DETROIT - Rick Wagoner's promotion last week marks another victory for the financial team that took control of General Motors after the 1992 boardroom coup.
Wagoner is cut from the same cloth as predecessor Jack Smith, who will remain at GM indefinitely as chairman. Both get credit for billions of dollars of higher shareholder value and for GM's rebounding stock price. GM's stock has outgained the S&P 500 since 1992.
Wagoner, who becomes CEO on June 1, promises to keep GM on that course.
'I had a lot of say in who's got the jobs today (at GM). As long as they keep performing like they have been, I don't see any wholesale changes,' Wagoner said.
But GM suffers from a split personality. While the Wall Street GM builds shareholder value through Internet partnerships and subsidiary Hughes Electronics Corp., the automotive GM faces serious challenges in North America. The past two years have been marred by costly labor strikes, escalating dealer dissatisfaction and declining market share.
Wagoner says he has no intention of letting North America slip farther.
GM will do fine 'if we keep selling what we can produce,' he said.
'Our guess is we can do that this year,' he said. 'I don't expect we'll lose share, but what is critical is we need to sell our capacity out. We did a pretty good job of that last year, and that's the plan for this year.'
Wagoner will be 47 on Wednesday, Feb. 9. He will be GM's youngest CEO ever.
GM has handed back $26 billion in capital to its shareholders during the past four years, GM CFO Mike Losh said in a January speech at the Automotive New World Congress.
Last week, GM added to that total, announcing it will give its shareholders $8 billion worth of its valuable Hughes tracking stock in exchange for their GM common stock. The tracking stock entitles holders to Hughes' profits but not its assets, which GM retains.
GM will use another $7 billion worth of the Hughes tracking stock to fund its pension plan.
Hughes, which has become a satellite communications giant, is not GM's only electronic commerce weapon. In November, GM bought 20 percent of Commerce One Inc., the California company that developed GM's TradeXchange business-to-business Internet site.
Losh last month valued GM's Commerce One shares at $3 billion.
'That's value creation for our shareholders that exists today, that simply didn't exist 90 days ago,' he said.
GM also is looking at other Internet related services, such as its OnStar in-vehicle communication system. OnStar, which will offer Internet access by year end, expects to have 4 million subscribers by 2003, up from 100,000 last year.
BUSINESS AS USUAL
On the automotive side, however, observers say GM is not moving fast enough.
Although Wagoner inherits a company much leaner than it was in 1992, he admits GM is still far from being the innovative, low-cost automaker he envisions.
His immediate challenges:
Revamping GM's lackluster vehicle lineup
Improving GM's relationship with its U.S. dealers
Forcing GM to take risks.
Wagoner said meeting those challenges will not require another reshuffling of executives nor a new COO, Wagoner's current title.
He also emphasized his support for GM's brand management, a movement at the company led by retiring board member John Smale and Ron Zarrella, president of GM North America.
'What we want to do is leverage the value of our family of brands, from the General Motors brand, to the Chevrolet, Pontiac, Saturn and others, to the specific product lines,' Wagoner said.
GM officials insist new products and a new company structure have GM's automotive business headed in the right direction.
'If we do that right over time, I suspect and hope we'll gain market share here like we did in most of the other major markets around the world last year,' Wagoner said.
Wall Street analysts agree to a point.
'It's not an issue of them doing the right things anymore, it's an issue of them doing them fast enough,' said John Casesa, an automotive analyst at Merrill Lynch in New York.
A tall and well-spoken man, Wagoner has the ear of Smith, Vice Chairman Harry Pearce and his top lieutenants.
Many, including Pearce, repeat parts of Wagoner's four-point mission statement like a mantra. Wagoner's four points are that GM must move with a sense of urgency, become innovative, stretch beyond its limits and act as a single company.
'We want to celebrate our successes, learn from our mistakes, and never be satisfied,' Pearce told Automotive News in January.
The son of an Eskimo Pie Corp. accountant, Wagoner has gone from leadership role to leadership role beginning with his days as a high school basketball star in Richmond, Va., and continuing throughout his 23-year career at GM.
Wagoner has spearheaded new initiatives such as e-GM, a retail e-commerce business unit, and GM TradeXchange. His experience includes running GM's North American and Brazil operations and financial roles in the United States, Canada, South America and Europe.
But it remains unclear whether he has support outside GM's hierarchy.
Inside the company and out, a common complaint is that GM needs more 'car guys' and fewer 'bean counters.'
David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan, said Wagoner has plenty of vehicle experts to advise him.
The result is GM is taking more risks with vehicles, Cole said. He added: 'Unless you're really participating in the emerging market segments with risk products, you're share will just wither away.'