GM's Ex-CEO: Worse Than You Thought

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THE STASH OCTOBER 21, 2009

GM's Ex-CEO: Worse Than You Thought

If you've been following the trials of the auto industry this last year, then you already know GM's management team, led by former CEO Rick Wagoner, left a lot to be desired. But, even so, Wagoner comes off as unbelievably lame in Steve Rattner's account of his time as Obama's auto guru. To wit:

At GM's Renaissance Center headquarters, the top brass were sequestered on the uppermost floor, behind locked and guarded glass doors. Executives housed on that floor had elevator cards that allowed them to descend to their private garage without stopping at any of the intervening floors (no mixing with the drones).

In my relatively few interactions with chairman and CEO Rick Wagoner, I found him to be likable, dedicated, and generally knowledgeable. But Rick set a tone of "friendly arrogance" that seemed to permeate the organization.

Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate, and the UAW. ...

As we continued our rather awkward conversation [about his ouster], Rick suddenly asked, "Are you going to fire Ron Gettelfinger too?" Startled by the reference to the UAW head, I replied, "I'm not in charge of firing Ron Gettelfinger," and Rick soon left to brief his board on our decision.

How bout a little personal responsibility? After all, as Rattner notes, "any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue." 

The question is whether Wagoner's successor, Fritz Henderson, is really up to the job of changing GM's culture. He was, of course, part of the same management team that made a habit of shuttling directly from the executive suite to the garage and back. (No word on whether or not that's changed.) Also, you get the impression from Rattner's account and others that the auto task force would have liked to hire an outsider, but thought there was a limit to the amount of change the company could withstand. My favorite indicator that Henderson was far from the ideal choice comes from this Times piece:

In truth, the task force had no interest in running G.M. But the only available alternative to Mr. Wagoner was Mr. Henderson, a lifelong G.M. employee, and he did not initially impress some task force members, according to administration officials involved in the discussions.

When asked at an early meeting to discuss G.M.'s culture, he gave what some members of the task force described as a long, meandering answer, concluding: ''I've been here 25 years. This is the only culture I know.'' However, Mr. Henderson quickly added that he was determined to change it.

The panel considered making him an interim chief executive, but decided that G.M. employees, rattled by the financial crisis and the departure of their boss, could not handle more uncertainty.

Yikes.

Rattner actually adds two interesting wrinkles to the Henderson subplot: 

1.) His version of Henderson's interim v. permanent status is slightly different: "Later, I spoke to Fritz, who expressed enthusiasm for his proposed promotion but asked that he not be called 'interim' CEO. 'You can fire me anytime you want, but at least give me a better chance to succeed,' he said. We agreed." Which is to say, it sounds like Henderson still has to earn the top slot. (Though I guess it's politically tougher to fire a second bona fide CEO than to replace an interim CEO.)

2.) "Through dozens of meetings and discussions ... GM management came forward with a plan that accelerated the plant closings, eliminated the Pontiac brand, increased the job and dealer reductions, and added white-collar job cuts. (Buick and GMC were saved by Fritz Henderson's passionate belief in Buick's China appeal and GMC's reputation for ruggedness [emphasis added.)" Hmmm. Both of those things may be true--I'm not in a position to judge. But they sound a lot like the near-reflexive resistance to change that got GM in trouble in the first place, and which hiring an outsider might have alleviated. (For example, it would be one thing if Henderson had presented evidence of Buick's China appeal [See update below]. But the term "belief" suggests a certain lack of hard data. The administration may have felt it could only push GM so far on this, too.)

Finally, per my previous concerns about democracies and financial crises, I thought this point was interesting:

Every congressional district had dealers, many of whom were leading figures in their communities. We were inundated with an avalanche of calls, letters, and demands. We patiently worked through each grievance and explained hundreds of times that the companies -- not the government -- made the decisions about which dealers to close.

But the episode left an indelible impression on me: If we hadn't had TARP money available and had had to seek congressional approval, I am convinced that one or both of our two automakers would have been forced to liquidate.

Update: A commenter points out that Buick is actually very popular in China. I guess I put that the wrong way. The evidence you'd want is that Buick's prospects in China justify maintaining the brand, given that the company may still have too many of them. As I say, that's certainly possible. But Rattner's use of the word "belief" made the case sound less than rigorous. (Then again, it's also possible that Rattner didn't mean to imply anything about the analytical process with his word choice.)

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posted in: the stash, economy, business, labor, law, politics, person career, oil, ceo, chairman and ceo, private, fritz henderson, rick wagoner, ron gettelfinger, steve rattner

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