[ETA: MSNBC is airing something about GM tonight, but I can’t find the details. It may be an article in a longer program (my guess would be 1600 Pennsylvania) or a special that bumps something else. If anyone knows more, drop me a line.]
When you’re thinking about who should be clearing his desk out in January, there’s one other W to keep in mind: General Motors CEO Rick Wagoner (no, really, he was born with that name). This clever fellow worked his way up to the top job at GM from posts in finance and operations outside the US. He came in young, fresh out of grad school, and had only a few years of domestic experience when he became CEO in 2000 at the age of 47. Between this and previous executive positions with the company, Wagoner oversaw the peak years of the SUV craze, the rise and fall of GMAC, and a 96% fall in the company’s stock value over less than three years (see a thorough bio from better days here). Despite spiking fuel prices over the last three years and the image backlash against SUVs, Wagoner continued to steer his company to depend upon the highly profitable SUVs, which could fetch as much as $10-$15,000 profit per vehicle. (In case you’re curious, the industry average is about $800, but some compact cars are even sold at a loss of several hundred dollars)
Despite the golden goose that laid the Hummer, GM continues to suffer financial woes new and old, some of which predate Wagoner’s taking of the helm; but not even Robert C. Stempel saw such a decline when he was CEO. But he never indicated government funds might be pursued until very recently; as recently as October, GM swore up and down it wasn’t facing bankruptcy.
Now, Wagoner is insisting that if GM doesn’t get an influx of cash this month, that GM will not make it to 2009. They’re even asking their employees, retirees, and car-owners to help lobby on their behalf.
I can’t help wondering if he isn’t rushing the matter, because he knows that under Obama and the next Congress, there is likely to be much more oversight and stipulation attached to any welfare checks (that’s right, I said it–Richard Wagoner is a corporate welfare queen!). Senator Chris Dodd (D-CT) is already calling for Wagoner to be replaced at GM, with others calling for the rest of the board to go as well.
In case you haven’t heard, Wagoner’s big plan to save GM-and-therefore-the-American-economy includes laying off another 30,000 workers (33% of current workforce, but that’s after other recent layoffs and buyouts pared it down by at least 50,000). I know, I know, omlettes and eggs, right? But with unemployment already getting uncomfortably high, do we really want to see that many more GM employees out on the streets, to say nothing of all those domino-effect jobs from peripheral automotive industries that rely on GM?
It’s not a pretty picture. There are already indications that the mortgage industry is about to undergo a second wave of defaulted mortgages (not that the first has passed) because so many prime (as opposed to sub-prime) mortgage-holders have lost jobs.
This is what you call a downward spiral.