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post #1 of 24 (permalink) Old 12-10-2008, 10:51 AM Thread Starter
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CNN: GM: Who could replace Wagoner

CNN/Fortune

GM: Who could replace Wagoner



Rick Wagoner's days appear numbered, but finding a new leader for General Motors won't be easy.

Alex Taylor III, senior editor
LAST UPDATED: DECEMBER 9, 2008: 9:38 AM ET


NEW YORK (Fortune) -- Now that President-elect Obama has suggested that General Motors and the rest of the Detroit Three may need to install new management as a condition of a bailout, the question is: Who will become GM's next CEO?

The auto industry is notoriously complex and luring seasoned executives to work in Detroit isn't easy.

Current CEO Rick Wagoner's able lieutenant, president and COO Fritz Henderson, would seem a logical choice -- but his chances seem slim.

Some members of GM's board of directors may get washed out along with Wagoner, eliminating a bloc of Henderson supporters. Besides, any government bailout would be accompanied by demands for a wholesale restructuring of the company with limits on executive control that Henderson would likely find objectionable.

The names of several other candidates have been raised in recent days. But they tend to be the usual suspects and could be easily disqualified on one or more grounds.

GE's Jack Welch was everybody's favorite CEO in the 1990s. But his star has dimmed in recent years and, at age 73, he probably isn't interested in some intensely hard work for possibly very little compensation.

Renault-Nissan CEO Carlos Ghosn, 54, led an historic turnaround at Nissan but has found the going more difficult at Renault. He'd love to make GM the North American third leg of his Franco-Japanese alliance, but Congress isn't likely to fund a GM partnership with a foreign company. If Ghosn did take over, it would probably be as chairman of the troika, meaning someone else would have to be found to run GM.

Home-town hero Roger Penske's name comes up every time there's a job open in Detroit and he knows the industry inside and out. Still a busy workaholic at age 71 with a successful auto retailing business and as the distributor of Smart cars, he would be unlikely to accept the post without a personal appeal from the President-elect.

But if the government "car czar" running GM digs a little deeper, he is likely to find some less heralded though equally able managers who have enjoyed success running large industrial companies.

Here are three he ought to consider:

Robert Lane, 59 chairman and of Deere & Co. The iconic maker of agricutural equipment is like a little GM: based in the Midwest with workers represented by the United Auto Workers, it sells to consumers through dealers, and faces strong foreign competition.

Lane has focused on making Deer run smarter, faster, and leaner, and profited handsomely from his success. He received compensation of $52.4 million in 2007.

John G. Rice, 51, vice chairman of General Electric and president and CEO of GE Technology Infrastructure. Considered a strong operating executive, Rice runs a global business group with 106,000 employees that includes healthcare, aviation, and transportation, among other things.

Last year, it notched a profit margin of 22% on revenues of $57.9 billion -- pretty impressive by anybody's standards, especially GM's.

Sergio Marchionne, 56, CEO of Fiat S.p.A. An outsider to the auto industry, Marchionne became CEO in 2004 of a company that sounds very much like GM today. Fiat had talent, knowledge, and skills, but the problem was culture: Too many platforms, too many people doing the same thing across brands, and nobody responsible for anything.

Marchionne instilled responsibility in management, streamlined the design process, and rationalized platforms. He also got GM to pay him $2 billion to end an engine-building alliance.

In 2005, Fiat recorded its first quarterly profit in more than four years.

"Marchionne is tough as nails and smart as all get out," said executive recruiter Greg Carrott, of Chicago-based Cavoure LLP. "Besides his success at Fiat, he speaks fluent English and spearheaded a turnaround at a Canadian packaging company in the 1980s."

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post #2 of 24 (permalink) Old 12-11-2008, 04:21 PM
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Re: CNN: GM: Who could replace Wagoner

I think its really sad that the Auto Industry has to rely on corrupt politicians for its survival.
Unions should have seen this coming.
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post #3 of 24 (permalink) Old 12-11-2008, 04:27 PM Thread Starter
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Re: CNN: GM: Who could replace Wagoner

I think it is the auto executives who should have see it coming. That's why they get paid millions.

Bill Ford and Allan Mullaly saw it coming. Why didn't the rest????

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post #4 of 24 (permalink) Old 12-11-2008, 06:44 PM
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Re: CNN: GM: Who could replace Wagoner

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Originally Posted by SobeSVT View Post
I think it is the auto executives who should have see it coming. That's why they get paid millions.

Bill Ford and Allan Mullaly saw it coming. Why didn't the rest????
I couldn't have said it better myself. 100% agree Sobe.

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post #5 of 24 (permalink) Old 12-11-2008, 09:06 PM
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Re: CNN: GM: Who could replace Wagoner

I could easily be wrong since I'm not a finance guy
but
imho Ford figured there was gonna be a shitload of "snow"
but
didn't expect the BankingAssholes to cause an "avalanche"
so
Ford's "dressed a lot warmer" than GM or Cerberus
but
is still inquiring if the rescue squad will be there if needed...
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post #6 of 24 (permalink) Old 12-16-2008, 10:07 AM
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Re: CNN: GM: Who could replace Wagoner

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Originally Posted by SobeSVT View Post
I think it is the auto executives who should have see it coming. That's why they get paid millions.

