Fighting Back

This is a tough time to be Rick Wagoner. The embattled chairman and CEO of General Motors is facing a growing chorus of critics calling for his head. With his company losing $10.6 billion last year and Toyota on the verge of overtaking GM as the world's No. 1 automaker, Wagoner has become the personification of Detroit's declining fortunes. He's struggling to engineer a turnaround by closing a dozen factories, offering buyouts to all 113,000 of his blue-collar workers and trying to jump-start sales with new SUVs at a time of high gas prices. Last week his job got even harder. First, GM revealed a widening probe into its accounting practices by the SEC and a federal grand jury. And then Delphi, the bankrupt car-parts maker once owned by GM, asked a judge on Friday to toss out its labor contracts. That could ultimately spark a strike that could drive GM into bankruptcy, analysts say. Wagoner, 52, has kept a low profile as the criticism has mounted. But now he's decided to come out swinging. In an interview with Newsweek, he offers a passionate defense of the job he's doing and rejects the notion of replacing him with an outsider. Excerpts:

WAGONER: Completely, because I know in the end, all of us are going to be judged on accomplishments, whether we address issues and take advantage of opportunities. And I think we're moving on both fronts, frankly, pretty well. So I feel very confident.

That is so simplistic. These are sophisticated problems with historical tails that run back 80, 90 years. The chance of someone coming in and understanding our business, making the right calls and doing them in cooperation with key constituencies like dealers and unions, is absolutely microscopic. That would be the biggest risk I've ever heard of.

I look at the pictures. [Smiles] Obviously, I flip through all the major papers but, frankly, I don't dwell on it.

They talk about that we are not moving to address the problems. I want to say, "Excuse me, what part of $15 billion in health care [cuts], 12 plants [closing], 30,000 people [cut], attrition programs, salaried health-care and retirement [cuts], salaried head-count reduction, a new sales and marketing strategy, advancing product programs--what part of that doesn't exhibit a sense of urgency in doing what matters? What's frustrating to me is a lack of recognition of the progress.

It's easy to announce stuff. It's not so easy to do stuff, particularly if you can't do it yourself, if you've got to do it in cooperation or in conflict with unions, if you've got to do it with Delphi, if you need partners to consider a partial sale of GMAC. What has been done in the last six months borders on unprecedented accomplishments and advances. This stuff didn't happen because somebody decided on Jan. 15, why don't we do stuff? This stuff happens because we're working on it, we're ready to do it, we're talking to people and then when we have it ready, we announce it.

He's a proactive participant in the board process. Beyond that, I don't think it's appropriate for me to comment.

No, there's a lot of footnotes on that. If one plant at Delphi goes on strike for a week? No. I mean it's inconvenient, but conceivably it would have minimal impact on us. If the whole of Delphi goes on strike for a long period of time--well, I don't see why they would do that. It's not in Delphi's interest. It's not in the UAW's interest. And it's not in our interest.

First of all, look at Delphi. That's exhibit A. People assume that just because you go into bankruptcy you can all of a sudden walk away from all your historical liabilities to creditors and to workers. And it's not clear that it's just that simple. Because workers and unions do have the opportunity to participate in negotiations, it's not a one-way cramdown.

Well, to be perfectly fair, I was last CFO in 1994. But it doesn't mitigate the fact that, hey, mistakes were made.

Sure, absolutely. I didn't like it at all. But once you discover that something is awry, you need to fix it. We went through something like 20 million documents to put all this stuff together.

From the priorities, the challenges that we're addressing today, this isn't at the top of my list. I'd say our focus at this point is getting our business right and profitable.

Yes. I think it's clearer than ever that our fate is somewhat shared with the union's. We've had pretty good cooperation working through some very, very difficult issues. We are essentially changing the history of the domestic business at General Motors. It's not easy, but it's very worthwhile and important. And we're going to do it.