Posted by: David Welch on August 5, 2009
New General Motors Chairman Edward Whitacre is every bit a Detroit outsider. He’s a lanky Texan who ran a phone company. He speaks plainly in a drawl. He went to Texas Tech, not University of Michigan or Michigan State like so many Motown managers. He didn’t even get a Harvard MBA. But some of what he had to say after his first board meeting sounded pretty familiar.
First off, he told reporters in a conference call after today that he didn’t think the company’s culture needed a big overhaul. Blessed with a stronger balance sheet and with just four brands to manage, GM can be successful with the people working there. “There are a lot of talented people at GM,” Whitacre said. “The people I encountered are very capable. I don’t think the culture needs to be changed. I think they will rise to the occasion. You’ll see a new GM.” That’s what Whitacre said when he was asked if GM needed some outsiders within its executive ranks, as opposed to a mostly new board of directors. That may be Whitacre’s view from his post as non-executive chairman of the board. But his CEO, Fritz Henderson, has leaned up management ranks and pushed his people to decide more quickly.
The next thing Whitacre said was a tired old rallying cry from generations of GM executives. He wants to hold and in fact grow the company’s market share. We’ve heard this one before only to see the share of the U.S. market steadily fall from more than 52% in 1962 to under 20% today. It was 19% in July. “It’s important that we maintain and improve our market share. That’s our top line,” Whitacre said. “We’re going to try to improve that.”
It will be tough given that GM is dropping four of its eight brands. The four—Hummer, Pontiac, Saab and Saturn—still commanded 3% of the U.S. market so far this year even as buyers fled for brands with a future. That’s one reason analysts figure GM’s share will drop to 15% before stabilizing. Whitacre made no promises, but his target is growth.
He wouldn’t give any kind of financial numbers. But he said GM has a plan to get back in the black. “We have a plan to cross that line,” he said. “It’s sooner than most people think. Hopefully, we’ll surprise people.” If he and CEO Fritz Henderson can deliver profits anytime soon, that would surprise a lot of people, including taxpayers who own 60% of the company. That could change soon, too. Whitacre said an initial pubic offering could come as soon as next year.
So will Whitacre preside over business as usual in Detroit? Don’t bet on it, says one senior Treasury Department official. Whitacre will make sure GM is improving, and so will a new board of directors that could only be tougher than the lax slate of directors it replaces, the official said. To his credit, he did assemble AT&T and he made it a competitor. “These are ‘A’ players,” says the Treasury official.