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Off with their heads! (But whose?)
Lindsay Chappell
Automotive News
November 18, 2008 - 3:12 pm ET
If Congress demands new management in exchange for financial aid to the Detroit 3, legislators may have a tough time figuring out which executives must be replaced.
Two of the Detroit 3 already are steered by the type of leaders often sought in shake-ups: newcomers with proven track records.
Ford Motor Co. CEO Alan Mulally and Chrysler LLC CEO Bob Nardelli both were recruited from outside the industry to restructure the money-losing automakers. And each of them has lured high-ranking managers from Toyota, the automaker whose success is often held up as a model for the U.S. companies.
Congressional leaders haven't committed to any specific plans for industry aid. A Senate proposal offered Monday included no demands for management change while prohibiting "golden parachutes'' for a company's top five executives. But the Detroit 3 chiefs prepared to testify in Washington today amid calls that any help be tied to their removal.
"The management is not innovative -- they need to go," Richard Shelby, R-Ala., the ranking Republican on the Senate Banking Committee, said on CBS' "Face the Nation" Sunday.
"It's on the table," said John Spragens, a spokesman for Rep. Jim Cooper, D-Tenn., a member of the House Budget Committee. "Implicit in this whole conversation is management change, whether by mandate or agreement."
Such a demand has a precedent. The federal $85 billion bailout of insurer American International Group (AIG) in September resulted in the replacement of CEO Robert Willumstad. The Bush administration selected retired Allstate Chairman Edward Liddy as Willumstad's replacement, even though Willumstad had held the post for just three months.
Glare on Wagoner
Most of the glare may fall on General Motors and its CEO for the past eight years, Rick Wagoner. On Nov. 7, when it posted its fifth straight quarterly loss, GM said it may run out of operating cash in the first quarter of 2009.
Some observers predict a GM management change will be a prerequisite to taxpayer funding. The New York Times reported today that a major question surrounding Wagoner is whether he'll keep his job.
"The public is asking for it, and Congress will have no choice but to ask for it," said John Wolkonowicz, an industry analyst for IHC Global Insight in Lexington, Mass.
"The public is grossly misinformed," Wolkonowicz said. "Wagoner has been doing a good job. Ford and Chrysler might get a pass, but Wagoner could be the sacrificial lamb."
Thirteen months ago, Wagoner, 55, capped three years of selling assets, closing plants and shedding workers by striking a historic deal with the UAW. The 4-year accord, copied at Chrysler and Ford, slashed the pay of new hires to about half the level of current workers and created a fund to shift $51 billion in retiree health care obligations to the union.
Shareholders responded by boosting GM shares above $42, a three-year high. Since then, GM has been crippled by record gasoline prices, which drained demand for its big pickups and SUVs and exposed its weaknesses in cars. Now, like other automakers, it's being squeezed by a global credit crunch that prevents customers from getting financing.
Stock below $3
In the meantime, GM's losses are mounting. It hasn't posted an annual profit since 2004. The stock last week traded below $3, the lowest in six decades. Its vehicle lineup, credited by reviewers as improved, hasn't delivered an annual U.S. sales gain since 1999. GM's U.S. market share stood at 20.1 percent at the end of October, down from 28 percent in 2001, when Bob Lutz joined the company to steer a product renaissance.
Wagoner last week told Automotive News that stepping down would be "counterproductive."
"What the industry needs now is the most competent, most experienced, most capable leadership team they could have at each of the companies," he said.
Mulally, 63, took the reins at Ford just as the automaker was about to undertake its third restructuring in five years. He came from Boeing Co., where he is credited with reviving the company's sagging commercial aviation unit and winning back market share from rival Airbus S.A.S.
Ford is benefiting today from a decision Mulally made within three months of his arrival: raising $23 billion by mortgaging its assets, including the blue oval trademark. As a result, Mulally told Automotive News that Ford now is in a different financial situation than the other two Detroit automakers.
Mulally's marketing chief, Jim Farley, was hired 13 months ago from Toyota, where he had been general manager of Lexus.
Still, Ford hasn't posted a monthly sales gain in the United States in 12 months. And it's wrapping up its 13th straight year without gaining market share.
Chrysler's financial situation is less clear. As a unit of private-equity firm Cerberus Capital Management LP, Chrysler isn't required to release financial information.
Cerberus hired Nardelli in August 2007 as it took control of the company, ending nine years under Germany's Daimler AG. Within a month, Chrysler had lured two of Toyota's top North American executives, co-President Jim Press and marketing chief Deborah Meyer.
Chrysler hasn't delivered a sales gain since last December, and it continues to pare its model line, cut jobs and close factories. It also has been plagued by being the automaker most dependent on trucks at a time of higher gasoline prices.
Still, Nardelli, Press and the other Chrysler brass get credit from Jim Arrigo, a Dodge-Chrysler-Jeep dealer in West Palm Beach, Fla.
"They're not to blame for this crisis we're in," Arrigo said this morning as he and 32 other dealers called on legislators in Washington to support Detroit loans. "We've got a great future if we can just get through this immediate problem."
