Shake Up at GM: Fritz Leaves, International Search is On!
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The shock waves are still rumbling through the automotive community. I do a lot of my work online and I first saw the story on MSNBC News around 8-pm est December 1, 2009. The report used a lot of jargon and wasn’t really specific as to Fritz’s reasons for leaving, but there was enough to read between the lines. I can well imagine that the stuff must have hit the fan BIG TIME in GM’s boardroom! I wonder if anyone had their cell phone video recorder going.
First, here’s the MSNBC story…
Let’s take this apart…
The first sentence says that Henderson “stepped down.” He wasn’t leaving at some future date or leaving so he could “spend more time with his family.” One can interpret “stepped down” several ways, such as, quit, forced out, or fired.
This is no small deal friends, as Fritz has spent his entire working career at GM. When people get to a certain level within a corporation, they enter what I call, “The VP-ness Race.” They all want to drive the bus. So when someone ascends to the lofty position of CEO, it “should” be their crowning career achievement. I am certain that when Henderson was made CEO back in March ‘09, his plan was NOT to leave abruptly after just eight months.
The recently appointed GM Chairman, Ed Whitacre is now the interim CEO. Whitacre is a super corporate critter that took AT&T from a $22 Billion dollar company to $234 Billion in ‘07. His retirement package from AT&T was $158.5 Million. “Big Ed” as he is called (he’s 6’-4”l) is not a “car guy.” But at this level of corporate culture, familiarity with the actual product is not always a requirement. Men such as this could be running a communications company, a panty hose company, or a toy company – the actual product created by a CEO contestant is often irrelevant to boards of directors. What matters is did they lead the company to growth and profitability. This model does NOT always produce good results.
Here’s an interesting quote from Ed Whitacre in a 2004 interview with The Wall Street Journal, “I’m not a real techie. I have a computer at home, but don’t mess with it that often. I mean, what am I going to do with 200 e-mails a day? No, I’m really not very techie, but I can use a computer.” On his ranch, he likes to kill rattlesnakes by stepping on their necks and smashing their heads with a rock.
Here’s Whitacre’s profile from Business Week…
Then there’s a story from The Huffington Post, titled, “Whitacre, New GM Chairman: “I Don’t Know Anything About Cars.” There are some interesting quotes from Big Ed here…
So, that’s GM’s new “interim” driver of the bus, er, ah, CEO. At least he says he is vowing to learn about cars.
The MSNBC story offered a few other interesting clues. The second paragraph states that a news conference was “hastily called and that an international search for a new CEO and president is planned.” This tells me that on the morning of December 1, 2009, Fritz and the rest of GM’s Board of Directors didn’t know that it would be Henderson’s last day at GM.
Apparently, the Board wasn’t happy with the speed of Henderson’s changes and decided to be more involved with decision making. The Opel Division was “for sale,” then not for sale. The Hummer sale to China isn’t yet completed and the Saturn/Penske deal sale fell through, as did the sale of Saab to Koenigsegg Group AB. Saturn and Saab are to be phased out – meaning, they will get no money for the brands or tooling. Everything will be essentially scrapped.
And on top of all that, after the boost from the Cash For Clunkers Program ran its course, GM’s sales went back to being flat. GM and the rest of the car industry have the same problem they had all this year – selling into a depressed marketplace with rising unemployment with no real end in sight.
So far, Ford is one of the only Detroit car maker to post profits. I have zero inside info on this, but personally, I doubt Ford’s figures. It’s simply too easy these days to cook the books to keep stock holders from selling stock. When shareholders dump stock, the company has less and less operating capital which can lead to a downward spiral that can be fatal to a company.
One thing not mentioned in the story was the morale inside GM. I’m certain it’s just dreadful. A corporation is much like an oceangoing ship, in that to survive, it must have a decisive captain, a clear destination, and vision. Quick and sudden changes like this have a powerful affect on the morale of those that are part of the crew of the corporation.
Now GM is left with an interim CEO with no automobile experience – in other words, no strong leader with a deep background and affection for automobiles. When someone gets into the upper stratosphere of the corporate world, they are literally swimming with the sharks. Any one could get eaten alive and spit out. Ed had best watch his back.
Whitacre is essentially an outsider to the car industry. Will it take an outsider to fix GM? I don’t think so. Would someone with car making experience be willing to get into the pool with the rest of the GM sharks? I doubt it. It looks to me that GM is in grave danger, friends. At 2-PM, December 3, 2009, GM’s stock was $0.75, down from the day’s high of $1.01 – down 25.75-percent.
Don’t feel too bad for Fritz, I’m certain his severance package will enable him to have a lush retirement. He’s only 51-years old. And if Whitacre gets dumped in a few months, he’ll be okay too and will have more time to spend hunting rattlesnakes with rocks. And don’t expect 85-year-old Lee Iacocca to step forward any time soon, or ever.
Does anyone inside GM have the background, passion, and vision to lead GM? If the criteria for CEO is “vision, passion, and deep understanding of the automobile business,” I’d vote for Corvette Chief Engineer, Tom Wallace. Let the Corvette guy run GM! – KST
Scott Teeters is a Corvette Historian and Artist whose work you have enjoyed in Vette magazine since 1976. You may enjoy his art and articles by visiting www.illustratedcorvetteseries.com. Sign up for the Corvette Report Update on this Home page and receive a Free Illustrated Corvette Series Corvette Engine Spotters Guide ebook as a Thank You!
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