Chairman and chief executive officer, General Motors Corporation
Born: February 9, 1953, in Wilmington, Delaware.
Education: Duke University, BA, 1975; Harvard University, MBA, 1977.
Family: Married Kathleen "Kathy" Kaylor, 1979; children: three.
Career: General Motors Corporation: 1977–1981, various positions in GM's Treasurer's Office; 1981–1984, treasurer of General Motors do Brasil (GMB); 1984–1987, executive director of GMB; 1987–1988, vice president and finance manager of GM of Canada; 1988–1989, group director, strategic business planning, Chevrolet-Pontiac-Canada Group; 1989–1991, vice president, finance, for GM Europe; 1991–1992, president and managing director of GMB; 1992–1994, executive vice president and chief financial officer; 1994–1998, executive vice president of GM and president of North American Operations; 1998–2000, president and chief operating officer; 2000–2003, president and chief executive officer; 2003–, chairman and chief executive officer.
Awards: Named Executive of the Year by Automotive Industries , 2001.
Address: General Motors Corporation, 300 Renaissance Center, Detroit, Michigan 48265-3000; http://www.gm.com.
■ G. Richard "Rick" Wagoner Jr., who in June 2000 at the age of 47 became General Motors's youngest CEO in history, took on the additional responsibilities of chairman on May 1, 2003. The world's largest automaker, General Motors ranked second among all American companies in terms of annual revenues, topping the $185.5 billion mark in 2003. However, it remained locked in a no-holds-barred battle with the rest of the worldwide auto industry for market share, and Wagoner
was determined to take whatever steps were necessary to in crease GM's piece of the auto buyer's dollar.
After two years of U.S. market share gains, GM in 2003 experienced a reversal as its share of the American automotive market shrank from 28.4 percent to 28 percent on a 2.4 per cent decline in U.S. revenues. Undaunted by the small decline, Wagoner in early 2004 told security analysts he was optimistic that the automaker would once again increase its market share in 2004. He predicted 2004 earnings of $6 to $6.50 a share. Of what it would take to succeed in the international auto marketplace, Wagoner told the Associated Press: "The winners in tomorrow's global auto industry will be those companies that best combine the efficiencies of global scale with a superb focus on local markets. I like GM's position" (January 8, 2004).
Although GM held 15.2 percent of the global automotive market, Wagoner faced an uphill battle in keeping the company profitable and growing its market share, according to a November 2003 report in Fortune magazine. In addition to the cutthroat competition of the automotive business worldwide, the company was staggering under the multiple burdens of government regulation, overcapacity, and massive pension and health care financing costs. Wagoner was particularly outspoken about the Japanese government's efforts to keep the yen artificially weak, which gave some of GM's biggest competitors—notably Toyota, Nissan, and Honda—a decided advantage in the international marketplace. Interviewed by Mark Haines on CNBC cable television in early 2004, the GM CEO said that the latest data indicated Japan had spent roughly $150 billion over the previous year to keep the yen down against the U.S. dollar and the euro.
Born in Wilmington, Delaware, on February 9, 1953, Wagoner spent most of his childhood in Richmond, Virginia. His father, a graduate of Duke University, extolled the virtues of the prestigious private North Carolina university to both Wagoner and his younger sister. Wagoner, an enthusiastic and promising basketball player in high school, took his father's advice and enrolled at Duke, which for decades had fielded a standout basketball team. Although he was majoring in economics with an eye to a career in business, Wagoner, who stood six feet four, secretly dreamed of becoming a professional basketball player. Those dreams, however, were dashed before his first year at Duke had ended. Wagoner played on the freshman basketball team but, as quoted in the Chronicle , Duke's daily newspaper, in early 2004, "learned pretty quickly I would not be pursuing a career in the NBA."
While at college, Wagoner met Kathleen Kaylor, who was two years behind him at Duke's undergraduate Trinity College. The couple married in 1979; they have three sons. Wagoner in 1975 earned his bachelor's degree in economics from Duke and enrolled in the MBA program at Harvard University. In 1977, shortly after receiving his MBA, he took a job as a financial analyst with GM's Treasurer's Office in New York City. According to the Chronicle (February 2, 2004), Wagoner found New York a bit overwhelming at first, but in time the job there proved to be "a great working environment with great people."
For the next four years Wagoner steadily worked his way up the ladder at GM's Treasurer's Office. In 1981, encouraged by his wife, he accepted a position as treasurer with General Motors do Brasil (GMB), the automaker's Brazilian subsidiary. This job, Wagoner told Automotive Industries , gave him an excellent overview of GM's entire business but on a scale that was easier to grasp than it would have been at GM headquarters in Detroit. "Manufacturing, engineering, how to deal with the government and banks … there were even days we had to get loans to meet our payroll" (February 2001).
