GM's Rick Wagoner: Runs Out of Tomorrows
By Michelle Krebs March 30, 2009
By Dale Buss
DETROIT -- Rick Wagoner finally ran out of tomorrows. The man who had survived at the helm of General Motors as it suffered unprecedented financial losses and a freefall in market share ultimately couldn't shake an even more procrustean force -- the vagaries of a U.S.-government bailout.
The 56-year-old former wunderkind beancounter resigned at the suggestion of the Obama administration as the new federal auto task force deals with the very latest of the recent disappointments overseen by Wagoner: GM's inability to coax and cajole unions, bondholders and other constituencies into agreeing to a sweeping new viability plan for the automaker. The government will have to extend GM's taxpayer-funded lifeline and try to wrap up a restructuring under a new CEO.
Though new in its finality, this last chapter of Wagoner's career at GM seems eerily similar to others before it. He always accomplished just enough to hang on to his job despite the increasingly gloomy outlines of his tenure. Wagoner generally enjoyed great support from within the company and those closest to it, including its board; yet he always left GM's various constituencies with the feeling that he would never quite get over the hump. He survived more than three years of calls for his head, but it has surprised very few that someone ultimately handed it to him.
It's easy to point to Wagoner's failures in his nine years as CEO. There was the $11-billion loss in 2005 and grinding deterioration in GM's balance sheet since then. The inability to get the United Auto Workers union to take the company's desperate condition seriously until 2007. His wholehearted bet on SUVs and trucks without adequate hedging in smaller vehicles and hybrids against the high possibility of just what happened last year: $4-a-gallon gasoline.
Wagoner also was too slow to attack the health-care monster that still threatens to swallow the company. And he has proven too stalwart in defense of a brand lineup that now clearly is too broad to be supported by any scenario for GM sales in the future. Oldsmobile died by Wagoner's hand, but Hummer and Saab and Saturn are still on life support.
And Wagoner's accomplishments were more difficult to document. He clearly began a turnaround of the sorry state of GM's new-product pipeline by bringing aboard Robert Lutz as vice chairman and vehicle-development guru. GM's product quality also continued to surge during Wagoner's tenure. He honchoed last year's celebration of GM's centennial by rightly focusing on the future rather than on the company's glorious past.
Because of his positive experience overseeing the expansion of ethanol power in Brazil, Wagoner led GM to an early bet on ethanol in the United States market that could still -- at least in the form of cellulosic ethanol -- pay off. And Wagoner facilitated GM's leadership in the online milieu.
But otherwise, what he accomplished mainly could be categorized under the rubric of "managing decline." By this definition, one of Wagoner's biggest accomplishments may well have been keeping GM out of bankruptcy court over the last few years.
No wonder that there have been previous forays seeking Wagoner's scalp. The most notable was an effort in 2006 by billionaire investor Kirk Kerkorian, who then held 10 percent of GM's stock, to force merger talks between GM and Nissan/Renault in the hopes of putting Carlos Ghosn, not Wagoner, at the head of a new global automotive superpower.
The pitchforks came out again last fall when the precipitous drop in U.S. auto sales forced GM and Chrysler to plead for a fast federal bailout. Wagoner's departure then seemed a foregone conclusion, especially after he displayed socio-political tone-deafness during the company's pitch for federal funds.
Wagoner did this by, among other things, refusing to engage seriously the possibility that GM should simply file for bankruptcy-court protection and an orderly restructuring. His continual insistence since then that GM's sales would plummet in the case of such an admission of defeat, because of a lack of public confidence in its brands, rang strangely because the company's sales already were off by half.
The Obama administration's deadline of tomorrow for GM to submit a feasible survival plan was Wagoner's last chance to salvage some sort of victory -- and career continuation -- out of the jaws of defeat. He couldn't meet that deadline. And so Wagoner ran out of chances.
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