By on July 6, 2009

So how long before New GM fires Uncle Fritz? In the most pragmatic of all possible worlds, where the Presidential Task Force on Automobiles (PTFOA) looked out for the taxpayers’ $50 billion as if it were their own—Fritz wouldn’t even BE GM’s CEO. Henderson would have been defenestrated along with Rick Wagoner. You know: the ex-CEO who groomed Henderson as his replacement. (How hard is it to connect those dots?) Henderson has assured his place in The Peter Principle Hall of Fame, capping his career as the PTFOA’s toady. And now, best case, he should follow Old GM onto the scrap heap of history. Not a chance.

The fact that Henderson wasn’t terminated with extreme prejudice the moment the United States government assumed complete control of General Motors tells us that Uncle Fritz is no Richard Nixon; the PTFOA will have Henderson to kick around some more. I repeat: the man’s a patsy.

Fritz didn’t decide to kill thousands of GM dealers. Fritz didn’t decide which GM brands to keep. Why would he? They’re family. White collar cull? Heaven forfend! We’ll use attrition. Mr. Henderson, it’s Congressman Barney Frank on the other line, asking for a stay of execution for a GM parts distribution facility in his constituency. Mary, why didn’t you forward this to the PTFOA? If I told you once—Barney! Hi! What’s that? I’ll check. Rest assured, I feel your pain. [Joke deleted].

Anyone harboring illusions that Uncle Fritz is large and in charge should note: Henderson didn’t take the stand and tell federal bankruptcy court that New GM had to be created by July 10—or die. It was Harry J. Wilson, a heretofore unknown member of the PTFOA. “We have no intention to further fund this company if the sale order is not entered by July 10,” Mr. Wilson told Judge Gerber. “It’s better to cut one’s losses.”

One’s losses? Hey Bub, those are MY losses you’re talking about. Anyway, who talks like that? Not Uncle Fritz. In fact, let’s pay a little attention to the man behind the curtain  . . .

“Prior to joining Silver Point in 2003, Mr. Wilson was a principal in the private equity business at The Blackstone Group, where he completed a number of private equity investments and leveraged buyouts,”youthinc-usa.org reports. “Mr. Wilson began his career in the Investment Banking Division at Goldman, Sachs & Co., where he worked in the Energy & Power group on a range of merger and corporate finance transactions.”

Hang on; the same Blackstone Group that competed with Cerberus to buy Chrysler? Yup. Although my wife destroyed my tin foil hat whilst heating-up some chicken nuggets, it’s clear that’s a cabal of investment bankers—led by Steve Rattner and Ron Bloom—are deciding the fate of the artist known as the world’s largest automaker. While Barack Obama has publicly stated his intention to “let GM run GM” [presidential paraphrasing], nothing could be further from the truth. Uncle Fritz is so not The Man.

So why keep him around? First, remember that the general public couldn’t give a damn who’s running GM. In fact, they’ve never heard of Uncle Fritz. If they see him on the tube, well, he looks nice. Avuncular. Credible. Non-threatening. So why not?

Second, as GM’s former CFO, Henderson is an excellent pencil pusher. If you were a member of the PTFOA and wanted to grab some numbers upon which to base your otherwise uninformed decisions about the automaker’s fate, Henderson’s the go-to guy. He couldn’t save GM if his life depended on it, but Uncle Fritz knows his onions.

Most importantly of all, Fritz is a terrific fall guy. If/when GM’s NA sales fall [further] into the trash, the PTFOA can throw Henderson on the pyre. The President has taken new steps to put General Motors on the path to profitability; a management shake-up is on its way!

The PTFOA should, of course, dump Henderson now. What better way to celebrate New GM’s birth, to draw a line under Old Skanky GM, than offing the bureaucratic bumbler who helped bring The General to the brink in the first place? Passing the torch PR, and all that.

Yes, well, who would replace Uncle Fritz?

As TTAC’s Ken Elias has pointed out, there are only a handful of auto executives capable of running GM, even in its truncated form. The number who could turn the ailing American automaker around is even smaller. And none of these talents is likely to do so for $500,000: the salary cap dictated by Congress for TARP (Troubled Asset Relief Program) recipients. Also, any CEO who’d take on the job (for real) would want independence from the PTFOA. And the PTFOA can’t have that, now can they?

So Uncle Fritz will soldier on. Or not. Either way, GM is unlikely to receive the one thing it needs to survive: leadership.

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18 Comments on “General Motors Zombie Watch 10: Fritz Henderson Must, Uh, Go...”


  • avatar
    esg

    Didn’t Fritz work as a double for Jack Nicholson as the Joker? I swear I see a remarkable resemblance…anyhoo…why oh why is he still the CEO? It makes ZERO sense.

    Excellent article, by the way.

