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Bloomberg: Rick needs to resign if GM is to get aid.

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Nov. 14 (Bloomberg) -- Rick Wagoner's 31-year career may fall victim to the mistakes of the industry and his own, even if General Motors Corp. survives.

The GM chief executive officer unleashed scrutiny of his record after asking for a government bailout to keep the Detroit automaker in business. Now, his departure may be a necessary condition of any federal rescue, business leaders and lawmakers say.

``Management needs to be replaced,'' said Robert Crandall, former chairman and CEO of American Airlines parent AMR Corp. ``The fact is that the management as a whole has had lots of opportunities to fix this. They haven't.''

Wagoner has run the world's largest automaker for the past eight years, presiding over $73 billion in losses beginning in 2005. He already endured a fight with dissident shareholders and several failed turnarounds and may argue he knows the company better than most who could take his job.

The 55-year-old executive joined GM in 1977, as U.S. automakers were fending off Japanese competitors who recognized the need a decade earlier to build fuel-efficient vehicles. While U.S. auto sales broke records during Wagoner's years as CEO, the three major producers -- Ford Motor Co., Chrysler LLC and GM -- battled against high labor costs from pension and retiree health care obligations.

Removing CEOs

``There's the feeling that next to financial services, automotive execs are the dumbest people in the world,'' said Thomas Stallkamp, a former Chrysler president who worked at the car company when it received emergency government loans in 1980. ``There are probably some symbolic moves that somebody's going to ask for.''

The federal government insisted on replacing the CEOs of American International Group Inc., Fannie Mae and Freddie Mac when they received aid. Lawmakers including Senator Sherrod Brown, an Ohio Democrat, said some executives may have to go before GM and the other U.S. automakers receive $25 billion in new government loans.

``It's pretty clear that management has made some pretty bad decisions over the last 20 years,'' Brown said, adding that changing management is something that Congress must ``think seriously about.''

Wagoner won't offer to resign, he told Automotive News this week. ``It's not clear to me what purpose would be served,'' he said. ``Our job is to make sure we have the best management team to run GM.''

Board Support

He wasn't available for comment. ``Nothing has changed relative to the GM board's support for the GM management team,'' the company said in an e-mailed statement.

The automaker, which may lose its title as the biggest to Toyota Motor Corp. at the end of the year, has dropped almost six percentage points of U.S. market share during Wagoner's tenure, falling to 22 percent as of Sept. 30. GM stock, at a six-decade low, has sunk 95 percent under the 6-foot-4-inch, Wilmington, Delaware-born executive.

``It's hard to imagine how a management team that has presided over this sort of decline would instill confidence that they can manage their way out of it,'' said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

Still, Wagoner has shown staying power, weathering the losses and activist investor Kirk Kerkorian's 2006 push for an alliance with Renault SA and Nissan Motor Co., Elson said. A case can be made that Wagoner shouldn't be blamed for GM's travails, he said, because it has been hamstrung by the costs of providing health care to 1 million employees and dependents, an issue that should have been handled by the government.

Bet Against Hybrids

As CEO, the former Duke University basketball player and Harvard University MBA early on bet against gasoline-electric hybrid vehicles, focusing research on hydrogen technology. GM offered its first full-scale hybrids in 2007, a decade after Toyota introduced the Prius.

He kept GM focused on trucks and sport-utility vehicles, only to press for development of the Volt plug-in electric car when gasoline prices soared. Truck and SUV sales are down 16 percent since 2004.

Wagoner used the purchase of South Korea's Daewoo Motor Co. to expand GM's overseas sales 51 percent to 5.5 million cars and trucks by 2007. He wrung concessions from labor unions last year, including cutting wages in half for new hires and offloading retiree health care to a union-run trust by 2010.

`Fundamentally Restructuring'

``We believe that we were well along to fundamentally restructuring our business before the current financial crisis, in terms of product quality, productivity, energy solutions and costs,'' Tony Cervone, a GM spokesman, said. ``That strategy will be what leads us to success in the future.''

Finding the right person willing to take the job may extend Wagoner's longevity. Firing management will cause more trouble than it solves if a new team has to relearn the issues and deal with federal overseers new to the car market, Stallkamp said.

``You can't parachute in a bunch of people that don't know anything about it,'' said Stallkamp, 62, now a partner at the buyout firm Ripplewood Holdings LLC. He said he ``has a lot of respect'' for many executives at the automakers and wasn't referring to any one person.

President-elect Barack Obama is pushing for Congress to approve as much as $50 billion for the automakers and appoint a czar or board to oversee them, people familiar with the matter said yesterday.

Iacocca's Strategy

Stallkamp recalled fighting with a government board that wanted to delay investments in light trucks and minivans during the Chrysler bailout. Chrysler CEO Lee Iacocca pressed for them and the family-friendly vans turned out to be one of the automaker's 1980s successes.

Wagoner's situation differs from Iacocca's, and the other Big Three auto leaders, because of his three-decade GM employment. Ford CEO Alan Mulally took up his post in 2006 after a career at Boeing Co. Robert Nardelli became Chrysler's CEO in 2007 after running Home Depot Inc.

Iacocca, known as a product innovator responsible for the Ford Mustang, was brought in to help fix Chrysler in 1978. He lobbied Congress for a bailout, and in January 1980 $1.5 billion in federally guaranteed loans was signed into law. Chrysler repaid them three years later.

``Lee Iacocca had a clear plan to return that company to profitability,'' said Peter Morici, a business professor at the University of Maryland. ``These guys do not.''

Time for Pay Cuts

Senator Charles Grassley, an Iowa Republican, said in a letter yesterday to the three auto leaders that they should follow Iacocca's example and cut their own pay. Iacocca took a $1 yearly salary and his executives as much as 10 percent less after the bailout, according to the letter.

