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.
111 Comments on “Editorial: General Motors Death Watch 239: Rick Wagoner’s Resignation...”
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Whether this is a turning point will depend on whether the next guy can reorganize GM into a viable concern. Their manufacturing efficienty and products (well, at least the newer ones) are pretty much where they need to be. The problem at this point is with GM’s fixed costs, among them debt payments.
One they get the fixed costs in line, they need to focus on creating thoroughly excellent products. This will require a much different organization than that found in most businesses. For those who haven’t read my take on what such an organization would be like:
http://www.truedelta.com/execsum.php
I thought Wagoner already did a pretty good job of preparing GM for bankruptcy…..
I agree with Robert. When those in power bail, it usually means sudden catastrophic failure is imminent. But when?
Honestly, I really don’t think Wagoner was THAT bad. Clearly he was ineffective in turning around the company, but only Superman could make ANY of those objective measures go up in the market conditions (and initial state of the company) of the past 5 years. Most missteps occurred before his tenure; if the morons in Washington think they can do better than someone who’s been in the industry and the company as long as Wagoner, they’ll find themselves either lucky or wrong.
If Mr. W had been in any other Industry, he would have been sacked long before this time, it sort of looks like he asked to leave?, I expect time will tell on this score, I note that the head of the CAW here in Canada was really upset when he heard this News! Amazing eh!
It really is tough to see where GM can go from here.
Its only chance is for the government to issue a blank cheque to its next CEO, in the hope that they can attract some top talent. Nissan only turned itself around because Renault gave it the capital and management to survive.
Likewise, no self respecting manager will want to take the position up without having some sort of backup (in this case, the government with cash on hip). What career manager is going to want to put his/her legacy on the line for a job where you’ll have government interference at every corner, be in the middle of a turnaround plan which your predecessor started (and you can’t stop) and have a demoralised staff? I strongly suspect that if Mr Mulally didn’t get that huge pay cheque at the beginning and that all that cash to turn the company around, I doubt he would have left Boeing. He had a good body of work there. Why ruin a good thing at a bad price?
I suspect the next CEO will be another GM lifer, simply by virtue that no-one else will want the job.
I was once told a story of a where a child did something bad (doesn’t matter what) and the parent decided to highlight to the child the actions of what they’d done.
They told the child to squeeze a tube of toothpaste out. Totally empty it.
“Was that fun?”
“Yeah!”
“Right….now put it back into the tube…”
(confused expression on the child’s face)
“It’s easier to do something, than to undo it.”
Putting toothpaste back into the tube is pretty much the situation GM is in now….
The fact it took Obama to force Wagoner to leave just shows how out of touch the upper management of GM is with reality. The Rick was a failure, yet the BOD and other managers continued to give him time and support.
Fritz Henderson will likely be the next CEO. If he does, he will have a long honeymoon period just like his predecessor did if the BOD has anything to say about it. No matter how many mistakes he makes, he’ll be given all the praise the BOD can give him. Not much will change, as the upper management and BOD will just continue to high-five each other as GM slips closer to finally filing for bankruptcy.
Now, what do you call a political system where the government tells businesses what to do?
De mortuis nil nisi bonum.
Now, what do you call a political system where the government tells businesses what to do?
C’mon – quit Stalin and give us the answer…:)
WOW!
Christmas came early this year!!!
AMF.
Detroit News says Fritz Henderson will be the next CEO, on an “interim basis”.
“GM has set a 9 a.m. conference call for Monday morning with top company officials. A person familiar with the matter said GM President and Chief Operating Officer Fritz Henderson would be named CEO on an interim basis.”
http://www.detnews.com/article/20090329/AUTO01/903290329/1361/Wagoner+forced+out+at+GM
@Ronnie: One that has a leg up on one that blindly hands money out to any failing industry?
The three options are:
1. Let them fail.
2. Throw money at them.
3. Throw money at them, conditionally.
I really doubt that President Obama had anything to do with the resignation.
Politics do not work that way, especially at the national level.
The BOD sat on their hands for years, just approving what was put before them. Stock holders are too diffuse to have any input.
Debt holders are in a different position, and the largest probably know better and have some power; More than the older-than-me Cadillac drivers, Detroiters, GM retirees, pumpers and the like.
