Tag Archive | "Dan Akerson"

Culture Overhaul Is Up To GM Insiders

Six months after stepping aside as General Motors Co.’s fourth CEO in five years and leaving his successor with a searing recall crisis, Dan Akerson tells The Detroit News “we all … didn’t fully realize how deeply some of the problems ran,” reported The Detroit News.

That’s not the half of it, as his hand-picked replacement, Mary Barra, is learning.

The most insidious aspects of GM’s corporate culture — blame-shifting, lack of accountability, a callous disregard for customers — survived decades of declining market share, financial losses and an epic bankruptcy. Those serial embarrassments mostly failed to penetrate, much less change, critical corners of the automaker’s engineering and legal operations.

Whether the recall mess proves any different will depend on how dramatically GM’s Barra-led leadership unambiguously departs from the go-along, get-along management culture that persisted for way too long there, enabling the ignition-switch fiasco blamed for at least 13 deaths and dozens of accidents.

There are the “demotions” that move personnel problems around instead of remove them; the unofficial “management union,” as Akerson referred to it in an interview last December, that memorializes excuses and protects underperformers; the nice-guy legacies of former CEOs Jack Smith and Rick Wagoner, who each presided nobly over decline.

There’s a still-prominent public ethos that equates criticism of GM and its missteps with a homegrown form of treason, as if a decade of hiding defective switch problems from customers and regulators is perfectly acceptable business practice. Any sentient person knows otherwise.

How ’bout finally getting it right? Akerson predicts the unspooling mess, still under investigation by trial lawyers, federal regulators, the Securities and Exchange Commission and the Justice Department, will drive a kind of systemic culture change he failed to deliver in his comparatively brief tenure. But will it?

The answer depends on leadership, who it promotes, how it compensates them and what it tolerates — or doesn’t, and uses the proverbial boot to underscore that a culture of accountability is more than expedient talk before congressional committees.

Barra’s taken many smart first steps — publicly sharing a withering internal investigation, changing GM’s safety reporting structure and management, instituting new programs to encourage reporting of safety issues to the highest levels, aggressively issuing recalls lest smaller problems grow.

But action and follow-through with GM people will speak loudest to the automaker’s risk-averse culture, including whether Barra’s claim to drive change will hold longtime colleagues accountable instead of giving them a pass that would not go unnoticed inside.

Finally, a culture rooted in accountability is marked by consistent discipline, exemplified in this town by former Ford Motor Co. CEO Alan Mulally’s tenure at the Blue Oval. His stint is proof that clearly articulated leadership can exorcise bad habits of the past and produce a consistent winner.

Reality is this: senior management is heavy with GM veterans, starting with Barra and product chief Mark Reuss. The company’s directors are proving less aggressive than the crew that led the automaker after its bankruptcy. Akerson is gone from the board, as are hard-headed business types like Ed Whitacre, David Bonderman and Robert Krebs.

The federally induced bankruptcy engineered by the auto task force quickly pushed GM through Chapter 11, eliminated four brands and cashiered a cadre of fifty-something executives, but it left relatively unmolested the “frozen middle” that harbored the secret of GM’s ignition-switch debacle. Its exposure after more than a decade is an opportunity to exact sweeping change.

It’s fashionable among outsiders-looking-in to trash GM’s “culture.” Members of President Barack Obama’s auto task force did it; members of Congress did (and do) it; Akerson, Whitacre and a slew of mostly now-departed executives did it, too, conveniently overlooking their roles in husbanding its worst aspects.

And it’s fashionable among Barra’s leadership team to counter that longtime company insiders are better equipped to lead dramatic change of GM’s quasi-ossified culture because they know it best. Maybe so, yet they’re also products of the culture they negotiated successfully to get to the top — none more so than Barra and Reuss.

The truth of GM leadership the past five years is that outsiders have proven less adept at changing GM’s culture than being driven by it. It’s now the insiders’ turn, a chance to alter GM’s historic arc and prove skeptics wrong.

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Ex-GM CEO Akerson: Barra ‘Unaware’ of Ignition Switch Problem

Via The Detroit News:

Former General Motors Co. CEO Dan Akerson says he believes his successor Mary Barra was unaware of the ignition switch problems that led to the eventual recall of 2.6 million vehicles linked to 13 deaths and 47 crashes.

