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Thread: Should Rick go?

  1. #1
    Vulture of The Western World Eric's Avatar
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    Should Rick go?

    Should the head of GM - Rick Wagoner - be asked to step down as a condition of any taxpayer-funded bailout?

    It's hard to see how he keeps his job - if the concept of accountability matters anymore. GM's problems are many and certainly not all of them are Wagoner's fault. Several of them trace their origins back decades, to bad decisions that laid the groundwork for today's difficulties - such as the failure of the company to simplify and consolidate its brand structure as market share dipped from 50 percent to the current 20-ish percent.

    Pontiac, Buick, GMC, Chevrolet and Cadillac are venerable institutions but may no longer be viable as more or less independent, full-line divisions.

    That's not Wagoner's doing, of course; it's a problem that's been festering since at least the 1990s (when Roger Smith of "Roger & Me" fame was in charge). Still, it's also a problem he didn't do much about, either. And during his tenure, GM actually expanded its roster of brands (Hummer) and pumped money into perpetually money-losing Saturn (originally conceived as a way to rehab GM's then-iffy image for quality by "starting fresh" but which today has been rendered irrelevant by GM's much-improved quality).

    It's certainly unfair to go after Wagoner for "not anticipating" the surge in gas prices that made SUVs overnight pariahs. Toyota didn't anticipate it, either. Ditto Nissan. Both were working diligently on hulking V-8 SUVs and full-size trucks that were actually bigger and even more wasteful than GM's (or Ford's or Chrysler's). Titan, anyone?

    The larger, more substantive criticism that does stick isn't that GM lacked small fuel efficient cars. It had those, plenty of them. They just happened to be clunky and cheap-feeling in comparison with the best import equivalents like the Honda Civic and Toyota Corolla. Those two are perennial big-sellers and have been for years, in good gas times and bad. They gave Toyota and Honda not just a fallback if and when the big trucks and SUVs went sour. They also created an enduring buyer base - composed almost entirely of former GM (and Ford/Chrysler) customers.

    GM, therefore, was caught with its pants down when the SUV/truck market collapsed.

    The Chevy Cobalt (and probably even more so the forthcoming Chevy Cruze) is a very good little car. It just ought to have been here much sooner. The Cobalt didn't replace the awful, completely obsolete Chevy Cavalier until 2005. That is certainly somebody's fault.

    Rick?

    A new guy might not be able to do any better, of course. But he would begin with a clean slate - and that is no small thing. Rick Wagoner and the other Big Three CEOs - whether you like 'em or hate 'em - are inextricably bound up with the current difficulties. If they do not go, there will be resentments - not unfounded - as well as a growing sense of the disconnect, at the highest levels of our country's economic life, between actions and accountability. It's hard - unless you're a Marxist - to object to high compensation for high achievement. But it's even harder - if you believe in "the invisible hand" of the free market - to countenance rewarding its opposite.

    The bottom line is GM is failing. If the guy in charge of the whole operation isn't responsible for that, to some extent at least, then who is? And if the head guy is allowed to avoid any real repercussions for the disaster that is unfolding, how can we, as a country, look the average assembly line worker in the eye and ask that he accept the loss of his job, or a major cut in his pay and bennies? Keep in mind that to the average line worker, loss of the job means possibly going broke. At the every least, it means having to scramble for a new/equivalent job to keep the mortgage paid up and food on the table.

    Retirement, for a guy like Rick, means just that. He goes home to the Grosse Pointe mansion in the gated community. Maybe he "consults" - or just plays golf. But unless he has been extraordinarily profligate, he will still be worth millions - and have no financial needs or worries whatsoever.

    So even if he is let go, the meaningful consequences are almost entirely aesthetic. For the average line worker, the consequences will hit closer to home. Is it not at least mildly off-putting?

    That this is even a question for debate shows how weird things have gotten in this country. Guys like Wagoner and his counterparts at Ford and GM are paid more in a year than most Americans earn in a lifetime. Note the distinction: Paid vs. earned. Because there is no way, without raping the language, that the compensation awarded to the Big Three's chieftains can be described as earned income. And that, really, is the bottom line here. GM is failing. Which means Rick has failed. You can probably draw the necessary conclusions.

    The question is, can he?
    Last edited by Eric; 12-10-2008 at 08:57 AM.

  2. #2
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    Waggoner's fault is that he hasn't taken the necessary painful steps needed to restore GM to profitability. And doesn't truly recognize how close the company is to calling in Marty the Liquidator.

    Chip H.

  3. #3
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by chiph View Post
    Waggoner's fault is that he hasn't taken the necessary painful steps needed to restore GM to profitability. And doesn't truly recognize how close the company is to calling in Marty the Liquidator.

    Chip H.
    If that definition holds - and I agree with it - then I think he needs to go.

    Being unable/unwilling to take necessary action - and not appreciating the extent of the problem/being detached from reality - means he's not the right person to be in that chair.

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    I don't think gthat the issue is a single man or any group of players including the government. They all are trying to pretend that GM is not bankrupt, which it is by by a couple of legal definitions. (Can't pay bills as they become due is one of those.) Bankruptcy was invented for this situation and the fools have their heads buried in the sand.

    With bankruptcy they could be rid of state rules making itr near impossible to be rid of a franchise without the franchisee's agreement; they could be rid of the job bank which pays laid off workers 95% of their pay for a year. In theory, that is to keep them on hand in case production demands increase which we all know is rot; then, pay and benes for current workers and retirees would be scaled back to something more in line with the value of their labor. And so on ... Any cash infusion will only delay the end.

