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Despite naysayers, Wagoner appears secure at GM

With losses at General Motors Corp (GM) mounting, US sales and market share plunging and other storm clouds raising the specter of bankruptcy, many have questioned the leadership of chief executive and chairman Rick Wagoner.

His primary goal at the automaker's annual shareholders meeting last week was to restore confidence. It was, all in all, a relatively good day for the 55-year-old.

Despite the anticipated critics -- one dissident shareholder suggested that he be indicted -- there were those praising Wagoner's "quiet confidence" and steady leadership during one of the roughest patches in GM's long history.

Strong first-quarter earnings have helped soften the skepticism that followed a US$10.6 billion loss last year.

And a series of public appearances has given Wagoner the chance to show himself as the man with the master plan.

"It's important to understand that our goal in this restructuring is not just to change GM's bottom line from red to black," Wagoner declared during the shareholders meeting last week.

"Our goal is to structure GM for sustained profitability and growth to set us up to be successful for years to come in this ever more global auto industry."

Whether Wagoner can pull it off is a question that divides many in the automotive community.

The ongoing problems with GM's former parts division, the now-bankrupt Delphi Corp, have not helped, and many cynics wonder whether there is enough time left to fix both the product portfolio and the automaker's myriad other problems.

But in recent months, Wagoner has garnered several votes of support. The GM board renewed his chairman's mandate. Then restated first-quarter results and the success of GM's employee buyout program transformed Merrill Lynch analyst John Murphy from bear to bull.

Issuing a "buy" recommendation on May 24, Murphy sent GM shares soaring more than 8 percent in a day.

Wagoner is significantly younger than the patriarchs who have traditionally ruled GM. Perhaps it is the impatience of his relative youth, but her also operates at a different pace, more in tune with Silicon Valley than the Motor City.

The combination of "bigness, bureaucracy and slowness [are] the absolute enemy of what you need to do in the business world," he is fond of saying.

There is no question GM is a lot smaller than the company Wagoner took control of as CEO on June 1, 2000. His top priority is to slash US$7 billion in costs by the end of this year, much of that by closing plants and cutting tens of thousands of hourly and salaried jobs.

It is not all about cost cutting, though. Wagoner sees tremendous opportunity for a more streamlined product development system integrating GM's varied global operations. The new approach is to develop a common "architecture," whose design details and content can be tweaked for a specific market.
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