In an interview with Forbes, Akerson — breaking his silence on the issue — said the board didn’t throw Barra under the bus by giving her the job and knowing of a looming crisis.

“Mary has said it: The moment she became aware of the problem, as I would expect, she confronted it. She didn’t know about it. I bet my life on it,” Akerson told the magazine in a story that was posted Wednesday morning.

GM has turned over hundreds of thousands of pages of records to Congress, and no emails or other records have emerged to suggest Barra knew about the issue in her prior jobs in product development and in other positions.

GM’s board met in Washington in December to pick a successor after Akerson told the board he needed to leave ahead of schedule because his wife had been diagnosed with cancer. Barra took over as CEO on Jan. 15, about a month before the first ignition switch recall.

Former senior executives at GM have previously told The Detroit News that top management was unaware of the issue. The Justice Department, Securities and Exchange Commission, a group of attorneys general and two congressional committees are investigating.

GM plans to issue its internal report from a former U.S. attorney in Chicago as early as next week into what went wrong, planning to provide a detailed chronology of the events that led to GM’s eventual recall of 2.6 million vehicles. GM also is expected soon to have a report from compensation expert Kenneth Feinberg. GM hired Feinberg to help the automaker look at options and determine if it will compensate victims related to the ignition switch defect — and if so, how much it will pay them.

This month, GM paid a record-setting $35 million fine and agreed to up to three years of enhanced oversight by the National Highway Traffic Safety Administration over its delayed recall.

GM Chairman Tim Solso also told the magazine that the board has confidence in Barra.

“The confidence has grown over a period of time, given the way that Mary has handled all the situations: testifying before Congress, meeting with the media,” Solso said. “She’s done a superb job, and the board recognizes that.”

Barra, in a rare interview since the GM recall crisis hit, also tells Forbes about listening to the stories of families who lost loved ones in crashes they believe are tied to the faulty ignition switches and she thinks the crisis will help the automaker change its ways.

“I really feel — obviously we want to do the right thing and serve the customer well through this — but it’s also an opportunity to accelerate cultural change,” she said.

More changes are expected once GM releases its internal report. The automaker already has made numerous changes to its safety engineering operations, as a few top engineering executives have retired from the company and Barra placed two engineers on paid leave. GM has restructured its vehicle engineering department and has moved several employees into new jobs in its safety engineering division.

Former Obama administration auto adviser Harry Wilson said last week the crisis “sadly is emblematic of the cultural problems.”

“They would do anything to save a penny, including some really bad decisions, both economically and morally. That was a part of the culture that was driven by a company that was living on the brink of disaster for many years prior to 2009,” Wilson said.

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GM Names Mary Barra CEO-Elect

Detroit – General Motors announced that Mary Barra, executive vice president, Global Product Development, Purchasing and Supply Chain, was elected by the Board of Directors to become the next CEO of the company, as well as join the GM Board. She replaces Dan Akerson, who will step down as chairman and CEO on Jan. 15, 2014.

Akerson pulled ahead his succession plan by several months after his wife was recently diagnosed with an advanced stage of cancer.

The Board also named Theodore (Tim) Solso to succeed Akerson as Chairman. Solso is the former chairman and CEO of Cummins Inc., and has been a member of the GM Board since June 2012.

“I will leave with great satisfaction in what we have accomplished, great optimism over what is ahead and great pride that we are restoring General Motors as America’s standard bearer in the global auto industry,” Akerson said in a message to employees.

With 33 years of experience at GM, Barra has risen through a series of manufacturing, engineering and senior staff positions. She is a leader in the company’s ongoing turnaround, revitalizing GM’s product development process resulting in the launch of critically acclaimed new products while delivering record product quality ratings and higher customer satisfaction.

“With an amazing portfolio of cars and trucks and the strongest financial performance in our recent history, this is an exciting time at today’s GM,” said Barra. “I’m honored to lead the best team in the business and to keep our momentum at full speed.”

