Wagoner puts a happy face on GM's troubles
At home in Richmond, Rick Wagoner faces some tough questions.
By Geoffrey Colvin, FORTUNE senior editor at large

(FORTUNE Magazine) - Here he is, General Motors' CEO, returning to his boyhood home of Richmond to give a speech about how he's turning around GM (Research).

Rick Wagoner says he knows what people must be thinking, "Isn't that kind of like George Bush going to a military base to talk about his Iraq strategy?" The audience of 3,500 laughs because they realize just how on-target the analogy is. On the whole, they love him in Richmond. But even the hometown crowd, it turns out, won't let Wagoner off easy.

General Motors CEO Rick Wagoner
General Motors CEO Rick Wagoner
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General Motors' pension fund, that is. In 2005, the largest corporate pension fund in the U.S. earned 13%. (more)

Facing the hardest problem confronting any American CEO today, Wagoner has been blitzing the media the past few weeks, ever since Dow Jones Newswires president Paul Ingrassia, a former Detroit reporter for the Wall Street Journal, predicted in the Journal that GM's board would can Wagoner by summer.

This Saturday-night appearance isn't part of that campaign. Wagoner agreed to it almost a year ago after his sister Judy, a high-level Capital One (Research) executive, persuaded him to accept an invitation from the Richmond Forum, a local nonprofit on whose board she sits. But it clearly feels good for America's most embattled CEO to get home, to see - fleetingly - friends and family, to eat his mom's fried chicken, which he has long insisted is the world's best. And it's an opportunity to pursue the mission.

Wagoner dares not let up. Before his speech he visits a Cadillac-Saab-Subaru dealer, then heads to a new Hummer showroom, where salesmen beg him to start production of a Hummer pickup like the concept vehicle GM has lent them for display. Everybody wants one, they say.

The dealer is miffed by the bad press Wagoner has been getting. "That's not Alfred E. Neuman," he says, nodding toward Wagoner. "That's Alfred P. Sloan," the legendary CEO who rescued GM in the 1920s and then led it to dominance.

For those in the GM ecosystem it's comforting to remember that the company has survived a near-death experience before.

At the Landmark Theater that evening, Wagoner is frank about GM's weaknesses - out-of-control employee costs and uncompetitively high fixed costs - and impatient with his critics. He reminds the audience of President Bush's prescription for GM - build "relevant products" - then pauses and asks acidly, "Gee, why didn't we think of that?" The audience loves it.

His big-picture message is unvarying: GM is doing everything possible to survive and prosper for at least another century. Wagoner has no choice but to exude perfect confidence. GM is in a downward spiral, and he has to break out of it. All his constituencies - investors, workers, customers, communities - realize he must remain relentlessly upbeat for exactly that reason, lending his views a surreal, ritualistic quality. Yet he does seem to believe them passionately. He has no choice.

Attendees of the Richmond Forum spend the program's first half listening to the speaker and writing questions on slips of paper. Then a moderator (me, in this case) sorts through them and asks the speaker some of the questions (plus some of my own).

I can't resist starting with the most aggressive question in the stack: "So a $72-per-hour all-in [labor cost] somehow makes sense to you?!? What are you - some kind of freaking fruitcake?"

Wagoner looks into the audience and deadpans, "Mom, I didn't expect you to ask such a tough one," waits out the laugh, and then explains how GM's health-care deal with the UAW last October is a big step toward reducing those costs.

Many other questions are tough - about Toyota (Research)'s rise, damage to GM workers' morale, the company's promotion of low-mileage SUVs.

I ask about the immediate threat that could derail everything: a UAW strike at Delphi, GM's largest supplier, which could push GM into bankruptcy within weeks.

This seems painful for him because he can't promise a good outcome. All he can say is, "Shame on us - on GM, the UAW, and Delphi - if we let that happen. It would harm everyone."

After the event Wagoner mans a receiving line at a hotel ballroom, shaking hundreds of hands, posing for pictures, laughing with guys he played high school basketball with and against. He asks for a light beer but barely gets to taste it.

At 11:40 he finally leaves, but his day isn't over. He's headed to the airport for the short hop to Washington, where the next morning Bob Schieffer will interview him on "Face the Nation," and he will again make the case that GM is doing everything possible to prepare for decades of future prosperity.

It may work out that way. Or maybe not. But to have even a prayer of making it true, Rick Wagoner can never stop saying it.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.