Nowadays, a Vote of Confidence is Akin to a Kiss of Death

If you believe what GM Director George M.C. Fisher says, Chairman and CEO Rick Wagoner's job is safe and secure. "We are absolutely convinced we have the right team under Rick Wagoner's leadership to get us through these difficult times and on to a bright future," said Fisher. Uh, sure.

Fisher's either blowing smoke or inhaling a special kind of smoke if he expects shareholders and GM watchers to believe that hyperbole. Wagoner and his team are responsible for GM's dire straits. They totally blew the hybrid car opportunity (think: Toyota Prius), were slow as molasses in curtailing the outrageous costs of lifetime health benefits for employees and retirees and, most recently, were asleep at the wheel as fuel costs skyrocketed and the company kept pushing gas-guzzling SUVs and trucks. On top of everything else, GM's stock has dropped from $40 per share in October to $10 today. Talk about reckless driving.

I wish I had a dollar for every time a board director, team president or general manager has expressed confidence in a failing executive or manager only to turn around and later fire the sad sack.

Like Willie Randolph was to the Mets, Rick Wagoner is a distraction to GM. He's become a lightning rod for anger, frustration, ranting and raving. If the ailing auto company has any hopes of pulling out of its death spiral, it needs to be focused.

Fisher and his cohorts will wake up at some point and relieve Wagoner of his duties. And, Rick will drive into the sunset with hundreds of millions of dollars in a severance package and a smoldering wreck of a company disappearing in his rearview mirror.

Comments

[bomberpete]

Like you, I've been watching this tragedy unfold with fascination. But I don't see this as a Willie Randolph situation, Repman. GM's Board of Directors aren't going to sack Rake-It-In-Rick.

No one -- including GM president Fritz Henderson -- could be talked into taking the job at this point. Really, to use the ship analogy, wouldn't someone else taking over GM be like White Star Lines sending out another captain to relieve Edward John Smith of his S.S. Titanic assignment just before hitting the iceberg?

Two whole generations have grown up driving Hondas and Toyotas, and aspiring to own BMWs and Lexuses. Trucks were the only thing GM had left, and to their credit, they build good ones. But too many of those buyers didn't need a heavy truck and now they're stuck with them. The only people who buy trucks now do so because they actually need them.

Sadly, GM is finally making somewhat-competitive products. The Chevrolet Malibu really is a decent alternative to a Toyota Camry or Honda Accord. But at this point, not enough people will trust their hard-earned money to own a GM, Ford or Chrysler car.

I don't think the Board of Directors really cares about any of this. GM's moves over the last five years indicate only one thing to me -- they've realized for a long time that the game is over. They'll file for Chapter 11 when they run out of operating cash or a lender willing to give it to them, even at the most usurious terms. At this rate, I'd say that will happen in 18-24 months.

Rick Wagoner might as well be the fall guy. He'll get his payout, the Board will get theirs, and the banks and Feds will be left to sort it all out.

I can't help but think of the following scenario 3 years from now: GM is in receivership and unrolling its North American operations. Rick, Fritz, Bob Lutz and the Board of DIrectors got all playing golf in Hilton Head when FBI agents arrest them for decieving shareholders. It'll make Enron look like a penny stock scheme.

Chrysler is done, too. The Cerebrus boys are in it to make money, and they now know buying that car company from the Germans was a stupid mistake. They'll sell off Jeep, sell the factories to Nissan or the Chinese, and get out of Dodge (literally) ASAP. The difference is that Chrysler is private, so they'll get out of it clean.

After all is said and done, Ford will get the "dead cat bounce" and survive, perhaps deservedly. Bringing in Alan Mulhally from Boeing 2 years ago shook things up as they needed to be. They got rid of Jaguar and Land Rover, they're bringing in the great European products to this market, and they finally get it -- the business doesn't revolve around Detroit anymore, and they've adopted accordingly.

Yes, I'm buying some Ford stock.

[Steve Cody]

Interesting analysis, Bomberpete. And, I do like the Titanic analogy. I have to believe, though, that GM's board will continue to drink the Kool-Aid. I think they believe GM is still a viable brand and will look to liven things up with a next generation leader. I've also read that Chevy and Cadillac are the only brands worth saving and that, after they dump all the under-performers, a much smaller GM will be better able to compete in the future. Maybe. But, there's no doubt the current leadership is god-awful.

[bomberpete]

I agree with you that if GM is to go forward (assuming they can survive the next 2 years), it would need to be as 2-brand company in North America. And yes, Chevrolet and Cadillac are the only ones worth saving.

The problem is that it won't happen. GM simply can't afford to shut down Buick, Pontiac, GMC and Saturn. Even GM Head of product design Bob Lutz (a classic old-time loose cannon in the John McCain mode)called Buick and Pontiac "damaged brands," while GMC are just rebranded Chevy trucks to give those dealers revenue, and Saturn, despite some good products (mainly from Germany), has strayed so far from its original brand mission that it's just as damaged. Hummer is already for sale (I predict it will go to a Russian or Dubai consortium). They want to dump Saab, which I can't imagine anyone wanting.

The problem is that all this needed to happen at least 10 years ago, at the same time they pulled the plug on Oldsmobile. GM had to pay out billions to its dealers for that. But hey, at least back then they had it to spare because of the SUV/pickup profits. Now they don't.

Chalk this rock-and-a-hard place situation as one more outcome of GM's god-awful leadership.