Just as President Obama has taken "ownership" of the U. S. economy, Ed Whitacre and the GM Board of Directors have taken "ownership" of GM. Let’s do a quick “body count.” Fritz Henderson, went from “hero” to “resigned” in a matter of weeks. Board Chairman Ed Whitacre recently said of Henderson, "The board gets along with Fritz; he has our unanimous support." After Henderson was "broomed" Whitacre then assumed Henderson’s CEO position in addition to his own Chairman of the Board duties, at least temporarily. At least Alan Mulally, President and CEO of Ford, had time to learn on the job before he found himself in total crisis. And Mulally came from a manufacturing background.
Brent Dewar, recently appointed by Henderson as head of the Chevrolet brand was “dismissed” and replaced by James Caldwell, who recently was head of Chevrolet fleet operations. This might make the people responsible for maintaining GM’s residual values a little nervous. Mike Richards, a recent Bob Lutz recruit after he left Ford, resigned as head of Buick-GMC after eight days. Lutz himself was reassigned and his marketing responsibilities were given to Susan Dochtery. Lutz is still vice chairman and a special advisor to Whitacre. I presume Lutz will be whispering into whichever of Whitacre's ears Steve Girsky isn't. Girsky is a board member and another special advisor to Whitacre, and is regarded by many as the mastermind of the dealer terminations.
Docherty had been tapped by Henderson to replace Mark LaNeve, who recently resigned as North America vice president of marketing and advertising. Ray Young recently announced his resignation as CFO. Mark Reuss, son of ex GM President Loyd Reuss and known as the “father of the Aztek,” is now the new Whitacre appointee as President of North American Operations. After running GM Australia for 18 months, Reuss was recently made vice president of engineering before this most recent appointment. According Whitacre, “Mark and Susan are terrific!” Given Whitacre’s recent endorsement of Henderson, LaNeve, and others, skeptics might be looking for salt shakers. The list of GM execs who have left the company recently is much longer than the names mentioned here. Many were only in their jobs for a very short time. Whitacre and the Board have brought executive “musical chairs” to a new level.
Currently there are many more questions than answers. Whitacre has been unspecific at best in answering questions, as was Lutz at the recent LA Auto Show. Whitacre's public statement about Henderson’s departure was that “we all decided it was time for a change.” This after eight months on the job and the resent endorsement. GM is operating like a privately held company when, in fact, all taxpayers are owners. Churning executives does not breed confidence.
We’d all like some answers to some compelling questions. Some examples? How many of these executive changes were planned? Which of the “retirements” were actually firings? What do the severance packages look like for these people? Are “gag” agreements included and if so, for what price. What specifically caused the sudden rift between Henderson and the Board? Why did the Company reverse Fritz’s decision to sell Opel? Was Fritz blamed for the collapse of the Saab and Saturn deals?
Afew more questions: Henderson AND LaNeve were the public faces of the dealer terminations who misrepresented GM’s “savings” before Congress. Were they scapegoats sacrificed now that GM needs to rebuild its relationships with dealers? What does Steve Girsky know about anything? Who is the genius who thought it was a good idea to axe hundreds of Cadillac dealers compelling many potential buyers have to drive hundreds of miles for sales and service? How does “high throughput” per dealer make GM profitable? What has been the government Task Force role in the recent executive changes? Where will GM get the money to pay back the European governments that “bridge loaned” Opel while a buyer was being sought? How does GM expect to maintain U. S. market share of 19% after shedding 4 divisions, Saturn, Saab, Hummer, and Pontiac, while also cutting hundreds of dealers who represent the brands that GM kept? The Buick LaCrosse is a great vehicle, but what else does GM have on the way of compelling new vehicles to sell? How do you expect to force the market for VOLT beyond the “early adopters” without huge government subsidies and/or tax credits, especially if the price of fuel stays steady? And how does that work when the government is your owner? Does the government help you compete against Ford, Toyota, Honda, etc. who also employ thousands of Americans? What happened to the innovative diesel engine that was being readied for production? Did postponing that program provide money for fired executive packages and to pay off European governments?
Don’t tell me these new appointees are so great after you praised the last group just before you fired them. You need to give me and a lot of others compelling reasons to buy your stock when IPO time comes around. Gratuitously firing executives for not getting the instant results you desire is reminiscent of the behavior of a petulant owner of a pro sports team. If you’re so smart, why don’t you show them how to do it without destroying your resale values. You’re not building up a reservoir of trust and confidence in potential investors, let alone prospective buyers.
David Ruggles
submitted to Wards Dealer Business for January 2010
