What Next at GM?

Will Whitacre hold onto the CEO job?

by on Dec.04, 2009

Can a Texas telecommunications engineer find happiness as GM's permanent CEO?

Can a Texas telecommunications engineer find happiness as GM's permanent CEO?

Now what?

As the automaker dove into bankruptcy, earlier this year, it was clear things would never be the same at General Motors.  But for those who thought there might be a bit more stability once the maker emerged from the Chapter 11 process, on July 10th, this week’s events show that change may be the only constant.

What’s clear is that Board Chairman Edward Whitacre is now making sure that the automaker’s top management team is shaped to his liking.  Fritz Henderson is out as CEO, with the 46-year-old Mark Reuss taking on  president of North America.  The septuagenarian GM Vice Chairman Bob Lutz maintains his title, but nothing else, with the equally youthful Susan Docherty now assuming his role as head of marketing.

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Keeping Score!

There’s still that gap at the top.  For now, “Big Ed” Whitacre, the self-styled folksy Texan and former AT&T chairman, is officially General Motors’ “acting” CEO.  A grand dragnet has, allegedly,  been launched to find someone permanent for the post.  But the Friday management realignment suggests to a number of observers that Whitacre eventually may abandon any pretense of this being a temporary position.

(Ken Zino on the latest GM shake-up: Click Here.)

There’s no question finding a replacement will be a challenge.

For one thing, there are the severe limits placed by the Obama Administration’s forced salary cap on companies taking a federal bailout.  There’s also the question of who might be willing to stand alongside Whitacre.

“You have to have a massive ego to be willing to take on the CEO post at a large corporation,” an executive in just such a position told me during a conversation at the L.A. Auto Show.  While chief executives ultimately know they report to a company’s board, GM recruiters will need to find someone willing to accept Whitacre constantly breathing over his (or, unlikely but possible, her) shoulder.  The alternative is a figure forceful enough to demand some contractual degree of autonomy – as former Boeing executive Alan Mulally did before signing on as Ford CEO and in effect neutering failed chairman  Bill Ford.

Who could recruiters be looking at?  There’s plenty of buzz within automotive circles, and several names keep surfacing, but these so-called experts have missed every development thus far at GM. Nonetheless, here’s the latest gossip:

Until today, there were still those who believed Lutz might have a shot, despite the former Marine pilot’s own assertion that he was too loose a cannon.  If anything, the question is whether the Swiss-born banker’s son will last out the year before once again retiring. He could last for a time tutoring the non-automotive Whitacre.

One of the few industry figures who could carry the clout to stand tall against Big Ed is the legendary Detroit entrepreneur and motorsports hero, Roger Penske.  But insiders say he’s unlikely to walk away from his own — much more successful — business empire, and even if he did, there’d be plenty of potential for conflict of interest.

Hyundai’s affable U.S. boss, John Krafcik has proven one of the few Americans able to hold his own against some equally challenging bosses, the Koreans.  Krafcik fended off repeated questions about a GM job during the importer’s two L.A. news conferences, and insiders rate him a dark horse at best.

As a colleague pointed out, there are a few folks who might not care about short-term salary caps, but might have other reasons to covet the GM post.  That includes Wendelin Wiedeking, the recently-ousted chairman of Porsche, who failed in his David versus Goliath bid to acquire Volkswagen.  Wiedeking might relish the idea of having a new platform to tackle VW’s manic board chairman Ferdinand Piech. But he bet gig an lost, hardly a recommendation.

Any number of other names, even that of former Ford CEO Jac Nasser, have surfaced in conversations and columns, this past week.

But there’s a clear hunch, and it’;s just a hunch, that GM may be more likely to go outside, as Ford did for Mulally.  That pick was particularly fortuitous because Boeing, with its long product development cycles and complex manufacturing challenges, nurtured a manager who apparently, thus far, has translated his skills to the auto industry, although the debt he incurred along the way, and which still needs paying back, is rated as junk.

Could a manager like Apple’s Steve Jobs (were his health problems dismissed) be able to comprehend, never mind take control of a company like GM?  It would be a monumental challenge.

Few seem to believe there’s a talent pool waiting within GM’s corporate ranks.  Nick Reilly, the affable Brit, has just been appointed head of GM of Europe, a critical task in the wake of the abandoned sale of a cash-bleeding Opel.  It would create far too much turmoil to uproot him again.

As for Mark Reuss?  If the name sounds familiar, that’s because his father, Lloyd, held the president’s title two decades ago, before being ousted in an earlier series of shake-ups at the financially troubled automaker.

There is little doubt Reuss has the passion for General Motors, which he joined in 1986.  He’s a  well-respected engineer, he helped develop the automaker’s first crossover vehicles, as well as some of its high-performance models.  And he’s been a driving force in attempting to fix its long-running quality problems, thus afar to no avail.  But for all his skills, his drive and his potential, he may still be a bit too youthful and inexperienced to add CEO to his resume. Worse, he is a consummate GM insider at a company at a failed company that was run and ruined  by same.

The same is true for Docherty.  She has an impressive resume, both in terms of university degrees – she holds three – and job titles.  But her focus has been more on the marketing side, with serious gaps in terms of product development and manufacturing, traditionally considered important for an automotive CEO. And the brands under her stewardship are posting  sales declines.

But in the new, post-bankruptcy world of General Motors, it seems anything may be possible at least in the opinions of the  chattering classes.  Including the idea that a phone company engineer who rose to become the head of one of the world’s most powerful telecommunications companies could wind up calling the shots.

Thus far, he clearly is.

Ken Zino reported on this story.

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3 Responses to “What Next at GM?”

  1. harry says:

    It will be a Washington insider not an automotive insider.

  2. Larry Nutson says:

    It has been said that the salary cap may be waived if necessary and a new CEO could be compensated “laterally” (the same as) current compensation, perhaps with the up side being options or restricted stock in an IPO.

  3. Ken Zino says:

    The IPO remains a very tough sell given the ongoing negative results at GM. And a big CEO salary is even a bigger liability to the Obama Administration in the upcoming mid-term elections. The bailouts are and will remain unpopular, and the growing job losses are politically big trouble for the politicians in power.