Tuesday, March 31, 2009

Why Wagoner?

by Tom Bozzo

1. Well, duh.

2. In the NYT, William J. Holstein's case for Wagoner should be read as damnation by faint praise. Promoting efficiency and quality improvements is laudable enough, but hardly the sort of vision thing that merits a U.S. CEO salary. Bob Lutz's product-development record is mixed in part due to Lutz's contempt for greenery and faulty assumptions that SUV demands were not price-sensitive, and in more significant part because GM's management was full of pound-foolishness as important product developments (e.g. marketable compact cars) were underfunded when the company more-or-less had money. The company can easily go bankrupt building bulletproof Buick Lucernes. And, troublingly, GM has persisted in future-mortgaging despite the availability of government aid.

3. Nevertheless, my question is, why not the more obvious choice of Chrysler's Robert Nardelli? If GM management has been years late and billions short, Chrysler's Cerberus-hired management has shown no public signs of elementary competence. Where GM's product plans are questionable (Cadillac station wagon?), Chrysler's are an intergalactic void unless you're very optimistic about its ability to bring its electric showcars into production or eagerly anticipating Americanized Fiats. As a major net beneficiary of the housing bubble and poster-child for CEO excesses, Nardelli is perfectly cast for the scapegoat role, not least because he's substantively more deserving of sh*t-canning as Wagoner.

The concern of course is that someone(s) on the Obama team think Nardelli is more deserving of forbearance than Wagoner because of his private equity bosses. I'm not saying that's true, but if it were, then I'd want to play poker against whomever can't see that Cerberus Capital Management has been exploding myths of the power of patient private capital and by most indications wants out.

(Cross-posted at Angry Bear, where in the comments Bruce Webb makes the very reasonable point that firing Nardelli would be needless piling-on. Indeed, a reasonable reading of the current situation [subject to revision in 30 days] is that a Chrysler failure has been determined not to pose 'systemic risk' and thus Chrysler LLC is toast if the Fiat deal falls through.)


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