The bailout for automakers faces opposition from Republicans, including House Minority Leader John Boehner and Senator Richard Shelby from Alabama who sits on the Senate Banking Committee. The Bush administration also opposes using any of the $700 billion financial-rescue package to aid automakers.

Wagoner, the CEOs of Ford and Chrysler, and the United Auto Workers president have been invited to testify at a Nov. 19 hearing before the House Financial Services Committee.

In several bailouts, the government has required top executives to leave when it takes financial control of companies. Treasury Secretary Henry Paulson replaced Fannie Mae CEO Daniel Mudd and Freddie Mac's Richard Syron when he put the two mortgage-finance companies into government conservatorship in September. AIG chief Robert Willumstad left after the Fed took control the same month.

Volunteered to Resign

In 1984, federal regulators replaced the board chairman and CEO of Continental Illinois National Bank and Trust Co. after taking an 80 percent ownership stake.

The chairman of Lockheed Aircraft Corp., now part of Lockheed Martin Corp., kept his job when the defense contractor won $250 million in federal loan guarantees in 1971, even after offering to resign.

``The management is more interested in Lockheed's survival than in any jobs, and that starts with me,'' Lockheed Chairman Daniel Haughtontold Time magazine.

Aid to the automakers must come with conditions that reduce their U.S. production costs to match or beat those of Toyota, said Crandall, who managed a unionized workforce as American Airlines CEO from 1985 to 1998.

Toyota generated pretax profit of $922 per vehicle on North American sales in 2007, while GM lost $729, according a June report by New York-based consulting firm Oliver Wyman.

``If we don't impose conditions that we honestly believe will make GM successful, then we're just kidding ourselves,'' said Crandall, who last owned an American car 10 years ago and now drives a Toyota. ``Their costs are simply out of whack and the quality isn't up to snuff.''

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Morici is an ignoramus, no exaggeration. An an airline executive talking about out-of-whack costs and quality, especially when he hasn't even owned an American car for 10 years? Now that's Chutzpah.

I do expect a Chinese-style oversight board approving any and all investment decisions. Welcome to national socialism.

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Rick should stay. The UAW should go and the legacy costs should be taken over by the government.

Remember: "Those who can... do. Those who can't (presumably because they lack the ability or intelligence) write about it." Peter Robison and Jeff Green at Bloomberg I'd put in the latter category.

I like this idea, Rick has to go.
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Morici is an ignoramus, no exaggeration. An an airline executive talking about out-of-whack costs and quality, especially when he hasn't even owned an American car for 10 years? Now that's Chutzpah.

I do expect a Chinese-style oversight board approving any and all investment decisions. Welcome to national socialism.

Of the 'Sieg Heil' variety?

Since many are ignorant of history Griff' if things become even more dire...

I'm interpreting the commotion on Wall Street, the deflationary spiral of Real Estate as our collectively groping our way in the dark as we seek 'bottom'. A truer valuation of who and what we are as a Post-Industrial Service Based...yadda-yadda.

The image of the America we have in our heads no longer exists. When the dust settles it'll be up to the survivors/victors to reshape it into it's next iteration. The winners get to write the History.

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Of the 'Sieg Heil' variety?

Since many are ignorant of history Griff' if things become even more dire...

I'm interpreting the commotion on Wall Street, the deflationary spiral of Real Estate as our collectively groping our way in the dark as we seek 'bottom'. A truer valuation of who and what we are as a Post-Industrial Service Based...yadda-yadda.

The image of the America we have in our heads no longer exists. When the dust settles it'll be up to the survivors/victors to reshape it into it's next iteration. The winners get to write the History.

A reality I've been expecting...

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Rick should stay. The UAW should go and the legacy costs should be taken over by the government.

Remember: "Those who can... do. Those who can't (presumably because they lack the ability or intelligence) write about it." Peter Robison and Jeff Green at Bloomberg I'd put in the latter category.

I appreciate the article that obama's advisor said with government aid, the workers need lower wages... kinda smears the UAW in the face...

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A reality I've been expecting...

There're enough arms out there for sure.

Sometimes I think along the lines of Costner's "The Postman"- 1997. If the fabric of Society becomes further tattered, you never can tell.

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A desperate soul driven to a desperate and despicable act...

Laid-Off Silicon Valley Worker Kills Three

SAN FRANCISCO — Police were searching Saturday for a disgruntled engineer who allegedly gunned down three people at his former office building in Santa Clara a day earlier...

http://www.huffingtonpost.com/2008/11/15/l...w_n_144028.html

Quiet men leading lives of quiet desperation as their world falls down around their ears.

Some may determine that they've no choice and in their harrowing confusion, lash out blindly and in such a mortal and homicidal rage.

Multiplied by tens of thousands of cases. Snap, another thread in the weave of society is irreparably broken.

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I agree Rick needs to go. Bring in someone from the outside to change the culture at GM and bring a new attitude to the company. Rick has had plenty of time to get things moving in the right direction and has continuously failed at doing so.

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Gee Let me see Management needs to go? Theyve had plenty of chances to fix this? I think that the U.S goverment has screwed this up by letting all these jap pieces of crap be sold over here.

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Gee Let me see Management needs to go? Theyve had plenty of chances to fix this? I think that the U.S goverment has screwed this up by letting all these jap pieces of crap be sold over here.

management... lets try free trade... i guess your right management does need to go.. bush out!

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i think that regardless of how well Rick really has or has not done in his job, i think in light of the this critical time, it may be needed for him to go, for symbolic reasons more than anything.

actually, if rick stayed it wouldn't bother me, but i think its Time for Lutz to go. the types of vehicles needed going forward from GM I think can be shaped by someone more in touch with a less traditional and more youthful subset of folks.

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