Tuesday, November 9, 2010

The G.M. Bailout: Giving Credit Where Credit Is Due

Rick Wagoner and Steven Rattner. Which one really saved G.M.?

The New Yorker
's Malcolm Gladwell has an excellent review of Overhaul, the chronicle of the G.M. and Chrysler bailouts by former Auto Czar Steven Rattner. But while Rattner views the bailout as a personal triumph, Gladwell finds an unlikely hero in G.M.'s resurgence — the oft-maligned Rick Wagoner. Gladwell writes:
Wagoner was not a perfect manager, by any means. Unlike Alan Mulally, the C.E.O. at Ford, he failed to build up cash reserves in anticipation of the economic downturn, which might have kept his company out of bankruptcy. He can be faulted for riding the S.U.V. wave too long, and for being too slow to develop a credible small-car alternative. But, especially given the mess that Wagoner inherited when he took over, in 2000—and the inherent difficulty of running a company that had to pay pension and medical benefits to half a million retirees—he accomplished a tremendous amount during his eight-year tenure. He cut the workforce from three hundred and ninety thousand to two hundred and seventeen thousand. He built a hugely profitable business in China almost from scratch: a G.M. joint venture is the leading automaker in what is now the world’s largest automobile market. In 1995, it took forty-six man-hours to build the typical G.M. car, versus twenty-nine hours for the typical Toyota. Under Wagoner’s watch, the productivity gap closed almost entirely.

1 comment:

  1. Rattner's contribution was negative, not positive. He led the charge to assign blame to anybody but the combination of the Obama and Bush administrations, who together had let the economy go over a cliff and caused big ticket purchases to stop dead; and the UAW, who muster massive numbers of votes and who lately have been very aware of reality but for decades had a wildly unrealistic understanding of how far they could push their economic power to demand more total compensation.

    Of the other notable players, Ed Whitacre has been a disaster. He remains abysmally ignorant of the auto industry's product design, marketing and technology. He hadn't owned a car in years, and always has a driver. He fired Fritz Henderson and pushed out Bob Lutz because they knew so much more than him. He hasn't done anything useful.

    Ditto for Dan Akerson. His only apparent accomplishment so far has been to direct the use of an obscure Navy-reference marketing slogan.

    In contrast to the above characters, the Wagoner/Henderson/Lutz team did wonders. The auto industry has a several-year results cycle. Consumer Reports just reported that GM's quality has improved faster than any other company's, and is now equal to the best in the industry. Wagoner, Henderson and Lutz deserve all the credit for that steep upward trajectory in product quality.

    It's dumb that GM was forced to lose its best product, labor relations and manufacturing leadership in decades because the Bush and Obama administrations broke the economy. I hope it doesn't end up being disastrous.

    ReplyDelete

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