Founded by William “Billy” Durant on Sept 16, 1908, last year marked the Centennial for General Motors, the worlds second largest automaker. As we look back we find that in the 60’s GM controlled 50% share of the domestic auto market. That figure dropped to 23% market share by 2005. Sadly that’s the view from my rear view mirror.
Fast forward to yesterday when GM presented a 117 page restructuring plan to Congress as they seek upwards of an additional $30 billion in the form of a federal emergency loan. They have plans to phase out the Saturn series in 2011.
As someone who appreciates, and has abused GM automobiles in drag racing competitions, I for one do not wish to see one of the Big Three crash and burn.
However as someone who supports the free market I cannot support massive bailouts even if there is a promise of loan repayment. It has been reported that GM is already carrying liabilities in the neighborhood of $190 billion dollars.
President/CEO/Chairman George Richard “Rick” Wagoner, Jr was promoted to president and CEO in June of 2000 when GM shares were selling at $60. GM closed today at $2.06 per share. He has admitted that his worst decision was axing the EV-1 electric vehicle and failing to put the right resources in their hybrid development.
Knowing our national concern for improved vehicle mileage, and reducing dependence on imported crude oil, this was a bad management call. While retaining GM and its hundreds of suppliers is important to America, Chairman Wagoner has a tough task at hand as he negotiates for major concessions on wages and benefits from the UAW rank and file and union leadership.
Juice readers.
Based on the approval of the Stimulus Bill do you think that GM will survive?
“He has admitted that his worst decision was axing the EV-1 electric vehicle and failing to put the right resources in their hybrid development.”
Indeed. Even worse, he stated that they sell SUVs because the market demands them, which of course was just a half-truth at best.
As one of my favorite authors, Thomas Friedman, states in his latest book, the Big Three shaped the market by lobbying to have the fuel standards lowered and to have SUV classified as trucks. “Miraculously”, with the appropriate advertising, the market then demanded what the Big Three essentially told the market to demand…
And don’t forget, Larry, that a lot of the people who now say the Big Three should have invested more in electrical cars and hybrids are the same people who a year ago called others who had the foresight “tree huggers”…
While I don’t have much sympathy for Mr. Wagoner, since as a top manager he should have known better, I think a lot of the people who now want to let the Big Three die are hypocrites who are just using the Big Three as scapegoats.
It is about time for them to acknowledge that the “tree huggers” were right…
When will we see the floor? GM trading at the end of 2-18-09 was $2.00 per share
Having worked as an analyst in the treasurer’s office at GM and in 1981 becoming Treasurer of GM’s Brazil subsidiary Rick Wagoner surely saw the numbers.
And, having been named CFO in 1992 he was not a new face at the company having spent virtually half of his life at GM. The handwriting has been there if he truly had a corporate vision. Let me also point out that Mr. Wagoner has been earning just over $2 million dollars per year. To receive that amount of compensation requires leadership for the stockholders who empowered him to promote their major product decisions. By is own admission he failed and now expects the average American to give him more time (and financial aid) to turn things around.
Wasn’t he one of the Big 3 CEO’s who flew in their private luxury jets to the prior Congressional Hearing?
We will simply have to take a wait-n-see timeout to find out what Congress decides to do.
“Wasn’t he one of the Big 3 CEO’s who flew in their private luxury jets to the prior Congressional Hearing?”
Not their private jets. These jets were owned by the Big Three.
In principle it is ok for business execs at that level to fly to destinations with company jets. Time is money, and I don’t think the stockholders want the management waste time for connections in airports.
Having said that, flying to Washington in the jets to beg for money, and each one of them flying in their own separate jets shows a complete disconnect from reality. Just like the bankers who were still going on fancy retreats, these guys clearly didn’t get it. They didn’t get that their way of doing business is over. And I still have doubts that they get it.
My question is: When will Mr. Wagoner start working for one dollar? Lee Iacocca did that when he rescued Chrysler in the 80ies. We should demand the same from the current management.
Joe.
We often heard the expression “time is money” in my working years. I changed it to read “time to market” as we tried to beat our competition to gain market share.
Yes, I can understand the drawbacks of senior executives flying with the working people and delays experienced checking in but, trying to convince Congress to give us billions of dollars, I would have driven fromn Detroit in the best mileage product in my stable. Knowing how sensitive fuel economy has become, and the presdient’s promoting same, one would expect these corporate brain trusts to anticipate the possible backlash of their actions. And 300 million Americans of all ages became aware of their ill advised travel option.
They don’t get it!