Lutz moves to an advisory role. But for how long?

Posted by: David Welch on December 11, 2009

Lutz.jpg

Before General Motors Chairman and CEO Ed Whitacre announced the shakeup in the company’s executive ranks on Dec. 4, the rumor mill was cranking out all kinds of possibilities about the future of Vice Chairman Bob Lutz. Some said he would quit. Others said that he would become CEO.

The latter was never going to happen, not with a board of directors that wants a change of pace and a new look at the company. At the same time, the board would have created even more problems if the company ousted Lutz. GM’s cars have gotten much better under Lutz. Styling is more aggressive. Inside, they have much nicer cabins than GM has ever put out. Without Lutz to barrel through the bureaucracy or do an end run around it, much of that would never happened.

Will he have much impact in his new role as vice chairman and advisor? Lutz says he believes he will even though he has no budget and no direct reports. His powers of persuasion and ability to get Whitacre to listen to him on key product decisions will dictate how much influence Lutz will have. If Whitacre is wise, he will listen to Lutz. Whitacre is a very successful CEO in his own right, but he confesses that he doesn’t know much about cars. Lutz does.

If Lutz doesn’t have much of an impact, he will leave pretty soon. That would be a shame. Whoever Whitacre and the board hire as a new CEO—and even if “Big Ed” keeps the job himself—GM will need a car guy to shepherd the good designs from the sketch pads to dealer showrooms. Even at 77, Lutz can make a difference.

Reader Comments

tg

December 11, 2009 11:09 PM

lutz is the dick cheney of the auto industry. he may have been good at the game he was playing, but the rest of the world was playing a different game.

JT

December 12, 2009 8:51 AM

Look like GM's new board of directors is doing everything right overall. But something that disturbs me with their recent action:

1. Selling out to the Chinese partner for the controlling stake in SGM for a mere US $84 Mil. What were they thinking about? Do they badly need that $84 Mil from the Chinese after getting $50 Bil from Uncle Sam? From now on, the so called joint venture is totally Chinese enterprise. So after decades and billions of dollars invested in China, that is all GM could show for? And worst yet, they are doing it when they can start to make some serious money from it. And another thing : hypocrisy. On one side they worried about the loss Intellectual Properties in selling Opel to the Russian and Magna, but didn't they gave the whole store to the Chinese when they got into that market? Besides, what country would top China for piracy?

2. Giving half of their investment in India to their Chinese overlord. For years, India has viewed China and its companies with suspicious eyes. Now with the help of GM, the Chinese car companies could sneak in under the radar screen. And guess what, India car market will be soon the second largest market in the world after China. I wonder when would GM will give Shanghai Automotive the 1% controlling stake here as well?

I doubt that VW, Toyota, Hyundai would do such foolish thing in China. But let's see. May be this is just one of those "Soft Power" maneuver that China did on Obama

JT

MacGuffin

December 12, 2009 5:25 PM

Probably a good idea to assuage Lutz's giant ego and find a role for him. Especially as GM gets back on its feet. It was probably a mistake to make him CMO, so putting him back in the product role and letting him do his magic is a good thing. Hopefully Big Ed won't be too hands-on. If Lutz was 10 years younger, he could be CEO.

Ballbuster

December 13, 2009 2:28 AM

Old fart Lutz would have been fired years ago but for the protection of malodorous ex-CEO Ricky Wagoner. After GM collapsed, Lutz should have stayed retired with ex-CEO Wagoner and not rejoin Government Motor under ex-CEO Henderson. Known as the "Car-guy" by those whom Lutz has successful schmoozed, including BW writer Welch, Lutz is fact a "Sly-guy" for impersonating a seasoned automotive executive. Given a clean slate and unheard of design autonomy at GM to produce a high volume-selling car 4 years ago, this "Car-guy" Lutz concocted the infamous one billion dollar fiasco, the dead-on-arrival, Pontiac Sky and Saturn Solstice. Undaunted by the huge losses, Welch states that "GM will need a car guy (Lutz) to shepherd the good designs from the sketch pads to the dealer showrooms." Obviously mesmerized by Lutz’s schmooz, Welch has become such a proverbial apologist that when Lutz belches gas in his face, Welch claims there is a faulty catalytic converter at BW press room. Despite Welch’s excuses, the fact is that both designer Wellburn and Lutz are an embarrassment to GM's Executive Committee whose inability to differentiate between the real talent from imposters within GM perpetuates the rot from within.

