Wagoner out, but is it the right move?

I’ve always been a stats geek when it comes to evaluating what’s good and what’s bad in sports…do you have a good batting average?  Then you must be a good hitter.  Low earned run average?  Then you must be able to pitch. 

My simple numbers driven approach usually guides me in business, too.  Stock price up?  Market share up?  Did you hit your sales goal?  Yes, yes and yes?  Then you must be a success.

So, the natural reaction to Rick Wagoner’s pending resignation should be “what took so long.”  GM market share has tumbled.  Sales have been brutal.

But, truthfully, I think Mr. Wagoner is getting a bit of a raw deal.  I know GM’s numbers are terrible, but Mr. Wagoner has been faced with a set of unprecedented challenges.  He inherited a bloated organization, handcuffed by a difficult labor agreement and skyrocketing retiree health care costs.  He’s helped reduce the number of employees in the company, improved vehicle quality, brought some excellent vehicles to market and filled the pipeline with promising future technologies such as the Chevy Volt.

The company is making progress, but its back is against the wall.  President Obama holds all the cards, and if he wants Wagoner out as a condition for providing more loans, then that’s what will happen.  And, that’s what really worries me.

Wagoner isn’t being removed by his own shareholders or board, he’s being removed by the President, who will likely oversee a slew of demands on GM.  The increased government interference will only add to the company’s bureuacracy and will likely force it to make vehicles that don’t meet real world demand.  

I know there are many who will say “good riddance.”  I’m not one of them.  If anything, I think this opens a world of opportunity for Ford.  If it can get by without a government loan, Ford will be much better positioned to develop cars and trucks that real people want. 

Only time will tell, but I am very curious to see how the stock market responds to this news in the week ahead.

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2 Comments

  1. Interesting perspective. I’m no fan of government intervention, but I’d like to think that in this case, it will help the many, many employees at GM who are ready, willing and able to make the cars people want (something I do think Obama gets loud and clear).

    Quite a statement to “the people” though. Drastic times, drastic measures?

  2. I’ve met Rick Wagoner and have certainly heard him speak many times during my career in the auto industry. I’m appalled but not surprised that one of the conditions for the loans to GM would be his ouster.

    I like Rick. Nice guy, and yes, some good stats in terms of how he’s helped GM come back in some impressive areas. But even all that Rick Wagoner is – was – has not been able to pull The General out of the hole that has been dug for it over time.

    Lots of things “happened” to GM over the last four or five decades that hurt it, from aging to bloating to the incredible amount of foreign competition that it’s faced, and it’s easy for many naysayers to predict the company’s demise. But I wouldn’t count it out yet.

    I’ve had many cars from different manufacturers over the years, however, and I keep coming back to my GM cars as my favorites. Heck, I still have the GMC Sonoma I bought over ten years ago and still drive it most days to work, even with over 175,000 miles on it. Why? Lots of reasons. Ask me if you want the whole list. One big reason is patriotism. Also, I’ve lived in Detroit for 23+ years and I’ll admit to feeling loyal to an industry that’s fed my family for so long. Like I said, ask me. I’ll tell you.

    But I don’t think it’s time to fill in that hole with dirt and plant a petunia.

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