On the eve of what looks to be a successful IPO, an interesting question was thrown at me: Who deserves the most credit. Rick Wagoner or Steve Rattner?
Steve, of course, is in the middle of a self-congratulatory tour for a book that minces few words in laying the blame for many of GM’s then problems at Rick’s feet.
The truth is far more nuanced.
GM’s turnaround has three main components: The first is great success in Brazil and even more so, in China. The second is a series of ever more competitive product. And the third is a drastic restructuring of costs.
Rick Wagoner is the architect of GM’s global strategy. And he recruited Bob Lutz to energize GM’s product designers. Both these efforts were been well underway before sales plummeted in 2008. (Rick had even started to chip away at GM’s much maligned culture.)
Rick also scored some successes in reducing costs—notably in some agreements with the UAW.
All this was obviated—at least momentarily—by the financial crisis.
This is when Steve Rattner and the Auto Task force entered the picture. Steve was able to decisively tackle issues that had thwarted Rick for years. A task much easier when you have access to TARP funds and are backed by the full weight of the executive branch of the US governments? A machete was taken to GM’s cost structure and break even went down to a previously unthinkable market level of 10-11M units sold annually.
I am not suggesting that all was perfect under Rick’s watch. He inherited a bad hand. His dealings with Fiat ended in embarrassment and the taking of a major financial hit. Pragmatically, GM also lost over $80B, which is impossible to overlook.
But Rick deserves credit for GM’s current global sales success and for its product renaissance. Without these fundamentals in place, there might not have been a GM to save.