The Muser

December 13, 2009 2:59 PM

This new board and management are wrong for this industry.

Firstly, "private equity" WAS, not about business, it WAS, about cutting costs, and leverage for mean and lean.

Mean and lean (or pace) is fine if you are in a fast moving industry but design of cars happens over time, assessment of market direction happens over time, you need experience garnered over time for that sort of thing, not "grab, slash and dash merchants", that is to say if your board is going to manage the company!

So GM as is, will never become a big employer again, not with that board of epitomy of "GsdM's" and not much else, in my book.

The company had changed as a motor car company had needed to change well before the oil speculation and credit crunch shut down purchasing of cars, and so I would bring back previous CEO and also Mr Henderson and continue as was. It was doing well as a well managed business, before the toy boys tore it to pieces. Events caught up on them, nothing whatsoever to with lack of pace, at least in the years since the last CEO before Mr Henderson took over. You don't sack a captain because the hurricane tears the sails in your boat.

After bringing back competent management, I would sack the board, and rather than have some hyped up on steroids water rippling merchants screwing things up into monosylabic sized business plans and wondering where you can buy engines, I would change the perception of the need for the board into the need for three or four legal and accounting consultants to simply sign off the accounts thereby in fact monitoring the accountants and good governance. That is all that is needed for the shareholders to judge management performance, and anyone who wants more info just needs to phone the CEO like any stock market expert.

Other than that, boards these days are old boy lunch clubs, and always will be as nowadays management is competent enough to do all things olden days (18th century) boards used to do.

Long term and day to day running of a business is in no way meaningfully enhanced by cohorts of retired pensioners. The board therefore only need be accounting and legal professionals and have some knowledge on managing and acquiring the right staff so if anyone needs sacked they know how to handle it and how to turn to head hunters. If you want to monitor the company on a quarter to quarter basis, there are any number of quality consultants that will be much more useful and cheaper than a board of retired has beens, and furthermore could in fact add value to the business.

Day to day running is out for boards, they simply are not on the ball enough. So you don't need more than maybe four to watch each other, as well as management, in good governance.

The small number also stops board member scapegoating, and also means a more tangible tie in to the company for them. If they have general business knowledge as well, that's OK, but not a draw back.

With that shape, activist shareholders have a way in they can complain to, and not one that is any more useless than present, and sleeping shareholders don't bother anyway, hence the name.

So having said all the above, concerning GM itself as an investment. If I was an investor I wouldn't bother with anything like GM at all, not only because of it's present attitude to it's business, not only because of it's inexperience, not only because of it's medlling board, but mainly because so long as you have an unprotected sales market where any Tom Dick and Harry with el cheapo costs and currency, can at most, assemble cars in the US, and then sell them, not actually using native components, and do so under the marketing nouse of native market developers, it has become nothing but an outsourcer, not a competitor for foreign businesses, and thus being a trader, not something that is ever likely to innovate or increase your investment meaningfully in the long run.

I have no problem with marketing companies per se, but cars is manufacturing and providing jobs for your own people, and the way things are at the moment that structure will soon be dead, as protectionism has become the word for the devil, never to be thought of far less mentioned.

With this kind of extinct economics running your country, as you only loose jobs, expertise and economic wealth to overseas, eventually the US and the west also, becomes extinct, and becomes a declining economic satellite of Asia, sinking to their standards of living and morality and innovation (but not copy catting) until the paint not only is falling off the cars, but also the walls of the marketing HQ in the US, and I want nothing to do with that, far less investing in what such an importer then becomes a money exporter.

There are some battles that are lost before you begin. And the demise of US cars and manufacturing and longevity, and thus the demise of the vanguard of western prowess and thus a particular culture of life, is for me probably the most important lost battle ever. I like winning, not supporting the dead.

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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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