DETROIT/WASHINGTON (Reuters) - Soon after becoming chief executive of General Motors Corp in 2000, Rick Wagoner huddled with top lieutenants to lay out his vision for expanding the global reach and profitability of the world’s top automaker.
The goal: make GM’s market share more than twice that of Toyota Motor Corp. The plan: a heavier reliance on more profitable trucks and SUVs to cash in on the boom market for big rides.
“If we were playing poker, I’d like my hand better than anybody else’s,” Wagoner was quoted as saying at that time.
Almost nine years later, GM is at the brink of bankruptcy. It has cut its workforce in half. Its stock price has declined 95 percent. GM’s survival now hinges on an expanded bailout from the U.S. government.
And Wagoner, who has been working for $1 a year since the start of 2009 in a show of shared sacrifice, has been forced to step aside by the Obama administration.
GM has declined to comment. A White House official, who asked not to be named because the announcement had not yet been made, said the administration had asked Wagoner to step down.
Analysts have said that GM’s problems began decades before Wagoner took over as chief executive.
Many also have argued that under Wagoner, the automaker made steady progress in cutting costs, improving quality, and turning toward more fuel-efficient cars.
Critics have countered that the changes came too slowly, leaving GM more vulnerable than key competitors when credit tightened and sales plummeted.
But on Sunday, both sides agreed that the timing of Wagoner’s resignation was more about political symbolism than the challenges associated with turning around a massive industrial enterprise that employs over 92,000 U.S. workers.
“Rick was very much an incrementalist and in the end it just wasn’t enough,” said Jeremy Anwyl, chief executive of autos website Edmunds.com. “The economy right now is exposing all of the car companies. None of them are viable. It’s just that some of them have deeper pockets than GM.”
GM has been kept afloat since the start of the year with $13.4 billion in emergency government loans and is seeking another $16.6 billion.
Wagoner, 56, was elected CEO in June 2000.
A graduate of Duke University with a degree in economics and a Master’s in Business Administration from Harvard University, Wagoner joined GM in 1977 and quickly rose through the automaker’s ranks of financial executives.
Although he had presided over a bad investment in Fiat SpA and the failure to pare GM’s money-losing brands such as Saab and Hummer, during his tenure at the top GM’s board remained steadfast in its support of Wagoner.
Late last year, Wagoner and the CEOs of Ford Motor Co and Chrysler were blasted by U.S. lawmakers for traveling by private jet from Detroit to Washington, D.C. to ask for a government bailout. They were subsequently parodied on the comedy show, “Saturday Night Live.”
University of Maryland economist Peter Morici called Wagoner’s tenure “mediocre” but disagreed with the timing of his departure.
“I don’t know that you change captains of the ship in a terrible storm,” Morici said. “Even if he got you into the storm, he knows how to get you out.”
GM has posted $82 billion in losses over the past four years. It has submitted plans to the government that include shedding its Hummer and Saab brands, which billionaire investor Kirk Kerkorian sought three years ago.
“If this is just sacrificing the CEO in some ritual way when nothing else changes, then it will really mean nothing,” said Rob Kleinbaum, managing director at RAK & Co and a former GM executive and consultant to the automaker. Kleinbaum has criticized GM’s inward-looking corporate culture.
GM, deep in its turnaround plan, had been grooming President and Chief Operating Officer Fritz Henderson as an eventual successor to Wagoner.
Henderson, promoted from chief financial officer last year, has been meeting with Obama administration officials along with Wagoner and other executives.
“He can step in and continue things,” said Aaron Bragman, an analyst with IHS Global Insight. “This is not necessarily an environment where you can shop for someone from outside.”
Since last summer, GM has had to repeatedly adjust its turnaround plans as U.S. auto sales sank to their lowest monthly rates in 27 years.
“I think Rick’s story will be written over the next six or seven years when there is a return to a market that is more reasonable,” said Dave Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan.
“You can’t really judge anybody during this kind of period because of the dramatic decline in revenue that is an absolute killer for an industry that has high capital costs.”
Reporting by David Bailey and Kevin Krolicki; editing by Patrick Fitzgibbons, Toni Reinhold