Take this job and shove it? Did GM CEO Fritz Henderson quit, or was he "resigned"?
Despite some big name speakers, there are usually few surprises during the opening session of the Los Angeles Auto Show. But this year could be a different. For one thing, the previously publicized headliner won’t be here — Fritz Henderson will be back in Detroit packing his things after”resigning” as President and CEO of General Motors Company. Speaking in his place will be Vice Chairman Bob Lutz whose future is also uncertain.
It’s unlikely, nay certain, that the boastful corporate infighter Lutz will provide any insight whatsoever into the boardroom intrigue that led to Henderson’s departure.
Indeed, even close associates havebeen left guessing as to whether the 50-year-old executive jumped or was pushed from his perch, although Ken Zino has provided a persuasiveve explanation for the firing based on GM’s awful business results and interviews with senior GM managers.
(Click Here for Ken Zino’s breaking news analysis on Henderson’s ouster.)
Though only some, well honestly few, observers wondered whether Henderson would last alongside GM’s hard-charging newly-government- mandated Chairman, Edward Whitacre, the timing of Tuesday’s announcement caught the complacent mainstream media by surprise. Although, the Detroit Bureau humbly submits, we have been saying Henderson’s future was in doubt since former chairman Rick Wagoner’s well deserved ouster earlier this year.
Why TV news readers expressed surprise that the number two GM exec was on the bubble as well, is beyond us – maybe it has something to do with the effects of peroxide on brain cells. All you had to do was look at the results since Henderson took over.
GM Chairman Ed Whitacre will fill in as acting CEO, but supposedly doesn't want the job long-term.
“Even though I’ve heard he’s been on thin ice,” says analyst Joe Phillippi, of AutoTrends Consulting, “it came as a complete surprise to me,” and, Phillippi adds, to his most senior-level contacts –all of whom are GM lifers — inside the automaker.
Well, maybe so, but this ignores the public statements made by senior Obama administration officials, and even the President himself, which demonstrated the disdain they had for GM’s incompetent management.
“I had no idea this was coming,” echoes one of the automaker’s executive vice presidents, asking not to be identified by name. “Fritz was the biggest change agent I know,” and seemed to fit in with the GM Board’s drive to reinvent the company.”
TDB readers can, understandingly, take a moment, well, more than a moment, to laugh out loud at this absurd statement that demonstrates, once again, how out of touch any, repeat any, GM executive is with the outside car-buying world. And don’t forget that a majority of U.S. taxpayers are so outraged by the bailout that — in an earlier time, which, thankfully, is the reason we have a constitution — a guillotine would have been set up in the Ren Cen lobby.
In an industry not known to keep secrets, word of Henderson’s departure didn’t leak ahead of time. What this means is open to interpretation, but here’s our view: GM-captivated media and their apologists who think that GM has a god-given right to survive, were ignoring the ongoing rejection of GM in the marketplace, and do not understand that GM is now a minor player in the global auto business. GM’s future is still very much in doubt.
During a hastily-arranged news conference as Zino reported, Whitacre put in a brief appearance, offering the usual terse words of praise for Henderson, then asserting that, “While momentum has been building over the past several months, all involved agree that changes needed to be made. To this end, I have taken over the role of Chairman and CEO while an international search for a new president and CEO begins immediately.”
While it is remotely possible that Henderson decided he couldn’t see eye-to-eye with the new GM Board – or with Whitacre or the White House, for that matter – all signs suggest he was fired or “he was resigned,” as Zino wrote.
Why is a question that Lutz is likely to hear a lot in the question-and-answer session following his speech at the L.A. show, where he replaces Henderson as the speaker It’s unlikely he will be honest with media as his tenure, too, as a GM insider and member of a failed management team is clearly a short term one.
Several possibilities about Henderson’s ouster and other pending GM senior exec firings seem probable, as we have previously reported.
As part of the federal bailout of the struggling automaker, GM was required to eliminate four of its eight North American brands. While the sale of Hummer might eventually go through, plans by Henderson to sell both the worthless Saturn and Saab brands have collapsed.
Meanwhile, GM has also unexpectedly reversed course on a plan to sell off a majority stake in its loss-making Opel subsidiary in Europe. The GM board, last month, decided it was too critical to the company to give up.
Henderson had been actively involved in the Opel sale, though, as analyst Phillippi points out, “he did so because the German government had it over a barrel,” refusing to provide much-needed aid unless the deal went through. Eventually, the automaker decided it could finance the necessary turnaround at Opel without the help of Berlin, a proposition that remains to be proven.
Whom to turn to is now for CEO, if anyone, are the next questions.
Unless the automaker is keeping a favored choice close at hand, laughable under the circumstances, observers say the selection process could take some time. That’s gobbledygook for six months or longer, according to some analysts who, with lucrative GM consulting contracts in hand, completely “missed” the Henderson sacking.
Until recently, the domestic automakers were loathe to go outside for help. Maybe not this time.
GM tried to bring in “new blood” during the 1990s, with folks like Ron Zarrella, the former Proctor & Gamble executive who failed to turn around the automaker’s long-troubled North American operations because of inbred GM management.
Ford has thus far done well with aerospace exec Alan Mulally, but Chrysler had little success under the guidance of Bob Nardelli, the former Home Depot Chairman who was resigned when the automaker emerged from bankruptcy, earlier this year. To be fair, Chrysler under the automotive insider and “expert” management of Daimler Benz worked itself into insolvency.
It would not be difficult to find and ex Ford or Chrysler exec since there are so many, said one source of unknown perspicacity, noting the sharp cutbacks at GM’s rivals. Critics, of course, note that unemployment is a well-deserved natural consequence of their previous decisions.
What about poaching from one of the import automakers such as Toyota, Honda or Mercedes-Benz?
There’s a big difference between those companies, though, which are basically just subsidiaries of foreign-owned automakers. Their U.S. executives generally oversee marketing and sales and don’t have the breadth of experience required to oversee product development and manufacturing and global sourcing.
Need we mention here the disastrous results Chrysler obtained under former U.S. Toyota star Jim Press? Maybe Whitacre should go it alone as CEO for time being. The Augean stables need more cleaning.
Ken Zino reported on and edited this story.