Dan Ammann, executive vice president and chief financial officer, was named company president, and will assume responsibility for managing the company’s regional operations around the world. The global Chevrolet and Cadillac brand organizations and GM Financial will also report to Ammann.

Ammann joined GM in 2010 where his first assignment was to manage GM’s initial public offering. As CFO, he has led a transformation of GM’s finance operations into a world-class organization. He also led the strategy to rebuild the company’s captive finance capability through the successful establishment and growth of GM Financial.

“We have a significant opportunity to further integrate and optimize our operations to deliver even better results,” said Ammann. “While we have made good progress, we still have much work ahead of us to realize GM’s full potential.”

Ammann will retain CFO responsibilities at least through the release of the company’s fourth quarter and full-year 2013 results in early February 2014. His replacement as CFO will be named later.

Mark Reuss, executive vice president and president, North America, will replace Barra as executive vice president, Global Product Development, Purchasing and Supply Chain. Under Reuss’ watch, GM’s North America region has produced consistent profits and improved margins during a product renaissance that includes the launch of award-winning cars and trucks such as the Cadillac ATS, Chevrolet Corvette, Impala and Silverado pickup.

“The driver’s seat of designing and engineering the strongest product line up in GM’s history is the best seat to have,” said Reuss. “We’re going to keep the pedal down on GM’s product resurgence and keep winning new customers.”

Alan Batey, currently senior vice president, Global Chevrolet and U.S. Sales and Marketing, will replace Reuss, and is named executive vice president and president, North America. Batey joined GM’s Vauxhall operation in 1979 and held several sales, service and marketing positions around the world. In his current position, he has developed the Chevrolet brand’s Find New Roads advertising campaign and has overseen a sweeping upgrade of retail sales and service operations at hundreds of U.S. dealerships.

“North America is the foundation of the GM turnaround story and I’m honored to help continue what Mark started,” said Batey. “We remain committed to delivering the world’s best retail experience to match the world’s best cars and trucks.”

The company also announced that Steve Girsky, vice chairman, Corporate Strategy, Business Development and Global Product Planning, will move to a senior advisor role until leaving the company in April 2014. He will remain on the GM Board of Directors.

“My goals as CEO were to put the customer at the center of every decision we make, to position GM for long term success and to make GM a company that America can be proud of again,” Akerson said. “We are well down that path, and I’m certain that our new team will keep us moving in that direction.”

Akerson was named GM Chairman and CEO on September 1, 2010. He joined GM in 2009 as a member of its Board of Directors. Since the company’s November 2010 Initial Public Offering, GM has recorded 15 consecutive quarters of profitability, has earned this year the best overall initial vehicle quality scores of any auto manufacturer, and has re-invested nearly $9 billion and created or retained more than 25,000 jobs at its U.S plants.

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GM Directors Undaunted By 33 Percent Stock Slump Praise CEO Akerson

General Motors Co. directors praised Dan Akerson’s performance as chief executive officer while saying he must now fix the automaker’s European operations and begin grooming a successor.

Akerson, who gave himself a ‘B’ grade during an interview last month, can stay on as long as he wants, directors Robert Krebs, Neville Isdell and Patricia Russo said last week in separate interviews before the company’s annual meeting in Detroit. GM regained the title of world’s largest automaker last year, when it earned a record full-year profit of $9.19 billion, reported Bloomberg.

Even with those successes under Akerson, GM’s stock fell 45 percent in 2011. Shares, including the U.S. government’s 32 percent stake, have declined 33 percent from the automaker’s November 2010 initial public offering through June 8, attracting value investor Warren Buffett’s Berkshire Hathaway Inc.

“We’re frustrated, but we don’t sit around the board table bemoaning the price of the stock,” Krebs, who joined GM’s board in July 2009, said by telephone from Chicago. “We’re in this for the long haul.”

GM rose 0.7 percent to $22.20 at 9:41 a.m. in New York.

About half of the company’s directors, including Krebs, Russo, Akerson and his predecessor, Ed Whitacre, joined the board as the company emerged from its 2009 bankruptcy reorganization. Whitacre replaced longtime GM executive Fritz Henderson as CEO, then surprised the board when he said he didn’t want to stay with the company long after the 2010 IPO.

