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Wagoner on resigning in exchange for Fed aid: "I don't think it'd be a very smart move".

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Wagoner: GM needs federal help before Obama takes office

Jamie LaReau

Automotive News

November 10, 2008 - 4:40 pm ET

DETROIT -- General Motors CEO Rick Wagoner says GM's financial distress is so dire that it must line up financial assistance from Washington before President-elect Barack Obama takes office in January.

"This is an issue that needs to be addressed urgently," Wagoner said during an exclusive interview today with Automotive News. Now is the time to "overshoot, not undershoot" when it comes to assistance for the auto industry, he added.

In return for financial aid, General Motors is willing to offer the government preferred stock, set limits on executive compensation and speed the introduction of fuel-efficient vehicles.

But Wagoner said he is not prepared to resign in return for government aid. "I don't think it'd be a very smart move," he said. "I think our job is to make sure we have the best management team to run GM. It's not clear to me what purpose would be served. …"

Wagoner conducted his interview three days after GM posted its fifth straight quarterly loss and said it may run out of cash within a few months.

GM reported that it had burned $6.9 billion in cash during the third quarter, dropping its cash reserves to $16.2 billion. To stay in business, the company must maintain reserves of $11 billion to $14 billion.

Wagoner said the company's cash burn in the fourth quarter will ease to $1 billion a month. "We expect our fourth-quarter cash burn -- even with a very weak industry -- to be more like the first two quarters," he said.

Wagoner declined to say how much money GM needs from Washington. But he said GM's turnaround plan assumes industry sales of 11.7 million new cars and trucks next year.

"I'd say the funding request that's gone into Washington would cover us under that scenario," Wagoner said.

Without government assistance, the automaker will not survive if industry sales stay mired at 11 million units, Wagoner said. "I'd question whether the U.S. industry as a whole could survive that without support," he noted.

Even with government aid, Wagoner said, GM will have to do "significantly more restructuring" if industry sales stay this low. But if annual industry sales return to 15 million units in a few years, Wagoner said, "We'd be doing pretty good."

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They cant limit executive compensation without government aid?

It's called a bargaining chip,Satty. :AH-HA_wink:

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Not a good one, it makes GM execs look greedy. The company is going under, losing a billion a month, but we're going to collect huge bonuses unless the government helps. Thats awful, if the powers that be at GM think like this, they deserve to be canned and get nothing in return.

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And Wagoner is a lifer who has proven completely ineffective during his tenure.. He needs early retirement (no pension) ASAP.

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I seem to recall that bonuses and salary were reduced for top execs at GM quite a while back...

Am I mistaken?

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You can argue the merits of Rick and his buddies but I'll go to my grave knowing the UAW killed GM. If not for their ridiculous work rules and union contracts then for the inability to unionize the transplants. I really don't see an attractive solution to the issue at this point so let the chips fall where they may.

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I think it's time for Wagoner to go as well as the entire Board of Directors.

Agreed..I think they need a fresh start. The current group is obviously not effective.

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Agreed..I think they need a fresh start. The current group is obviously not effective.

But they brought us the Camaro and G8.

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But they brought us the Camaro and G8.

True, there have been some excellent products during their tenure. But they have led the company to the brink of collapse.

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True, there have been some excellent niche, low profit products during their tenure. But they have led the company to the brink of collapse.

Fixed

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True, there have been some excellent products during their tenure. But they have led the company to the brink of collapse.

Perhaps.

But then again, the company might be on the brink no matter who was running the show. The brink shifted one hell of alot closer in the last month or so through no fault of GM management.

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But they brought us the Camaro and G8.

They also sold controlling interest of GMAC - a critical strategic asset, and were the architects of the Fiat debacle.

BTW, the G8 sold 1000 units last month and unless GM gets a bailout, it may not be around long enough to deliver the first retail Camaro.

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Fixed

Invalid. The mass stuff has been getting good also during their tenure also--Malibu, Aura, etc. And the '08 CTS.

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Perhaps.

But then again, the company might be on the brink no matter who was running the show. The brink shifted one hell of alot closer in the last month or so through no fault of GM management.

Meh..I still think a contributing factor to their problems now are a result of relying to much on trucks and SUVs for so long and ignoring cars..had they invested 5-8 years ago in developing world class cars, they could have been selling Toyota/Honda numbers in compact and midsize sedans in recent years..

Edited by moltar
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Meh..I still think a contributing factor to their problems now are a result of relying to much on trucks and SUVs for so long and ignoring cars..had they invested 5-8 years ago in developing world class cars, they could have been selling Toyota/Honda numbers in compact and midsize sedans recent years..

Certainly you have a valid criticism there, but to assume that it would have been enough to stave off this crisis is doubtful.

EDIT: It is also immaterial, given the punishing we will all take if GM is allowed to go belly-up.

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Invalid. The mass stuff has been getting good also during their tenure also--Malibu, Aura, etc. And the '08 CTS.

The trucks have always been top notch, but that bubble had to burst. The bread and butter cars have improved, while the 1995 Lumina was about 5 steps down from a 1995 Camry, the 2008 Malibu is one step down from the 2008 Accord. They haven't gotten good enough fast enough.

