GM’s perennially optimistic ex-CEO Rick Wagoner is now being hailed as a “sacrificial lamb” who didn’t deserve to get sacked. Don’t buy it. Wagoner may be a nice guy, but he did a terrible job.
Paul Ingrassia lays out the facts:
Since Mr. Wagoner became CEO in June 2000, GM’s stock price has declined from more than $70 a share to under $3. The past year has been brutal on all stocks, but even in 2005, when car sales stood at near-record levels, the company lost $10.6 billion and the stock had plunged nearly 75% from when Mr. Wagoner took the helm. GM also suffered a steady slide in its U.S. market share — from 28% to 22% — during the Wagoner era.
In 2001, Mr. Wagoner negotiated a European alliance with Fiat (yep, the same company now talking to Chrysler) on terms that could have forced GM to buy the Italian auto maker when Fiat was hemorrhaging money. GM had to pay $2 billion to buy its way out of that dilemma.
Then Mr. Wagoner belatedly placed big bets on full-sized SUVs and pickup trucks just as gas prices started to soar and gas-electric hybrids got popular. GM’s answer is the Chevy Volt, a more-advanced hybrid that’s still two years from launch and will cost around $35,000 when it does appear…
[I]n December 2000, Mr. Wagoner’s first major move as CEO was to announce the closing of Oldsmobile, which had shrunk to a fraction of its former sales. But the up-front announcement — as opposed to a quiet buyout effort — enabled dealers to demand top dollar for closing their franchise. It took GM nearly four years, myriad lawsuits and more than $1 billion to shut Oldsmobile down.
After [that], say former General Motors executives, any discussion of further culling GM’s lineup of eight different brands or of demanding major improvements in factory productivity became strictly off-limits with Mr. Wagoner. There was a “can’t do” mentality that accepted too many brands, too many dealers and too many workers as immutable facts of life that could only be changed slowly and gingerly, if ever. That might have worked had Americans continued buying big pickups and SUVs at a record-setting pace for another decade or two. But that prospect never was realistic, even before car sales collapsed nine months ago. Mr. Wagoner stuck with overly rosy forecasts until the very end.
So hooray for Steve Rattner and Barack Obama for having the balls to do what should have been done. Now if only Tim Geithner could be encouraged to bring the same spine to bear on the banking industry.