Sunday, March 29, 2009

Obama tells GM's Wagoner to beat it (Lots of Updates)

Just got an alert that the White House has asked GM head Rick Wagoner to step down. The long-time chairman and CEO is leaving immediately. In other words, President Barack Obama is now the man in charge of GM's future.

Smartest man in Detroit now clearly is Ford's Allan Mulally. I take back everything negative I ever said about the man because he had the smarts way back when to prepare Ford for the day when the economy went into recession or worse, sales plunged, gas prices soared and Motown went to DEFCOM 5.

Mulally beefed up Ford's credit lines, thus making it possible for the company not to go hat-in-hand to Washington for bailout money, as did GM and Chrysler. Made me want to go buy something with the blue oval on it just as a gesture of support, something I may yet do when the new Fiesta arrives.

Wagoner has not gotten much in the way of positive ink from me, but the worst thing that can happen to GM or any corporation that hopes to survive as a going consumer concern is to put Washington politicians in charge, regardess of which party they represent.

Obama is expected to unveil Washington's new plan to save Detroit tomorrow. Here's betting the United Auto Workers won't have much of problem with the Obama plan because the unions own Obama.

More to come on this very sad day in the history of the American auto industry.


Here's The New York Times story. Here's The Washington Post story. And here's The Wall Street Journal story. Looks like the Times and the Post got the advance leaks, but not the Journal. And here is what appears to be AP's first write-through.


Robert Farago at The Truth About Cars says nothing can be done to save GM and the departure of Rick Wagoner essentially changes nothing. Here's how Farago puts it:

"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 new car market is still contracting, 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."

Over at Autoextremist, Peter De Lorenzo promises a post on Wagoner's departure shortly.


De Lorenzo, a long-time critic of the former GM leader, offers this assessment of the mostly overlooked advances Wagoner was responsible for during his eight years at the helm:

"But there was another side to Rick Wagoner's tenure that the instant pundits out there either refuse to acknowledge - out of their out and out hatred for anything to do with GM and Detroit - or that they simply couldn't fathom because of their abject lack of experience or what is probably closer to the truth, their complete lack of understanding of how this business actually operates. And that is that if Rick Wagoner hadn't taken the aggressively decisive actions that he did take, GM would have been out of business years ago.

"Wagoner's move into the Chinese market (a continuation of the doctrine laid out by his predecessor, Jack Smith) proved to be pivotal in providing a road map for the company's future. And Wagoner's insistence on utilizing and exploiting the global capabilities of GM's far reaching corporate empire, with forays into Korea, Brazil, Mexico and Eastern Europe, laid the groundwork for a completely modernized and globally competitive endeavor.

"But Wagoner's most impressive move during his tenure was to recognize his own limitations as a financially-oriented leader, while at the same time setting his own ego aside in order to bring Bob Lutz into the company. Wagoner handed Lutz the keys to GM's woefully moribund product development system and said "Fix it," while giving Lutz carte blanche to do it.

"And the results were magnificent. During Wagoner's tenure - while benefiting from the vision, passion and sheer will to succeed that Lutz brought to the table - GM saw its greatest design, engineering and product era since its glory days of the 60s."

And for the record, Autoblog reports that GM's Wagoner isn't along in the newly unemployed line. Peugeot's board of directors just sacked the French firm's CEO, too.


From's Karl Brauer (via email) :

"Wagoner is seen as the man at the wheel when GM veered into the sun. Whether that's an accurate appraisal or not doesn't matter. The current administration is as concerned (maybe even more concerned...) with looking good as it is with genuinely fixing the problems in Detroit. There's no downside for them with this move. If GM still fails they can claim the company was just too far gone to fix. If it successfully turns around they can say, 'See! We got rid of the former exec and put in a new guy that saved the day because we're just so brilliant we knew this move would work!'

"Personally I think GM's future success or failure will have nothing to do with Rick Wagoner's departure."

And from Mrs. Brauer (also via email):

"Wait a second -- Obama told Wagoner to leave? What does Obama know about running a car company that Wagoner doesn't? I don't understand."

Note to Karl: Smart wife, my friend!

From Buickman at GeneralWatch (via email):

"Wagoner's ouster was long over due. it took the White House to do what the Board should have done years ago. What remains to be seen is if his replacement is willing to dramatically alter the marketing. otherwise this executive shuffle will be meaningless."

And much more from Jim Dollinger at GeneralWatch, which has been demanding Wagoner's ouster for a long time. Dollinger =s Buickman.

From Bob Holland:

"Yeah, he was shoved out the door, but I suspect, like Bob Lutz who is also leaving, Wagoner must know that working at GM—assuming it survives—will no longer be any fun. Take a long vacation Rick. You deserve it."

From Sam Kazman, General Counsel Competitive Enterprise Institute (CEI):

“By a strange coincidence, this Administration issued higher fuel economy standards only days before announcing its newest bailout plans. Those standards impose a huge burden on the industry, of about $50 billion in added research and development costs over the next five years. Moreover, the low price of gasoline makes those standards even more stringent. In short, the Administration is strangling the industry with one hand while dangling bailout funds with the other.”

CEI has been among the most prolific and hard-hitting critics of CAFE standards for many years.

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