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I know someone who actually has met Wagoner and has ties to GM lots of them. She is a very bright lady and has childern at the same highschool my son attended and my daughter attends. She just happens to teach there as well, and I trust her judgement and she says nothing but kind things about him. She also is very worried about fuel economy and being green and even though her and Rick don't see eye to clearly on everything she has nothing but praise for him and what he has done at GM. I don't think he is the evil or not effective person we make him out to be. We got the Enclave, Malibu, Solstice, G8, GTO, Lucerne, GMT-900's, STS, CTS and Traverse under this team could they have done a better job? I don't think much of one but it is nothing that killing the Unions won't fix seriously. GM has the product but the Unions keep shooting themselfs in the foot and not realizing keeping on asking for more and more is ultimately killing them. GM will soon have a great 5th Gen Camaro a new G8 ST, LaX and a Volt they should be very proud Lutz and Wagoner included. Both men have made some really good moves on tuff calls at GM. I think if the Union can go or at least get resonable agreements it would help GM out way more than 25 billion from the goverment. Then again they need both.

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The trucks have always been top notch, but that bubble had to burst. The bread and butter cars have improved, while the 1995 Lumina was about 5 steps down from a 1995 Camry, the 2008 Malibu is one step down from the 2008 Accord. They haven't gotten good enough fast enough.

And/or perceptions haven't shifted fast enough...

I do think that not maintaining a diverse portfolio at all times was a grave error. Even so, these are extraordinary times that are testing everyone (Toyota included). Without swift, smart, intervention by the feds, we are all in for a very rough ride the likes of which only those at the end of their lives can claim to remember.

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And/or perceptions haven't shifted fast enough...

Disagree. That's an excuse, honestly. GM hasn't produced anything really to shift perceptions. To shift perceptions, GM needed to do things well in a big, dramatic way. Having a "great" car here or there doesn't do it. GM will not survive with a Malibu, the 900s, and a CTS. The rest of the lineup is fairly uninspiring and/or unmarketed. The SAAB 9-3 should be a huge seller. That's awesome product. But it isn't. Few SAAB dealerships and nonexistent marketing.

The entire Pontiac lineup excepting the G8 is mediocre at best, badly dated and chintzy at launch at worst. Buick has the Enclave. Lucerne is average-to-above-average, and the Lacrosse will thankfully be replaced soon by what is hopefully a far superior product. Saturn has...well IMO the VUE. I'm not impressed with the Astra, and as far as I'm concerned the AURA is not worthy of the praise it received. Cheesy fake wood trim, hard plastic complete with fake plastic "stitching" on the door sills, and basically an execution that is IMO as bad as that of the G6.

Both the G6 and the AURA have the same deficiency: a poor interior that mars an excellent exterior.

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Unless you can bring someone in that can do any better becareful of what you wish.

Rick could have done better but with both hands tied behind his back with limited funds and union rules you just can't do what you need to do when you want to do it.

Also some of the moves looked good at the time they were done but Monday moring quarterback always see the errors better than the guy calling the shots.

Is there someone better out their? I am sure there is but untill you find them you better hang onto what you have as Rick has made some Mistakes he is not a Bill Ford.

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Unless you can bring someone in that can do any better becareful of what you wish.

Rick could have done better but with both hands tied behind his back with limited funds and union rules you just can't do what you need to do when you want to do it.

Also some of the moves looked good at the time they were done but Monday moring quarterback always see the errors better than the guy calling the shots.

Is there someone better out their? I am sure there is but untill you find them you better hang onto what you have as Rick has made some Mistakes he is not a Bill Ford.

Bill Ford was smart enough to know he needed someone else to do the job!

We quickly forget that GM wasn't making money before the latest economic disaster. In years that the US (& World) were buying record #'s of vehicles, GM was either losing money or barely making 1-2% net...a well run, mass market manufacturer should be netting much more.

Change is scary---but the notion that an 'outsider' can't run GM is a farce. It's simply untrue---and besides, I don't believe others could have done much worse than 60-90 days from running out of money?

And, of course RW doesn't think his resignation is a smart move---for him. I'm sure he's a nice man--probably extremely charming as well---what else could explain his employment, given his track record? Who here can honestly state that they would have a job if they performed in their job as RW has in the last 8 years?

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Regardless of what anyone thinks of Chairman Wagoner, given the implacable GOP component of the current U.S. Congress, Rick had best have a contingency to remain appearing as solvent as possible through at least the end of March '09. I don't see any 'give' in terms of GM getting their bridge-loan/rescue package/bail-out during any lame-duck session.

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Bill Ford was smart enough to know he needed someone else to do the job!

We quickly forget that GM wasn't making money before the latest economic disaster. In years that the US (& World) were buying record #'s of vehicles, GM was either losing money or barely making 1-2% net...a well run, mass market manufacturer should be netting much more.

Change is scary---but the notion that an 'outsider' can't run GM is a farce. It's simply untrue---and besides, I don't believe others could have done much worse than 60-90 days from running out of money?

And, of course RW doesn't think his resignation is a smart move---for him. I'm sure he's a nice man--probably extremely charming as well---what else could explain his employment, given his track record? Who here can honestly state that they would have a job if they performed in their job as RW has in the last 8 years?

Exactly right on all counts.

And what exactly does Rick want to do with the estimated $22B he will eventually ask the US Government for? Finance another 12 months of "cash burn"?

RW and the Board have made so many strategic blunders, it just plain doesn't matter if he is charming or not - it's time for a new approach.

I want GM to survive and thrive as much as anyone else here does. But to do that, GM must make some radical and tough choices. They must totally restructure their decision making process. GM must transform themselves from the bottom up. Will RW and the current Board do that? I don't think so. After that, there's nothing else to talk about.

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