Wagoner has a part in GM’s turnaround
|November 11, 2010||http://detnews.com/article/20101111/OPINION03/11110365|
Wagoner has a part in GM’s turnaround
Serially maligned General Motors Co. is showing a recurring knack for making money — $6.1 billion before taxes so far this year — by selling cars and trucks to real people worldwide, meaning the race is on to claim credit for its quickening turnaround.
With an initial public offering to investors scheduled for next week, GM’s revival stands as partial vindication of the Obama administration’s controversial decision to plow $50 billion from American taxpayers into an iconic company whose management and union leadership spent way too many years ignoring reality.
Its comeback as a smaller, leaner automaker appears to affirm the tactical decisions of the president’s auto task force to push GM through bankruptcy, eliminate brands, rationalize its dealer network, reconstitute its board of directors and install outsiders as CEO and chief financial officer, to name two.
End of story, in the telling of Steven Rattner, a private equity sharpie who headed the president’s auto task force. He wrote a book about it that landed just about the same time as an expected sanction from the Securities and Exchange Commission for his alleged role in a New York pension influence scheme.
Except that isn’t the end of the story — not by a long shot — as reviewers of Rattner’s "Overhaul" and others are pointing out, sometimes acidly, and as the broader sweep of facts attest. Because GM, whose global footprint and product portfolio now are earning billions, is where it is partly because of moves made by the CEO whom Rattner unceremoniously cashiered after a single meeting.
Rick Wagoner? Yes, Rick Wagoner, the amiable incrementalist and GM lifer whose mistakes and record of financial profligacy obscure the fundamental operational progress that make a new GM possible by giving Team Obama and Rattner — who’ll tout his book at a meeting of the Automotive Press Association at the Detroit Athletic Club Monday — something worth saving.
Under the ousted CEO, GM cemented the automaker’s position in China, on track to soon surpass the United States as the world’s largest auto market. His GM did Russia before Russia was cool, pressed its advantage in Latin America, invested nearly $4 billion in Cadillac more than a decade ago to transform the brand into the credible luxury player it has become.
Wagoner’s GM rehabilitated relations with the United Auto Workers in such unlikely places as Lansing, where assembly lines were manned by teams trained in Germany to produce Toyota-level quality in Cadillacs and crossover vehicles. His GM sharply improved Chevrolet, revived a moribund Buick with the LaCrosse, Enclave and Regal and delivered the technology powering the over-hyped gas-electric Chevy Volt.
Talks with the union in ’05 and the national contract in ’07 delivered the first batch of health care concessions, established the health care trust fund and formed the beginnings of a second-tier wages for new hires — all of them core pieces in the turnaround boasted by Rattner, the White House, Wall Street and current GM management, as if authorship is theirs alone.
It’s not. In short, Wagoner’s leadership provided as many preconditions for GM’s successful turnaround as it did reasons why he and his team were constitutionally and culturally incapable of completing the turnaround accelerated after they were removed, retired or both.
That’s an important distinction too easily lost in Rattner’s victory laps, the sweeping defenses (and condemnations) of Wagoner’s leadership or the laments from homers who still think — seriously? — that media bashing, misguided consumers and bad timing hastened GM’s fall into federal control.
Does Wagoner deserve credit for laying the operational foundation that made new GM a reality? Yes. Could he and his team have engineered it themselves given more time and enormous amounts of (public) money? No, not from within the constraints of the constipated GM culture they perpetuated.
Remember, this is the same CEO who was so traumatized by the costs of killing Oldsmobile that he couldn’t consider killing brands — Saturn, Pontiac, Saab, Hummer — that no longer exist in the leaner GM.
This is the CEO who asked Treasury for bailout bucks in October 2008, first testified to Congress in mid-November and waited until Thanksgiving to retain bankruptcy counsel for GM because the idea was too horrible to contemplate.
A veteran of GM’s storied New York Treasurer’s Office, Wagoner and his CFOs presided over a finance operation that could not identify how much cash the company held at any given time. He also was the boss whose loyalty to colleagues and business school buddies clouded his judgment of their performance and prevented him from wooing top outside talent.
Wagoner’s legacy in the fall and rise of a new GM clearly is mixed. But when the credit is dispensed for the makings of a comeback — and it will be, probably starting later this month — he’ll deserve more than the victors writing their history are willing to admit. Even if he couldn’t finish the job.