Rick Wagoner Fired!
FoxBusiness has the story:
“This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it’s a recognition that it will take a new vision and new direction to create the GM of the future,” President Obama said.
The next 60 days will be crucial to General Motors, during which it will be provided “working capital,” to produce a better business plan, President Obama said.
“Let me be clear: the United States government has no interest or intention of running GM. What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company,” the President said.
Rick Wagoner and GM sealed their fate when they mismanged their business and went to the government with their hands out. I have no sympathy for either.
As competitive pressures have increased, GM failed to make hard decisions about their business and focused their energy on the vehicles with the highest margins – trucks and SUVs. This focus meant that when times were good, and when oil prices were low, GM could be profitable in spite of much higher costs than their competitors. When consumers changed their spending habits in response to higher oil prices, GM began to lose money.
Again, rather than addressing the root cause (legacy pensions/healthcare and union work rules that made their employees less productive), Rick Wagoner and GM kicked the can into the future. They kept sales up by selling cars at ever smaller margins until they were losing money on every car they sell. In the process, they mortgaged their future by incentivizing consumers to buy before they were ready.
Once the economy went into recession, they were done. Again, rather than addressing the root cause (sensing a pattern here?), they went to the government asking for help. They got it, but government dependency is always a fool’s bargain. While the Constitution doesn’t authorize government support or control of private enterprise, we have the spectacle of the President forcing out the CEO of a Fortune 500 company.
AIG executives (and other bailout recipients) have been punished with a retroactive, punitive 90% tax. GM was told to fire it’s CEO, and Chrysler was told to cozy up with Fiat if they want to survive.
Who’s next?
March 31st, 2009 at 5:34 am
Mike. You are so correct. GM was foolish to run to the government for help. They should have just filed for bankruptcy.
Hopefully other companies can learn a valuable lesson from this. The government is not the solution to your problems. Go to the government with your hand out and you just might be replaced by big brother.
Can we add CEO of GM to Obama’s titles?
April 1st, 2009 at 5:12 am
I wouldn’t feel too sorry for Rick Wagoner. He was in the middle of trying to extort money from US taxpayers. He and General Motors decided long ago that rather than solve ther problems legally through the bankruptcy court they would extort funds from you and I. Good riddance to him. Let the Socialists eat their own.