Tonight. On World’s Most Extreme Detroit Apologists… Move over Jerry Flint! Forbes’ ancient and once venerable scribe thinks GM CEO Rick Wagoner hasn’t raped stockholders by pocketing more than $100m in executive compensation. But The Detroit Free Press‘ Justin Hyde and Brent Snavely are willing to go even further. While their most recent mega-apologia predicts the end of Wagoner’s misguided management, the writers are happy to give the floor to analysts who suggest that Wagoner’s done- and is still doing— a great job. “Erich Merkle, an analyst from Crowe Horwath LLP, said Wagoner inherited years of bad decisions from previous managers that have limited his options. ‘You almost need to put Roger Smith on the hot seat, and I know he’s dead,’ Merkle said of the CEO who led GM from 1981 to 1990. ‘They were setting the company up for disaster later down the road. The business model that was created and the way that the contracts were structured were such that they were just not economically viable.'” Mea culpa be damned. And you can be damned sure that Merkle isn’t the only one blind to Wagoner’s cataclysmic effect on GM’s business…
Hyde and Snavely point out that an anyone who bought $10k worth of GM stock in June 2000 — when Red Ink Rick was named president and CEO — would see their stake diminish to just $860. And yet, “GM’s decline has done little damage to Wagoner’s stature among industry executives because its Detroit rivals have done no better. ‘Rick is very highly respected, and he is a very good leader,’ said Neil DeKoker, president of the Original Equipment Supplies Association. ‘They are just facing challenges that are bigger than any one individual or group of individuals can handle.'”
So it is just a question of great landing too short runway. Aaron Bragman, automotive analyst for IHS Global Insight, say yes. “Ehe biggest criticism he hears of Wagoner is that while change has occurred, it hasn’t happened fast enough. ‘And actually, I have been fairly impressed with his turnaround plan,’ Bragman said. ‘They have gone from being largely a group of fiefdoms around the world to what seems to be a very well coordinated company.'”
R-E-S-P-E-C-T. Tell me what Rick means to thee. “‘I think he’s as respected as anybody in the industry. I think he’s earned that. He’s been managing in a very difficult period,’ said David Cole, chairman of the Center for Automotive Research in Ann Arbor. ‘You’ll see that he has led a very important transformation.'”
And that’s what happens when you got and look for… Detroit’s Most Extreme Apologists.
Regarding Roger Smith… ‘They were setting the company up for disaster later down the road.’”
Mr. Smith was indeed a corporate buffoon of epic proportions and did great damage to GM.
That said…. his reign ended, ummm, about 18 years ago! Enough time for even a mediocre executive to steer the GM ship away from the rocks.
You’re doin a good job there, Waggy.
I helped bankrupt GM and all I got was this lousy T-shirt ? [if only…..]
‘Rick is very highly respected, and he is a very good leader,’ said Neil DeKoker, president of the Original Equipment Supplies Association. ‘They are just facing challenges that are bigger than any one individual or group of individuals can handle.’”
Bull. If Wagoner had started addressing the risks eight or ten years ago, GM might not be in this kind of trouble. Yes, he’s got very serious problems, but they’re of his own making because he’s had years to fix them. At least Ford was dumping assets when it still had a chance to get money for them. They got a decent buck and reduced costs to boot. GM can’t give Saab, Hummer or it’s heavy truck business away.
Daimler saw the brick wall coming and divested itself of Chrysler. Granted, Daimler wrecked Chrysler to start, but even the notoriously arrogant M-B management knew that they wouldn’t be able to fix things. If you want examples of “smart”, Toyota and Honda didn’t put all their eggs in one basket. Both companies diversified their product portfolios (Honda less so, to their disadvantage when trucks were all the rage) in such a way that a downturn in any one wouldn’t cripple them too badly.
Rick, on the other hand, did nothing different until it was too late, and then proceeded to spend his time shedding assets like mad and setting GM up for an inevitable bailout. And then things went really bad.