In 1984 Wagoner was promoted to executive director of GMB, a post he held until 1987, when he was named vice president and finance manager of GM of Canada. In 1988 Wagoner was named group director for strategic business planning at the Chevrolet-Pontiac-Canada (C-P-C) supergroup. After participating in a broad range of business decisions at GMB and GM of Canada, he found the job at C-P-C less than satisfying. C-P-C had a huge central office but was very compartmentalized. "My ability to contribute wasn't the same," Wagoner told Automotive Industries (February 2001). "These were independent groups, stapled together. C-P-C gave us no economies of scale or efficiencies—not a winning strategy for the future." Although he spent only a year at C-P-C, Wagoner took a very valuable lesson away from the experience, one that would serve him well in the future.
After his brief stint with C-P-C, Wagoner was posted to Zurich, Switzerland, as vice president, finance, for GM Europe. After two years in Zurich, he returned to Brazil in 1991 as president and managing director of GMB. As the leader of GM's Brazilian operations, Wagoner was credited with updating the company's operations in this key South American market. According to Forbes magazine, Wagoner championed the "get current, stay current" strategy at GMB, scrapping GM's previous practice of selling older-model cars in Brazil; instead, he brought the latest models to market there. It was in these two high-level jobs, Wagoner told Automotive Industries , that he learned about the importance of integrating a great product, close cost control, lean manufacturing, and global purchasing. "Both experiences showed me what we could do when we leverage GM's global resources. It significantly molded my thinking and still does today" (February 2001)
In 1992, 15 years after going to work for General Motors, Wagoner finally made his way to GM's corporate headquarters in Detroit, as executive vice president and chief financial officer. His success on the financial side of the company's operations had made him a logical choice for this post. His appointment as CFO put him on the team being assembled by John G. Smale, the lead director on GM's board, and John F. "Jack" Smith, then president and CEO, to return the automaker to profitability. The early 1990s, under the leadership of Robert Stempel, had seen big losses for GM: $2 million in 1990, $4.5 billion in 1991, and a whopping $23.5 billion ($20.8 billion from an accounting charge) in 1992. Late in 1992 Stempel was replaced by Smith after a boardroom coup.
A year after his appointment as CFO, Wagoner was given the added responsibility of overseeing GM's worldwide purchasing operations. From 1994 until 1998, he served as executive vice president of GM and president of the automaker's North American Operations (NAO). Wagoner has described himself as something of an outsider, coming as he did from the financial side of GM's operations. "I didn't tear down engines at 16," he told Irene Gashurov of Fortune (February 21, 2000). "But I think my product instinct is pretty good…. I work here because I have the same passion for product that any CEO does." In the latter half of the 1990s Wagoner was an ardent supporter of GM's advanced design system called APEX (Advanced Portfolio Exploration). Under APEX a team of more than 120 engineers and marketing specialists actively designed, engineered, and test-marketed 50 new vehicles at a time. Of Wagoner's contribution to the new direction in GM vehicle design and marketing, GM designer Wayne K. Cherry told Fortune (February 21, 2000), "Rick is the reason our product-development strategy has turned around."
As president of NAO, Wagoner engineered a major turnaround in this most crucial of GM's markets. At the time he took over at NAO, the division had suffered three consecutive years of losses, totaling in excess of $11 billion. In 1994, his first year in the post, NAO managed to squeeze out a profit of roughly $680 million. For 1995 NAO's earnings jumped to $2.4 billion. Work stoppages in the first and fourth quarters of 1996 held NAO's earnings down to $1.2 billion that year, but the division bounced back in 1997 with a profit of $2.3 billion.
Wagoner's success in turning things around at NAO made him an ideal candidate for higher office within GM's corporate structure, and in 1998 he was tapped to serve as the company's president and chief operating officer. In his new post, Wagoner spearheaded a campaign to centralize the giant automaker's sales, marketing, and other operations. For decades the company had been operated as a collection of semi-autonomous fiefdoms, but under CEO Jack Smith and Wagoner GM's management took pains to coordinate its multivarious functions more closely. Wagoner told Bill Koenig of the Indianapolis Star and News (November 17, 1998) that such centralization had "never been an objective until Jack took over," referring to Smith's appointment as CEO in late 1992.
