GM's Succession Plan Gets Clearer

Posted by: David Welch on March 4, 2008

Fritz.jpg

General Motors just about paved the way for Fritz Henderson, its newly-minted president and chief operating officer, to eventually take over the corner office from Chairman and CEO Rick Wagoner. The company promoted Henderson (pictured above) on March 3 after giving the finance whiz and rapid-fire talker a series of high-level promotions since 1997. Henderson is 49 and occupies a seat that GM has kept open since Wagoner was annointed CEO back in 2000.

Henderson’s progression to GM’s top seat has been in the making for years. Since 1997, he has swept through top jobs running GM’s Latin American, Asian and European business units. He pulled off mostly-successful restructuring jobs in every one. He even got GM’s perpetually-bleeding European business to make money. The region did slip back into the red last year.

In his most recent post as Vice Chairman and CFO, Henderson took lead on some of the most of the thankless jobs the company had to offer. He was a key player in getting the union to sign off on a landmark contract last fall that could save the company. Henderson also was boss on the sale of 51% of GMAC to Cerberus Capital Management. Usually, GM buys companies right before their value sinks. Remember investments in Fiat or Isuzu, anyone? But Henderson sold half of GMAC right before its mortgage business started hemorrhaging. That still hurts GM’s profits, but at least Cerberus is around the share the pain. Wagoner also stuck Henderson with the three-way negotiations between GM, the United Auto Workers and bankrupt parts maker Delphi. He has had to bargain buyout deals for union workers that would help Delphi clear the way to hire lower-paid factory hands. In that case, Delphi still has yet to emerge from bankruptcy.

Henderson’s next job will likely be running GM after Wagoner retires. When that will be is pure speculation. Wagoner is 55. GM insiders have speculated for years that he wouldn’t run the company past his late ‘50s. Who knows when he will actually retire. But the succession plan appears to be in place.

What isn’t clear, and it’s a problem Henderson must solve, is who will replace Vice Chairman of product development Bob Lutz? The 76-year-old car czar has spearheaded a styling renaissance at GM and is writing his legacy with the Chevrolet Volt electric car. He has hinted that once the Volt is for sale, which should be in 2010 or 2011, he might finally pack it in. Henderson is a finance guy whose credentials include getting the highest score on the May 1980 CPA exam. That’s wonderful, but it still means he needs a car guy. Some GM executives say that Jon Lauckner, GM’s vice president of vehicle program manager, could take over for Lutz. That also is just guesswork. Henderson will probably be the guy making that call. Assuming the promotions and departures go as expected, finding a worthy successor to Lutz could one day be one of his biggest decisions.

Reader Comments

Noz

March 4, 2008 2:06 PM

Interesting bit o' news/speculation re: Fritz. One always has to wonder what one is trying to hide behind facial hair. That, in the bitterest of endes, Wagoner has proven to be more of a loser than winner, this when appraising GM's reverse-directed performance over time. And then there is Lutz. Massive ego, little ability to actually get much on the road. Witness the latest failures, the G6 series, the Pontiac Poultice and Saturn Sunset. The HHR is certainly nothing, and the CTS is designed for and selling the unstable, immature, even anti-social bratty braggarts of our time. The Escalade? Now there is a bloated, bent and frayed goose feather. A gussied-up/highly profitable mediocre Chevrolet that is clumsy driving, super-thirsty, and too often favoured by some of the land's least desirable folks hiding behind the 'smoked' glass.

Some kind of legacy! With the above-named wonders and the shorted-out Volt, Herr Lutz will ride off into the sunset dangling from under his tattered parachute.

Fritz ought to think twice and jump now while the time is ripe. Perhaps Cerberus would take him in place of that puffed up egomaniac Nardelli... I have to add that finance guys have never done Chrysler any good, they have killed the company over decades following the departure of the founder, a self-taught engineer, WPC.

Jaxer

March 5, 2008 10:00 AM

I would just like to see GM finally relaese the Camaro that they have been talking about for years. It does't seem to take the other car companies that long to produce a car...

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jruhi4

March 5, 2008 1:22 PM

A car guy successor to Bob Lutz? It's not that difficult. Just look across the Atlantic and bring Wolfgang Bernhard back to the States.

