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Leadership in the Automotive Industry: A Conversation with Dean Emeritus Glen Urban

G. Richard Wagoner Jr.: October 11, 2006; Running Time: 56:31

About the Lecture

About the Lecture

Rick Wagoner’s outlook is optimistic, in spite of the bumpy road General Motors has traveled recently. With MIT Sloan Dean Emeritus Glen Urban, he discusses GM’s aggressive recovery plans in response to $10 billion in losses last year, and his determination to regain the public’s trust and confidence in GM cars.

Wagoner sees new global competition creating both challenges and opportunities. India and China have opened up markets “that this industry hasn’t seen ... since the 1930s, ‘40s and ‘50s.” But, continues Wagoner, “we have more than 400 thousand retirees,” all of whom are dependent on GM for benefits. “We cover about one million people in the U.S. -- 1% of people over 60 years old receive their health care from GM.” Given that people are living longer and costs of medical procedures and drugs have spiraled upward in the past few decades, GM’s billions in sales are eaten up by these “legacy” costs. GM also has more than 100 thousand hourly workers who get paid whether they’re building cars or not, unlike foreign auto manufacturers.

But Wagoner, even with Toyota breathing down GM’s back for the spot as number one auto maker, doesn’t seem to sweat it. After cutting thousands of jobs and negotiating with unions, GM will look “to grow in the right places.” For instance, the company has a unique partnership with a Shanghai auto corporation, and will soon be supplying 12% of China’s cars. In an aside, Wagoner mentions that the Chinese “insisted on the Buick brand” -- the last emperor drove a Buick, so it’s got a “good image” over there. This is in sharp contrast to American consumers for whom the Buick name has “become polluted.”

Wagoner’s a bit of a skeptic around current hybrid technology, having been stung when GM rolled out a model electric car in the 1990s that everyone admired but no one purchased. He’s throwing his weight behind improved fuel cells, which will be essential to a low carbon emissions car with a single propulsion system that can also compete with the internal combustion engine.

Wagoner looks around and sees “other industries that haven’t made it: steel, rubber, the airlines. They’ve dumped their historical obligations (to workers) and just said, sorry.” But he feels responsibility both to employees past and present and to the “serious, important work we’re doing.” If GM can cut back on liabilities, he says, and leverage its great assets, “we’ll come out the other side very well positioned.”

Lecture Details

Location: E51-115

About the Speaker

G. Richard Wagoner Jr.

GM Chairman & Chief Executive Officer

G. Richard Wagoner was elected GM chairman and chief executive officer in May, 2003. He had been president and chief executive officer since June 2000. He is a member of the board of directors of General Motors Acceptance Corporation, a GM subsidiary.

Wagoner began his GM career as an analyst in the Treasurer's Office in New York in 1977. After serving GM in Brazil, Canada and Europe, he was named executive vice president and chief financial officer of GM in 1992, and also had responsibility for worldwide purchasing from 1993 to 1994. He was elected president and chief operating officer in 1998 and had been executive vice president of GM and president of North American Operations since 1994.

Wagoner received a bachelor's degree in economics from Duke University in 1975 and a master's degree in business administration from Harvard University in 1977.

G. Richard Wagoner Jr.

GM corporate profile

About the Host

About the Host

MIT Sloan School of Management

The MIT Sloan School of Management, based in Cambridge, Massachusetts, is one of the world’s leading business schools — conducting cutting-edge research and providing management education to top students from more than 60 countries. The School is part of MIT’s rich intellectual tradition of education and research.

MIT Sloan began in 1914 as engineering administration curriculum in the MIT Department of Economics and Statistics. The scope and depth of this educational focus have grown steadily in response to advances in the theory and practice of management to today’s broad-based management school.

A program offering a master’s degree in management was established in 1925. The world’s first university-based executive education program — the MIT Sloan Fellows — was created in 1931 under the sponsorship of Alfred P. Sloan, Jr., an 1895 MIT graduate who was then chairman of General Motors. A MIT Sloan Foundation grant established the MIT School of Industrial Management in 1952 with a charge of educating the “ideal manager.”