Wagoner to step down from GM immediately

[lendaddy]

Originally Posted by the

Not immediately jettisoned, but you do have to properly product plan more than a few months out. Ignoring all product planning and only focusing on developing what will sell in the next month is not the way to run a massive car company.

The problem is that GM cannot make a small car in the US that will turn a profit. They are inherently locked out of that market by the reality of their structure. Their only hope would be a rebadge.

Also, I am quite confident that SUVs are still the best (financially) performing platforms they make, I know they were even in the beginning of the year when I was getting the rags. Their price point and shared platform model allowed the big three to compete in SUVs even though they are handicapped, the lower price point models and even the midgrade sedans do not. In cars GM has to produce the same sweater with less wool.....it just can't be done.

After the BK this whole story changes (assuming Obama doesn't get his hands in that and protect UAW contracts).

[jyl]

No. This is a big gamble, I agree. But would you prefer we hand over to existing management $30BN+ of taxpayer funds and watch them come back in a year for even more money?

This is a management that, just a few months after asking for $18BN of government money, now has doubled that request to $36BN of government funds ($30BN from the US, $6BN from other countries), expects to burn $18BN of that cash in 2009, expects to stagger forward under $50-60BN of debt since it failed to secure the necessary bondholder concessions (plus a pension that is underfunded by some $20BN), and whose "recovery plan" assumes a market recovery to SAAR of 12.5MM units (versus 9.1MM SAAR currently) as well as almost no further share loss. Is that a viable recovery plan? - doesn't sound like it.

Looks to me like the govt is saying to management, this was the last straw - while it is willing to provide the necessary money to save GM, it has no faith in management. It also seems to be telling the bondholders, this is your last chance - give the necessary concessions voluntarily, or see your debt wiped out in bankruptcy.

I understand you don't like the fact that the govt in effect fired Wagoner. But who were you expecting to fire him? The Board - who has insisted that he was on the right track for all these years? The shareholders - who have either given up, or are hedge funds trading in and out for 40 cent moves?

The govt gave GM $9BN in late 2008 and earlier this year, so that GM would have time to come up with a viable recovery plan. GM didn't do it. Goodbye, CEO and Board.

Originally Posted by pwd72s

I'll ask you, John...since you seem fully in support of Government now managing GM...

Can you name one Government run automobile company that has been successful?

It's not about Wagoner's head rolling...it's about who fired him...

[Zeke]

Originally Posted by lendaddy

The problem is that GM cannot make a small car in the US that will turn a profit. They are inherently locked out of that market by the reality of their structure. Their only hope would be a rebadge.

Also, I am quite confident that SUVs are still the best (financially) performing platforms they make, I know they were even in the beginning of the year when I was getting the rags. Their price point and shared platform model allowed the big three to compete in SUVs even though they are handicapped, the lower price point models and even the midgrade sedans do not. In cars GM has to produce the same sweater with less wool.....it just can't be done.

After the BK this whole story changes (assuming Obama doesn't get his hands in that and protect UAW contracts).

I just think your mind set is very Detroit. I really disagree with a rebadge. Where in history is the success is this venture? A car company needs identity and that comes from proprietary products. Profits also come from using common parts to build various models without the public really thinking about that process. Think Falcon>Mustang.

For instance, the now defunct Caprice most likely used many parts that a Chevy/GM 1/2 ton PU used. In turn, it was sold as a police car and a fleet car. If there's so much profit in trucks, why not Caprices?

I don't know, but I'd be looking into that.

I don't want to end up thinking my local GM dealer is simply a repair station for a Hyundai. Or worse, that Isuzu debacle they were involved with. If they can't sell the sizzle, then there's no point in serving either hot dogs or steaks.

[kaisen]

Originally Posted by jyl

It also seems to be telling the bondholders, this is your last chance - give the necessary concessions voluntarily, or see your debt wiped out in bankruptcy.

Bingo!

