Wagoner takes the fall for GM
Wagoner takes the fall for GM
Auto task force’s close look at company leads to decision that management is to blame
As soon as President Barack Obama began using the words "failed management" in connection with the prospect of more federal aid for General Motors Corp., CEO Rick Wagoner’s days were numbered.
The 56-year-old Wagoner is stepping down immediately, a casualty of management mistakes real and perceived, a free-falling national economy and a political zeitgeist that simply won’t tolerate more taxpayer-financed "bailouts" without some very public hangings.
Wagoner is one.
"If you read the tea leaves, you saw this coming — especially with the shots this White House is taking at management," an industry executive close to the situation told me Sunday. Wagoner "was totally devoted to trying to fix this company."
Devotion may be necessary, to borrow a favorite Wagoner locution, but it clearly is not sufficient and hasn’t been for some time. In a call Sunday with GM’s automotive strategy board, less than a day before Obama’s expected announcement of his conditions for supporting GM and Chrysler LLC, Wagoner told the executives "the White House asked him to resign" and indicated that President Fritz Henderson would be "in charge."
The steep downside of federal involvement for Wagoner, Henderson and the remaining management team is that their desperate pleas for a lengthened federal lifeline gave Obama’s auto task force a warts-and-all inside look at GM’s books, its products, its strengths and weaknesses and — most of all — its mistakes.
It allowed task force members to hear how little faith bondholders have in Wagoner, CEO since 2000, to steer a leaner, smaller GM into an all-new competitive world where the "Detroit way" simply could no longer survive.
It enabled Team Obama to learn from United Auto Workers President Ron Gettelfinger, the industry’s most influential voice in Washington, the details of his mistrust for Wagoner — and his strong support for Henderson.
It focused politically charged attention and understandable second-guessing on GM’s aborted global alliances (Suzuki, Isuzu, Fuji Heavy Industries and Fiat SpA), its chronic money-losing brands (Saab, Saturn and Hummer, among others), and Wagoner’s nice-guy penchant for backing members of his executive team long after their failures had become apparent.
Worse, for Wagoner, the task force gave the president and Treasury Secretary Tim Geithner a set of facts that were largely free of GM’s customary corporate filter and that closed the distance between the reality of Detroit and the perceptions of Washington.
Those facts, rightly or wrongly, provided justification to oust GM’s CEO as a way to atone for the administration’s botched handling of the $165 million AIG bonus debacle just as Obama is scheduled to be in London for a crucial meeting of the G-20.
Don’t think that won’t score the new president points with his fellow heads of state, including German Chancellor Angela Merkel and British Prime Minister Gordon Brown. Both of their governments, among others in Europe, are weighing requests from General Motors-Europe for emergency funding to save jobs, and the departure of Wagoner is likely to make those discussions easier, not harder.
Ditto GM’s protracted negotiations with bondholders and the UAW. In both cases, if for different reasons, Wagoner is more identified with GM’s problems than its successes, a CEO whose tenure coincided as much with the automaker’s slow response to domestic troubles as it did with GM’s impressive performance overseas.
Bottom line: One of the most decent guys ever to run a car company in this town, arguably too decent, emerged as an obstacle to a politically defensible auto deal the Obama White House clearly wants to engineer.
Why? Because the alternative — a GM Chapter 11 bankruptcy filing — is too unpredictable for the effect it could have on suppliers, would-be customers, consumer confidence and the politics of the economy. Wagoner’s job, the political calculus goes, is a small price to pay if his departure speeds a resolution that would avert a larger economic calamity.
For all the support he still enjoys amid GM’s salaried ranks, Wagoner’s tenure was marked by unfulfilled promises, massive corporate losses, destroyed credit ratings, the insignificant value of GM shares, tens of thousands of jobs lost and the gutting of GM’s sprawling operations.
All true. Why it’s true doesn’t much matter anymore.