Snoz

March 5, 2008 2:08 PM

Long ago in our faded memory, there was also a famed accountant named Townsend at Chrysler who worked his way through the good-o-boy network. His mantra was the "look at the bottom line." As a CPA his primary, and some say his only ability, was monitoring the liability-asset spreadsheet. So it came to be that under Townsend's helm, Chrysler cobled together the Aspen, Volare, and a few other losers that would not start in hot weather, lousy gas milage, smog control device slapped on untamed engines, hardwares that fell a part. It is any wonder that even municipalities avoid these cars like the plague. With even fleet sales to government agencies drying up, Chrysler folded. The lesson behind the Townsend mess was swept under the rug as the politicians debated how to use tax payer money to salvage the bankrupt Chrysler. In the auto business, there is no substitute for passion in designing and building quality cars. Under the guidance of "Bean Counters" at GM and Ford, American consumer were instructed to buy cream-puff like the LN-7, Astek, Cavalier, Pinto, Vega, Seville, Tiempo, Freestar, Omega, Corvair, Nova, etc. People who did the sexy marketing and creative financing were elevated to the corporate penthouse while guys who did the mechanical nut and bolt designers were relegated to the basement. Nobody care that the paint faded in less than two years, or the door gasket leaked water or engine lockup at high temperature or engine stalled when the car makes a left turn, or the gas cap would shear off causing fatal fire inside the driver compartment. What's important is staging runway models in your September auto show. For the more cerebral, lets play the guilt-trip jiggles, " Listen to your heart beat, America!" So where has all these clever strategy from our genious leaders of Big3 gotten the US car makers. Look no further than their market share.
When engineering takes the back seat behind accounting; when innovation is relegated to corner room; when "Marketing" is given front row status; when men with no auto engineering skills and with no passion for building quality cars are promoted ; when those who are "rapid fired talkers," and bean counters are elevated to CEO positions, the flow of red ink at Big3 will continue. When Toyota suffered a series of recalls, the Japanese Prime Minister called Mr. Watanabe for a personal meeting to discuss concerns about the importance of positive perception of Japanese goods on the world market. Japan has national pride in its cars. What does USA have in GM,Ford, Chryler cars? GM's once dominant 80% market share plummeted to 23% in the past 35 years. Has any American president admonish any GM,Ford, Chrysler CEO for their shoddy products and how they negatively impact perception of American goods? Don't even bother with our answer because perhaps, it is already too late. The American car makers are so tainted with reputation of producing inferior cars that even Korean Kia, Hyundai are moving boldly on GM, Ford, Chrysler's turf. But the old-boy network lives on, oblivious to the catatrophe that awaits them. And why should they? Sucking in $20million/year salaries plus corporate perts, these fat old geezers mind as well live on another planet when compared with the factory/office workers. The Big3 would like you to believe that the truck axle strike, the high labor cost, legacy pension plan of UAW, and medical cost are forcing them to close plants to increase profitability. The truth is that the Big3 has incompetent leadership, and these incompetent old geezers are out of step with reality and car buyers. The Old-boy network gave us Wellburn, Lutz, Wagoner, and now a fast talker, Fritz. It's time to think of this as a used car salesman dress up in a suit-n-tie.

LARRY

March 5, 2008 2:19 PM

NOT SO FAST...GM/GMAC MADE "RESTITUTION" TO CEREBUS FOR THE SUBPRIME LOSSES IN THE MORTGAGE SIDE OF GMAC...AFTER THE REFUND I'M NOT SURE THE SALE OF 51% OF GMAC TO CEREBUS WASN'T THE BEST DEAL CEREBUS MAY HAVE EVER MADE OR ANOTHER BAD DEAL FOR GM....MAYBE ON PAR WITH THE DEAL THEY MADE I "THINK" IT WAS WITH FIAT..ONCE THAT ENDED, GM WAS LEFT WITH A DISEL ENGINE PLANT IN POLAND!

Tom Paine

March 6, 2008 12:27 PM

Noz: I think the CTS is pretty nice, and the new coupe version even better. So let's give Lutz his due there, but we can take it away for the Pontiac GTO, the Aussie import nobody wanted.

GM's past has not only involved some really bad cars but also making investments that just made no sense and soaked up huge amounts of money: Saab, Subaru, Fiat, Lotus (Lotus?!). Having someone to watch where the money goes would actually be something new for GM. Innovation has its place but at the end of the day vehicles have to be priced to a particular market, something Toyota and Honda, for example, are supremely adept at doing. Saturn was a brand that was supposed to match the state-of-the-art in small car building and never was better than a generation behind the competition.

Andie

March 6, 2008 1:36 PM

I hope Mr. Henderson starts out on the right step by reversing all the mistakes that GM has already made. For example, in October, GM had given added responsiblity to the same agency, Leo Burnett, that launched the "It's not your father's Oldsmobile" that led to the permanant removal of Oldsmobile. Leo Bunnett is also the same agency that decreased Pontiac sales by 40% over the past seven years. Not a very wise decision by Rick Wagner and his team of Marketing Professionals. Since the change, sales began to rapidly fall for all of the divisions Leo Burnett is responsible for promoting.

Cathy

March 6, 2008 1:40 PM

Let’s hope Fritz brings more women into the upper management level jobs. Women CEO led companies, such as Avon whose stock jumped from $4 to $39 and EBay’s whose stock jumped from $1 to $27 in the past 20 years, have far outperformed the male dominated companies of GM whose stock decreased from $42 to $22 and Ford whose stock decreased from $16 to $6 over the same 20 years. Perhaps the car industries should have their companies be more representative of America. For example, research shows that companies that have a good diversity of women working for them outperform other companies by 47%. Women make up 49% of the workforce in the U.S., they purchase more than 65% of all new cars, influence 95% of all automobile sales in U.S. households, and are the fastest growing segment of new and used car buyers today, yet the car industry is made up of 80 to 95% of men in management positions. In addition, the women who own dealerships at General Motors is made up of 3% and the number of women dealerships at Ford is 5% despite research showing that both men and women prefer buying cars from women over men. Overall, the total dealership workforce nationwide consists of 7% women. Let’s hope Fritz is a progressive leader that wants the best for GM stockholders and the best is growing the business with diversity and fresh ideas on how to target the new consumer that has emerged – women.

Ann

March 7, 2008 6:02 PM

Well said Snoz. Too many "yes" men at GM. That's why the share has decreased by 100% in the past 20 years while other companies' shares are over 500% higher. Let's have GM be more representative of America. It is poor management to have 95% of a company made up of white men in a city of Detroit where women are about half the work force and where the city is close to 30% African American. Sounds like GM needs a visit from the Afirmative Action Committee.

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