Obama to GM CEO Wagoner: You're Fired!

Posted Mar 29th 2009 9:10PM by Peter Cohan
Filed under: General Motors (GM), International Business Machines (IBM)

Last fall, I suggested that General Motors Corp. (NYSE: GM) ought to follow a six point restructuring plan. One of those steps was to can GM's CEO Rick Wagoner. Under his tenure, which began in 2000, GM's stock has lost 95% of its value and GM has posted $30 billion in 2008 losses while presiding over a North American market share slide from 33% to 19%. What amazes me is that GM's board did not step in years ago. So Monday, President Obama will officially ask Wagoner to step aside.

Regrettably, getting rid of Wagoner leaves an important question unanswered: Who is willing to step into GM's CEO position who is clearly better able to fix the problems that ail GM? It is far easier to fire the person who made the mistakes than it is to find the right person to fix the problems. For that job, I can think of one person who has a successful track record of turning around companies in deep trouble -- Lou Gerstner -- who brought International Business Machines (NYSE: IBM) back from the brink in the 1990s.

In the meantime, GM is poised to get more government billions to keep it afloat. I am confident that getting rid of the CEO who got GM into its current condition is a good move. And it probably helps deflect the criticism heading towards the White House as it unveils additional billions for GM. But unless the next CEO who comes into the job actually starts to remedy GM's problems, it will be far more difficult to defend the next government handout GM demands.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

Tags: featured, general motors, general motors corp., general motors gm, GeneralMotors, GeneralMotorsCorp., GeneralMotorsGm, gm, inthenews, obama, obama administration, ObamaAdministration, rick wagoner, RickWagoner

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Reader Comments (Page 1 of 1)

3-30-2009 @ 10:21AM

David said...

Dear President Obama:

Please consider Mr. Lido Anthony Iacocca to replace Mr. Wagoner. I'm sure you will agree he is qualified to lead GM to the summit of the auto manufacturing industry. Thank you.

3-29-2009 @ 10:54PM

MatWith1T said...

Will Rick be getting a $400 or $500 million dollar severance package?

3-30-2009 @ 12:07AM

Ron said...

Now that the president has got rid of the CEO of GM he should get rid of the Unions that are involved with GM. If I am bad at running my company, I have the opportunity of going bankrupt. GM should be no different. The Unions are the reason that GM is bankrupt. You can't sell a faulty high price car in todays market.

3-30-2009 @ 2:39PM

chuckles3t said...

Ron, sounds like a republican blaming the unions as always. How about the big bussiness part here.

3-30-2009 @ 12:54AM

Sreve said...

American people to Obama, "YOU'RE FIRED"!

3-30-2009 @ 12:56AM

Sreve said...

American people to unions, "You're leeches and you're fired"!"

3-30-2009 @ 5:12AM

reenadhiman9 said...

The article is very good and is going to be a useful information hub for economists and general public in throughout the world.

3-30-2009 @ 5:22AM

al coholic said...

Although it is expedient for Obama to ask for Wagoner's head it does set a precident that may morph into a scenerio somewhere down the pike that we may later wish we hadn't traveled.

3-30-2009 @ 6:31AM

powerfill1 said...

I sure hope the 2010 midterm elections give us something closer to a balance of power.

3-30-2009 @ 6:30AM

Dan Barnett said...

Steve, I've got some really bad news for you.

Unions members are American people.

3-30-2009 @ 4:18PM

kathleen said...

The problem with all of this is that Obama really has no right to fire any one in the private sector. But since he thinks he is the king rather than the president he has now set a dangerous precedent and practiced yet another socialist tenet. A very sneaky way of nationalizing a private company. And the joke of it all is that these geniuses in Washington know NOTHING about running a car company. As a matter of fact, what has Obama ever run? Nothing. Absolutely Nothing. He never even ran a candy store. Or any business. Another laughable move by the government. Shame of this is that it was government that did nothing but hurt the car industry... with their outrageous cafe standards and the like.

So the government which does a horrible job of running itself is now running the financial sector of the country and has now started to run the American auto manufacturers.

The solution was as plain as the nose on your face...bankruptcy.