    So, huge amounts of taxpayer money will be pissed away for no good reason beyond buying votes and funding the retirements of the union bosses.

  5. #5
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by jdm124 View Post
    I don't think gthat the issue is a single man or any group of players including the government. They all are trying to pretend that GM is not bankrupt, which it is by by a couple of legal definitions. (Can't pay bills as they become due is one of those.) Bankruptcy was invented for this situation and the fools have their heads buried in the sand.

    With bankruptcy they could be rid of state rules making itr near impossible to be rid of a franchise without the franchisee's agreement; they could be rid of the job bank which pays laid off workers 95% of their pay for a year. In theory, that is to keep them on hand in case production demands increase which we all know is rot; then, pay and benes for current workers and retirees would be scaled back to something more in line with the value of their labor. And so on ... Any cash infusion will only delay the end.

    So, huge amounts of taxpayer money will be pissed away for no good reason beyond buying votes and funding the retirements of the union bosses.
    Very good points.

    Still, without denying any of the above, it's hard for me to see how the guy in charge not only when the company went into its death spiral but has been around for several years before, during the period when at least an effort could have been made to address some of the problems that got the company to where it is, can stay.

    What is he being paid to do, exactly, if not run the company successfully?

    And that is precisely what he has failed to do...

  6. #6
    Senior Member misterdecibel's Avatar
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    Well I think he should be drawn and quartered in public, after being forced to return all the salaries and bonusses he "earned" since he first got a title with a "C" in it.

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    I don't think anyone knew how close GM has gotten to the brink. I certainly didn't see it coming so hard, so fast. CEO's and politicians who let things get closer and closer to a train wreck need to be humiated in public. They certainly knew the problems better than the customer who occasionally visits the parts counter at the local dealership. The poor, sorry performance of these "leaders" begging for money is probably the closest they will be to having to pay the price for their inaction.

    GM, Ford, and Chrysler CEO's and public relations departments have done a lousy job of explaining their industry to the Amerikan pubic. While congress was debating the Clean Air Acts during the 1990's, they sheepishly did nothing. While the NHTSA was developing craaaaaaaaaaaash standards for cars and trucks, they did nothing to raise a fuss. They certainly did nothing to help us get rid of the hated 55 mph speed limit despite the fact cars sales jumped from 15 m to 18 m per year when the 55 mph limit was dumped. They have benefited from a very vocal small minority of their customers who advertise their product by word of mouth and advocate policies that help motoring, deserved or not.

    While they closed plants inthe United States left and right, they wouldn't stand up to the UAW on some of their more ridiculous requests. The idea of paying for non-productive individuals in perpetuity is really kind of ridiculous. (Yes, Wagoner should pay to work there!) I'm not against generous company pensions, but the idea of GM purchasing viagra for its ex employees is ridiculous.

    The auto companies have become irrelevant because they acted irrelevant. True, they made a big difference in this country at one time, but they continued to downplay their beneficial traits while accentuating their arrogance and their syrupy complicity with the government to their customers. I still chafe at the idea that these bastards continue to shove things like OnStar and DRL's down customers throats. Their dealers continue to sell saaaaaaafety benefits when in fact the government has made it manadtory in many cases. Their refusal to allow tuners tune their engines without voiding the warranty is the height of arrogance and condescention.

    Wagoner is right on one thing. GM failed and betrayed their customers. That statement alone closes a sad chapter of decline and fall of the automotive history that began during the ecology movement of the 1970s. If they survive the next 6 months, they will continue to do the same thing. It's also not just GM, its the whole damned lot of them.

    It makes me sick to think that people like this continue to be put in charge of what could have been America's industrial crowned jewel. I think that Wagoner should be forced to watch youtubes of himself begging in front of congress for the rest of his life to remind him how he and his contemporaries have let the industry fail.
    Last edited by swamprat; 12-10-2008 at 12:01 AM.

  8. #8
    Dean
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    I think Eric's analysis of Rick's situation is spot on. Blame does not completely lie with Wagoner of course; there is more than enough blame and shame to go around.

    He did nothing to make the situation better with the possible exception of the new labor agreement but that is really too little too late.

    The biggest problem with Wagoner and all of the GM top managers is that they have been and are still in denial. They have no understanding of how Americans truly perceive their products and they have an overly inflated sense of their company's products. They live in a bubble.

    GM's top people are still exhibiting this behavior by primarily blaming the current problems on the credit crisis. Lutz said this again in interviews published today.

    The government does not know how to run an enterprise like this and an political based CEO would be a total disaster. But someone who has run a large industrial enterprise (preferrably manfacturing) but is outside of the auto industry would be a good choice. That's why Ford chased Mullaly so hard. He understood complex manfacturing and customer relationships but he wasn't tainted by a long career in Detroit.

    By the way, Eric should also do a piece on the GM Board of Directors. They are even more unsuited than Wagoner and they made even more mistakes over the years. They totally forfeited their fiduciary duties.

  9. #9
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    Quote Originally Posted by Dean View Post
    ...
    The biggest problem with Wagoner and all of the GM top managers is that they have been and are still in denial. They have no understanding of how Americans truly perceive their products and they have an overly inflated sense of their company's products. They live in a bubble.
    ...
    GM might do well to hire Michael Moore to do a "Rick and Me" for internal showing. As you suggest the public does not need it because they already know.

  10. #10
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    The bailout

    I saw this on another forum.

    Chip H.
    Attached Images Attached Images

  11. #11
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by chiph View Post
    I saw this on another forum.

    Chip H.
    Pretty funny!

    I saw one myself about the GM CEO driving to DC in his new Mendicant....

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