Bill Ford and Allan Mullaly saw it coming. Why didn't the rest????
I'd agree with that. After all, a company with a finance arm that also is involved in mortgages should have seen this coming. GMAC runs Ditech, and services the CMG Home Ownership Accelerator. Someone there should have seen this coming.

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post #7 of 24 (permalink) Old 12-16-2008, 01:55 PM
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Re: CNN: GM: Who could replace Wagoner

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I'd agree with that. After all, a company with a finance arm that also is involved in mortgages should have seen this coming. GMAC runs Ditech, and services the CMG Home Ownership Accelerator. Someone there should have seen this coming.
Quote:
Originally Posted by SobeSVT View Post
I think it is the auto executives who should have see it coming. That's why they get paid millions.

Bill Ford and Allan Mullaly saw it coming. Why didn't the rest????
#1 Bill did not foresee the credit freeze. They were in such dire straights that they were forced to give as lien everything to get loans. And this was in a better credit enviroment. No one could led based on their cash flow. They had to give security. That is how bad things are at Ford. That includes all Ford Assets. Ford was in such bad shape that getting these loans was their only way out. That inlcudes the blue oval, the F150 badge, the Horse, basically any assets Ford has is mortgaged. You got to be careful when evaluating management.
Ford has nothing over other detroiters other than the access to credit that they have. Its not like they are financing their operations from revenues, but drawing down on their pre-negotiated credit lines.


GM on the other hand could have gotten its turn around done using its pre September cashflow without mortgaging itself away were it not for the september credit freeze. Do not try to spin things positive. The credit freeze is not the problem really, its the resulting dissapearance of 40% of the auto market, which is a big chunk of the auto market, and thus GM's cash flow. If they get federal loans, they will still own all their brands and will not be mortgaged away like Ford.


As regards to the mortgage meltdown, wagoner saw it and ditched 51% of GMAC to get it out of their consolidated financials before the 2007 meltdown. They anticipated well the collapse of the housing market. They did not anticipate the credit freeze prompted by the bailout.
So, there you have it.


Short term spur of the moment analysis do not in anyway paint a fair picture.
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post #8 of 24 (permalink) Old 12-16-2008, 02:32 PM Thread Starter
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Re: CNN: GM: Who could replace Wagoner

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#1 Bill did not foresee the credit freeze. They were in such dire straights that they were forced to give as lien everything to get loans. And this was in a better credit enviroment. No one could led based on their cash flow. They had to give security. That is how bad things are at Ford. That includes all Ford Assets. Ford was in such bad shape that getting these loans was their only way out. That inlcudes the blue oval, the F150 badge, the Horse, basically any assets Ford has is mortgaged. You got to be careful when evaluating management.
Ford has nothing over other detroiters other than the access to credit that they have. Its not like they are financing their operations from revenues, but drawing down on their pre-negotiated credit lines.


GM on the other hand could have gotten its turn around done using its pre September cashflow without mortgaging itself away were it not for the september credit freeze. Do not try to spin things positive. The credit freeze is not the problem really, its the resulting dissapearance of 40% of the auto market, which is a big chunk of the auto market, and thus GM's cash flow. If they get federal loans, they will still own all their brands and will not be mortgaged away like Ford.


As regards to the mortgage meltdown, wagoner saw it and ditched 51% of GMAC to get it out of their consolidated financials before the 2007 meltdown. They anticipated well the collapse of the housing market. They did not anticipate the credit freeze prompted by the bailout.
So, there you have it.


Short term spur of the moment analysis do not in anyway paint a fair picture.
And yet while Ford has introduced or is about to introduce a brand new F-150 (and by al accounts a great F-150) a redesigned and very improved Mustang, redesigned Ford Fusion and Mercury Milan with Hybrid versions that are getting better reviews than any of its counterparts (domestic or imported) have ever gotten, a brand new Taurus, a brand new Lincoln MKT crossover, a world class economy car Ford Fiesta, a new Ford Explorer, the Ford C-Max and the Euro Ford Focus, GM cancelled the Camaro Convertible until de next redesign, postponed the next Buick LaCrosse and halted all investments in R&D. You may not think this is a fair picture but it s a real picture. Life is not always fair my dear Tahoe.

So you see, it is not about how much money you have but also about what you are doing with it.

You may think that GM's management is better than Ford's and BTW you are pretty much alone on that, but the fact is that Bill Ford recognized that his company was in trouble AND ACTED way before GM people decided to take their blindfold. Ford fired himself, hired Mullaly and the rest is history. That took guts, the guts that neither Wagoner or GM BoD seem to have. You may think that is great that GM assets are not "mortgaged" but I think its even greater that the tax payers do not have to bail out Ford.

