GOLDING’S TAKE: Make room in the early bath, Sergio needs freshening up
The world order in the auto industry changed dramatically today with Rick Wagoner of GM and Christian Streiff of PSA Peugeot Citroen both sacked. The reasons are different. The underlying cause is the same.
Wagoner, 56, was a hugely popular chief executive for nine years, much admired by his board members, very steady at the helm, but ultimately doomed. Someone had to take the early bath to atone for the world record trading losses of US$80bn over five years that GM is now asking taxpayers to pay for. Wagoner gets a well-earned rest but will not be remembered as a successful industrialist.
Streiff, 54, was an outsider to the industry, unsure of himself and of his support, whose confrontational style was needed when first he was appointed to drive inefficiencies out of the business. But once the time came for consensus he was not capable of defining objectives and leading the charge.
Both were warm and rewarding interviewees - always intrigued by the difficult question and patient and broad-minded in the search for an answer.
Ultimately though, for both men, there was no answer. There are too many carmakers, too much government intervention and vacillation, too many cars and too few buyers. That situation will persist.
Wagoner was open and honest and a people-person, and because of that he was able to get concessions from unions on legacy costs, support from fellow directors on strategy, and make GM a very good company to work for; too comfortable probably. The cost savings though have not been nearly enough; the business was never sustainable.
What went wrong for GM and the whole of the US industry was the sudden change in fuel prices. For far too long the US administrations had applied low tax on fuel which encouraged demand for larger and larger cars that had no relevance to the rest of the world. When the good times ceased to roll, demand crashed. Dominance in that product segment became a millstone.
Streiff was known to be confrontational in style before PSA took him on. He was chief executive of troubled plane maker Airbus for just four months. He was brought in from St Gobain to sort out the delays in delivery of the A380 but failed to get consensus among the owners and quit.
There has been trouble getting the French state, Peugeot family and the board to agree a national automotive strategy but this time Streiff did not quit. He was substituted, surprised, and sent for an early bath.
France is a curiosity in the European auto industry in that it is the only country to support two competing national champions - PSA and Renault. The recent view intriguingly expressed by Sergio Marchionne, the career banker and innovative head of Fiat, is that the world has room for six major car brands. Translated loosely and partially, that means that all three ailing American companies should be one, and Renault/PSA and Fiat should be another; but Marchionne has the strange idea that Fiat and Chrysler could usefully be joined.
As conditions worsen in the market, there is no scope for bravery of that sort. No matter how much progress Marchionne has made with the basket case that was Fiat, he does not have the strength to save Chrysler. If he persists in trying, there's a fair chance he will be taking an early bath with Rick and Christian.