Italian Job Coming on GM's Wagoner? (GM)

This from Saturday's BreakingViews column in The Wall Street Journal Europe comparing General Motors Corp. (GM) and Italy's Fiat:

Two years ago, Fiat was the wreck of the car industry. Its absorption into General Motors looked preordained. How things have changed. Today Fiat's market cap is nearly $15 billion -- a fifth greater than GM's. Aside from savoring this stunning reversal of fortunes, is there a lesson the Italians might provide GM and its investors?

The column then points out that GM's troubles mirror those of Fiat during its darkest hours. Sales are plunging, market share is eroding, factories and workers are idling and the business is burning cash. All that, and the stock has plummeted, the dividend has been slashed, and the debt is rated junk.

Fiat surmounted these obstacles by jettisoning assets not central to its industrial focus on cars, trucks and heavy machinery. But it also cut closer to the bone, not only selling most of its financing arm but a chunk of its crown jewel, Ferrari. It swapped debt for equity, sold new shares and wangled $2 billion from GM for giving up the right to force it to buy Fiat Auto. That allowed Fiat to reinvest in its area of expertise, cheap and cheerful cars. Last year, Fiat snapped a 17-quarter run of losses. The stock has surged 80% in a year.

Then the piece continues with this:

GM's playbook is not too far off from Fiat's. One notable distinction is the slower pace at which GM's board appears to be moving. It halved the dividend instead of eliminating it, for example. And management appears unwilling to part with ancillary brands, such as Hummer and Saab, something its new, hard-nosed director Jerry York sought.

And, in the end, GM in general and CEO Rick Wagoner in particular can't catch a break from the BreakingViews editors as they note two differences between the Detroit auto giant and Fiat:

Fiat had nothing like GM's long-term health-care and pension liabilities. These may be insurmountable without a bankruptcy filing. Oh, and Fiat's board did something else that GM hasn't -- it fired four chief executives before it found the right turnaround artist in Sergio Marchionne. If GM studies Fiat's lesson closely, that can't be far behind.

I've stated before that I am not down on Wagoner like many. I may be crazy but there you go. Yes, he's been CEO for several years. But the problems at GM date back at least four decades and turning this company around is like turning a huge supertanker at sea. It won't turn on a dime. What's more, there's no way to know whether or not Wagoner and York/Kerkorian are playing a "good cop, bad cop" routine regarding the painful cuts needed. Maybe York is dragging Wagoner and the Board kicking and screaming. Maybe Wagoner is secretly cheering him on. One thing we DO KNOW is that they've been talking -- that's how York got put on the Board.

Whether this ultimately results in a Boardroom "hit" on Wagoner remains to be seen.

P.S. Even if Wagoner is fired, no one can say he made a mistake bringing Bob Lutz in. Lutz is the first real "car guy" GM has had supervising car design in ages.

P.P.S. Doron Levin, Bloomberg's auto columnist, calls for GM's Board to "step up" and make a change at the top in this piece.