If GM survives this mess they will go down in history has the company that had to be rescued by the government.

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post #9 of 24 (permalink) Old 12-16-2008, 02:39 PM
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Re: CNN: GM: Who could replace Wagoner

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Originally Posted by SobeSVT View Post
And yet while Ford has introduced or is about to introduce a brand new F-150 (and by al accounts a great F-150) a redesigned and very improved Mustang, redesigned Ford Fusion and Mercury Milan with Hybrid versions that are getting better reviews than any of its counterparts (domestic or imported) have ever gotten, a brand new Taurus, a brand new Lincoln MKT crossover, a world class economy car Ford Fiesta, a new Ford Explorer, the Ford C-Max and the Euro Ford Focus, GM cancelled the Camaro Convertible until de next redesign, postponed the next Buick LaCrosse and halted all investments in R&D. You may not think this is a fair picture but it s a real picture. Life is not always fair my dear Tahoe.

So you see, it is not about how much money you have but also about what you are doing with it.

You may think that GM's management is better than Ford's and BTW you are pretty much alone on that, but the fact is that Bill Ford recognized that his company was in trouble AND ACTED way before GM people decided to take their blindfold. Ford fired himself, hired Mullaly and the rest is history. That took guts, the guts that neither Wagoner or GM BoD seem to have. You may think that is great that GM assets are not "mortgaged" but I think its even greater that the tax payers do not have to bail out Ford.

If GM survives this mess they will go down in history has the company that had to be rescued by the government.
Ford and GM have a slew of products in the pipeline. That point is mute. GM is bigger than Ford. So, they will definitely have more products coming out than Ford at any one given time.

By all accounts products coming from Ford are top notch. So are GM's. The Silverado is not shabby. Given its about 3 years old, but has new slight upgrades year to year. In fact it has far superior power trains currently than anything in Ford’s stable. I expect the F150 to be better all round since it’s new, though some magazines beg to differ and say the Silverado is still the better truck. See some posts here. It is to be expected of them to make a better truck than those already on the market. We all are looking forward to the Camaro vs. Mustang Spat.


Now as to who was bailed out and who was not, that is true GM needs government loans, but it does not negate other facts discussed above Bill made the correct decisions. Allan too given the impossible situation they were in. The situation being that; Ford had their credit freeze before the financial collapse and had to mortgage all the assets to unlock themselves out of it.

I hope you understand that banks were not willing to lend Ford against their cash flow, but were willing to lend to GM. And GM was in good shape enough not to need the cash anyways based on prior projections.

That is the story here. Now Banks who lent this money cannot dare freeze it now like they are doing to other smaller companies in the US as we speak. It would be suicide for the banks from a political standpoint. Can you imagine a headline now? Reading like "citi freezes Ford credit line" , though they probably know the numbers they used to advance the money are not relevant anymore. And right now they are facing a conversion of up to 70% from credit to Equity for the portion that has been drawn down. Who is going to force that conversion? The banks, willingly or the Feds? You can spin it, but once the Feds restructures Detroit’s balance sheets, it will amount to a Ford Bailout. with or without cash advances from the Feds.


But its not change facts that GM was in a better shape going into the freeze. And you got to credit Wagoner with all the things he has done too while you look his tenure.
GM will be rescued. It is not going down. The problems these companies face are huge. Do not for one moment think Ford is viable yet. There is still the cost structure to address.
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post #10 of 24 (permalink) Old 12-16-2008, 02:56 PM Thread Starter
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Re: CNN: GM: Who could replace Wagoner

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Ford and GM have a slew of products in the pipeline. That point is mute. GM is bigger than Ford. So, they will definately have more products coming out than Ford.
Excuse me? Do you follow the news? They had a Cruze thing about to be launched and was postponed, the other car in their pipeline was the LaCrosse and that one was halted too. The Camaro convertible dead. the rest will be all carryovers and redesigned. The Chevy Volt is the only thing that they seem to have going on. The Insignia based Aura was killed.
Quote:
Originally Posted by Tahoe View Post
By all accounts products coming from Ford are top notch. So are GM's. The silverado is not shabby. Given its about 3 years old, but has new slight upgrades year to year. I expect the F150 to be better. It is to be expected of them to make a better truck than those already on the market. We all are looking foward to the Camaro Vs. Mustang Spat.

Now as to who was bailed out and who was not, that is true, but it does not negate other facts. Bill made the correct decisions. Allan too. But its not not change facts that GM was in a better shape going into the freeze. And you got to credit Wagoner with all the things he has done too while you look his tenure.
GM will be rescued. It is not going down. The problems these companies face are huge. Do not for one moment think Ford is viable yet. There is still the cost structure to address.
Wagoner probably thought the same way you think and now everyone is asking for his head.

About GM being rescued, I hope you are right. The alternative would be too sad and disastrous. But as much as you seem to hate it, the fact is that Ford is rescuing itself.

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