Why is every schmack with a soap box(Jerry Flynt – backseat driver for Forbes) compares compensation of Detroit executives to Wall Street executives? This indicative of our current measuring stick – their failure is worth then ours (Wall Street vs. Detroit). Why not compare salary of Wagoner and/or Lutz to CEO of Toyota, FIAT or Honda? I am sure that neither or those execs don’t even dream of GM (and Ford) compensation levels, yet their companies are doing just fine.
Aaron Bragman, automotive analyst for IHS Global Insight, say yes. “The biggest criticism he hears of Wagoner is that while change has occurred, it hasn’t happened fast enough. ‘And actually, I have been fairly impressed with his turnaround plan,’ Bragman said. ‘They have gone from being largely a group of fiefdoms around the world to what seems to be a very well coordinated company.’”
What a load of crap. Red Ink Rick should’ve been shown the door after the flop of the GM-Fiat venture. That was ONLY $2 billion directly associated to him!
Just to be contrarian…
Why has Rick been able to hold onto his job? That’s a serious question, I’m not teeing up for the “because he’s a moron surrounded by morons who were appointed by morons” argument.
First off, I have a hard time believing the entire GM BoD is full of idiots. Go to the list…
http://www.gm.com/corporate/investor_information/corp_gov/board.jsp
Is the argument really that ALL these people are numbskulls? The President of the University of North Carolina? The CEO of Coca-Cola? The Chairman of Pfizer?
Really?
6 of them appointed within the last 5 years, which honestly was not what I expected, I thought I was going to see that most of them had been in place for 20 years. Not the case.
And then you read stuff like what’s in RF’s post…
Be objective for a second, avoid the emotional response…because here’s the thing I struggle with. There are a lot of business leaders out there both within GM’s BoD, and externally, that support Wagoner. There’s a lot of press calling for his head, but some that are not.
Frankly, where there’s a blogger/reporter on one side screaming “he should lose his job – he lost money!” and some big time business leaders on the other side saying “I’ve seen the data nobody else gets to see, and I think he’s doing as well as can be done…or at least don’t see a better alternative…”
Guess who’s more credible in my mind?
Business people get fired all the time, so don’t argue that “they’re just looking out for their own..” , “it’s the good old boys…”
There’s a reason he’s still there. A business-based reason.
What is it?
There’s a reason he’s still there. A business-based reason.
Don’t assume that businesspeople are infallible.** Two of the most terrible sicknesses to infect a corporation are as follows:
* Management, especially upper management, being unable to admit mistakes for fear that an admission of fallibility calls everything else they have or may do into question.
* Front-line and lower-management’s unwillingness to either a) call upper-management on it’s failures or b) present real evidence that failure is happening at all.
Many, many businesses fall victim to this, especially when management abstracts itself from the business. It doesn’t matter if you’re managed by engineers, accountants, lawyers or plumbers: lose track of the fundamentals, let the process become more important than the product and/or start worrying about fallibility instead of results and you’re in a world of hurt shortly.
Ironically, “smart” people are just as, if not more, susceptible to this. It’s easy for, say, Joe Plumber to admit fallibility; it’s much harder for, say, Rick Wagoner or George Fisher to do so. They should know better, heck, they do know better. They’re the smartest guys in the room, the best and brightest, they can’t be wrong.
** Two examples from GM’s own board: George Fisher presided over Kodak’s implosion at the start of the digital camera age by failing to track the way the industry was going; he’s also notable for starting Motorola’s fall from grace. Eckhard Pfeiffer effectively killed the successful, independent Compaq, weakening it through non-core acquisitions and making it a target for more focused companies like Dell. Any of this sound familiar?
David Cole, head of the Center for Automotive Research is a complete buffoon, far removed from reality and a total tool of the US auto industry. I’ll laugh when, unlike GM, Ford and Chrysler “employees” who are paid to not work, he’s on the unemployment line. It’s apologists like him, on the industry’s dole, who help keep us from a real solution for the industry, which is on death’s door.