It's Sunday night, and that's what it looks like will be the headline after Monday press conferences: That President Obama is requiring that GM CEO Rick Wagoner must step down for GM to get additional aid. If it's true, it's an astoundingly heavy-handed move that, according to one unimpressed automotive colleague, "just might reduce GM to penny stock next week."
I don't know Wagoner well, but I've interviewed him multiple times over the past 15 years or so. He is not what we would call a "car guy," but he was smart enough to hire one -- Bob Lutz, the best in the business. It stunned the industry when Wagoner hired the flashy, outspoken Lutz -- I wrote that it was the sort of thing an ego-driven micro-manager like Ford's Jac Nasser would never do, hire such a high-profile exec that could, and did, often take the spotlight from Wagoner.
Wagoner knew it was a good move for GM to have Lutz, and it was. Now Wagoner will take a second bullet, apparently serving as the scapegoat for GM's troubles. He will get little or no recognition for the progress GM has made with its product line these past few years.
Having watched the domestic industry decline over the past decades, I'd submit that some of the blame can be placed at the feet of current execs, but they inherited a lot of problems that simply can't be easily fixed. The "legacy" costs GM must bear -- retirement and health care for past employees, for instance -- add more to the cost of a GM vehicle than the cost of steel. I am not arguing against benefits, but when companies like Hyundai and Honda don't have those costs, it is difficult for U.S. companies to compete.
Shed no tears for Wagoner: He'll be fine. And requiring his resignation will likely be seen as a win-win in terms of public relations for Obama: If GM improves, it will be seen as a result of the President's deft leadership. If GM doesn't improve, Omaba's spinners can suggest that Wagoner and his team dropped the ball and let it roll so far away that no one could retrieve it. But hey, we tried!
It wil be fascinating to see where GM stock ends up at market closing Monday. A positive reaction will be license for the administration to take more of an active role in replacing executives in private industry. A negative reaction -- well, we'll know soon enough, won't we?
TrackBack URI for this entry
Subscribe to this comment's feed
Meet the people that keep this site up and running.