CEO Watch List - (Recommended Reading) Rick Wagoner, GM, Update 6

As General Motors GM (NYSE) continues to bleed the company is finally sending out signals that it understands the difficulties it faces.  As is so often the case with GM the drastic measures it is now taking may still be too little and too late.  Rick Wagoner GM's CEO continues to insist he is on the right road and understands what he needs to do to right GM.  I remain skeptical as I have in my previous blog posts.  Alex Taylor III has written another fine story for Fortune outlining the new steps being undertaken by Wagoner and his team to turn GM around.   According to Taylor Tuesday's announcement of GM changes illustrate,

... GM is reacting to events instead of anticipating them. Nowhere in Tuesday's announcement is there any mention of the structural changes that will allow GM to compete with a smaller market share shorn of its high-profit light trucks. No product lines were killed, no brands were euthanized, no big budget items wiped off the books. GM still has too many dealers selling too many individual models - and now it has even less money than before to market them.

Wagoner likes to say that nobody could have foreseen the spike in oil prices that made GM's old business model in North America obsolete. But he might have picked up a report titled "In the Tank: How Oil Prices Threaten Automakers' Profits and Jobs" that was produced by research operations just a few miles from GM's headquarters, in cooperation with the Natural Resources Defense Council.

It predicted that "sales, profits, and American jobs are at risk if Detroit automakers continue with their current business strategy in the face of higher oil prices."

That report was published in July 2005 - exactly three years ago.

Wagoner may survive his position but at what continued cost.  As GM workers, shareholders and the U.S. economy suffer the U.S.' largest automobile company should really be planning for the future rather than just reacting to events.

For more:

Financial Times

Bloomberg

Guardian UK

Businessweek

CEO Watch List - Rick Wagoner, GM, Update 5

As the American Automobile Industry flirts with a serious financial contraction or possibly worse, General Motors GM (NYSE) continues to lead the pack downward.  Earlier today Goldman Sachs listed GM as a sell.  According to a story today by Kevin Krolicki of Reuters, 

Shares of General Motors Corp hit their lowest level since 1955 and dragged down the auto sector on Thursday after Goldman Sachs cut the struggling U.S. industry's largest manufacturer to a "sell" rating and warned it would have to raise capital.

... With the Thursday price fall, GM's market cap fell to less than $6.5 billion. The company has the smallest market cap in the Dow Jones industrial average .DJI, of which it has been a component since 1925.

As I have been discussing for some time now, Richard Wagoner, GM's CEO, remains on the hot seat.  He was recently interviewed by Smart Money Magazine's, Reshma Kapadia.  I have excerpted below two of the interview's Q and A's to give you a flavor for Wagoner's problems and how he views them.

A lot of people are talking about a U.S. recession. Can the great American automaker still turn things around?

Sure. There are a number of things that will play out over the next couple of years that should improve our earnings. When we complete the 2007 labor agreement, we will get $4 billion to $5 billion in savings, a half billion when our supplier Delphi gets out of bankruptcy, and if the U.S. industry gets back to average sales, that will be $1 billion to $1.5 billion, conservatively. We don't have the profitability we want, but we are improving our cash flow. So even in a very difficult U.S. environment, help is on its way. But we're not waiting for help to get here. We are coming up with other ways to improve our cost structure, including a buyout offer for U.S. hourly employees.

What do you say to those shareholders who are fed up with the stock price?

I'm a big shareholder myself; I share the frustration. I'm confident that as the market psychology turns and assumes some of these issues are behind us, we'll be well positioned. I talk to major investors regularly, and of course they would love to see a higher stock price. But they say, "Keep going and do the right stuff for the future." So that's what we are trying to do.

The real question I am thinking -- is it now too late to make a change at the top of GM right now as gas, inflation, the economy, SUVs, Hummers and trucks all conspire to complicate the problems facing General Motors? 

For more:

LA Times