The departure of Rick Wagoner as chief executive of General Motors was inevitable once Barack Obama’s auto taskforce had concluded that it did not believe the restructuring plan GM had submitted in an effort to gain billions more in government support.
The question is whether Fritz Henderson, who is a GM lifer like Mr Wagoner, has enough credibility to retain his post as Mr Wagoner’s successor for long.
My impression of Mr Henderson, for what it is worth, has generally been favourable. He was placed in charge of GM’s turnaround efforts in Europe and elsewhere, and always appeared to be under no illusions about the need for fundamental change at the company.
Although Mr Henderson is a down-to-earth and likeable character, he has always seemed a mite tougher than Mr Wagoner in his approach to restructuring, and more eager to challenge GM’s orthodoxies and its entrenched interests, notably its unions and its dealers.
That said, the question is whether GM needs another veteran of Detroit, steeped in its peculiar rituals and understandings, to dig it out of a very deep hole.
Mr Wagoner’s biggest problem was that he saw his job too much as playing the hand he was given – which was an extremely poor one – rather than demanding that the game was changed. From the first time I met him, five and a half years ago, he talked of making the best of a bad job.
His initial strategy to deal with the burden of retiree healthcare and pensions int the US was to try to keep boosting its sales volumes there for long enough to ride out the bulge in costs. That would have taken a decade of keeping its revenues high with discounting and cheap financing.
When it became transparent that this was not going to work, Mr Wagoner reversed path and tried seriously to reform its old union agreements, as well as trimming its dealer network. But, as the taskforce report makes brutally clear, the gap between aspiration and reality remained wide.
Given that GM’s share price fell from $70 a share to single digits, Mr Wagoner was never a convincing choice in terms of shareholder value. But a lot of people felt that his combination of intelligence, tenacity and trust from GM’s constituencies remained useful enough to keep him in place.
Behind this lay the general belief in Detroit and elsewhere that, since the car industry is such a grinding, low margin and complex business, you need an insider to run such a company.
That orthodoxy has been challenged, however, at Chrysler (Bob Nardelli), Ford (Alan Mulally) and Fiat (Sergio Marchionne). Insiders, who are steeped in the traditional ways of doing things and all the reasons why it is too risky to try something different, have their own disadvantages.
So where does this leave Mr Henderson, a tough and talented executive but indubitably an insider? I suspect he may have damaged his long-term chances by pinning his colours so firmly to Mr Wagoner’s mast during the drawing up of the GM restructuring plan.
In particular, I was sorry to see him fall in line with Mr Wagoner’s dubious insistence that GM would lose far more by going into Chapter 11 bankruptcy than restructuring outside it. Given that it has not managed to negotiate seriously with its bondholders so far, I remain unconvinced.
I would give him a 50-50 chance, which is not bad given the odds on GM as a whole.
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