The directors turned to Akerson, a Navy veteran who had split his career between telecommunications and private equity.

“I don’t think we could’ve found anyone better,” Isdell, former CEO and chairman of Coca-Cola Co., said in a telephone interview from France.

Isdell, Krebs and Russo say they’ve witnessed a cultural change at the automaker, once known for management by consensus that was too slow and too cautious.

“The company is a lot more externally focused and a lot more competitively driven,” Russo said by telephone from New York.

Walking out of the last GM board meeting, Krebs said he told Isdell that GM “isn’t even the same company that we saw when it came out of bankruptcy.”

Isdell agreed. Akerson has found and promoted “very good people who know what’s wrong and are dying to do the right thing,” he told an Atlanta audience last month.

Still, the CEO shouldn’t be given too much credit for GM’s stellar profits, because it was the company’s government-backed bankruptcy, managed by Steven Rattner and Ron Bloom, that lowered the automaker’s break-even point, said Maryann Keller, principal of a self-titled consulting firm in Stamford, Connecticut.

Last year’s market-share gain — GM added half a percentage point in the U.S. — was aided by Toyota Motor Corp.’s production shortfalls caused by natural disasters in Asia, said Keller, a former Wall Street analyst. GM faces increased competition from a resurgent Toyota as well as Volkswagen AG, which has aggressive global growth goals, she said.

“How’s he doing for somebody who didn’t know anything about the car business when he took over? I suppose OK, but you’re measuring against that criteria,” Keller said.

Akerson has been successful in building a strong senior management team, from which he should be able to groom a successor, said Russo, the board’s lead director. She said research suggests external successors make sense for companies needing change.

“I don’t believe that’s the case for GM at this point,” said Russo, a former Alcatel-Lucent SA CEO. “I would hope that when the time is right we’ve got a sufficient bench to be able to find the right successor.”

Vice Chairman Steve Girsky, 50, North America President Mark Reuss, 48, and Senior Vice President for Global Product Development Mary Barra, 50, have been mentioned by Akerson as possibilities. It isn’t a choice the board expects to face soon.

“I’ve encouraged him to stay long enough to find a successor in the company and to get the board comfortable,” Krebs said, estimating it would take “a couple years.”

The agenda for GM’s annual meeting tomorrow in Detroit includes re-electing all 12 directors, including Akerson, and adding two new members: Jim Mulva, 65, former ConocoPhillips chief executive officer, and Tim Solso, 65, retired CEO of Cummins Inc.

The shareholder meeting coincides with a board meeting, where members have recently been getting detailed analyses of what competitors are doing better than GM.

“Costs are still too high,” Krebs said. While GM’ operating margins are about 5 percent, he’d like to see that nearly double to the level that both Volkswagen and Hyundai are posting. “We’re envious of the financial results those companies are turning in.”

About half of the gap between GM and those rivals is because of Europe, where GM has lost $16.4 billion since 1999, Akerson has said. Analysts have estimated it will cost at least $1 billion to restructure Opel, and it may take years to stop the losses.

“We have to wait until 2014 before we can close a plant and clearly that has to be done,” Krebs said.

Akerson’s legacy — and the board’s — will be shaped in large part by whether he’s successful in turning around GM’s European operations. Though Henderson had advocated selling most of Opel, the German carmaker owned by GM, Akerson helped persuade the board to keep it. That was the right decision, Krebs said.

“We’re going to fix it,” he said, “so it becomes a low- enough cost producer so that it can survive in the bad times and make a lot of money in the good times.”

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GM Profitable in All Regional Units: CEO

General Motors Co. is now profitable in all of its regional units, Chief Executive Officer Dan Akerson said. That’s a sign of a turnaround for a company whose European Opel unit is still in fix-it mode.

Akerson, speaking at Bloomberg’s Dealmakers Summit in New York today, said GM’s global presence was one of the selling points during the company’s initial public offering last year. In July, Akerson squelched rumors that GM planned to sell Opel. GM was correct to have reversed an agreement to sell its European Opel unit in 2009, he said.

“It was a bad deal,” Akerson said. “We were giving Europe away.”

