Maximum Bob vs "Red Ink Rick"

[Guest buickman]

My friend Jerry and I often disagree. today we are in complete agreement:

What About Bob?

Jerry Flint, 04.03.06, 2:30 PM ET

"New York - General Motors just announced that it is selling 51% of GMAC, its moneymaking vehicle-financing arm, for $14 billion cash over three years, including $10 billion by the end of this year. The buyer is an investment group led by Cerberus Capital Management.

GM (nyse: GM - news - people ) should pour every penny of the sale's proceeds into new vehicles and new technology. Unfortunately, it is likely that much of the money will go into what I call the burial fund--money to pay off workers to retire early and give up benefits; money to guarantee medical care; money for the infamous Jobs Bank that pays workers for years not to work.

In fact, the GMAC deal will probably encourage the United Auto Workers union to hang tough against Delphi (nyse: DPH - news - people ), the giant parts maker. Delphi, once part of GM and still a significant GM supplier, is bankrupt and wants to cut pay and benefits drastically. GM is already chipping in to take some of the Delphi people back on its payroll. Supporting Delphi could eat up most of the proceeds from the GMAC sale.

Last week GM sold a piece of its GMAC mortgage business, and it recently sold or is selling its interests in Japanese automakers Suzuki (other-otc: SZKMF.PK - news - people ), Fuji Heavy Industries' (other-otc: FUJHY - news - people ) Subaru, and Isuzu Motors (other-otc: ISUZF - news - people ). In all, GM is picking up about $20 billion from these sales, including GMAC. That is pretty much the value of GM's common stock, so theoretically GM could take the money, buy back its stock and take the company private. Don't bet on it.

What happens now?

The key issue is still management. It is widely expected that some time this year, if there is no sign of a turnaround, Chairman and Chief Executive Rick Wagoner will step down. Will GM replace Wagoner with a leader of the Carlos Ghosn type, someone who understands the auto business and can lead effectively, or will it be another business-school MBA from the financial side of the company, the type that has led GM so ineffectively for decades?

If it were up to me, Bob would be the new GM boss. Bob, of course, is Robert Lutz, GM's vice chairman in charge of global product development. He's responsible for the vast improvements we are beginning to see in GM vehicles.

Lutz knows the car business as no other American: He was an executive vice president at Ford Motor (nyse: F - news - people ) and president of Chrysler. In his younger days, he led the great BMW sales charge in Europe. He isn't a college-trained engineer--for which some snub him--but a self-taught car guy. He's Detroit's best, a hot driver who also owns a jet fighter and a helicopter, an ex-U.S. Marine fighter pilot and the best-looking 74-year-old I know.

Ah, there's the rub. He's 74.

One more little problem: Lutz is not a backstabber, and this is a business in which backstabbing is fine art. He's loyal to the core, and he won't push Wagoner down the stairs.

Lutz has run into some problems at GM, which is natural for someone who attracts the press like a rock 'n' roll god. In an age when public relations departments carefully coach and script every public word uttered by their chief executives, Lutz never learned how to be politically correct. Sometimes Lutz speaks with too much candor, such as the time last year when he called Pontiac and Buick damaged brands--which, of course, is the truth. Dealers thought Lutz wanted to kill Pontiac and Buick, and they went berserk. In fact, Bob was working hard to save those nameplates, but he was just being honest.

To help boost Pontiac, Lutz personally pushed through the Pontiac Solstice roadster, which is a sensation. Of course, the Lutz magic doesn't always work as planned. Another effort to give Pontiac some quick pizzazz by importing a fast coupe from Australia and calling it a GTO was less than a success. Right now, he is pushing global platforms, working to adapt European structures for cars here in America. We'll get an idea about whether that is a viable plan this fall when new European-type cars are built here as Saturn models. My guess: they'll revive the brand.

Lutz built the great team that saved Chrysler in the 1990s. He fought with the charismatic Lee Iacocca, and they didn't love each other, but they were a team. His last great car battle at Chrysler was to bring out the PT Cruiser, which became immensely successful. Lutz was the obvious candidate to replace Iacocca when he retired, but Iacocca delayed his retirement. Anyway, no one that Iacocca knew would ever be good enough for him. When Iacocca finally brought in Bob Eaton from GM to run Chrysler, Lutz became Eaton's loyal number two.

With the Daimler buyout of Chrysler, Lutz got rich--tens of millions rich--though it wasn't his decision to sell the company. He just couldn't sit still or play golf. He tried to save Exide (nasdaq: XIDE - news - people ), the battery maker, but when Wagoner asked Lutz for help, he was ready to carry the flag again, and he officially joined GM on Sept. 1, 2001.

His immediate effect on GM was electric. The company pushed out Ron Zarrella, the generally despised president of North American Operations, and junked its ridiculous product development program, which had made real product development all but impossible. For the first time in ten years, car people began to have some leverage over the accounting and marketing people at GM.

