Debating Detroit's Direction

General Motors, Ford, Chrysler
Tuesday, November 18, 2008

Today and tomorrow top executives from the three largest U.S. automakers are scheduled to converge on Capitol Hill to plead their case for $25 billion in government aid. In addition to money, some wonder whether the industry needs new leadership.

Would Detroit's management survive federal intervention?

G. Richard Wagoner Jr., 55

General Motors

Wagoner began his GM career as a financial analyst after graduating from Harvard Business School in 1977. He steadily worked his way up the management ladder. In 2000, he was named GM's chief executi ve.

Under His Watch: As foreign rivals introduced smaller, more fuel-efficient vehicles, GM focused on trucks and sport-utility vehicles. It pushed development of its plug-in Chevrolet Volt only when gas prices skyrocketed. Since 2005, Wagoner has overseen $73 billion in losses. But GM also led the renegotiation of United Auto Workers contracts, which will shift health-care costs to a union-run trust beginning in 2010 and allow automakers to pay new hires lower wages.

His Bailout Pitch: American automakers were on the way to restructuring the industry when the economy soured. "I doubt there's anyone who disputes that we're operating in very challenging times, certainly one of the most challenging in the history of the U.S. auto industry," Wagoner told investors.

Should He Stay or Should He Go? GM has too many brands without enough innovation, some analysts say. "He's been a part of the crew that drove this bus right into the wall," said industry analyst Maryann Keller. But others argue that Wagoner knows GM better than any successor; the firm just needs to survive until 2010 when the health costs are transferred to the trust and cars like the Volt arrive in showrooms.

Alan Mulally, 63


Mulally is an engineer who earned his business degree at the Massachusetts Institute of Technology. He spent most of his career at Boeing and is credited with revitalizing the manufacturer's commercial aircraft business. Mulally took the reins at Ford in 2006.

Under His Watch: Ford cut its bureaucracy. Mulally has combined Ford's North American and European operations. The company also broadened its product line to include more small cars and fuel-efficient technologies.

His Bailout Pitch: "The most important thing we want to do is make sure we have this dialogue and we have, you know, mechanisms in place so if [the economy] deteriorated substantially we'd be able to access a bridge loan and pay it back and get through the downturn and keep this very important industry alive because it's so important to the economy and the recovery," Mulally told investors.

Should He Stay or Should He Go? Of the Big Three, Ford's vehicle lineup is generally regarded by many analysts to be in the best position to compete with foreign rivals should the company weather the economic slump. From his aerospace days, Mulally gets credit for understanding manufacturing and international competition. "He has everyone marching to the same tune," said Dennis Virag, president of the Automotive Consulting Group. Yet, Ford continues to hemorrhage cash. It burned through $7.7 billion in the third quarter.

Robert L. Nardelli, 60


Nardelli received his business degree from the University of Louisville. He spent most of his career at top positions in General Electric and Home Depot. Nardelli streamlined Home Depot's operations and brought in technology to improve the supply chain. He arrived at Chrysler last year, after its sale to Cerberus Capital Management.

Under His Watch: Coming out of its disastrous merger with German automaker Daimler, Chrysler has a weak product pipeline. Instead of moving to smaller vehicles, it stuck close to Jeeps, Dodge pickups and minivans.

His Bailout Pitch: "We just can't say give us money and it's a road to nowhere. I think we have to have a very crisp plan," Nardelli told business leaders at a conference in Palm Springs, Calif. "We have to be visionary as to where we want to go. We have to break out of some of these old paradigms and really save a very valuable industry for this country."

Should He Stay or Should He Go? Nardelli inherited a very broken company that may take years to turn around. He gets high marks for boosting sales and reorganizing management at Home Depot, but some of his steps at Chysler have drawn fire. His dealings with suppliers have ruffled feathers as has his decision to hire some former Home Depot managers. Many have not forgotten the criticism he got over Home Depot's lackluster stock performance or the size of his severance package -- $210 million in cash and stock options.

-- Kendra Marr

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