Warren Brown's Car Culture
It was a sacrifice on the altar of political expediency.
There was G. Richard Wagoner Jr., chairman and chief executive of century-old General Motors, struggling to make a go of it in a collapsed economy. Holding the knife was a young U.S. president, newly elected and under tremendous pressure to placate a restive public demanding corporate capital punishment.
The public's anger was occasioned by rapidly rising unemployment, lost pension and medical benefits, rising home foreclosures -- and news that leaders of financial institutions largely responsible for their suffering were taking massive bonuses after demanding and receiving hundreds of billions in taxpayer dollars to help keep their businesses alive.
Wagoner was the perfect sacrificial lamb. Reserved to the point of shyness, he seemed aloof. Under his leadership since 2000, GM lost $82 billion. His company, which once had commanded as much as 60 percent in a U.S. market uncontested by foreign rivals, was now fighting to hold 21.1 percent. And after receiving $13.4 billion in emergency federal loans last year, here was GM, along with an even more hapless Chrysler, collectively asking to borrow $21.6 billion more.
President Obama was inclined to extend and expand the loans to the automobile companies, which were fast running out of cash and rolling toward bankruptcy -- a fate Obama and the car people wanted to avoid, or, at least, to control. But giving the Detroit car companies the money without satisfying the public's lust for blood was a political no-no. Somebody had to go.
My sources, all speaking on condition of anonymity, said Wagoner -- "Rick" to his many friends -- effectively volunteered.
There was no Obama-Wagoner angst, as suggested in many media reports. Both men understood the dire nature of the political situation.
Wagoner did not want to endanger GM's chances of getting its share of the additional taxpayer loan money, about $16.6 billion. Obama, according my automotive sources, did not want to risk further public outrage in the wake of the outcry over executives at the stumbling insurance giant, American International Group, taking $165 million in bonuses after receiving billions in taxpayer bailouts.
After being assured that "something was in it for GM" -- expressly, a loan extension -- "Rick agreed to go," one source said.
Other sources point to Wagoner's interim replacements. They include Kent Kresa, 71, the new GM chairman, a former Northrop Grumman chief executive who has been on the GM board since 2003. "He was one of Rick's biggest supporters on the board," one GM source said.
And then there is the hard-charging Frederick A. "Fritz" Henderson, the GM executive who, under Wagoner's tutelage, reorganized and streamlined GM's European operations and successfully integrated GM's once far-flung, often redundant vehicle design and development operations into a global unit.
Wagoner brought Henderson back to the United States in 2006 to help do for the company's North American operations what he had done in Europe and, earlier, what he had done for GM's South American businesses. Henderson now moves into position as GM's president and chief executive from his most recent position as company vice chairman and chief financial officer.