Car Guys vs. Bean Counters - Bob Lutz [87]
Personally, I worried about a future GM without the superb (but expensive) capabilities of Opel’s engineering organization, but elimination of the huge annual profit drain and ongoing large capital commitment dictated the choice. European Chevrolet, with production in Korea and the Eastern European countries, was not part of the divestiture, and was to form GM’s future in the world’s largest car market (Europe). But, while profitable and growing rapidly, it could not hope to compensate, in terms of volume and market share, for the loss of Opel/Vauxhall. The Opel-less GM, losing two million units, would no longer even be a contender among the giants vying for the title “world’s largest automotive company.” But, having made the painful decision to sell GM’s European operations, little did we realize that, a few short months later, the decision would be reversed by the new board, selected jointly by GM’s three largest new shareholders, the U.S. federal government, the Canadian government, and the UAW.
That reversal was hastened by the next shock to a now partially numb GM: on March 30, 2009, Rick Wagoner was pressured to resign by the Automotive Task Force, the U.S. Treasury, and, I suspect, the new president himself. The old GM board, still legally bound to defend the shareholders as well as to select or fire key executives, was miffed over the way this was handled, considerably at odds with the law and rules of corporate governance. It was “explained” to the board that, post–the increasingly firmly planned Chapter 11, the government would be the largest shareholder and that understanding and support for Wagoner’s “resignation” would be in the best interest of all.
The reaction in the company over Wagoner’s departure was one of sadness and regret. Rick was a kind, intelligent CEO of spectacular human qualities. The welfare of the GM family was close to his heart. Much of the progress, ill-publicized and subject to media distortion though it was, must be credited to Rick and his team. Possibly, it was his very concern for people and his unwillingness to take “bet your company” risks that convinced the task force that the cleanup in Chapter 11 and after should be left to a new team. It’s hard, when a new owner pays billions for a company, to argue that he or she can’t select the players.
Rick Wagoner’s last act as CEO was to convince the Automotive Task Force and the board to ask Fritz Henderson to replace him. Initially, Henderson’s title was to be preceded by the dreaded “interim.” Wagoner, mustering his considerable powers of persuasion, convinced the decision makers that equivocating on Henderson’s authority or permanence would severely restrict his ability to get the job done; the adjective was dropped. It soon became obvious in board meetings, however, that “interim” was alive and well: On meeting Henderson for the first time, the new chairman, Ed Whitacre, drawled, “It’s gonna be hard for me to be a non–executive chairman.Ah’m used to runnin’ things. The job ah really want to do is yours, Fritz.” Embarrassed laughter all around.
Still, Fritz, a supremely intelligent executive who had successfully run Latin America, Asia-Pacific, GM Europe, and had most recently been chief financial officer and vice chairman, immediately set to work with a sense of urgency. Meetings were cut to a minimum, executive ranks were reduced drastically through voluntary and less-than-voluntary retirements, product excellence (my role) continued as the highest priority, massive fixed-cost reductions were implemented, and for the first time in years—and with strong encouragement from Chairman