New 2010 Cadillac CTS Coupe - The last of the good ones from GM?

So, the Obama administration has decided they no longer like having Rick Waggoner as CEO of GM, so he should resign. It’s somewhat reminiscent of the mob “suggesting” that the local shop owner should pay them insurance money because the world is a dangerous place. Now the Obama administration can step in and tell a company that the administration knows more about their business than the company’s board of directors does, so they should be the ones to decide who leads and who doesn’t.

Where does this stop? Will any number of companies have to seek the administration’s approval before appointing people to management roles. What criteria will the government use to decide who is worthy to run a company and who is not? Will one of the primary criteria be who is more likely to toe the administration line on policy and procedure? A frightening thought, that. It points to the reason why taking federal money is a dangerous gamble, with plenty of strings, and no guarantee of success.

Precisely how much does the Obama administration know about running a large motor vehicle producer? As one of the major supporters of the administration are the Nation’s unions, it raises the question weather or not Rick Waggoner’s decision to renegotiate GM’s union contracts in 2007 played any role in the administration’s decision. In fact, GM probably should have declared Bankruptcy long ago so they could have gotten out from under the parasitic agreements that greatly contributed to their downfall.

What role has Waggoner played in the decline in the General’s fortunes? Why precisely does he deserve to be removed as leader of one of our nation’s greatest companies? He has been criticized auto industry insiders and analysts for being hesitant to close plants and streamline the company in an effort to restore profitability in the face of declining sales.

Many have condemned him for relying on large trucks and SUVs as a main profit center for GM, such that when fuel prices rose dramatically last year the company was left with expensive, unsold inventory. Many of these same people and others really feel that the average citizen has no place piloting such mammoth vehicles. They are concerned that that such modes of transportation consume far more that their fair share of resources. However that is determined….

The consensus from many environmentalists, those in the administration, and others is that GM brought about their own demise by relying too heavily on such large vehicles. When gas prices rose, they got a well deserved whacking about the knees.

The ironic thing is that GM has been losing money and the aforementioned large vehicle sales were actually making a handsome profit for the firm. Should they have stopped production of such vehicles, only to see their revenues and profits decline even further? That probably would not have been a sound business strategy. I can see it now..”Well, product line ‘A’ is making us the majority of our profit, but some people don’t like it, so we should probably shut down production.” “But Jack, the customers love them, and they keep buying them.” Yes, but that’s not really important right now, is it.”

It wasn’t like some people would have you believe. GM was not like a drug peddler at a junior high school. They didn’t force these vehicles on consumers. No, they built them in response to consumer demand. They couldn’t just their product mix change at a whim when fuel prices rose 35% in a year. Consumer demands can change much more quickly than the products they want to buy.

For those of you unfamiliar with product development cycles in the automotive business, they typically take many years. Motor vehicles are complex pieces of machinery, subject to any number of regulations and customer demands. You can’t just slap them together in a few months in response to any market condition that happens by.

Waggoner has done more than any GM CEO in recent times to reverse the General’s problem of just plain producing generally inferior products over the past 30 years. That’s right, for the most part, GM made crap with 4 wheels. There were exceptions, such as their pick up trucks, but mainly there was quite a bit of garbage rolling off the assembly lines.

Waggoner has, in great measure, changed that. Since the beginning of the millennium there have been some nice, even world class machinery leaving the lines at GM. Cadillac has seen a resurgence, releasing the redesigned and highly regarded CTS last year. This mid-sized luxury sedan has been favorably compared with the best from BMW, Lexus and Mercedes. GM’s trucks are better than ever. The Corvette provides world beating performance and handling for a fraction of the cost of other sports cars. The new Chevy Malibu looks good, has a nice interior, and gets over 30mpg on the highway, while holding 5 passengers in relative comfort.

Something else; wonder of wonders, GM finally learned how to design a nice interior and cockpit. No more ugly interiors in American autos. The new truck and Cadillac interiors are fantastic. The Chevy Malibu is a great place to spend time behind the wheel, and the Corvette finally lost the diso, video game look to something more like you’d find inside a real sports car.

The new Chevy Traverse and GMC Acadia is an attractive, large SUV for those who don’t need to tow heavy loads. It returns the best fuel economy in it’s class while seating 8 with a decent amount of room.

It’s not to say that every vehicle GM produces is fantastic. But it’s too bad just as they are finally producing some great vehicles again, they may be led around by the administration like a dog on a chain. They’ll be able to dictate who leads, how they do their marketing, where they have their corporate retreats, how they travel, and which vehicles they produce. That doesn’t sound like a recipe for success. It sounds like a 5-year plan in the Soviet Union, circa 1935.

If this is any indication, industries will be led by those who know nothing about them, have never run a business before, and beholden to any number of interests besides the share holders and employees. If the share holders and board of directors decide that Waggoner has been doing a rotten job and want him fired, that’s fine, kick him out post haste. However, the leadership of the country should not also be the leadership of our major (and possibly minor) businesses.

In this case, they’re probably booting out the wrong guy. He’s actually done a decent job and whoever they appoint to replace him may not do nearly as well. If the government can lead him around like a bull with a ring through his nose, they’ll probably be much happier.

Maybe those in Congress should hold themselves to the same standard. Wouldn’t that be a change. When congress has a 10% approval rating, as they did a few months ago, perhaps they should resign. Chris Dodd, (D-CN) indicated that it was time for Waggoner to move on. Maybe Dodd should take his own advice. At least maybe he could help all of us get a better mortgage interest rate. Are the likes of Dodd who we want at the helm of or businesses or our nation?