GM's Secret Success

GM CEO Rick Wagoneer has led numerous unheralded innovations, contends William Holstein.

Published: 06-Jan-2009

WITH billions of federal dollars flowing to General Motors, and with the incoming administration likely to discover that still more assistance is required, we can expect renewed calls for G.M.’s chief executive, Rick Wagoner, to lose his job as the price of failure. This view presupposes that Mr. Wagoner has not been willing to bring G.M. into line with the new global reality, that he has not designed cars Americans want to buy and that the company is a “dinosaur,” to quote Senator Richard C. Shelby, Republican of Alabama.

In reality, Mr. Wagoner has presided over the most sweeping transformation of G.M. since the 1920s. He has reversed management’s long practice of meekly going along with the demands of the United Auto Workers, notably with a deal to transfer health care costs to a union-controlled trust over the next two years.

During his tenure, as president, then as chief executive, Mr. Wagoner also put in place a previously unthinkable two-tier wage system to reduce the company’s average cost per worker; halved the company’s unionized work force in the United States through layoffs and plant closures; spun off Delphi Corporation, its largest parts supplier; and sold controlling interest of GMAC, its financing arm.

A decade ago, suggesting that Mr. Wagoner attempt these restructuring goals would have been ridiculed as unrealistic. But these moves have largely succeeded and by 2010 should strip $5,000 from the cost of every G.M. vehicle.

The company has made enormous strides in imitating and improving upon Toyota’s lean manufacturing system. At G.M. plants, gone are the mass assembly techniques pioneered by Henry Ford. Instead, workers are organized in small Japanese-style teams and encouraged to make sure problems are fixed on the spot rather than passed down the line. The quality gap between G.M. and Toyota has been closed.

Mr. Wagoner has allowed his designers to recapture car design leadership with products like the Cadillac CTS, the Saturn Aura, the new Chevrolet Malibu and the revived and visually dazzling Camaro. The cliché that G.M. makes only gas-guzzling sport utility vehicles is years out of date.

On the innovation front, Mr. Wagoner was responsible for introducing OnStar, the onboard communications and navigation system, and he has made a huge commitment to lithium-ion batteries, which will power the Chevrolet Volt, an extended-range electric vehicle. If the Obama administration wants to create new “green” industries here in the United States, these batteries represent a potential $150-billion-a-year opportunity.

Lastly, Mr. Wagoner has globalized G.M. to a degree that it never has been before. The company’s strong position in China has helped support the difficult turnaround effort in North America.

Before the financial crisis tanked American automotive sales, Mr. Wagoner had almost guided the country’s largest industrial company into a new era, demonstrating great resilience in the face of intense global competition. Making him a scapegoat might be politically expedient but it ignores the very tangible progress he has achieved.

William J. Holstein is the author of the forthcoming “Why G.M. Matters: Inside the Race to Transform an American Icon.”

Views :3509

<< PREVIOUSNEXT >>
RELATED NEWS ITEMS

GM inadvertently releases early a series of executive photos with views of the Volt in the background.

GM Co-chairman Bob Lutz with newly debuted Chevy Volt electric car

GM's Co-Chairman appears on Comedy Central's Colbert Report and runs into unexpected flak.

Bob Lutz answers press questions at 2009 NAIAS. Photo credit: EVWorld.com

American buyers usually choose the largest vehicle they can afford from a fuel standpoint. Breaking that habit is difficult, said Bob Lutz.

READER COMMENTS

blog comments powered by Disqus