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GM's Next General
Jerry Flint, 05.09.05, 12:00 AM ET

Where can they find the fighting spirit of Iacocca, the resolve of Ghosn, the expertise of Zetsche and the brains of Sloan?
G. Richard Wagoner gets the award for gut. In April he named himself boss of General Motors' North American operations. That's where the trouble is. As chief executive of the whole corporation, he could have set up new fall guys, but instead he put himself on the line. If he can't fix GM North America, well, it's reasonable to figure that he'll step down. But he's bought himself some time.

I hope he rescues this company. If he doesn't? It's not too soon for the board to start pondering who might be the next chief executive. The situation is dire. In the combined 13 years under Rick Wagoner and his predecessor, Jack Smith, GM has lost 30% of its market share in light vehicles. That share is now 26%.

What does General Motors need? A chief executive with the fighting spirit of Lee Iacocca, the determination of Carlos Ghosn, the car talents of Dieter Zetsche (who has brought American Chrysler back from the brink), plus the financial inspiration of the great Alfred Sloan, who ruled over the empire from 1923 to 1946.

The first candidates that come to mind are people who might be wonderful but ain't gonna get the job:

John F. Welch Jr., the GE retiree. While a case may be made for an outsider, Jack's day is past.

Lee Iacocca. He's past 80, but they'd take Methuselah if he could do the job. Forget it. Lee climbed to the top of Ford and saved Chrysler, but he'll never get to run GM. His bridges are burned in Detroit.

Carlos Ghosn. He heads Renault and Nissan, a huge operation by itself, and be frank, would you rather be in Paris or Detroit?

Dieter Zetsche. The wurst he wants to eat is in Stuttgart, in the Daimler executive dining room. The job he has done at Chrysler gives him a shot at the top job in Germany, so he's not going to leave Chrysler for GM.

Now here are some plausible alternatives.

J.T. Battenberg, 62, has been chief executive officer of Delphi, the parts giant that was split off from GM. J.T. was a GM officer, one of the best, even a president of GM (when it had three presidents). He ended up with the thankless job of saving Delphi, which meant constant chopping and rebuilding. Recently he's been tarred by accounting trickery that I doubt he was aware of, which probably eliminates him. Good man, though.

Robert Lutz, GM's vice chairman in charge of products, may be in the midst of being tossed to the wolves. But he would make a good president and chief operating officer. He's 73, but so what! He still flies his own chopper and would be a great wingman for a chief if he can fly through today's storm.

Fritz Henderson, 46, the chairman of GM Europe has serious potential. He seems to be straightening out GM Europe. But the job isn't done yet so he might not be ready for Detroit.

Gary White, 54, who is responsible for GM's big trucks, the business that kept GM going the past few years, and Mike Grimaldi, 53, head of GM Canada--two smart fellas.

Another good candidate is Mark Hogan, 53, a former fast-tracker at General Motors who was exiled to the minors to get him away from the union, which didn't like his ideas. He came back but then resigned to become president of parts supplier Magna. So he knows GM and has the right experience. Good guy.

John Devine, 60, was the chief financial officer of Ford and left when he didn't get the top job. He was recruited to the same position at GM and is vice chairman now. He's more of a car guy than most financiers and would be trusted by Wall Street. Imagine Devine as chief executive and Lutz as president--two Ford men would be working to save GM. Payback time. You see, a half-century ago a GM man, Ernest Breech, came over with a handful of GM men and saved Ford. "I was the cleanup man for GM, but this one was really a mess," he said of Ford. Maybe it's time that Ford repaid the favor.

What does Wagoner or his replacement have to look forward to? GM's product reputation will grow with cars like the new Buick LaCrosse to the coming-in-summer Pontiac Solstice. Eight new ones in a year. But it's tough; first-quarter sales, 1,003,000 cars and trucks, were down 5% from last year.

A serious problem, one that Wagoner has not been shy in publicizing, is its $5 billion-plus-a-year medical bill, mostly for retirees and dependents. (I guess I can't blame him for that: The United Auto Workers first got coverage of retiree medical costs decades ago.) He'd like the UAW to open the current contract, which expires in 2007, for a cutback in this benefit. His move to take center stage with the North American operation will buy him some credibility with the union, but still it's going to be a tough sale for him. It won't be any easier for his successor.

Jerry Flint, a former Forbes Senior Editor, has covered the automobile industry since 1958. Visit his homepage at www.forbes.com/flint.

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Interesting read. It doesn't sound like there is any one consensus contender.

Frankly, I would hand it to Lutz if they have to replace Wagoner. Now, I like Wagoner and don't think he should be tossed just yet. He is a good finance guy who should be able to put together a respectable recovery plan.

However, I think Lutz brings all the tools needed. Plus, putting Lutz in the top spot may help him more effectively remove the remnants of how GM used to do business internally, and really wake up the creative minds behind the scenes.

1,248 Posts
Look beyond the short time horizon....

mikefred1952 said:
Let's hope they get someone that can get the top fixed on the Solstice and get it delivered by June 21st! :lol:
As a field "engineer" type my self, once there is budget and sufficient staffing for a project (which there has been for Solstice), adding more pressure from the top to get the job done more quickly can often yield longer schedules or compromises in quality. Basically, you can't dictate innovation and clever engineering; it can be encouraged, but not forced.

I believe GM is taking the right approach here. Yes, they are getting some bad press for the release delay, but it is an encouraging sign that they care enough about the product and their own quality standards to take the time to "get it right".

Marketing always wants the product before it can possibly be ready; management always wants it for less cost; customers want the absolute maximum possible quality and features; and the guys caught in the middle of this maelstrom of conflicting requests are the engineers, technicians, machinists, line workers and others.

Now, will the delay infuriate the impatient? You bet. Will the Press feast on the news? Sure, bad news is far more interesting than good news. Is that press coverage bad in the short run? Yes, it can pull downward on the value of the stock.

Is the press coverage for a choice by GM to delay the product in order to produce a product commensurate with their quality standards bad in the longer run, say 2 years from now? NO! Actually, this event may well be recalled in 2 years time by saying that in the face of fit and finish quality issues, GM made the tough choice to delay a widely publicized release of a wholly new platform until the product met their quality standards.

Now if GM let impatience dictate, and a new top level Exec "forced the release" despite the quality issues, what would happen? Well, the press and popular opinion would be ruthless and never ending. Quality problems could seriously mar the corporation's credibility far into the future.

Does the delay frustrate some people? Sure, there are always impatient folks who make plans based on optimistic schedules. Over the long term, however, the quality and qualities (including outstanding design) will be a far better choice. Will they lose market share to folks who decide they can't wait? Some. Will they gain back market share over the long term with high quality products? YES, provided those products are priced well and have appealing designs.

Personally, I laud GM for making sure it's right, and will patiently continue to drive my current car. Looking long term, folks who do buy the car in the late autumn will have it ready and waiting to throw back the top and enjoy that first beautiful spring day.
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