Maybe a bond holder or somebody really important,(Fill in the blank, maybe Obama’s Aunt, investment manager, etc.) besides my wife, rented a vehicle and drew a Cobalt at the Memphis airport this week.
C’mon – quit Stalin and give us the answer…:)
Bzzzz. Wrong answer. Stalin didn’t tell businesses what to do, his state owned all the businesses.
I’m thinking something that’s more “third way” than socialism or capitalism.
I’ll give you a hint. Jonah Goldberg’s current book discusses it.
Fritz? – you gotto be kidding? What GM needs now is an outsider to ask “why?” The model GM worked to just ain’t working – GM needs to get into a “PR”(post-Rick) mode asap.
Katie – I fear you’re right, GM will look internally to find somwone (anyone) BO will accept and appoint them. Another GM-staffer who has enough ‘plausable denability’, to say “it’s a new day”.
As much as am I pleased that RiR is History, I regret his passing, not least because he’s no longer in the frame to be accountable for what he’s presided over. Can’t you see him at breakfast this morning saying to his wife, “s^&t, we don’t need this, how’d you fancy a few weeks in the Carribean?”.
The captain of the Hindenburg decides it’s time to walk away from a smoking hole in the ground.
So, loaning billions of dollars to business is ok for the government, but asking for a bad ceo to resign is beyond the pale?
Name another company that lost this much money, market share, stock price and prestige in 5 years. I don’t even think the other two can match the numbers. GE comes close, we will see if Jeffery keeps his job for much longer.
Rabid Rick ran GM into the wall, aided by the BoD and the other chief executives around him. His salary the past few years was a disgrace, not even close to what he should have taken which was a dollar a year.
Sure he was GM blue to the bone and most definately cared about the company’s fortunes but in the end he FAILED to make correct decisions about product, market, Union contracts, and leadership around him. I think any one of these areas would have made a difference today if he didn’t choose the path of less resistance. From VEBA to Volt, the real answers were on the wall.
Small hybrid cars, like the cobalt.
Tell the Union to F off. Strike if you don’t like it because, hey, we got 200 days of cars in stock
Red Tag and employee pricing. Let’s sell cars at a loss and call it a business. This drained the bank like nothing else except…..
GMAC and home loans. Why on earth would a car company get involved with sub prime home loans and stay involved as the market crashed?
And on and on. Importing Opals and Korean cars for an American Revolution sales campaign.
Nucking Futs.
I’m hoping that Mitt Romney is on a plane tonight bound for DTW. Probably not because I’m not sure the PTFOA (or whatever it is) has the stomach for his tough love approach, but he’s one of the few people that has a snowballs chance in hell of turning them around.
Hollow Man? More like Robocop, but definitely Verhoevian.
6000-SUX: An American tradition – 8.2 MPG!
It would fit nicely on his resume.
OK So March 31st was the deadline,and GM missed it.The President of the United finds himself between a rock and a hard place.Somebody has to pay the piper,and that fell’a calls the tune.
Welcome to the world of former GM employees Rick.
I’ve said it before and I’ll say it again, Detroit’s biggest problem isn’t the economy, it’s Detroit. For way too many years there was this incestuous mentality, largely due to corporate inbreeding that caused it’s demise.
You really can’t blame them they were so isolated from the rest of the country, heck, the rest of the world. After all for so many decades after WW II whatever the Big 3 produced was always good enough, why change? Remember the old saying “what’s good for GM, is good enough for the country”?
The notion of false superiority, repudiating the threat from foreign competition with ridiculous statements like “we’ll drive ‘em back into the sea” all while ridiculing foreign competitors was nothing less than insightful if not completely ludicrous.
I can still fondly recall memorable statements like “if the Japanese had to build cars in the good old US of A they would never be able to maintain those financial cost advantages.”
Or who can forget the visionary leadership Wagoner displayed (only a mere 4 years ago) when he decided to kill the USDM Zeta worldwide rear-wheel-drive platform in favor of bringing out- wait for it… a new line of full size pickups!?
Keep in mind this occurred during the time of ever rising gas prices when any 12 year old could see the writing on the wall spelling the death knell for gas guzzling pickups and SUVs.
In retrospect, even those rear-wheel-drive Pontiac G8’s and Camaro’s rolling off Holden’s assembly lines are not even close to appropriate given the current economic mess.
