Only six months ago, General Motors chief executive Rick Wagoner stood in front of hundreds of employees in the atrium of the company’s Detroit headquarters, celebrating the automaker’s 100th anniversary.
“So, what’s our assignment for today and tomorrow?” he asked. “Above all, it’s to demonstrate to the world that we are more than a 100-year-old company. We’re a company that’s ready to lead for 100 years to come.”
Whether or not the company regains that leadership, Wagoner will certainly not. After returning to Washington with cup in hand a second time to ask for an additional $16.6 billion, he was unable to satisfy the White House that he could lead the beleaguered company out of its present death spiral.
“On Friday I was in Washington for a meeting with administration officials,” Wagoner said in a statement Monday morning. “In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have.”
The administration’s auto advisory board deemed Wagoner’s plan to cut its debt insufficient, according to a summary of its findings released to reporters.
Still, its insistence that Wagoner step down is an extraordinary intervention of the federal government into the management of a private company. A senior administration official told the Washington Post that Wagoner’s resignation was required because the company needs a “clean sheet.”
“We felt that having a change of leadership would be consistent with the clean-sheet approach,” said the official who was not named.
It also asked the automaker to replace most of its board and to increase its reliance on more fuel-efficient vehicles. Wagoner and other U.S. auto executives have been criticized for pushing sport-utility vehicles and pickup trucks, and moving too slowly to develop vehicles that consume less fuel.
G.M. announced today that Fritz Henderson, its president and chief operating officer, would succeed Wagoner. It tapped board member Kent Kresa, the former CEO and chairman of Northrop Grumman, as chairman.
The news brought strong criticism from Wagoner’s defenders, among them Michigan Gov. Jennifer Granholm, who said on NBC’s “Today” show that he was “a sacrificial lamb.”
Wagoner had spent his entire career with what had once been the largest company in the world and had always expressed unwavering confidence in it.
After graduating from Duke University in 1975 as a star basketball player, he went to Harvard Business School, and got a job with G.M. immediately afterward, in 1977, as a financial analyst.
Ironically, his star rose as the result of another financial crisis, in 1992, when chief executive Robert Stempel was forced out, and Wagoner, then 38, was vaulted into the job of chief financial officer.
His mentor, the chief executive John F. Smith Jr., named Wagoner president of G.M. in 1998, and he succeeded Smith in the top job in 2000.
Like his predecessor, Wagoner aggressively expanded G.M.’s operations outside the United States. The company now sells 65 percent of its vehicles overseas, thanks to his Wagoner’s push into markets like China, Russia and Latin America.
However, G.M.’s sales slump at home led to it losing its longtime title last year as the world’s largest auto company, replaced by Toyota.
John Casesa, an industry analyst and managing partner of the Casesa Shapiro Group, told the New York Times that Wagoner’s finance background may have been a poor fit to lead the company at a time of change.
“The most successful auto companies are run by people who came out of the revenue-generating functions - manufacturing, design, marketing - making cars and selling cars.”
But Wagoner, said Casesa, “skipped the whole apprenticeship that most auto C.E.O.’s experience.”
During Wagoner’s tenure as chief executive, beginning in 2000, the company’s stock has fallen from $70 a share to less than $4 now, and its market share has fallen roughly 10 percentage points. Yet until now, he has fended off multiple challenges to his leadership, most notably from the investor Kirk Kerkorian in 2006 and from angry members of Congress during hearings last fall.
Through three major restructuring plans enacted on his watch, which included the elimination of dozens of plants and tens of thousands of jobs, he maintained the confidence of his board.
But critics faulted him for only recently acknowledging the need to significantly pare the company’s brand and model lineup, and to better match the company’s bloated infrastructure with the shrinking market.
He has also been criticized for his slowness to pursue fuel-efficient vehicles. Wagoner has said that one of the moves he regretted most was G.M’s decision to kill the EV-1, an electric car that it leased to customers in the late 1990s. Although the vehicle was not profitable, it helped G.M.’s image with environmentalists, which in 2006 Wagoner conceded he had understood too late.
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1 Comments
#1. Brittancus 03.30.2009
When the auto industry has huge overheads for health insurance for the thousands of personnel , and even more for retirees that are receiving health benefits. It is no wonder their businesses can’t make a decent profit. Their saddled with billions of dollars from a health industry, that have questionable practices. Isn’t that why we voted for President Obama , to bring in a single payer health care system? Not with what we are going to get–auditors, not doctors in wealthy insurance companies dishing out limited services. Being a moderate voter I think one of the most important issues to get Americans back to work is Health care? Large and small businesses in this America have to negotiate with the middle man–Insurance companies!
They are the inter-mediator, we can well do without? If car manufacturing companies didn’t have to pay extra for health care for it’s hundreds of thousands of workers. Then we would be on a level-playing-field, with our foreign competitors who are subsidized by their governments? Why is it European countries like France, United Kingdom have a single payer system through the government that–WORKS! The usual critics have everything to gain, and so much more to lose–they will put every obstacle in the way of Universal health care. Before Britain was invaded by immigrants under the European Common Market, my family had excellent Social health care.
Every employer and every worker paid into the system and the outcome insured you of hospitalization, doctor visits, specialists, eye and teeth care. Then of course the majority of upper class Americans don’t like the idea, because they can well afford the co-pays, premiums that the insurance companies add to their exorbitant fees. But then they get the best service, including home visits. The mechanics of health care in the US is no different to England’s, including sitting in the waiting room and seeing the physician. If you needed to see a specialist you was referred by letter. The Democrats will state they are working for the American people, but for some that’s an outright fallacy? It’s unlikely we will never get rid of the greedy insurance companies–until we have taxpayer Campaign contributions for many corrupt politicians. Same with E-Verify for US Workers, because big business didn’t like being cut off from cheap illegal labor. Of course the special interest lobbyists, will distort the truth to get voters to deny the 47 uninsured Americans (NOT ILLEGAL ALIENS) peace of mind–for–OUR–families and children.
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