[kaisen]

Originally Posted by milt

I just think your mind set is very Detroit. I really disagree with a rebadge. Where in history is the success is this venture? A car company needs identity and that comes from proprietary products. Profits also come from using common parts to build various models without the public really thinking about that process. Think Falcon>Mustang.

For instance, the now defunct Caprice most likely used many parts that a Chevy/GM 1/2 ton PU used. In turn, it was sold as a police car and a fleet car. If there's so much profit in trucks, why not Caprices?

I don't know, but I'd be looking into that.

I don't want to end up thinking my local GM dealer is simply a repair station for a Hyundai. Or worse, that Isuzu debacle they were involved with. If they can't sell the sizzle, then there's no point in serving either hot dogs or steaks.

.....and your mindset is very California.

GM's GMT truck platform still sells several hundred thousand units each year, and at a profit.

Maybe the Volt will excite you.

[Zeke]

Originally Posted by kaisen

.....and your mindset is very California.

GM's GMT truck platform still sells several hundred thousand units each year, and at a profit.

Maybe the Volt will excite you.

OK we have a winner winner, chicken dinner. GM shuts down everything but profitable lines. Sell trucks and SUV's until the last dealership closes it doors. Then sell them mail order.

I've got 1000 shares of GM I'll sell you for 10 bucks a share. How could you go wrong?

[kaisen]

Certainly that's not why I made the point. But the trucks aren't lame ducks. They also will not (cannot) support GM. But neither will a performance car, an economy car, or a body-on-frame rear-drive car ala Caprice. The high-volume players are trucks and mid-sized sedans. Profit there might save GM.

[Racerbvd]

Originally Posted by dd74

Interesting - some newscasts are suggesting Obama may have had a personal hand in Wagoner's ousting. That it was more than just an internal decision on GM's part.

Others are calling Wagoner a scapegoat.

Chrysler evidently has to hurry up and finalize a deal with Fiat, or they may also face Obama's ire.

Check out these quotes from an AP story about Wagoner's firing:

But Wagoner is now a high-profile casualty of government intervention, forced out as part of the Obama administration's sweeping last-ditch effort to save the century-old auto giant.

The management shake-up, according to several industry analysts, shows that the administration is serious about forcing GM to change more quickly and dramatically than it did during Wagoner's nearly nine-year tenure as CEO.

http://enews.earthlink.net/article/top?guid=20090329/49d051d0_3421_1334520090330-1847018343

So is Obama calling the shots in Detroit, or am I simply misinterpreting what's written here?

No 1/4 Black Hitler is calling the shots and will lead to ruin.

[Shaun @ Tru6]

Very well said.

My oped: It's about time accountability has resurfaced in Capitalism, even if Government has to be the one to revive the concept.

Originally Posted by jyl

No. This is a big gamble, I agree. But would you prefer we hand over to existing management $30BN+ of taxpayer funds and watch them come back in a year for even more money?

This is a management that, just a few months after asking for $18BN of government money, now has doubled that request to $36BN of government funds ($30BN from the US, $6BN from other countries), expects to burn $18BN of that cash in 2009, expects to stagger forward under $50-60BN of debt since it failed to secure the necessary bondholder concessions (plus a pension that is underfunded by some $20BN), and whose "recovery plan" assumes a market recovery to SAAR of 12.5MM units (versus 9.1MM SAAR currently) as well as almost no further share loss. Is that a viable recovery plan? - doesn't sound like it.

Looks to me like the govt is saying to management, this was the last straw - while it is willing to provide the necessary money to save GM, it has no faith in management. It also seems to be telling the bondholders, this is your last chance - give the necessary concessions voluntarily, or see your debt wiped out in bankruptcy.

I understand you don't like the fact that the govt in effect fired Wagoner. But who were you expecting to fire him? The Board - who has insisted that he was on the right track for all these years? The shareholders - who have either given up, or are hedge funds trading in and out for 40 cent moves?