But hey, when you’re GM it don’t matter cause anything we make, the country’s gonna buy, right? Yeah, and we’re gonna party like it’s 1999!
Here’s another thought… you know that new Presidential Caddillac limo that weighs as much as the Lincoln Memorial, looks like the aborted fetus between a Chevy Suburban and a 1986 Sedan de Ville and probably sucks down about 12 gallons per mile?
Maybe Obama decided he’s tired of being tailed by Exxon tanker trailers in his motorcade just to keep this behemoth fueled every 6 blocks – it’s time for payback… true
One last point, now that GM is being absorbed into the “collective” via US tax dollars, what will their new name be?
Federal Motors, MG (money grubers), how about keep it GM but change the name to Government Motors this way the remain execs can keep the embroidered hand towels and monogrammed gold china?
I will restate the opinion I gave in my article on Retooling GM Culture: removing the CEO as an isolated sacrifice is meaningless; the culture that drove the company to its current situation will be alive and well. But if this is the beginning of a broad change in GM’s leadership and structure and not just a symbolic act, then I think there is real hope for the company. The critical question is whether the White House understands, and is willing to force, the true need for broad transformation or will be content with this relatively unimportant act. We should know which it is soon.
His exit will cost us billions more. Thanks, Rick.
It doesn’t:
* Help GM’s cash flow.
* Improve GM’s product mix.
* Boost GM’s quality, real or perceived.
* Accelerate the Volt timeline, which will save the company. Or definitely won’t.
I guess we’ll hear shortly about how he’s pillaged the company with some ‘excessive’ golden parachute, to which I say “maybe, maybe not”.
So, loaning billions of dollars to business is ok for the government, but asking for a bad ceo to resign is beyond the pale?
Yep. When the gov’t is making personnel and management decisions a bright line has been crossed.
It’s worth noting that there’s no way Obama or anyone could have really changed anything this fast. He’s making a lot of friends. Don’t forget, it’s early yet.
As he cleans out his desk (assuming guys like him really clean out their own desks), I hope that this thought occurs to The Rick:
“DAMN!! I could have done what I KNEW was the right thing by going Chapter 11. Sure I would’ve been shown the door, but at least I would’ve gone out as a hero who did the right thing regardless of the consequences to me personally.
Instead, because I didn’t have the balls to leave while I still had a little dignity, I let GM suck on Uncle Sam’s sugar tit until they finally got so pissed off at my own (and my board’s) incompetence that they gave me the boot anyway.
Now not only is my ass out on the street, but I also will be forever known as the dickless wonder who rode GM into the ground. And all I have to show for it is my bankruptcy-proof pension.”
In the end, Wagoner screwed himself just as badly as he screwed GM.
When the gov’t is making personnel and management decisions a bright line has been crossed.
No problem. Have GM repay the money, and they can make all the decisions that they want. (Clearly, they are quite adept at making poor ones.)
Beggars can’t be choosers. GM is already effectively defaulting on its loans, so they are in absolutely no position to complain.
hiptedh: don’t you mean “1959″?
Finally.
The forces of the past can no longer pretend business as usual.
The complete and total makeover of GM is finally starting.
The NY Times is reporting that within 30 days GM will file for bankruptcy or a “chief restructuring officer” will be named to “knock heads.” I think the emphasis on Henderson’s new title should be on “Interim.”
Well since it took a salary of what $14 million to keep a man as talented as Wagoner at the top of GM, it will be interesting to see the companies lining up to get him now that he’s on the market.
I’d kinda prefer the bright line be at the loans. If you’re the only thing keeping a business alive, you get to fire people. That’s just common sense.
guyincognito :
March 29th, 2009 at 7:39 pm
Well since it took a salary of what $14 million to keep a man as talented as Wagoner at the top of GM, it will be interesting to see the companies lining up to get him now that he’s on the market.
——————————————————–
I’m on it – the next Republican candidate for 2012 presidential elections. Hey, Sara Palin needs a VP running mate, right?
about freakin’ time…
Seven years ago, Rick proclaimed that GM would be the king of profitability by going all-in on trucks and SUVs while letting its car business wither and die. That was a major strategic decision and it led to the disaster of 2008.
Given GM’s size, it has to be a first tier player in every major market segment on a global basis. Rick never made decisions consistent with such a strategic objective. He was a bean counter first, last and forever. Some bean counter rise above the narrow minded finance spreadsheet view of the world, he wasn’t one of them.
