GM's innovative boss

William Holstein:

WITH billions of federal dollars flowing to General Motors, and with the incoming administration likely to discover that still more assistance is required, we can expect renewed calls for G.M.’s chief executive, Rick Wagoner, to lose his job as the price of failure. This view presupposes that Mr. Wagoner has not been willing to bring G.M. into line with the new global reality, that he has not designed cars Americans want to buy and that the company is a “dinosaur,” to quote Senator Richard C. Shelby, Republican of Alabama.

In reality, Mr. Wagoner has presided over the most sweeping transformation of G.M. since the 1920s. He has reversed management’s long practice of meekly going along with the demands of the United Auto Workers, notably with a deal to transfer health care costs to a union-controlled trust over the next two years.

During his tenure, as president, then as chief executive, Mr. Wagoner also put in place a previously unthinkable two-tier wage system to reduce the company’s average cost per worker; halved the company’s unionized work force in the United States through layoffs and plant closures; spun off Delphi Corporation, its largest parts supplier; and sold controlling interest of GMAC, its financing arm.

A decade ago, suggesting that Mr. Wagoner attempt these restructuring goals would have been ridiculed as unrealistic. But these moves have largely succeeded and by 2010 should strip $5,000 from the cost of every G.M. vehicle.

The company has made enormous strides in imitating and improving upon Toyota’s lean manufacturing system. At G.M. plants, gone are the mass assembly techniques pioneered by Henry Ford. Instead, workers are organized in small Japanese-style teams and encouraged to make sure problems are fixed on the spot rather than passed down the line. The quality gap between G.M. and Toyota has been closed.

Mr. Wagoner has allowed his designers to recapture car design leadership with products like the Cadillac CTS, the Saturn Aura, the new Chevrolet Malibu and the revived and visually dazzling Camaro. The cliché that G.M. makes only gas-guzzling sport utility vehicles is years out of date.

On the innovation front, Mr. Wagoner was responsible for introducing OnStar, the onboard communications and navigation system, and he has made a huge commitment to lithium-ion batteries, which will power the Chevrolet Volt, an extended-range electric vehicle. If the Obama administration wants to create new “green” industries here in the United States, these batteries represent a potential $150-billion-a-year opportunity.

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GM styling has not really captured the imagination the way it did in its glory days. The Chevy Silverado, looks like the stylist decided not to finish the front end or they decided to give it a look of having its lower teeth knocked out. Still it is not a bad vehicle especially in terms of mileage. It is right with the Ford F-150 in getting around 20 mpg. Both are significantly better than the Dodge Ram which struggles to get 15 mpg. The Chevy and Dodge have had more maintenance issues than the Ford.

I am still skeptical on the hybrids. For optimal operation, you are still going to have a very limited range. You are also going to have two different systems to do maintenance on and a significant price will have to be paid for new batteries at some point in the life of the vehicle. When you consider the price premium for the hybrid vehicles the cost of driving them is probably more than the less costly less fuel efficient competition. If fuel efficient and dependability are your main criteria, you are probably still better off with a Honda Civic.

Most of the auto critics in Congress and in the media seem to be people who do not have much experience with owning and driving vehicles. Thomas Friedman may own a Prius, but he seems to spend most of his time on mass transit or being chauffeured. Only about one percent of the US population depends on mass transit regularly but that one percent seems to be the ones trying to tell the rest of us how we should be getting around. The fact is that the nearest mass transit to Washington, Texas is about sixty miles away, and it would not be that handy for the rest of the trip to Houston and back.