GM, the largest U.S. automaker, predicts that its European business will be profitable this year, excluding some costs. Losses at the unit were a question mark for investors when the company went public in November 2010, according to Bloomberg.

GM has been cutting capacity in Europe and has hired Detroit consulting firm Alix Partners to help the company find efficiencies in engineering and revenue opportunities in its sales and marketing operations.

Opel earned $102 million in the second quarter before taxes and interest. The German business unit lost $390 million in the first quarter because of $395 million in goodwill impairment costs.

GM, based in Detroit, has lost $14.5 billion in Europe since 1999. The automaker in 2009 agreed to sell 55 percent of Ruesselsheim, Germany-based Adam Opel GmbH to Magna International Inc. and partner OAO Sberbank, before reversing course in November 2009.

Akerson appeared at the gathering with JPMorgan Chase & Co. Vice Chairman James B. “Jimmy” Lee. JPMorgan, Morgan Stanley, Bank of America Corp. and Citigroup Inc. led the GM IPO.

“Investors liked the story,” Lee said of the GM offering, which was originally priced at $26 to $29 a share before being sold at $33. “Another piece of the puzzle was new management. Investors said, ‘This was a new bunch of guys running this company.’”

GM’s goal for Europe is to be “profitable by just better than break-even before restructuring charges,” Nick Reilly, president of GM Europe, told reporters Sept. 13 at the Frankfurt auto show.

“In 2012, we won’t have those restructuring charges,” Reilly said at the time. “They’re mostly done. We’ll get the full 12-month benefit of the restructuring that we’ve done.”

GM rose 11 cents to $21.19 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have slid 36 percent from their IPO price.

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GM Chief Akerson Buys Shares Before Decline to Low Since Automaker’s IPO

General Motors Co. Chief Executive Officer Dan Akerson purchased $250,500 in shares of the automaker, a day before the company fell to a new low.

Akerson bought 10,000 shares yesterday at $25.05, Detroit- based GM said in a regulatory filing. Akerson, 62, owns 103,600 shares after the purchase, today’s filing said.

The stock-market rout that sent the Dow Jones Industrial Average to its lowest since September 2010 helped send GM shares a new closing low in New York Stock Exchange composite trading since the automaker’s November initial public offering. GM fell $1.62, or 6.3 percent, to $23.92 as of 4:15 p.m, according to Bloomberg.

Akerson, GM’s CEO since September, said yesterday he was unsure whether “turmoil” in the securities markets may discourage consumers from buying new vehicles. The largest U.S. automaker has forecast at least 13 million new-vehicle sales in 2011, including medium- and heavy-duty trucks.

“We’re a little unsure of these numbers,” Akerson said at a conference with analysts yesterday. “When the market does recover, we should be able to really leverage it beyond what you’ve seen so far since our IPO.”

Akerson’s purchase of GM stock is the second in less than three months. He bought $939,900 in shares of the automaker on May 11, when GM traded at $31.33, according to a filing the following day.

GM will benefit from moves to cut costs planned for the next decade, Akerson and other executives said yesterday.
Dan Ammann, GM’s chief financial officer, said frequent changes to the automaker’s product plan waste $1 billion a year. Canceling or delaying product programs adds to engineering costs because GM has to pay more to suppliers when orders change, Ammann said during a presentation.

GM plans to reduce the number of architectures that its vehicles are built from to 14 by 2018, from 30 in 2010. The number of engine platforms will be cut by about half in the next decade, according to a slideshow presentation.

GM may be able to improve its profit margins by 2.3 percentage points from last year to 7.4 percent by 2015, Barclays Capital analyst Brian Johnson said today in a research note. GM didn’t commit to a specific margin target, said Johnson, who rates GM “overweight” and is based in New York.

At today’s closing price, the value of the U.S. Treasury Department’s stake in GM has plunged $7.53 billion since Jan. 7. GM shares closed that day at $38.98, the highest since the IPO.

Treasury holds more than 500 million shares, making it GM’s largest owner. The government’s stake is worth $12 billion, down from $19.5 billion as of Jan. 7.

The U.S. Treasury took a 61 percent stake in GM as part of its $49.5 billion bailout of the automaker. The Treasury sold $13.6 billion worth of stock in the November IPO.

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