The govt gave GM $9BN in late 2008 and earlier this year, so that GM would have time to come up with a viable recovery plan. GM didn't do it. Goodbye, CEO and Board.

[Dennis Kalma]

I think Wagoner was probably a reasonable, capable GM guy....but if 30 years in the change business has taught me anything it is that almost anyone who has been steeped in the same company culture, with the same norms, rules and approaches for 30+ years cannot bring meaningful, radical change to the organization. While I am willing to suppose there is the rare individual that can manage it, I don't think Wagoner was one of those very unique people.

I don't like the government stepping in, but I don't think that Mohammed....er...Obama... had any choice. The question is now whether he can find a capable car guy to whom he can give carte blanche and allow them to make the change. I think GM's only possibility of survival is to go into bankruptcy, give the UAW the average of the labour contracts that the US plants of Nissan, Honda and Toyota have, pare the product line down and focus the engineering teams to bring the best of what is in the pipeline....or create if the pipeline is down to a dribble as fast as possible. Just build a good, midsized family car with Toyota quality and American feel, plus keep building them pickups for the farmers and farmer wannabees.

Too simplistic on the solution I know, but the key is bringing in the whiz kids and let them do their thing.

Dennis

[pwd72s]

Question: Can anybody here name one Government managed car company that has been successful????

[Dottore]

Originally Posted by pwd72s

Question: Can anybody here name one Government managed car company that has been successful????

Volkswagen...

[artplumber]

Originally Posted by the

....Ignoring all product planning and only focusing on developing what will sell in the next month is not the way to run a massive car company.

Wasn't the problem a pipeline that takes too long from concept to production?

[jyl]

Some people resent the government pressure on GM to shift its mix toward fuel efficient vehicles. Those people are as short-sighted as the GM executives who ran the company into the ground.

The global recession has driven down the price of oil and gasoline, which has given a respite to the low-MPG large SUV and 1/2 ton+ pickup truck that is GM's bread and butter.

With oil in the $30s to $50s, many oil projects have been shelved, which means future supply has been cut. Oil projects take many years to yield production, and delays now will affect production for the next 10 years.

When the recession ends and global growth resumes, oil prices will go right back up to $100, $150, or higher, and gasoline will be $4+ again.

If GM remains dependent on large SUVs and pickups then, they will collapse again. I cannot imagine that the US govt or voter will tolerate bailing out the company twice in a decade.

[jyl]

Originally Posted by Racerbvd

No 1/4 Black Hitler is calling the shots and will lead to ruin.

Are you trying to send this thread to PARF?

[Rick Lee]

Originally Posted by pwd72s

Question: Can anybody here name one Government managed car company that has been successful????

Trabant and Wartburg. Hey, they literally had a captive market.

[gostraight]

Dacia, Aro, Skoda, Tatra, Moskovich, Lada, Gaz, Volga, Yougo, and other eastern block marvels

[gostraight]

forgot the Polonez

[turbo6bar]

Originally Posted by Shaun 84 Targa

Very well said.

My oped: It's about time accountability has resurfaced in Capitalism, even if Government has to be the one to revive the concept.

Not sure a government takeover via massive capital injection is capitalism. Capitalism is allowing GM to go into bankruptcy and emerge to start again. The lure of profits must be tempered by the risk of failure. Otherwise, we will make these mistakes, again.

[Shaun @ Tru6]

Originally Posted by turbo6bar

Not sure a government takeover via massive capital injection is capitalism. Capitalism is allowing GM to go into bankruptcy and emerge to start again. The lure of profits must be tempered by the risk of failure. Otherwise, we will make these mistakes, again.

My point focused on accountability. Boards are no longer protecting shareholder value and are in cahoots with the C-level execs they hire. GM share price is down 97% while Wagoner was leading the company and walks away with $20M.

Rewarding failure is not part of Capitalism, yet here it is on a scale beyond belief.