General Motors Death Watch 200: Granted

Andrew Dederer
by Andrew Dederer
general motors death watch 200 granted

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.”

Join the conversation
2 of 66 comments
  • Dr Lemming Dr Lemming on Sep 28, 2008

    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.

  • Blindfaith Blindfaith on Sep 28, 2008

    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.

  • Cprescott Yawn.
  • 28-Cars-Later Wrangler people are crazy.
  • 28-Cars-Later "Transition" to layoffs, this guy is the Bob(s) from Office Space.
  • Vap65689119 As a release engineer I also worked in quality, if they are serious they should look at Toyotas business model which has their suppliers as genuine partners, thats how you get a quality product
  • Mike-NB2 I seem to have landed in an alternate universe. $12,000 for a Jeep that's going on a quarter-century old and with an automatic transmission? Wow.