Rick Wagoner is a decent guy. But is he a decent businessman?
Not if you look at the bare statistics. GM lost $30.9bn in 2008, GM’s share price has plummeted to lows not seen in a lifetime, and the firm has haemorrhaged US market share, on Wagoner’s watch. So GM’s chairman –who was forced to step down last week – must be judged a failure.
But the truth lies somewhere in between these domestic failures and his international successes. Wagoner understood the Chinese market’s potential and expanded the company’s interests there, ensuring GM vies for automotive supremacy with Volkswagen in what’s now the world’s biggest car market. Likewise, Wagoner had the balls to takeover bankrupt Daewoo, giving GM a foothold in Korea and providing a low cost model range that’s been successfully marketed under the Chevrolet brand.
Wagoner also hired Bob Lutz to spice up GM’s cars, and he forced R&D teams scattered around the globe to think as one, boosting economies of scale. This had mixed results, from the impressive Cadillac CTS or Holden/Vauxhall Monaro to the risible Cadillac BLS or Saab 9-2X, a badge engineered Saab 9-3 and Subaru Impreza respectively. The execution may have been haphazard, but the strategy – to think globally and search for scale – continues to be followed by some highly respected bosses still running car companies. And GM’s cars have got better, admittedly from a low base.
Ultimately, Wagoner was undone by the structural problems he inherited and never conquered: too much capacity and crippling healthcare and pension costs. GM has spent a staggering $100bn on pensions over the past 15 years – how can any firm be competitive with that kind of liability? Wagoner closed plants and cut costs, but he never went far enough.
It’s fascinating to turn the clock back to 2006, when Renault-Nissan’s flirtatious advances were rebuffed. If ‘le cost killer’ Carlos Ghosn had become GM boss at Wagoner’s expense, would he have saved the company from crippling disaster a couple of years later?
Ghosn has found Renault a much tougher nut to crack than Nissan, and it’s likely that even he would have struggled in the face of GM’s powerful unions and legacy costs.
Ultimately, it’s not one man who’s forced through GM’s critical restructuring but an almighty economic crisis. So the very thing that could still destroy GM could also turn out to be its last-ditch salvation. That’s an irony that won’t be lost on that decent guy, and decent businessman, Rick Wagoner.