Mitt Romney for CEO of GM.
It would be both a bi-partisan gesture and a real pistonhead with good business sense. Perfect replacement.
Personally, I would classify Ricky’s reign as Luciferian.
The NY Times is reporting that within 30 days GM will file for bankruptcy or a “chief restructuring officer” will be named to “knock heads.” I think the emphasis on Henderson’s new title should be on “Interim.”
I call bullshit. We all know that Obama has a devious plan to enable the moochers and destroy capitalism as we know it. Instead of spending money on programs he believes in, he would much rather spend it to clean up Bush’s mess by bailing out incompetent rich people. There is no way he will let his hard won control over the auto industry evaporate with a bankruptcy.
If the gubmit can now tell insolvent companies kept afloat with taxpayer money to fire incompetent executives then where will it end? The goose step, that’s where. Buy guns. Stock up on food. Hide your women. The end is nigh.
“Now, what do you call a political system where the government tells businesses what to do?”
You do know that is exactly how the US built the arsenal of democracy with which WWII was won, don’t you? During the war years the entire economy was directly controlled by various boards in Washington under the orders of the President. Even basic supplies for the populace were only available under a strict regimen of rationing. Young and middle aged men could pretty much count on being drafted and told exactly what they would be doing and where they would be doing it. Many neo-cons are very proud of the US’ efforts in WWII, yet neglect to acknowledge how it was done.
Believe it or not, democracy doesn’t not necessarily equal laissez-faire capitalism.
Back to GM: If Fritz is the replacement then we just have more of the same. Meet the new boss, same as the old boss.
“You do know that is exactly how the US built the arsenal of democracy with which WWII was won, don’t you? During the war years the entire economy was directly controlled by various boards in Washington under the orders of the President. Even basic supplies for the populace were only available under a strict regimen of rationing.”
OH MY GOD!! ZOMG!!!! TEH KOMMEHNISM!!!11!
/sarcasm
Time for another prediction. What other “visionary” CEO heading the 3rd largest domestic car maker should also be sent packing?
Give up? Here’s a clue – he’s currently working the same magic mojo for Chrysler that he accomplished at Home Depot.
That’s right, let’s not forget what an outstanding job former Home Depot chief Robert Nardelli is currently doing for Chrysler.
You know he was selected for his uncanny ability to “turn things around” based on his previous experience.
Has to be, how much of a stretch is it to go from claw hammers to motor vehicles?
Is this a great country or what!?
hiptech–
I really hope Nardelli is fired next. He needs to get the pink slip as much as Wagoner did.
Rats or Rick are first to run from a sinking ship.
And for all those down-spiraling years, where were the GM directors?
Sucking tail fin juice and doing the bobble-head: yes, yes, ok, ok, zzz?
why do some people think of romney as a piston head? his father, george, was the automotive ceo (before becoming michigan governer, and later a republican candidate for potus).
mitt grew up in detroit, went to school out of state, and never looked back (except to visit dad, who continued to live in bloomfield hills.)
btw, robin williams also grew up in bloomfield, father was a fomoco exec, but i wouldn’t particularly hang the gear head moniker on him either…
I think we need to put Pete DeLorenzo on a suicide watch….this SURELY is going to drive him over the edge.
“…why, that’s pure unmitigated bullshit”…haha
I’m just looking at the cars he owns, Robert. He seems to like American cars a lot.
I’m a Democrat and tend to think of Mitt as soulless bean counter, but that’s what GM needs right about now. A soulless, pistonhead Republican bean counter.
Mitt Romney–horrible President, kick-ass automotive CEO.
Robert,
Mitt would be a great candidate for CEO of GM because he has extraordinary experience in both the private and public sectors. He turned around Bain & Company (the consulting firm) when it was near bankrupcy, and then started Bain Capital (the private equity firm), creating $Billions in value.
He fixed the Salt Lake City Olympics, and ran Massachusetts. You may not agree with his politics (I certainly don’t) but as a manager and leader, he really is unparalleled today.
Is he a car guy? Not really – he’s no Lutz that’s for sure. But does he understand the industry? Can he inspire workers and suppliers? Can he make hard decisions? Can he pull together bondholders, the government and shareholders?
Better than anyone I can think of.