Barra and Reuss: A New Leadership Team for a New General Motors

Motor City Blogman

General Motors’ independence, its shedding of the “Government Motors” epithet, seemed like a long way off when I was attending the frequent press conferences in Detroit’s Renaissance Center in 2009. Just shy of mid-decade, the U.S. Treasury has sold off its remaining GM stock, at a loss of more than $10 billion compared with the Troubled Asset Relief Program (TARP) bailout. Altogether, reports the New York Times, the Treasury has recouped $433 billion on its initial TARP “investment” of $422 billion.

And so, carefully timed announcements have all fallen into place within the past thirty-six hours.

Controversial GM CEO and anti-Mulally Dan Akerson announced his retirement Tuesday morning, with the company’s board electing Mary “no more crappy cars” Barra his replacement. Enthusiasts will be disappointed that it’s not GM’s biggest car guy, Mark Reuss. With the moves announced Tuesday, Reuss moves up from North American president to Barra’s old position, executive vice president for Global Product Development, Purchasing and Supply Chain.

Fact is, Reuss will be a more influential car guy for future GM products as its global product chief than he would as CEO. It will be Reuss’s job to propose compelling product, and it will be Barra’s job to determine whether or not said product is good for GM’s bottom line. To outsiders like me, the Barra-Reuss combo looks like a much more promising combination than Wagoner-Lutz. Imagine how much more successful the Kappa Pontiac Solstice/Saturn Sky might have been under current circumstances.

Elsewhere in the lineup, board member Theodore Salso replaces Akerson as GM’s chairman. Salso, 66, may be an interim chairman – GM historically has made the CEO and the chairman the same person. So … chairwoman in the future?

Dan Amman moves up from chief financial officer to company president, placing him in charge of GM’s regional operations around the world. He’s keeping his CFO job, at least until fiscal year 2013 results are reported next February.

After Barra, 51, and Reuss, 50, Amman, 41, was third on every pundit’s shortlist to replace Akerson as CEO. He’s one of the “outsiders” who joined GM after the ’09 bankruptcy.
Akerson has been quoted as blaming the old GM guard, which includes Barra and Reuss, for the corporation’s problems. While the product had been substandard, Akerson should have specifically blamed the pre-bankruptcy financial guys, from Roger Smith to Rick Wagoner and Fritz Henderson, who stymied product development with cost constraints and strict adherence to a stodgy corporate culture. Amman is far more of a car guy than Smith, Wagoner, and Henderson ever were, so he’s the GM executive to watch when he reaches his mid-50s.

Prior to Tuesday morning’s executive shuffle, the Treasury Department announced its divestiture of its remaining stock. Earlier in the day, the Center for Automotive Research (CAR) in Ann Arbor, Michigan, released a report that the Bush and Obama administrations’ bailout of GM and Chrysler saved 2.631 million jobs in 2009 and 1.519 million jobs in 2010. You can’t argue with the precision of those numbers. CAR says that kind of loss would have cost the federal government $105.3 billion in tax revenues and transfer payments such as food stamps.

Wall Street investors who lost all their investments in Old GM remain angry that they lost everything, while United Auto Workers members still have something on which to retire. Those investors holding less of a grudge, however, may be enjoying the fruits of new GM’s $40+ per share stock price, as the Dow Jones Industrial Average keeps hitting new highs. New GM’s first dividend payment can’t be far off.

New GM also helped weed out too many showrooms and too many brands, the former a result of individual states’ laws that protect dealerships, even as foreign brands diminished domestic market share, and the latter the result, mostly, of the former. Alfred P. Sloan’s brand strategy of the 1920s worked well up to the ’50s, when each brand started getting more overlapping models. In the old days, Chevy dealerships would fight GM for a version, say, of a Buick model, even if it was inappropriate for a Chevrolet.

I know what you’re thinking. That problem still persists, especially between Chevrolet and Buick and GMC. It was one of the excuses Akerson used last month in announcing a reversal of the strategy going back to 2005 to sell Chevys below Opel/Vauxhall in Western and Central Europe.

GM still has a lot of work to do in order to strengthen its brands, from much-improved Cadillac on down. It has come far compared with the Roger Smith days, in part because of the men and women who worked hard to change the corporate culture before bankruptcy. But the necessary cuts in GM brands, dealerships, and production capacity could only happen the way it did because of the provisions of the forced bankruptcy, the actions the company needed to take in order to live to see another day. GM’s post-bankruptcy survivors have done a stellar job of reviving the images of Chevy, Buick, GMC, and Cadillac.

From outside the RenCen, GM’s new leadership appears to have the skill to make the most of its post-bankruptcy potential. It will not disappoint us only if it can continue to exceed such expectations.