Wagoner Takes Top Deputies’ Jobs In Attempt To Halt Automaker’s Slide

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

General Motors Corporation’s chief executive, Rick Wagoner, will step in to replace two top deputies in North America after the automaker slashed its 2005 profit forecast in half because of falling sales in the region.


Mr. Wagoner will assume the regional duties of GM North American President Gary Cowger, 57, a longtime manufacturing boss, and North American Chairman Robert Lutz, 73, who came out of retirement four years ago to help revitalize GM cars and trucks. GM, the world’s largest automaker, last month said its first-quarter loss will be the biggest in 13 years because of North American problems.


Mr. Wagoner’s “neck is in the noose in North America,” said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “He is saying to shareholders that North America is going to get a full-court press.”


Mr. Wagoner, 52, is taking full responsibility for fixing the region as GM’s American market share has fallen to its lowest level in 80 years and as Toyota Motor Corporation and other Asian rivals gain more ground. Mr. Wagoner, who became chief executive in June 2000, said last month he will use lower prices and more advertising to increase sales. He is also trying to cut health-care costs, which add about $1,525 to the cost of each vehicle sold in America.


The automaker reduced first-quarter North American production 12% as American sales fell 5.1% in the first three months of the year.


“There have been rumblings of Cowger being in trouble,” said an analyst with New York-based Burnham Securities, David Healy. “Lutz has been spending more time on global responsibilities, so it doesn’t look to me like he’s been kicked upstairs.”


Mr. Lutz’s comments two weeks ago that the company would consider a “phase-out” of some lines and that its Pontiac and Buick brands were “damaged” may also have displeased Mr. Wagoner, Mr. Healy said. Mr. Lutz retreated from those statements last week in a Denver speech.


GM’s market share in America, its largest market, declined in the first quarter to 25.7% from 27% a year earlier, according to Autodata Corporation of Woodcliff Lake, N.J. Toyota’s share during the quarter rose to 13% from 11.9% a year earlier.


Messrs. Lutz and Cowger were given their North American responsibilities in November 2001, when the automaker’s American share was 28.4%.


Mr. Lutz retains his title as GM vice chairman and will focus on worldwide product development. Mr. Cowger will focus on worldwide manufacturing and labor and will continue to report to Mr. Wagoner, a spokesman, Brian Akre, said.


Mr. Cowger signaled March 23 that the automaker will be discussing health-care with the United Auto Workers union as it tries to make health-care costs more competitive “across the board.” The automaker covers 1.1 million employees, retirees, and dependents under its health plan.


Salaried workers pay some of their health-care premiums as well as co-pays at GM. Union workers don’t pay the premium and have fewer and lower co-pays than salaried employees. Mr. Lutz said on March 23 that GM needs “to get to the point where all our employees, salaried, and hourly, have that same basically salaried-type health-care benefit.”


The GM changes “look to put Mr. Cowger on point to tackle the healthcare issues with the UAW,” a Credit Suisse First Boston analyst, Chris Ceraso, wrote in a report yesterday.


“Given the challenges we face in North America, it makes sense for me to assume control of GMNA’s day-to-day operations and shorten the lines of communication and decision-making,” Mr. Wagoner said in the statement yesterday.


GM’s falling profit and shrinking market share have prompted ratings companies Standard & Poor’s and Fitch Ratings to lower the automaker to one level above non-investment-grade, making it more expensive for the company to raise funds.


“It shows how serious GM feels its current situation is that Wagoner is directly overseeing North America,” Brian Bruce, who helps manage $17 billion at PanAgora Asset management in Boston, including GM shares, said in an e-mail interview yesterday. “Increasing demand and profitability in North America will be the components of any recovery.”


The New York Sun

© 2025 The New York Sun Company, LLC. All rights reserved.

Use of this site constitutes acceptance of our Terms of Use and Privacy Policy. The material on this site is protected by copyright law and may not be reproduced, distributed, transmitted, cached or otherwise used.

The New York Sun

Sign in or  Create a free account

or
By continuing you agree to our Privacy Policy and Terms of Use