GM’s Wagoner defying gravity

In the last decade or more, General Motors has lost market share to Japanese, Korean and German automakers. This prolonged recession has brought GM to the edge of bankruptcy. Last year, Toyota cars (not including trucks) outsold the GM models in the U.S., and next year the Japanese carmaker could outsell GM’s combined lineup of cars and trucks right here on General Motors’ home turf.

Throughout the most recent phase of GM’s slow, ponderous collapse, there has been one consistent factor: Rick Wagoner, now 56, has been at the top.

How would a sales record like his play in Japan? Or Korea? Or in Europe? Or even in Dearborn, Mich.? The answer lies in the heads that have rolled.

In the last few months, Toyota, Honda, Mazda and Nissan have replaced their leadership. They didn’t wait years or even months after losing market share and profits. The Koreans (Hyundai and Kia) don’t even wait for a downturn. They unceremoniously dismiss their U.S. operations leadership when things are going well.

BMW, Mercedes and Volkswagen have replaced their leadership. BMW went through a transition after problems with British Rover; Daimler (Mercedes) after problems with acquisitions related to Chrysler and Mitsubishi; and VW has had good old power struggles leading to a sort of Coups des Bosses.

In Dearborn, Mich., home of Ford Motor Co., even company namesake Bill Ford stepped down and brought in Alan Mulally from Boeing to be the new CEO. Chrysler stole Jim Press from Toyota to try and save its day.

Throughout all these changes whirling around the worldwide automotive globe there’s been one constant - Rick Wagoner of GM. I find it hard to understand why or how. I think he might really be Superman from Krypton.

A CEO is supposed to make things better, not worse. In any job, from the lowest-paying position at McDonald’s to the highest-paying job in the world, a paid employee is supposed to perform, if not outstandingly, then at least adequately. If they don’t perform, they’re out, especially in positions with fiscal responsibilities. Boards of directors, whose responsibilities are to the stockholders, do the axing.

Mr. Wagoner has done good things for General Motors. He hired Bob Lutz, who turned the company’s products around. He did some powerful negotiating with the unions to get the costs down. While he’s been in the job, the company has streamlined costs and products by moving to global platforms. Under Wagoner, China became a manufacturing site and a market. All good.

But there’s a record of failure. There’s market share, which has fallen during most years of his leadership. It was 33.2 percent in 1994, the year he became chief of North American operations. Market share in February 2009 was 18.3 percent.

There’s the Fiat deal. In 2000, GM swapped a 6 percent stake in itself for 20 percent of Fiat - and gave Fiat a “put option” to sell GM the rest of the carmaker between January 2004 and July 2009. But it was a terrible deal, and GM pledged to give Fiat $2 billion if it didn’t buy it all. GM ended up paying the $2 billion, which was a kick-start to the Fiat recovery and a huge cash hole in GM’s pocket.

There’s Delphi: Under Mr. Wagoner, GM split off the parts maker Delphi in 1999 to save money with lower labor costs for parts, but then guaranteed that the newly formed company would pay the top UAW wages and benefits. It’s difficult to figure out what the senseless deal has cost GM, but $11 billion is my guess.

Then there’s the disappearing act: He made Oldsmobile go away. Now he’s thrown a blanket over Pontiac, Saturn and Hummer. And let’s not forget losses: $80 billion and change in four years.

Mr. Wagoner went from chief financial officer in 1992 to president of North American operations in 1994 to chief operating officer in 1998. He became president and chief executive officer in 2000. During his tenure as CEO, GM shares have plummeted from around $60 in June 2000 to today’s price of $1.80 at this writing and, of course, the company is only in business here today because of money received from the U.S. government.

When you ask top executives at General Motors what their biggest problem is, they say perception. They are right. Perception is the problem. It’s difficult to imagine any other major corporation on the brink of ruin that wouldn’t have a change in management.

Mr. Wagoner has risen steadily. He is, as far as we know, honest and decent. He is an intelligent man who wants his company to succeed. But under his watch GM has gone from the world’s leader in car sales to nearly having to throw in the towel. The way I see it, Mr. Wagoner must get greenbacks flowing into GM, or else Superman might be destroyed by his green nemesis: kryptonite.