There's a need for speed at General Motors, says new CEO Dan Akerson.
Though General Motors will stage its long-awaited IPO, later this year, don’t expect that to raise enough money to completely repay the roughly $50 billion taxpayers invested in the troubled automaker to pull it out of bankruptcy, cautioned GM’s new chief executive officer.
Though Dan Akerson, who took over as CEO on Sept. 1, declined to directly discuss GM’s upcoming initial public offering he appeared to rule out the possibility that all of the government’s 60.1% stake in the carmaker will be put on the block immediately.
“It is the goal of this company to return that money to taxpayers,” declared Akerson, a graduate of the U.S. Naval Academy. But he quickly cautioned, “I don’t think that will happen in one fell swoop.” It will move likely take “a couple of years,” he added.
A life-long Republican who donated a significant amount of money to the Republican Party during the presidential campaign, in 2008, Akerson nonetheless said he was very appreciative of the GM bailout, which he insisted should not have seen as a “political decision,” but was rather something best viewed as in the best interest of the country.
That was the same reason he decided to sign onto the GM board, following its 2009 bankruptcy, and then agreed to become its CEO – a job to which he will add the title of chairman at the end of the year. “What drove my decision was a sense of duty to America,” the new GM chief executive told a room full of reporters. “I think manufacturing is fundamental” to the country, he stressed repeatedly.
Akerson responded to several questions by admitting he is still getting up to speed barely two weeks into his tenure. “I’ve been drinking from a fire hose and trying to learn as fast as a can,” he said with a smile that barely concealed the challenges he will be facing in the coming years.
There are some industry observers who have speculated Akerson took the CEO post just to help GM through its IPO. His experience with the big investment fund, The Carlyle Group, clearly gives him both credibility and the contacts to pitch the merits of the stock offering.
But he made it clear that he didn’t take the job to be a short-timer. If anything, his comments during the breakfast meeting with the media suggested Akerson is looking at the long-term – certainly for the GM, a company he said “will be very different five, 10 years from now.”
He cited several reasons, such as energy and environmental issues, as well as the industry’s increasing level of competition. The automaker, he noted, is now looking at where to go in terms of electrifying its vehicle fleet. The first battery-driven model, the Chevrolet Volt, will hit market later this year and observers anticipate a number of additional plug-ins and pure battery-electric vehicles will follow.
If there was anything good to come out of GM’s 2009 financial collapse, suggested Akerson, is that the “acid bath of bankruptcy” has made it learner and more efficient, a company he suggested should be the “envy” of its competitors.
Akerson notably said he has no intention of shaking up the top ranks of General Motors’ management, in contrast to what happened when his predecessor, Ed Whitacre, became CEO late last year.
Nonetheless, Akerson repeatedly emphasized the need for ratcheting up the “speed” at which GM operates, which may give a reflection of his years in the fast-paced telecommunications industry. That high-tech background also was apparent when Akerson was asked about GM’s OnStar subsidiary. The telematics brand announced a significant re-focusing this week and Akerson’s comments suggest it will make even bigger moves in the years ahead.
While Akerson wouldn’t talk about the GM IPO, pointing to federal guidelines, he was clearly confident that the maker is on the mend. But he also stressed that despite recent profits, “two strong quarters don’t a turnaround make.”
That will be a point Akerson and his management team will likely keep making in the months to come as General Motors begins the preliminary discussion process with the United Auto Workers Union. The UAW’s four-year contract comes up for renewal in September 2011 and new union boss Bob King has made it clear he believes his GM workers should be rewarded for the concessions they made to help keep the company afloat.
King has raised possibilities, such as a profit-sharing program, but when asked about the options available, Akerson said he has no intention of negotiating through the media. Nonetheless, he has already met with King and stressed that his goal is to move away from the traditionally adversarial relationship union and management had during most of GM’s first century.
“The UAW is a very important constituent in our company,” said Akerson. “I view them no in an adversarial role but in a participatory role.”
One of the big changes that was already underway even before Akerson joined the GM board was the maker’s increasing focus on overseas markets – which the CEO noted now account for about two-thirds of the company’s unit sales. Asked if that would change the way the company perceived itself, the former Navy officer grew slightly testy, insisting “This is an American company,” just one that does business globally.
Indeed, Akerson said he hopes that the world will eventually view GM to mean “Global Motors,” rather than the derisive “Government Motors” nickname critics have used since the bailout. He said that while such criticism may have cost the carmaker sales support for its turnaround effort have also attracted other buyers.
In the long-run, however, it will take well-built, attractive product and good pricing to make GM a success. Akerson, it turns out, understands why many buyers walked away from the poorly-made models of years past.
Some years back, he acknowledged, he had an “intense situation” with a General Motors vehicle he owned. A long-time GM buyer, he switched to an unnamed import after that experience, though both Akerson and his wife are both driving Cadillacs now.
In his new role, Akerson could echo the actions of past GM chairmen and CEOs and “put my fingerprints” all over the company. But he insisted he will try to limit such intrusions, especially when it comes to product design. Praising styling czar Ed Welburn, Akerson admitted that “I will yield to Ed’s creativity.”
That suggests the new CEO is taking to heart an apparent criticism raised by GM’s former Vice Chairman Bob Lutz, who suggested Akerson needs to “learn to listen.”
“He’s right,” Akerson said. After a pause, the new chief executive added that, “In a job like this you have to listen. But I didn’t get to where I am in life by being deaf, dumb and blind.”