| Rick Wagoner's ousting had more to do with politics than his ability to revive GM |
 |
 |
 |
| Written by ALG Admin |
| Monday, 30 March 2009 13:15 |
|
From the Detroit News: Well, at least now we know who's running General Motors. The Obama White House, in an extraordinary expansion of the government's reach, Sunday demanded and got the head of Rick Wagoner, the automaker's embattled chief executive. In doing so, the president brushed aside GM's board of directors, selected by shareholders and entrusted with the power to hire and fire executives, and assumed that role for himself.
While GM's board had been often restless with the transformation of GM under Wagoner's leadership, it maintained its confidence in his ability to get done a very tough job. Shareholders can read the handwriting on the wall -- this isn't their company anymore. That's the risk you take when you go hat in hand to Washington. It ought to be a red flag for other companies and industries that might be thinking a federal bailout is the answer for surviving the recession President Barack Obama is using the $13.4 billion in federal loans as leverage to re-create GM in the image of a Washington with little apparent affinity for manufacturers. The president will lay out his vision for General Motors and Chrysler this week, and has said he'll seek changes in the product line-up to produce larger numbers of small, fuel-efficient vehicles, an initiative already underway at both companies, but at a pace sensitive to the marketplace. Too slow, apparently, for the White House. Obama wants change to come faster. Wagoner, who was being torn between pleasing consumers and satisfying the government, wasn't moving fast enough. The president also needs a scalp to wave before both a Congress growing queasy about federal bailouts and the automaker's bondholders, who aren't happy about granting a huge discount on their GM debt. The trick now is to find someone to run the automaker. Good luck with the headhunting. How many top-notch corporate executives will jump at the chance to lead a company that is sinking like a rock? Who will be willing to share the corporate suite with federal bureaucrats? And by the way, the job pays a buck a year, and if you need to fly, it better be coach. Running a tobacco company has to have more appeal. Wagoner wasn't perfect. He was too slow in beginning the makeover of General Motors -- though for the record, he got it underway well before the industry needed a federal rescue. He wasn't aggressive enough about cost cutting, perhaps, and was reluctant to declare the death match with the United Auto Workers union that some in Congress demand. But he knew about building cars and trucks, and had put a plan in place to do so profitably once again. The next GM chief will have to take over that blueprint mid-stream and sail it through. The departure of the popular Wagoner will also be another hit to employee morale. There's another thread running through this story. Obama has been banged around the last couple of weeks because of the bonus scandal at AIG. His administration, with the help of Congress, botched the aid package to the failed insurance giant, allowing the indefensible bonuses to be paid and triggering public outrage that is increasingly focused on the White House. Dumping Wagoner lets Obama deflect attention away from Wall Street, where his Treasury Department is still moving through quicksand, and turn it on Detroit. He can portray himself as being tough on the corporate executives who are ruining America, without having to draw blood from the bankers. As for Wagoner, we have to believe he slept better Sunday night than he has in a long while. He loved General Motors. He spent his entire career moving up through the ranks. The balance sheet on his tenure will show much on the positive side. GM finally has a model line-up that offers competitive vehicles from top to bottom. Had it not been for the meltdown of the financial markets and the resulting recession, GM would have been well positioned to sell some cars. Give credit to Wagoner. It's also leading the race to develop marketable electric vehicles, another Wagoner priority. And when a scapegoat was needed, Wagoner put his head on the block. Wagoner has been put through hell the last six months. He is not the bad guy in the collapse of the auto industry, and shouldn't be remembered that way.
|
| Last Updated on Monday, 30 March 2009 13:45 |
Tags
TrackBack URI for this entry
Subscribe to this comment's feed
Can you imagine? Those invisible hands have been so flawless in their judgments. How dare he! Thank god he won't do anything so inefficient with respect to those brilliant institutions who invested in and insured mortgage backed securities. That might be nationalization, socialism, communism, defiance of the wisdom of the market . . . words like those scare me far more than those brilliant boards of directors, those brilliant executives, and those brilliant financial minds who take risks and make America great by becoming richer than anyone . . .