GM taps Microsoft's Liddell as CFO as the C-suite turns over

Posted by: David Welch on December 21, 2009

Liddell.jpg

Maybe it’s not so hard to get talent to move to Detroit and work for General Motors. The auto giant hired erstwhile Microsoft CFO Christopher Liddell, 51, as its CFO today, as Bloomberg first reported in this story. It was the latest move by Chairman and CEO Ed Whitacre, who has been running the company since GM’s board ousted CEO Fritz Henderson on Dec. 2. Liddell may have been on his way out at Microsoft, but his resume is pretty stacked, which hints that GM may be able to get some good talent in to the C-suite.

Want to know the best thing about his resume? It doesn’t say General Motors New York Treasury Office on it. GM is supposed to have the best finance department in the land. The company has plucked top graduates from Harvard Business School for years. The people managing GM’s pension funds have shown a great knack for beating the market, even in the worst of times.

But as business strategists, GM’s money men have been bunglers, says longtime GM watcher Maryann Keller. Roger Smith launched Saturn and bought the first 50% of Saab, she noted. Both plays overextended GM’s limited cash flow, hurt the other brands and ended disastrously. The late Roger Smith also takes a lot of blame for poor product decisions and bad quality. His tenure atop GM is regarded as disastrous. Jack Smith, who ran GM though the ‘90s, spent billions paying dividends to Wall Street and buying shares back even as the company was spending too little on products and marketing. Rick Wagoner, who was ousted earlier this year by the Treasury Department, continued that tactic by paying more than $1 billion a year in dividends while borrowing money to shore up the pension fund and cutting expenditures on new models. He also blew about $4.5 billion to get into and then out of a failed investment in Italy’s Fiat Auto. And let’s not forget that under Wagoner, GM used its GMAC lending business to go headlong into subprime mortgages, which has cost the financier billions in losses. Anyone remember Ditech? That came from GMAC’s mortgage unit.

If that’s not enough, Wagoner also went on a discounting binge to keep the factories running when car sales were going soft. Rather than take on the union and try to manage the paid-layoff clause that just-about guaranteed employment, he turned to rebates, 0% financing and cheap leases. That kept cash flowing in, but it burned up profits and turned GM’s brands into bargain houses. It’s no wonder Steve Rattner, the former chief of the Treasury Department’s Auto Task Force, said GM had the worst management he had ever seen.

It’s also no wonder that Whitacre wants new blood and new thinking. Sure there are many talented people at GM. Car guys like Bob Lutz and Mark Reuss know what car enthusiasts want and how to make those cars. But when it comes to managing the finance department, Whitacre may be smart to get a fresh start.

Reader Comments

GMfan05

December 21, 2009 2:52 PM

Hopefully this is not too little too late. I think GM can thrive again because of its fantastic lineup of excellent products, especially those upcoming over the next 3 years. Which leads me to another point: Don't kick Rick Wagoner too hard...he was the one that hired Bob Lutz. That alone washes away all other bad decisions. Without Lutz, GM would not have a reason to exist; its fleet would still have gray plastic cladding, crappy interiors and marshmallow suspensions. As a "car guy", Lutz changed all of that and we have Mr. Wagoner to thank for that.

Dr. Dennis O'Connor

December 21, 2009 3:03 PM

I spent 16 years of my life in Plant Engineering in Chevrolet keeping the machines running and the assembly lines humming... I left the auto business when it became clear that GM was hell bent on a fatal course of bland products and coddling the union, and they flat out refused to listen to us in middle management, we who ate/slept/breathed cars and who knew what the public wanted and would buy...

I thought it would take ten years for GM to implode, it took 34 years... Now as I survey the wreckage of the greatest car company that ever existed I feel like vomiting...

dr. o

Sean Westervelt

December 21, 2009 5:39 PM

The ignorance of the press is one example of the problem. GM never "bought" Saturn, it was built by scratch partly to start new to deal with the GM bashing press. Since perhaps under another name thay would be treated fairly. Yes GM management past has had issues, way in the past.
Their size and lack of flexibility due to Gov't policies and laws coddling to speaal interes groups like the UAW was significant. At least GMfan05 gets it.

notabeancounter

December 21, 2009 6:41 PM

I think GM is taking a step in the right direction by hiring a person with a engineering background who knows about finances, not the other way around.
This is the right approach for a company which its main business it to manufacture technical complex products, that is why I think Ford made the right decision when they hired Alan Mulally.

Clyde

December 21, 2009 9:31 PM

In my opinon, their staff need to learn what they do not teach at Harvard Business School. I stop buying GM brands because of quality issues. Reguardless of which GM brand I purchased, I had the same failure events before their vehicle reached 60,000 miles. This was due to repeated bad alternators, cooling system, power window, air conditioning compressors, rack and pinion system and check engine light emission problems. In my opinon, they have a hugh mountain to climb before they get my business back.

Car Guy

December 21, 2009 9:41 PM

It's the product...the cars...not finance. GM has essentially been making "junk" for the last 30+ years.(with the exception of Cadillac CTS...which is sad because it proves they can do it).Haven't bought an American car since '79...and won't til they measure up to the Japanese autos.

Husin O'Bama

December 22, 2009 12:24 AM

Liddel will have a good shot at CEO post later.

Bob

January 1, 2010 11:09 AM

Car guy you don't have a clue cause you've been all puckered up since the 70's. GM's products are on par with the japanese you should go out and have a look. You realize that Toyota lead the industry in recalls this year?

ps

January 13, 2010 9:02 AM

Clyde- Do you mean pretending to build widgets in an imaginary factory with no labor factors at the lowest possible cost is not the path to success in the auto industry? That's what Finance MBA's contribute to industry. I think the results speak for themselves.
Anyway, more engineers and fewer bean counting parasites in the executive suites is the way forward. Just ask Ford.

News1

January 15, 2010 1:41 AM

Nice postings and news are very interesting on this site...

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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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