 10,000 miles. The exhaust manifold cracked. The radio died at about 20,000 miles. The engine burned a quart of oil every 1500 miles. The front window just cracked why who knows. The paint peeled off after the first year. the muffler failed at 20,000 miles. The blinkers worked and stop lights worked because you could put your hand out and tell people which way you were going until the window failed to go up and down. The interior dash lights were gone. The wires continued to heat up. The heater did work but no blower. So , I had no defrost. The tires were good for 15,000 miles. This was a six banger and did get 12 mpg.

    The dealers did nothing but throw you out of the service department.


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