General Motors CEO Rick Wagoner is set to resign his position tomorrow. The timing of Wagoner’s departure is clearly symbolic. It’s meant to signal the nation that it’s OK throw bailout billions GM’s way because it’s a new day. Well, there’s a new guy at the top, anyway. Which may or may not be true, depending on whether or not Wagoner’s hand-picked successor and virtual clone Fritz Henderson inherits the job. If Henderson gets the nod, the symbolism of Wagoner’s defenestration will be far richer than its architects intended. For it will confirm the growing suspicion that the president’s mantra of hope and change is heavy on the hope and light on the change. And while that plays out, Wagoner’s resignation will eventually be seen as a way point on a journey of self-destruction, rather than a turning point on a bridge to . . . nowhere.
This is not the place for a post mortem examination of Rick Wagoner’s career as a GM lifer. There is no need nor room for debate about Wagoner’s negative impact on the artist formerly known as the world’s largest automaker. By any objective metric—market share, profitability, share price, capitalization, anything—Wagoner’s tenure at the top was an abject, epic failure. In fact, I pronounced Wagoner R.I.P. three years ago, in March 2006. I said it then, I’ll say it now: it’s too late to save General Motors. General George S. Patton himself could rise up from the dead, slap a few of Wagoner’s soldiers, assume command and fail. All Wagoner’s replacement can do, indeed should do, is prepare the automaker for bankruptcy.
Wagoner leaves GM buried [barely] alive under a Himalayan mountain of debt, much of it his creation (under the guise of lowering operating costs). The company which once held the title as the world’s most profitable corporation now carries some $46.5B worth of debt. President Obama could add 20 or 30 or even 50 billion dollars in “loans” for GM tomorrow. He could force a 100 percent debt-for-equity swap for ten cents on the dollar amongst GM’s bondholders. He could dictate that the United Auto Workers accept stock in lieu of ANY contribution to its Mother of All Health Care Funds. And it still wouldn’t be enough to extricate General Motors from its current predicament.
GM has been and will continue to be an over-dealered, under-funded mess. Its brands are a complete disaster. Even the brands with some remaining psychological equity—Chevrolet and Cadillac chief amongst them—are suffering from bailout backlash as Americans grow angry at the increasingly obvious black hole that is Bailout Nation. With a handful of notable exceptions (mainly because they ARE exceptions), GM’s products are not competitive. And, lest we forget, the U.S. new car market is still contracting violently, with millions of unsold units just waiting for their makers to give up, sell them at any price and further depress sales and profits. In short, GM currently has zero opportunity for relative or absolute growth.
Given this hopeless morass, Wagoner’s resignation comes at the worst possible moment. It will fuel the boundless, baseless optimism which led to the first $17.4B GM bailout (not including a share of the Department of Energy’s $25B retooling loans or the $1B GMAC-related loan). Of course, that’s the entire point: Wagoner’s sword-falling routine gives the Obama administration and his Presidential Task Force on Automobiles something “concrete” upon which to pin their empty message of future auto industry transformation. What’s more, with Wagoner out of the way, the president can amp-up his electric car and high mileage dreams. See? We’re not subsidizing the same old SUV-building bastards. We’re reinventing the car industry!
What’s the bet Wagoner will announce his resignation without a single mea culpa? His statement will be as short as it will be meaningless. Seed-sowing, torch passing, foundation building—no matter what the metaphor, the underlying message will be “I prepared GM for the success to follow.” The fact that there will be no success to follow is neither here nor there. The feds’ willingness to keep GM on taxpayer funded life support means that Wagoner will be enjoying the fruits of his labors—including his bankruptcy-proof pension—even as those who inherit his legacy of his incompetence struggle to extricate anything of value from the inevitable corporate carnage.
I can’t decide whether Wagoner’s career at GM is Wagnerian, Chekovian (Cherry Orchard), Millerian (Death of a Salesman) or Shakespearean (King Lear). In the final analysis, it’s all of the above. And as long as we’re going down the literary path, Wagoner is the ultimate Hollow Man. Although news of his resignation arrives with something of a bang, the company Wagoner guided will not end with equal force. Thanks to the men at the top of the GM pyramid it will end with a whimper.