GM Chairman Whitacre: The culture doesn't need changing

Posted by: David Welch on August 5, 2009

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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.

Reader Comments

Gary

August 5, 2009 4:46 PM

Decisions, decisions. Do I fire the VP for left seat head restraints, or the one for the right seat?

Hmmmm.

August 5, 2009 6:05 PM

Does share = profit? How about making some money to pay back the taxpayers.

ps

August 5, 2009 9:56 PM

Okay, cut half your brands and hold market share. Hahahahahahaha! And ATT? They suck. I dropped them. IPhone holders hate ATT which is why many are cracking the code. He's nothing but a Stempel redux, except he doesn't have the doofus look and the Prince Charels ears.

Snoz

August 6, 2009 12:26 AM

As another old fart from the Old-Boy-Network with little to no knowledge about the auto industry, Whitacre will burn away GM's time and money while its competitors are gathering momentum and seizing market share. Is the pool of talent at GM so thin that its bench consists only of Whitacre and Lutz? Apparently yes. Perhaps without much choice, GM as Government Motors is having a difficult time attracting quality talent to help it survive. In that event, why wait for a second GM bankruptcy when equity holders should liquidate now and buy Honda or Toyota shares?

rjbjr

August 6, 2009 8:07 AM

Dear Mr. Whitacre,
You are new to GM, so it's understandable you don't see a need for any culture change yet.

Took me some time to see the problems too. But, keep looking. You can increase market share, but it will require an entirely new manufacturing paradigm/culture.

With the appropriate changes, you can increase productivity and produce cars at significantly less cost than the competition.

The current culture discourages productivity improvement and discourages creativity.

Here's a suggestion to steepen your learning curve. Spend some time on the factory floor, yours and at your suppliers. Don't go for the traditional staged tour. Bypass the execs and talk to the folks actually manufacturing things.

Then, think how all this might be done more efficiently. There are many ways to do that, but all require cultural/fundamental system changes.

Good Luck.

Jill

August 6, 2009 10:12 AM

Old dog never can't learn a new trick. GM need a new breed of talents and fresh blood to survive against Ford and other far more competative automakers.

Noah

August 6, 2009 10:23 AM

When I saw the appointment of Mr. Whitacre, I questioned whether this guy would have any clue as to how to energize GM. Looks like my feelings were correct as this guy is lost and has no clue how to make GM competitive. We are wasting valuable time and OUR money with with this guy in place. Let's get a change agent in place like Ford.

PJT

August 6, 2009 10:32 AM

This is not encouraging for GM's future. Compare Mr. Whitacre's comments to those from Alan Mulally's early days, such as "We've been going out of business for 30 years." To suggest that GM just needs to tweak the operation and carry on is to ignore the evidence of past restructurings and downsizings, all which sounded similar and none of which seemed to solve the problems. Beyond the terrible economy, there are fundamental problems with the way the talented people of GM are being led. Culture is a management issue, and by downplaying the need for change, GM management is failing in one of their most basic responsibilities.

Westernfan

August 6, 2009 5:11 PM

This early in his tenure, what would you expect him to say? Even after the layoffs and restructurings, most of the current white collar crew will still be there- and he's going to have to work with them. It's probably better not to antagonize the folks that work for you unless and until you have to. We can only hope that he's keeping more insightful thoughts to himself for the time being.

Lonnie E. Kutil

August 16, 2009 9:55 PM

I have owned GM products all my life but once the government took over the company, ousted the CO, installed a new CO and gave the majority control to the UAW then I have lost all confidence in what I think used to be the best car company in the world. I have a Chevy 3500 crew cab pickup and I like it, but I may never buy another GM product uhtil you get out from under the UAW control and new opressive govenment control. You can sent this to Barrack Hussein Obama's snitch site. Thank you.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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