Loss of respected industry vet may haunt GM
December 3, 2009
Howes: Loss of respected industry vet may haunt GM
Less than 24 hours before General Motors Co.’s directors showed CEO Fritz Henderson the door, a ranking executive for a rival automaker made a telling admission to me over dinner:
Through all of last year’s congressional hearings, the firing of former CEO Rick Wagoner, the shotgun bankruptcy, the jobs cuts and plant closings, GM is continuing to "build really good cars," he told me. The real crime, to the extent there is one in the sloppy dismissal of Henderson this week, will be if the coming interregnum kills the product momentum GM so clearly has — and that the ousted CEO exemplified.
"It’s not about paying back loans, or going public, or being tough," a former GM exec who worked directly for Henderson told me Wednesday. "It’s about building and selling great cars and trucks. Fritz understood that. Every division he ran, except his tenure in North America, had substantial improvement in performance."
That’s true, including the "except in North America" part. Which is why Fritz Henderson didn’t deserve this, as much as GM’s directors — proxies as they are for the Treasury Department — had the right to let him go.
He didn’t deserve the chaotic separation that played out Tuesday in real time and made GM’s directors look as if they were making things up as they went along. Nor did he deserve the implication that his team at GM is doing nothing or the implied slap to "insiders," as if the only successful turnarounds in the global auto industry are engineered by outsiders.
They aren’t. More often than not, they’re failures named Zarrella and Nardelli, Zetsche and Bernhard, Press and Reitzle. All of them big names, all of them steeped in accomplishment and all of them men who parachuted into Detroit auto jobs and failed, often miserably.
In brooming Henderson, GM’s directors are ridding the company of a 25-year lifer with deep knowledge of operations, finance and corporate strategy in every region of the world. He’s perhaps the only top GM executive in a generation to be openly trusted by the United Auto Workers, an attribute the directors will learn to value should GM’s turnaround take hold about the time 2011 contract talks roll around.
Meet the new boss
Henderson’s a straight shooter who refused to shy from the B-word when others inside GM couldn’t even spell bankruptcy. He pushed to dump models that didn’t play well and to cut brands, like Saab, that have no hope of earning even a modest profit. He earned credibility with GM insiders for leading the company through the most perilous time in its 101-year history.
And what do the directors get to take his place? Right now, a Texas telecom exec who confesses to knowing very little about cars. Who praises the departing CEO even as he dumps him and refuses to answer questions about it. Whose rep, to put it kindly, is quickly dampening the team spirit that Henderson and his executive committee were successfully fostering.
The directors get the prospect of a protracted CEO search certain to get mired in the executive pay politics of bailout-sensitive Washington. Depending on who they land, they get the possibility of slipping internal morale in a company still coming to terms with the historic trauma of the past year and the quickening pace of cultural change begun by Henderson.
They get the likelihood of a long learning curve in the CEO’s office (even St. Alan of Mulally called around for pointers in his early days at Ford Motor Co.). And they get — we get — the thrill of watching GM’s new outsider CEO walk across the Detroit River on his first day of work next spring.
Look, Henderson was destined to be a short-timer, the only question being how short. He made mistakes, real and perceived. The deal to sell Saturn to industrialist Roger Penske blew up (thanks to last-minute balking by Renault-Nissan). The flip-flopping over whether to sell Adam Opel GmbH said as much about the directors as it did Henderson. The aborted sale of Saab and dissent over the scale of sales incentives weakened him.
Henderson’s penchant for moving slowly to build ties with players in Washington, including heavyweights on Team Obama who sought get-to-know-you meetings with the GM CEO but waited months to get them, didn’t help. Not smart, considering that GM arguably sits at the nexus of bailout politics precisely because it is not a Wall Street bank liberally dispensing campaign contributions.
Detroit loses, too
His critics, and they’re legion, already don’t lament his departure because he’s Old GM and Old GM is about as discredited as the Soviet Union. But with him goes one of GM’s final human links to its home, to its Detroit headquarters and to any obligations it may have to either.
On Monday, Gov. Jennifer Granholm, the state’s two senators and other political leaders are expected to attend a ceremony in Hamtramck to announce that the extended-range Chevrolet Volt hybrid will be assembled at the GM plant there.
Henderson was scheduled to be there, but he won’t be. Neither will CEO Ed Whitacre, head of the new GM.