GM's Whitacre Outlines Automaker's Short-Term Game Plan

GM's Whitacre Outlines Automaker's Short-Term Game Plan

By Michelle Krebs December 15, 2009

In his first media roundtable since adding CEO to his title only 14 days ago, General Motors Chairman Ed Whitacre said: the automaker would pay back $6.7 billion in government loans by June; selling more cars and generating revenue are GM's top priorities; and a sale of Sweden's Saab to Dutch sportsmaker Spyker is "possible."

Whitacre, the retired CEO of AT&T who became GM chairman at the request of President Obama's automotive task force following GM's emergence from Chapter 11 bankruptcy July 10, said GM will make a $1.2 billion payment on the loan it received from the Treasury Department's Troubled Asset Relief Program (TARP) this month.

GM then intends to make quarterly payments until June 2010 when it will pay in full the $6.7 billion in TARP funds it owes. At the same time, GM will make payments on its loans from the Ontario and Canadian governments.

Whitacre said the TARP loans would be re-paid by a combination of internally generated cash flow and funds from loans provided by the government through the bankruptcy. GM's government loans amount to in the neighborhood of $40 billion.

The government will be paid back in full and the United Auto Workers union's health-care fund for retirees will be funded only when GM goes public. And Whitacre would not speculate on when GM would launch an Initial Public Offering, nor did he suggest when GM would become profitable again. He said GM must produce results and publish results as well as re-evaluate all of its assets before an IPO could be launched.

Saab: Time Running Out

Whitacre said GM was negotiating with a single bidder for its Swedish marque Saab, that being tiny Dutch sports carmaker Spyker. Asked if a deal with Spyker for Saab was "possible" or "likely," Whitacre responded "possible."

And if a buyer isn't confirmed by Dec. 31, Saab will be eliminated, he reiterated.

Sell More Cars, But How?

Whitacre insisted that GM's No. 1 short-term goal is to sell more cars. "We already produce great cars, now we have to sell more. We need more revenue," he said.

But he gave few specifics as to how that would be accomplished, or how GM, which has through numerous CEOs tried to change public perception about its products, would shift public sentiment. He pointed to GM's newest May the Best Car Win ad campaign, its 60-day money-back guarantee and five-year warranty as examples of how to win back customers.

Urgent Changes Made in Short Order

In his only two weeks on the job, Whitacre said urgent changes, indeed, have been made, including organization changes, such as re-combining sales with marketing, which was separated during the brief CEO tenure of ousted Fritz Henderson. New faces have been put into high-level jobs, including Mark Reuss as GM's president of North American operations. GM has  revised its business plan and the company has re-stated its mission statement to "design, build and sell the world's best vehicles."

An affable Texan, Whitacre said with his distinctive drawl that he didn't know what GM's mission statement was before "but it was longer and more complicated that that."

Whitacre confirmed GM likely will announced a new CFO next week. Current CFO Ray Young was moved to the CFO of international operations, Whitacre said, because Young wanted to move to China. Automotive task force members, notably Steve Rattner, criticized GM for lax financial controls.

Much as Ford's Alan Mulally held weekly meetings with his direct reports -- meetings that became known as "Thursdays with Alan," Whitacre meets with his nearly a dozen direct reports every Monday to make sure everyone communicates and everyone is accountable.

Looking for an Inspirational Leader

A search for a new CEO was launched a week ago by an outside recruitment firm. Whitacre said no specific timetable exists for filling the post. While speculation has been that the 68-year-old Whitacre ultimately may stay in the job, he told the board he did not want to hold the job for the long term, though he admitted he didn't define to the board "long term." 

In terms of what GM is looking for in its CEO, a strong, inspirational leader tops the list for Whitacre. "Car business experience would be nice but isn't a requirement," he said. "Manufacturing or industrial experience would be helpful ... someone with Asian experience would be nice but not a requirement." 

But what is essential, he said, is someone who is a motivating and inspirational leader.

GM hasn't ruled out someone internally but is looking externally at people with CEO or senior management experience, he said. The board has no candidate yet, he added.

Just as challenging as finding the right person is luring that person to GM and to Detroit, Whitacre admitted, particularly since the board will be restricted in how much they can pay a CEO because pay must be approved by the Obama Administration's pay czar.

The CEO candidate "will have to have the desire for the job and interest in making a great company great again" more than have an interest in the compensation.

Long Hours, No More Pay

Whitacre praised Fritz Henderson, who was ousted by the board two weeks ago, leading to Whitacre taking over the top job. "He's a terrific guy," said Whitacre. "He was successful in getting the company through bankruptcy and four months beyond that."

But, he said, "the board and Frtiz wanted to go in different directions," which led to Henderson and GM parting ways. Whitacre gave no examples of those different directions, though he said Henderson wanted to spin off part of Opel and the board -- as well as Whitacre -- wanted to keep it "100 percent" as it considers it a very valuable asset.

Meantime, Whitacre said he is receiving absolutely no compensation for doing the CEO job, though he receives pay as chairman.

As chairman, Whitacre spent a day or two a week in Detroit and every other day on the phone with GM business.

Now, as CEO, Whitacre has moved from his home in San Antonio to the Marriott hotel in the Detroit Renaissance Center, which also serves as GM's corporate headquarters. He spends 14 hours a day, five to six days a week on GM business.

Claiming he ran out of clean shirts and suits, Whitacre said he put on jeans and a sweatshirt last week and made his way northward to Flint, Mich., a town devastated by the decline of GM as chronicled by filmmaker Michael Moore in the movie "Roger & Me." Whitacre drove around the city and not only walked but worked the assembly line at a plant, where he boasts he installed a hood on car.

He's being tutored on the auto industry by Vice Chairman Bob Lutz who was appointed an advisor to Whitacre. "His job is to be a teacher to Old Ed," he said. He's quick to admit when he doesn't know an answer. 

And Whitacre is wandering the halls. He's been known to hop into the public elevators, strike up conversations with intimidated employees, who he asks about their jobs and to provide him with a tour of their workplace.

Painted as both an industrial hero for his role of creating a giant of the telecommunications world with AT&T and a villain who has come to clean house at GM, Whitacre doesn't appear to spend much time or attention on those descriptions. Rather he says "what you see is what you get."

A long-time admirer of GM and a life-long purchaser of GM vehicles, Whitacre's goal is simple: to make the iconic GM a great company again. -- Michelle Krebs, Senior Analyst and Editor at Large

 

 

 

 

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.