Rick Wagoner Gone

Rick Wagoner is finally out as CEO as GM. He left at the urging of the Obama administration. Finally there has been some accountability Should there be rejoicing or dancing in the streets? Will Wagoner's successor be able to sprinkle magic dust on a system that is headed toward failure?

Rick Wagoner has been in a position to save GM since 1992 when he was the CFO. That's 17 years to turn the company around. Yet since 1992, GM's market share has dropped from 33% to 17%. I believe that GM's performance would have been the same regardless of who was in charge.

Why did I single out Wagoner if the system he was running was destined for failure? Because he was the poster child for the systemic failure of American manufacturing businesses. He also representative of a system of leaders that put themselves first. While he knew his company was failing, he along with thousands of GM executives were happy to take massive salaries from a dying company.

What Rick and other business leaders have failed to realize is that the environment has changed. What worked in American business, what is still taught at our greatest MBA factories, no longer works.

In his article for Forbes entitled "Why Rick Wagoner Had To Go", Jerry Flint agrees that Rick had to go but rightfully wonders is there anyone who can do better?

"it might be a mistake to cheer Wagoner's leaving, because we don't know if his replacement will be any better. The second in command, the president and chief operating officer, is Fritz Henderson, and he is expected to succeed Wagoner, at least for now. Frankly, it is difficult to see what he did to become president of the once largest automaker in the world. "

There will always someone who will step in to take the large salary and say they can do it better (will Fritz now take a $1 per year salary?). The data says that GM will continue on it's sad path to nothingness.

Updated Chart

I wanted to update GM's scorecard. GM released their 2008 earnings. The good news is that Rick's performance improved by $7 Billion from 2007. The bad news is that GM still lost over $30 Billion in 2008. That's a whopping (negative) $327,000 per employee!

Now during Rick's tenure, GM has lost a cumulative $67 Billion. I hate to break the news to GM shareholders but this guy is not a winner. He looks like a winner but he is NOT a winner.

GM has asked for a total of $25 Billion to save the company. That comes out to over $250,000 for every single employee at GM (most of whom will be laid off over the next few years). I wonder if we wouldn't all be better off giving this money to the employees to start their own businesses or maybe just to give them a 4 year vacation.

I have one simple question, why does Rick still have a job?

Rick's Destruction of an American Icon

In an November 19 Wall Street Journal Op Ed article, Rick Wagoner bemoaned the state of his auto industry and stressed the importance of maintaining a strong manufacturing base in America. He talked about how the automotive industry is a vital engine of economic growth and a foundation for economic stability. He discussed the how critical the auto industry was for America to compete in the global marketplace of the 21st century.

I don't think that anyone in America disagrees with Ricks statements. Except perhaps Rick himself. For all of Rick's wonderful words in 2008, his actions from 2000 to 2008 have systematically destroyed the auto industry and the American Dream for hundreds of thousands of Americans.

In his article Rick states at General Motors, we have been responding to fierce competition here and abroad by transforming our business. Over the past decade, we have taken tough actions to cut costs. He even goes so far to equate transforming the business with eliminating the very American Manufacturing base he says is so important. Since 2000, we have reduced our U.S. hourly workforce by 52%, from 133,000 to 64,000, through buyouts and other programs. During the same period, we have cut our U.S. salaried employment from 44,000 to fewer than 30,000, and reduced our U.S. executive ranks by 45%.

Rick's goal is to reduce the total work force from 94,000 to 65,000 by 2012. So I want to make sure that I get this right Rick is asking for $20 Billion from the taxpayers to cut an additional 30,000 jobs. That's $666,000 for each employee that he eliminates. That is a raw deal for the employees of GM and the American people. We all deserve better.