Lindsay Chappell
Automotive News
November 18, 2008 - 3:12 pm ET
If Congress demands new management in exchange for financial aid to the Detroit 3, legislators may have a tough time figuring out which executives must be replaced.
Two of the Detroit 3 already are steered by the type of leaders often sought in shake-ups: newcomers with proven track records.
Ford Motor Co. CEO Alan Mulally and Chrysler LLC CEO Bob Nardelli both were recruited from outside the industry to restructure the money-losing automakers. And each of them has lured high-ranking managers from Toyota, the automaker whose success is often held up as a model for the U.S. companies.
Congressional leaders haven't committed to any specific plans for industry aid. A Senate proposal offered Monday included no demands for management change while prohibiting "golden parachutes'' for a company's top five executives. But the Detroit 3 chiefs prepared to testify in Washington today amid calls that any help be tied to their removal.
"The management is not innovative -- they need to go," Richard Shelby, R-Ala., the ranking Republican on the Senate Banking Committee, said on CBS' "Face the Nation" Sunday.
"It's on the table," said John Spragens, a spokesman for Rep. Jim Cooper, D-Tenn., a member of the House Budget Committee. "Implicit in this whole conversation is management change, whether by mandate or agreement."
Such a demand has a precedent. The federal $85 billion bailout of insurer American International Group (AIG) in September resulted in the replacement of CEO Robert Willumstad. The Bush administration selected retired Allstate Chairman Edward Liddy as Willumstad's replacement, even though Willumstad had held the post for just three months.
Glare on Wagoner
Most of the glare may fall on General Motors and its CEO for the past eight years, Rick Wagoner. On Nov. 7, when it posted its fifth straight quarterly loss, GM said it may run out of operating cash in the first quarter of 2009.
Some observers predict a GM management change will be a prerequisite to taxpayer funding. The New York Times reported today that a major question surrounding Wagoner is whether he'll keep his job.
"The public is asking for it, and Congress will have no choice but to ask for it," said John Wolkonowicz, an industry analyst for IHC Global Insight in Lexington, Mass.
"The public is grossly misinformed," Wolkonowicz said. "Wagoner has been doing a good job. Ford and Chrysler might get a pass, but Wagoner could be the sacrificial lamb."
Thirteen months ago, Wagoner, 55, capped three years of selling assets, closing plants and shedding workers by striking a historic deal with the UAW. The 4-year accord, copied at Chrysler and Ford, slashed the pay of new hires to about half the level of current workers and created a fund to shift $51 billion in retiree health care obligations to the union.
Shareholders responded by boosting GM shares above $42, a three-year high. Since then, GM has been crippled by record gasoline prices, which drained demand for its big pickups and SUVs and exposed its weaknesses in cars. Now, like other automakers, it's being squeezed by a global credit crunch that prevents customers from getting financing.
Stock below $3
In the meantime, GM's losses are mounting. It hasn't posted an annual profit since 2004. The stock last week traded below $3, the lowest in six decades. Its vehicle lineup, credited by reviewers as improved, hasn't delivered an annual U.S. sales gain since 1999. GM's U.S. market share stood at 20.1 percent at the end of October, down from 28 percent in 2001, when Bob Lutz joined the company to steer a product renaissance.
Wagoner last week told Automotive News that stepping down would be "counterproductive."
"What the industry needs now is the most competent, most experienced, most capable leadership team they could have at each of the companies," he said.
Mulally, 63, took the reins at Ford just as the automaker was about to undertake its third restructuring in five years. He came from Boeing Co., where he is credited with reviving the company's sagging commercial aviation unit and winning back market share from rival Airbus S.A.S.
Ford is benefiting today from a decision Mulally made within three months of his arrival: raising $23 billion by mortgaging its assets, including the blue oval trademark. As a result, Mulally told Automotive News that Ford now is in a different financial situation than the other two Detroit automakers.
Mulally's marketing chief, Jim Farley, was hired 13 months ago from Toyota, where he had been general manager of Lexus.
Still, Ford hasn't posted a monthly sales gain in the United States in 12 months. And it's wrapping up its 13th straight year without gaining market share.
Chrysler's financial situation is less clear. As a unit of private-equity firm Cerberus Capital Management LP, Chrysler isn't required to release financial information.
Cerberus hired Nardelli in August 2007 as it took control of the company, ending nine years under Germany's Daimler AG. Within a month, Chrysler had lured two of Toyota's top North American executives, co-President Jim Press and marketing chief Deborah Meyer.
Chrysler hasn't delivered a sales gain since last December, and it continues to pare its model line, cut jobs and close factories. It also has been plagued by being the automaker most dependent on trucks at a time of higher gasoline prices.
Still, Nardelli, Press and the other Chrysler brass get credit from Jim Arrigo, a Dodge-Chrysler-Jeep dealer in West Palm Beach, Fla.
"They're not to blame for this crisis we're in," Arrigo said this morning as he and 32 other dealers called on legislators in Washington to support Detroit loans. "We've got a great future if we can just get through this immediate problem."
.... anyone got an Advil? 
