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From the Detroit Free Press:

UNCERTAINTY AT THE TOP: Buzz puts Wagoner in the hot seat

March 30, 2006

BY SARAH A. WEBSTER

FREE PRESS BUSINESS WRITER

The rain dance in the media to oust Rick Wagoner, General Motors Corp.'s chairman and CEO, seems to have whipped into a frenzy this week.

Of course, a rain dance doesn't always beget rain, and Wagoner's post might be as safe as any job can be atop an organization that is losing money and sales, and is the subject of at least six federal accounting investigations.

While there are no public signs that a coup is about to take place at GM's Renaissance Center headquarters, the Wall Street Journal, New York Times and Business Week have been speculating and suggesting this week which executives might be suitable replacements for the embattled Wagoner.

A GM spokesman said the board of directors backs Wagoner.

"We certainly understand why the media are speculating," GM spokesman Brian Akre said in a statement. "That speculation aside, the fact is that Rick Wagoner continues to have the support of the board of directors, the management team and GM employees and dealers. In other words, the support of all the constituencies that count. He's very focused on the tasks at hand to turn GM North America around." In some ways, the buzz is surprising coming off a period in which the Wagoner-led GM announced a series of major and methodical cost-cutting or money-raising moves. They included:

# A buyout program to cut hourly ranks, which might avert a strike at Delphi Corp., GM's largest supplier, and trim labor costs more than expected.

# The sale of part of GMAC Commercial Holding Corp., a commercial real estate subsidiary, for $9 billion.

# A landmark deal with the UAW to cut health care benefits, which will save GM an estimated $1 billion annually.

# A restructuring plan to idle 12 facilities and lay off 30,000 hourly workers.

These actions, some might think, would buy the 53-year-old Wagoner some extra time in his post -- recognized by many as the toughest job in American business.

But new revelations about the depths of GM's accounting irregularities, on top of GM's existing load of performance problems, create new concerns.

Wagoner -- who earned a bachelor's degree in economics from Duke University in 1975 and a master's degree in business administration from Harvard University in 1977 -- emerged from obscurity to become GM's CFO at the age of 39.

That was in 1992, as the automaker regrouped during the worst financial crisis in its history.

Since then, Wagoner has been in a leadership role where he seems to have made some critical management missteps.

The company has acknowledged it became too reliant on incentives and profits from big vehicles, such as SUVs. A string of less-than-inspired vehicles over the past six years has also helped GM lose 3.7 percentage points of market share. GM now sells less than one-fourth of the cars and trucks sold in the United States.

Wagoner might easily bounce back from these problems, but the mounting array of accounting irregularities raises new questions for the former GM CFO.GM, which recently said it lost $10.6 billion in 2005, or $2 billion more than previously reported, is now the subject of at least six SEC investigations, according to GM disclosures made this week.

It's unclear how serious some of those probes might be, or how far they might reach.

In the wake of this uncertainty, industry watchers have been compiling a pool of qualified Wagoner replacements. On the list: Lewis B. Campbell, chairman and CEO of Textron; Mark Hogan, president of the auto supplier Magna; Carlos Ghosn, the head of Nissan and Renault, and GM's current CFO, Frederick (Fritz) Henderson. Campbell and Hogan are former GM executives.

Despite the growing speculation, Keith Crain, chairman of Crain Communications, publisher of Automotive News and a longtime industry insider, said he doesn't think anybody outside GM's board really understands how vulnerable Wagoner's job is.

"It's all pure speculation," Crain said. "And I don't think it's kind to speculate. I think that the board makes their own decision based on their own criteria."
 

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Lol, I thought they were referring to Buzz Hargrove (CAW president)...
 
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