Another top priority for GM in the late 1990s was labor relations, an area in which the giant automaker lagged its competitors. Wagoner told the Star and News that GM was making an effort to repair its strained relationship with the United Auto Workers (UAW): "My sense is people are working hard on (labor) issues" (November 17, 1998). Early on in his dealings on labor issues, Wagoner was perceived as a hardliner. In the period between the beginning of 1996 and the end of 1998, according to BusinessWeek , Wagoner's efforts to boost productivity and outsource some manufacturing operations helped to trigger 13 work stoppages with a collective cost to the automaker of $4 billion. In what was probably his worst error of judgment, Wagoner in the spring of 1998 ordered dies removed from a Flint, Michigan, plant that was about to begin manufacturing critical truck components. Workers were so infuriated by the move that they shut down all of GM's manufacturing operations. Of that misstep, Wagoner told BusinessWeek: "Just add that to the list of the other million things where we probably made the wrong call" (February 1, 1999).
Stung by the consequences of his hard line on labor issues, Wagoner in late 1998 began softening his approach. BusinessWeek (February 1, 1999) reported that Wagoner had consulted with top UAW leaders before naming Gary Cowger to head GM's worldwide manufacturing and labor relations. UAW president Stephen P. Yokich told the magazine that the UAW was pushing "for someone who could work well with the union," and Cowger's years on the factory floor had earned the union's respect. Wagoner also made it a point to maintain closer ties with union leaders, participating in meetings and telephone consultations. "We're opening up the dialogue a lot more," he told BusinessWeek .
On June 1, 2000, Wagoner became GM's youngest CEO in history when he succeeded Jack Smith in that position. Wagoner retained his post as president, while Smith remained GM's chairman but handed over responsibility for leading the corporation on a day-to-day basis to his protégé. Smith told the Richmond Times-Dispatch that the younger man's appointment was not just a reward for what Wagoner had already accomplished but also "a vote of confidence that he can take GM to even greater heights in terms of products, services, and shareholder value" (February 4, 2000).
Wagoner had already distinguished himself from his predecessors by breaking with a long-running GM tradition of promoting from within. Wagoner's first major hire from outside GM's ranks actually came in February 1999, more than a year before his promotion to CEO. Steve Harris, one of the auto industry's most widely respected spokespersons, was lured away from his job as senior vice president of communications at DaimlerChrysler to become GM's vice president of communications. Less than six months after taking over as CEO, Wagoner brought longtime Ford Motor Company executive John Devine on board at GM as vice chairman and chief financial officer. Perhaps the most daring of Wagoner's hires from outside came in early August 2001 with the appointment of Robert Lutz, a former vice chairman at Chrysler Corporation, as GM's vice chairman for product development. The Swiss-born Lutz had worked closely with Lee Iacocca to lead Chrysler's second comeback in the late 1980s and early 1990s by bringing to market such innovative products as the Dodge Ram, Dodge Viper, and Plymouth Prowler.
In naming Wagoner its Executive of the Year in February 2001, Automotive Industries interviewed a handful of widely respected auto industry observers, all of whom applauded the GM CEO for his willingness to hire from outside in order to put together the best possible team. Dave Cole, director of the Center for Automotive Research, said, "Rick has already broken the historic, internalized culture at GM. He's brought in key outside executives like Steve Harris and John Devine. Equally lavish in praising Wagoner's outside hires was auto industry analyst and author Maryann Keller: "Hiring John Devine to be GM's chief financial officer was a terrific move by Wagoner. It shows he's willing to pick his own team. Devine knows the car business."
The impact of Wagoner's bold moves on GM's bottom line was perhaps the clearest sign that the new CEO was moving in the right direction. In 2001 GM posted a profit of $601 million on worldwide sales of $177.3 billion, a net profit margin of only 0.3 percent. The company's net profit margin jumped to 0.9 percent in 2002, when net income hit $1.7 billion on revenue of $186.8 billion. Most impressive of all was the company's performance in 2003, when net earnings rose to $3.8 billion on sales of $185.5 billion for a net profit margin of 2.1 percent.
Although GM faces a wide array of new and continuing challenges in its quest to pad its bottom line and increase its market share, Wagoner seemed confident when he was interviewed on the CNBC cable network on January 5, 2004. He expressed his belief that the auto market in the United States would run "at a higher annualized rate" in 2004 than in 2003. One of the biggest challenges facing GM—and Wagoner—was finding a way to increase the earning power of its automotive sector. In recent years much of the company's earnings came from GMAC, its financing division, which finances not only autos but homes as well, a business that boomed in a time of record low mortgage rates.
Wagoner and his family lived in suburban Detroit. Away from his responsibilities at GM, he served as chairman of the board of visitors for Duke University's Fuqua School of Business and also sat on the board of trustees of the Detroit Country Day School.
See also entry on General Motors Corporation in International Directory of Company Histories .
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——, "Looking Out for No. 1: General Motors CEO Rick Wagoner Speaks Out on the Yen, Health Care—and Why He Doesn't Think Much about the Rest of the Big Three," Fortune , November 24, 2003.
——, "No. 25: Rick Wagoner: General Motors," Fortune , August 11, 2003.