Jerry York Dies Suddenly in Detroit
Veteran Corporate Finance Whiz Led Efforts to Oust Former GM CEO Rick Wagoner, Merge GM with Nissan/Renault, and Thwart the Culture of Denial at GM.
Jerry York, the former Chrysler finance executive who teamed up with Las Vegas investor Kirk Kerkorian in 1995 in a failed attempt to take over Chrysler, has died suddenly in suburban Detroit of a brain aneurysm at age 71.
York, who joined Chrysler in 1979, shortly after Lee Iacocca arrived there from Ford, figures largely in Paul Ingrassia’s superb new book, “Crash Course: The American Automobile Industry’s Road from Glory to Disaster,” due to his instrumental role not only in the history of Chrysler Corporation over the past three decades but, more recently, at General Motors thanks to his brief stint on the GM board during a crucial point in the company’s turnaround attempts.
In January 2006, with Kerkorian having recently become GM’s largest individual shareholder, York delivered a speech to the Society of Automotive Analysts in Detroit that shook the Big Three business community to its core. As Ingrassia recounts in “Crash Course,” York bluntly laid bare the stark facts about GM’s dismal condition: “[GM’s bleak] situation calls for the company going into crisis mode,” he said, “and adopting a degree of urgency that recognizes if things don’t break right, the unthinkable [bankruptcy] could happen.”
York’s pleas were heard, and later that month he was elected to the GM board of directors. His tenure on the board would be short—only eight months—and ultimately unproductive, but it was certainly not for lack of trying on his part. He quickly became a very painful thorn in the side of embattled CEO Rick Wagoner. By early April 2006, with GM having just made the surprise announcement that it had lost $10.6 billion in 2005, Wagoner was on the hot seat and was close to losing his job. York was pulling strings furiously in the background to make that happen, but in the end the board chairman, a Wagoner loyalist, rallied the other members and kept Wagoner in the CEO suite.
Disgusted but undeterred, York then turned to Carlos Ghosn, CEO of Nissan and Renault, to discuss a merger with General Motors, an idea that was received coolly by Wagoner but which the board was forced to consider due to Kerkorian’s substantial shares. Over the entire summer of 2006, as Ingrassia recounts in compelling detail in “Crash Course,” a fascinating saga of corporate negotiations and boardroom intrigue ensued, but in the end, York was thwarted once again by Wagoner. The GM CEO knew that, in any merger with Nissan and Renault, it would be the superstar Ghosn, not Wagoner, who would be top dog of the combined conglomerate. Wagoner deftly managed to swing board support to his side, and the proposed merger with Nissan and Renault was dead.
Within days, York submitted his resignation to the GM board, stating that “The company has made excellent progress in several areas . . .[but] I have grave reservations concerning the ability of the current business model to successfully compete in the marketplace. . . To get to the crux of the matter, I have not found an environment in the board room that is receptive to probing much beyond the materials provided by management . . . That environment has been a puzzle to me.”
York was proved prescient on all counts. His prediction during his January 2006 speech that GM could go bankrupt within 1000 days was off by only 30 days, and his recommendations that Saab, Hummer, and other GM brands be sold or closed were eventually realized, but only through the company’s bankruptcy.
Although considered by some to be a bothersome corporate gadfly (York spent two years at IBM in the early 1990s slashing and burning the bloated computer giant before joining Kerkorian), York knew the finances of the car business like no one else, was a brilliant tactician, and never hesitated to call a spade a spade, a rare skill in the insular boardrooms of Detroit. His track record isn’t perfect—he encouraged the disastrous merger between Daimler-Benz and Chrysler in 1998 because he and his boss, Kerkorian, reaped huge profits from it—but I will go out on a limb and say that, if we could turn back the calendar to the year 2000 and elect York to the CEO chair at General Motors rather than Rick Wagoner, the fate of what was once the world’s largest corporation would have turned out far differently.