  • avatar
    agenthex

    Although my wife destroyed my tin foil hat whilst heating up some chicken nuggets, it’s clear that’s a cabal of investment bankers—led by Steve Rattner and Ron Goldman—are deciding the fate of the artist known as the world’s largest automaker.

    Uh, these are private equity guys, exactly the type you’d generally want to run or wind things down effectively.

    Also, I’m pretty sure OJ snuffed Ron Goldman, or somebody did.

    BTW, I’m not sure why you keep calling the Presidential Task Force on the Auto Industry, the PTFOA

  • avatar
    jkross22

    There is really no need to change the leaders at GM. The company is essentially unchanged even though the Feds keep calling this a Ch. 11, which it definitely was not. This joke of a bankruptcy proceeding has been analogous to buying a pound of turkey at the deli while the guy behind the counter has his thumb on the scale.

    Sure, they dumped the dead brands, but the engine that took them into the brick wall at 90mph is still red-lining and is now heading toward the beach.

    Unless someone gets their head screwed on straight fast, this company is ultimately headed to Ch. 7.

  • avatar
    Rastus

    I’m with you on this …trust me.

    “Fritz” is a career Mo Fo who played a major role in the downfall of this once-mighty auto maker.

    Fritz (the cat) is being rewarded for his incompetence. How many of you hard working readers are “rewarded” for YOUR incompetence?

    Kind of goes against the grain of this country, don’t you say?

    Fritz…GO HOME. Play with your dog, your wife, your kids, your flowers…just get the hell out of GM, ok? YOU DON’T HAVE WHAT IT TAKES TO RUN A SLURPEE STAND…LET ALONE GM (new or old).

    Besides, Fritz, the American tax payers don’t want you in office. This is our company now…now either bow out gracefully, or get the hell out due to belligerent owners…your choice.

  • avatar
    sutski

    Surely the old management should be left at the old GM and new “unattached” people brought in to turn new GM around.

    I am sure there are many thousands of people who would accept 500k for a salary and who are also more than capable of running GM.

    I say take some graduate MIT and Harvard bods, maybe throw in a couple of TTAC B’and B’ :) and set them loose at new GM !!

    At least it would be fun seeing what they decided to make/sell, as opposed to seeing the slow boring inevitable demise that is sure to happen with Uncle F still at the helm !!

  • avatar
    shaker

    Americans foment “revolution”, prop up a paper dictator and run things behind the scenes.

    It worked in numerous small countries, why not here?

    Modus Operandi

  • avatar
    commando1

    Give Fritz all the authority he needs to truely drive the last nail into GM’s coffin. This nonsense has dragged on long enough. Let’s get this over with and send GM off into the history books before it causes any more misery to eveyone and everthing else in it’s current path.

  • avatar
    th009

    “Fritz” is a career Mo Fo who played a major role in the downfall of this once-mighty auto maker.

    Henderson may not be the right guy for the “new” GM … but if you think that Wagoner and Henderson single-handedly destroyed the company, you are deluding yourself.

    The seeds of destruction were sown in the 1950s and 1960s when the company agreed to automatic cost-of-living adjustments, defined-benefit pensions and healthcare for life. Complacency and poor product planning in 1970s and 1980s really sealed the company’s fate.

    In the last 10 years, there is little that could have been done to reverse the company’s course. It was a matter of pumping water out of the Titanic, and at best you could have prolonged the agony by another decade.

  • avatar
    rmwill

    I say take some graduate MIT and Harvard bods, maybe throw in a couple of TTAC B’and B’ :) and set them loose at new GM !!

    And then proceed to kill GM.

    Where do you think the Treasurers Office weenies like Henderson came from? Duh Harvard and MIT.

    MBA’s kill car companies dead.

  • avatar
    stevelovescars

    th009 makes an excellent point, the seeds of destruction were sown long before Wagoner and Henderson were at the top of the company. There were most certainly some long-standing issues that made wholesale change very difficult.

    On the other hand, when I worked at the company from 1991 to 1999 I think most of the employees on the front lines were pointing out what needed to be done and how problematic these issues were. Let’s just start with the fact that someone at GM actually was paid to decide that all correspondence using the word employee should be spelled “employe”… as saving ink and wear and tear on the e-key on the typwriters were going to save the company into profitability. Of course, every outside of the company just thought that GMers couldn’t spell.

    Wagoner and Henderson didn’t kill the patient, the metastasized tumors growing for the past 50 years did. However, they and most of their predecessors in the privileged class at GM failed to create the correct sense of urgency and were unable to or unwilling to make the difficult decisions that could have attacked the disease head-on. Nobody, it seemed was able to make the desicion to cut off the arm to save the body.

    It’s easy, in hindsight of course, to see that more drastic actions were needed earlier. The billions of dollars is would have cost to axe some brands, for example, seem like a pittance to what it has cost to support them for too long. But if executives and c-level managers claim to be so necessary (and worth so much pay) it’s solely because they are supposed to anticipate these issues and deal with them.

