In attempting to stay within my own guidelines for this blog, I want to consider the resignation of GM CEO Rick Wagoner. It is far too easy to just take one side or another on this subject: "He needed to go" or "It's none of the Government's business".
Of course, this has implications in my own world. Under his leadership the General Motors plant in Oklahoma City was closed and had a large impact felt by many in the state of Oklahoma. I personally had a number of friends and acquaintances who were affected by the loss of jobs or were forced to move.
That is a good place to begin I suppose, with Mr. Wagoner's many changes in the company structure. For almost 15 years he was at the helm of America's largest automotive corporation. During his tenure the value of GM stock has collapsed and it's share of the US auto market has fallen from 33% to just 18%. The company was restructured three times during this period, leading to the elimination of numerous manufacturing plants and the loss of thousands of jobs.
So one can see where it makes sense to go after Mr. Wagoner. He led a failing company and never turned around a slide that had gone on for decades. If the US taxpayer is going to invest in bailing out the automotive industry, certainly a wise move would be to have better executives at the helm, right?
Perhaps not. While I don't intend to defend Mr. Wagoner's years leading GM, what occurred might not be all his fault. While so many cable television pundits are making a great deal of noise about what all he did wrong, he wasn't the only executive to lead a car company that saw sales slip and it's position in the US market fall. His time running GM coincides with the increase in popularity of foreign, and less expensively produced, cars and trucks. It is, in fact, Toyota that replaced GM as the globe's best selling automotive company.
One journalist, Micheline Maynard, pointed out that Mr. Wagoner spent his entire career at GM, starting there right out of Harvard in 1977. Also noting that his background was in the finance side of the industry, never sales or any other revenue generating department.
So perhaps it is that Rick Wagoner was never a good choice to run GM? Or was it that such a behemoth was bound to fail as the industry changed and foreign competition increased? Should we look at the quality of products offered by the differing companies? Though a sensitive subject, how do American auto companies compete while providing union members benefits and livable wages? Will the introduction of more fuel efficient cars and trucks help save GM and others, or is it too late?
These are all issues that need to be considered if the American automotive industry is going to survive. Normally left to poorly attended panel discussions between economists, this now springs to the forefront as the government is forced to invest in the future of these companies. Just the same, it is important that we all react with initiatives based on sound economic study. Leaping to conclusions and taking actions that simply feel good may leave us wanting not that far down the road.