Even with Lutz, GM is still struggling. I say that without Lutz, the company wouldn't have a chance. Today the product is improving, quality is up, designs are much better, the interiors are good and the fit and finishes are top flight. So far, there haven't been any "Gotta Have" cars--to use a Lutz term--but many of the new vehicles are at least moderately successful. The new big trucks are world-class.

I'm not saying Lutz will become head of General Motors. But I'll tell you this: If he did, they'd have a "Semper Fi" leader who would say "follow me" and mean it. And people would follow him.

GM would come back--or go down fighting, not whimpering.

Moses was 120 when he led his people to the promised land.

So why not Bob?"

In fact if one were to check the minutes of last year's annual meeting, they would find that this is exactly the suggestion I made in Wilmington.

Like him or not, no one can argue with the fact that Maximum Bob is a "Car Guy".

Buickman

[Croc]

A vapid article posted by a vapid poster.

Hasn't Lutz said he doesn't want to be CEO?

He already has enough influence within the company as-is...

[caddyfan2004]

GM (nyse: GM - news - people ) should pour every penny of the sale's proceeds into new vehicles and new technology. Unfortunately, it is likely that much of the money will go into what I call the burial fund--money to pay off workers to retire early and give up benefits; money to guarantee medical care; money for the infamous Jobs Bank that pays workers for years not to work.

GM has no choice but to pour money into buyoffs and the Jobs Bank, because these are contractual agreements until at least 2007.

[Guest buickman]

Actually they could have changed the marketing and put people back to work, meanwhile keeping GMAC. Rather, IMO they incur short term suffering to achieve long term goals. That is where the CEO is guilty of misleading investors.

Buickman

Edited April 4, 2006 by buickman

[Northstar]

Actually they could have changed the marketing and put people back to work, meanwhile keeping GMAC. Rather, IMO they incur short term suffering to achieve long term goals. That is where the CEO is guilty of misleading investors.

Buickman

So you're saying you'd rather have short term success but fail with long term goals? Sounds like a GREAT plan to me

[Cadillacfan]

The key issue is still management. It is widely expected that some time this year, if there is no sign of a turnaround, Chairman and Chief Executive Rick Wagoner will step down. Will GM replace Wagoner with a leader of the Carlos Ghosn type, someone who understands the auto business and can lead effectively, or will it be another business-school MBA from the financial side of the company, the type that has led GM so ineffectively for decades?

Stop dreaming. Ghosn said he would never leave. GM and Ford had already courted him already and he turned them down.

[Guest buickman]

So you're saying you'd rather have short term success but fail with long term goals? Sounds like a GREAT plan to me 

<{POST_SNAPBACK}>

I would have some respect for Red Ink Rick if he had said it like it is rather than avoiding making the necessary corrections in marketing to drive sales. Instead he played the small investors into thinking he sincerely wanted to improve. These people are not that sequentially stupid as to lose so much share so consistently. They know exactly what they are doing and that is why the Board supports such dismal failure. Imagine Al Davis of the Raiders on GM's Board. Do you think he would allow a mantra of "Just lose baby"?

Buickman

[97regalGS]

Stop dreaming.  Ghosn said he would never leave.  GM and Ford had already courted him already and he turned them down.

"Carlos Ghosn type" ie. not Ghosn himself, but someone LIKE him.

[regfootball]

buickman, you need a blackberry.

[Newbiewar]

Stop dreaming.  Ghosn said he would never leave.  GM and Ford had already courted him already and he turned them down.

Carlos... the same one who heads Nissan?

The same one that since his leadership has developed undependable vehicles?

"Carlos Ghosn type" ie. not Ghosn himself, but someone LIKE him.

[Guest Josh]

I'll replace Ghosn with Wolfgang Burnhard.

He's the next big thing in Automotive news.

I say GM should have scooped him up long ago.

Lutz even tried to two years ago.

He'll be in GM before the middle of '07

[RJB]

Jerry York will be next!! Mark my words. I don't want it and a lot of people don't either. But hey it sounds like a good rumor...LOL!!!! Seriously, a lot of people have mentioned that around work here. So with the way the boat is rocking you never know with these unsettling times.

[91z4me]

I'll replace Ghosn with Wolfgang Burnhard.

He's the next big thing in Automotive news.

I say GM should have scooped him up long ago.

Lutz even tried to two years ago.

He'll be in GM before the middle of '07

Can I quote you on that?

[97regalGS]

Can I quote you on that?

based on previous record, look for him to be here by middle 2008.

[Guest Josh]

I'd rather put my money where my mouth is and be off by a year than pull the "I told you so" game when I actually never told ya so.

[91z4me]

I'd rather put my money where my mouth is and be off by a year than pull the "I told you so" game when I actually never told ya so.

I was just joking, Josh. It seems as though everyone wants to bag on you so I thought I would do it in jest.

We ?

[Guest Josh]

I understand completely. I still continue to treat everybody the same.