Tuesday, December 18, 2018

Mary Barra’s Unpopular Bid to Save General Motors

 Sadly GM is downsizing.  It is more than anything an indictment of financial engineering that uses continuous expansion to hide aging assets.  GM acquired competitors and assets over a century while acquiring a whole world of social contracts as well that postponed real costs.  In too big to fail entities, these costs accumulate and are not expunged through failure.

I personally think we need a size restriction on all corporate entities that holds them to a maximum ceiling low enough to prevent the too big to fail concept.  It always must end this way.

Right now the company is shedding their oldest plants.  They have to.  Some of those assets may be picked up by other auto companies.

With a booming economy finally upon us, those high value workers will find similar work likely by moving. 
Mary Barra’s Unpopular Bid to Save General Motors

Mary Barra, chairman and CEO of General Motors, speaks with the news media after meeting with U.S. President Donald Trump and auto executives at the American Center for Mobility on March 15, 2017, in Ypsilanti, Michigan.

Bill Pugliano
Why you should care

Because the future of an American auto giant is in her hands.
Mary Barra might have the toughest job in corporate America right now. As mourners gathered on Wednesday to pay tribute to former U.S. President George H.W. Bush at the Washington National Cathedral before a front row filled with current and former American presidents, the chairman and CEO of General Motors made her way into closed-door meetings on Capitol Hill to face another sullen group of national leaders: the members of Congress whose constituencies will be the most impacted by GM’s recent announcement that it will halt production at five plants in North America next year and cut up to 15,000 jobs.

It was nearly 27 years ago that Bush made his way to Japan with then GM Chairman Robert Stempel to meet with Japanese leaders and business executives in an effort to open up markets and make American automobiles more competitive with surging Japanese imports. The trip ended with Bush vomiting his dinner into the Japanese prime minister’s lap. Meanwhile, GM and the other Big Three Detroit automakers continued to have their lunches eaten by their Japanese counterparts.
Barra, the first female CEO at a major automaker, has continued to act decisively to run a smaller, more profitable company.
To steer an American car company through the rugged terrain of the automobile industry in recent decades is to be driving a vehicle that always seems dangerously close to a new cliff. After climbing past Ford in 1927 to become the world’s largest automaker, GM soared for decades, growing into a global behemoth that dwarfed competitors like Toyota and Volkswagen. But chinks in the side-impact armor that began to show during the 1980s and ’90s burst open during the Great Recession when GM came crashing down to earth, abandoning four of its North American brands in return for a federal bailout.

Now, after a resurgent decade, GM again finds itself in a precarious position, and so does Barra. GM “has to be the most thoroughly disliked company in Washington right now,” Rep. Debbie Dingell, a Michigan Democrat, told CNN. In the past week, Barra has been publicly scolded by President Donald Trump and now privately confronted by congressional delegations from each of the three states where the plants targeted for closure are located — Michigan, Ohio and Maryland. GM’s shake-up is the result of a variety of factors, including the massive market shift from sedans to sport utility vehicles, not to mention the tariffs on imported steel imposed by the Trump administration earlier this year, which GM claims have cost it around $1 billion.

The 56-year-old Barra, who Forbes recently ranked as the fifth most powerful woman in the world, has faced such fire before. Just days into her new job as GM’s CEO in January 2014, a crisis involving an ignition switch malfunction in older vehicles resulting in 124 deaths threatened to upend the company’s post-bailout success, and Barra was called to publicly testify before Congress on the matter. But the stark remarks that Barra, a GM lifer who earned a Stanford MBA on a GM fellowship and spent 33 years with the company before becoming its CEO, made at an internal town hall meeting at the time were perhaps more significant. “I never want to put this behind us,” she told her company. “I want to put this painful experience permanently in our collective memories.” 

The Michigan native’s subsequent bold actions matched her words as she used the crisis as an opportunity to fire underperforming executives, redirect the company’s culture and streamline a bloated organization the way she had once reduced a 10-page dress code policy as the company’s head of HR to two words: “Dress appropriately.” “Mary is as strong as they come,” the legendary investor Warren Buffett once observed of Barra. “She is as good as I’ve seen.”

Barra, the first female CEO at a major automaker, has continued to act decisively to run a smaller, more profitable company, even when that has meant closing GM’s struggling European operation, abandoning markets in places like South Africa and Russia, and selling its Germany subsidiary Opel-Vauxhall. She has also steered the company in some risky but promising directions, from the $1 billion purchase of Cruise Automation in 2016 to help the company cement its position in the autonomous driving market to the recent narrowing of its manufacturing to SUVs and trucks. “The reality is that in the sedan market, the Camrys and the Accords and the Civics of the world have dominated that space forever,” says Kelley Blue Book executive analyst Akshay Anand. “And that was not something that was going to change overnight.”

Such moves, however, can require some ruthlessness. The recent layoffs blindsided many workers — right before the Thanksgiving holiday. “These were very difficult decisions,” Barra said in a statement released Wednesday after meeting with members of Congress, where she claimed that many hourly employees at the impacted U.S. plants would have the chance to work at other GM plants. Still, as GM employees brace for the future after the company endures yet another cataclysmic event, this particular “painful experience” may be one that Barra and remaining GM employees want to put behind them and not commit to their “collective memories.”

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