In any case, it tees up a question that has been burning for several years. Should Wagoner be fired? The problem with Dodd bringing this up is that Washington doesn’t really know anything about the auto industry. Dodd is no exception. He said in the beginning of the Senate hearings on an auto industry bridge loan Detroit ushered in an era of gas guzzling suvs. Well, Dodd has been in Congress since 1975. Suring that time, Congress never failed to pass up on closing a loophole in fuel-economy rules that would have made suvs impossible to sell, let alone become a two-decade phenomenon. So now, he feels qualified to fire Wagoner. He isn’t.
At the same time, Wagoner’s record is almost impossible to defend. Since he became CEO, the company blew money on things like a $1.3 billion stake in Subaru parent Fuji Heavy Industries, which yielded no cars or technology worth mentioning. He spent $2.4 billion to get into Fiat Auto and another $2 billion to get out. GM has also paid more than $4 billion in dividends while borrowing billions to cover its pension fund. That’s almost $10 billion wasted. And during his tenure, GM borrowed some $18 billion to shore up its pension fund.
At the same time, Wagoner cut capital spending early in the decade while many product lines—except the trucks and suvs—went too long without a refresh. Hybrids were stiff armed and the EV1 electric car was killed. Like his predecessor Jack Smith, he made sure he took care of shareholders. But the company lagged in product and technology.
Wagoner was dealt a tough hand, perhaps tough than any CEO in the country. But he wasted too much cash. And to say he didn’t transform GM is such an understatement that it seems silly to mention. As basic measures go, he has failed. The stock price that soared above $90 a share a decade ago is now below $5. Market share has fallen eight points to 20% since Wagoner became chairman in 2003. No top executive would keep his job after that.
With a record like that, it is time for him to move on. Perhaps give his No. 2, President and COO Fritz Henderson a shot. Maybe there is some outsider waiting to come in. Former IBM savior Louis Gerstner recently came available. But before firing Wagoner, I want to know the plan. Who will take over? For all the General Electric stars that Chrysler CEO Bob Nardelli has earned, he didn’t do miracles for Chrysler. But Alan Mulally came from Boeing to Ford and has done well.
But tell me the plan first. It can’t just be Henderson. The job is too big right now for one man to do it all. And if it’s an outsider, who will it be? Yes, Wagoner should go. But not until the current crisis is past, or someone tells me who the new top dog will be. Right now, GM’s needs some semblance of stability more than anything.