  • avatar
    bevo

    The situation with Chrysler and GM is change we can all believe in like changing Supreme Court rulings. If our last president can ignore the law, then our current president can hope to ignore the law too.

    Change and hope we can all believe in.

  • avatar
    akear

    Fritz is just filling in time like President Ford. He is an interm CEO that won’t be around very long. In running GM he probably has no more control than either any of us.

  • avatar
    mikey

    @stevelovescars…Yup I coudn’t have said it better. I mean that literally I can’t write that well.

    @akear…I think your right. Fritz is on a very short leash. The New GM had better start showing some life real soon.

  • avatar
    ihatetrees

    And none of these talents is likely to do so for $500,000: the salary cap dictated by Congress for TARP (Troubled Asset Relief Program) recipients. Also, any CEO who’d take on the job (for real) would want independence from the PTFOA. And the PTFOA can’t have that, now can they?

    The job is so politically toxic that no good exec would touch it for 3x the TARP max.

    And for those who think 500K is enough compensation, note that the pool of qualified CEO candidates is already comfortably wealthy. Only a few and marginally qualified potential CEO’s would give up what they’re currently doing (or about to retire from doing) in exchange for running GM @ 500K/year.

  • avatar
    CarnotCycle

    Wagoner and Henderson didn’t kill the patient, the metastasized tumors growing for the past 50 years did. However, they and most of their predecessors in the privileged class at GM failed to create the correct sense of urgency and were unable to or unwilling to make the difficult decisions that could have attacked the disease head-on. Nobody, it seemed was able to make the desicion to cut off the arm to save the body.

    Your cancer analogy rocks, but to be fair in the withering criticism of these schmucks, those guys WERE the metastasizing tumor. Trained and succored for decades in the cultural cocoon of bad management – and isolated from the actual car business – they were the incubating tumor. When they got their mitts on the operation, that was the cancer spreading to the lymph nodes. Free to clusterf*ck everything, everywhere, they killed all the healthy tissue left.

    Good example is giving Fiat $3 billion in cash so as not to be forced into buying the mess for $5 billion. VEBA’s another one. Missing the hybrid boat, badly, by years and years, was another. Selling your best hybrid technology assets (Allison) to essentially finance the VEBA and buy yourself two more quarters of breathing room, that’s another. There is no 20/20 hindsight on these moves being stupid. Most of them were called for what they were in real-time here on the Truth.

  • avatar
    th009

    CarnotCycle: Good example is giving Fiat $3 billion in cash so as not to be forced into buying the mess for $5 billion.

    You’ll need to blame Jack Smith for that one, as the decision to buy into FIAT was made on his watch.

    CarnotCycle: Selling your best hybrid technology assets (Allison) to essentially finance the VEBA and buy yourself two more quarters of breathing room, that’s another.

    At that point they literally were pumping water out of the Titanic, as I said — the ship was already sinking fast.

    In any case, if you look at the total hybrid sales volumes, doing a better job on those would have made little difference to GM. The critical mistakes were far bigger and made far earlier.

  • avatar
    EquusMAximus

    I got stuck with a Chevy Cobalt last week for a 2,200 mile drive to Florida. Handled poorly, trip odometer only goes to 999 miles, I guess an extra digit was too much cost. My drink nearly melted in the cup holder due to poor insulation under the carpet, Distance to Empty counts down your tank, but when it gets to 50 miles, it only tells you to get fuel, guess you are on your own guessing how many miles are left. What idiot designer thought this was a great idea? Air Conditioning totally inadequate for Florida temps and humidity. A TOTAL piece of junk, still marketed under improved quality….who do they think they are fooling? How do you give away 30% of your market share? By building junk, and only improving your marketing. GM STILL produces some of the worst crap on the market. If I’m going to spend $20-30k for a car, I want the best value for my expenditure, and that’s not with a company like GM. GM has perfected putting lipstick on a pig.

  • avatar
    Maverick

    GM needs a change agent. Whether or not Fritz Henderson is that person remains to be seen.

    However, if the PTFOA saw a better guy, I’m pretty sure that they would have brought that person in. Also, I think that separating the CEO role from the Chairman title was a very good call.

    Say what you will about PTFOA and the whole idea of the bailout, I think PTFOA got most of it right. They were pretty brutal in their assessment of GM and held tight to forcing GM to make the tough decisions that have languished for years.

    The New GM is now on its own to make this work. My sense is that Henderson is a change agent. Could there have been better choices? Perhaps. Should he clear out the executive ranks? Absolutely. Does he need new blood? Yes.

    Remember, however, that the fish stinks from the head down. Deming said that management is 85% of the problem. With a good CEO things can fall into place.

    I would have liked to see Henderson introduce the New GM on Friday with a bevy of changes to really set the tone. That didn’t happen. We’ll see very soon if GM is going to be faster-greener-leaner-smarter or just more of the same.


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