Co. Vice Chairman Bob Lutz characterizes President and CEO Fritz Henderson’s resignation Tuesday as both distracting and shocking, while experts suggest a replacement likely will come from outside the auto industry.
GM hoped to use the Los Angeles auto show, the company’s first national sortie since emerging from bankruptcy, to boast about the new products it has coming and court West Coast consumers who historically balk at its cars and trucks.
Those plans appear to have backfired with yesterday’s news, although Lutz thinks differently.
“You never like a distraction, but the interesting thing is the public buys cars; they don’t buy management teams,” Lutz tells journalists after delivering this morning’s keynote address to open the show, a function previously assigned to Henderson.
Lutz points to the recent management turnover and takeover fervor atAG and Porsche AG, where “the cars just kept selling.” And he cites his own company, which despite its bankruptcy managed to keep selling vehicles.
“Our sales continue to improve, and our reputation continues to improve,” he says. “So while I wish the timing (of Henderson’s departure) were different, and I wish it hadn’t happened at all, I don’t think it will set us back at all.”
He also admits GM’s management team was not left unaffected by Henderson’s departure, which as the story advances further appears to have come at the request of the auto maker’s newly seated board of directors.
“Clearly, this is a psychological shock,” he says. “We all had a great deal of faith and admiration for (Henderson), felt he was a very good leader who had led the company through one of the most difficult periods of its history, I think, successfully.”
Henderson guided GM through its bankruptcy in 39 days, a timetable previously unthinkable for companies even half the size, after President Obama’s automotive task force pushed former Chairman and CEO Rick Wagoner aside on the final weekend in March.
But after Chapter 11, Henderson failed to sell off a majority stake in its Adam Opel GmbH unit in Germany to parts-supplierInternational Inc. GM’s board ultimately decided to keep Opel, drawing severe criticism from the German government.
A deal to sell the Saturn brand to mega-dealer and entrepreneur Rogeralso fell through, and late last month Swedish supercar make Koenigsegg Group AB backed out of an agreement to buy Saturn.
In addition, Henderson was pushing to take GM public again in second-half 2010, while Chairman and now-interim CEO Ed Whitacre said publically he considered talk of an IPO premature.
However, the exact circumstances behind Henderson’s resignation remain unclear.
Whitacre delivered a statement yesterday announcing Henderson’s departure but refused to take questions from journalists called to GM world headquarters for the press conference.
“The board makes these decisions,” Lutz offered. “The board acts on behalf of the shareholders, and we in the management team, we’re all big people and we’ll just buckle down and get the job done.
“You can dwell on what happened and let it get you down. But I think the rest of the executives at GM are just going to say, ‘It’s something that took us by surprise; something we wouldn’t have done; something we don’t necessarily like; but our loyalty is toand the shareholders and the public that buys our cars.’”
Meanwhile, the search for a long-term successor to Henderson has begun, although it remains unclear what sort of executive GM’s board might pursue.
Given the success ofMotor Co. CEO Alan Mulally, who moved from Boeing Co., the successful candidate could come from outside of automotive, says John Challenger, CEO of the Chicago-based placement firm Challenger, Gray & Christmas Inc.
“There is much more consideration of outsiders in Detroit than in the past,” he tells Ward’s.
Says Tim Urquhart, an analyst with IHS Global Insight in London: “GM obviously wants an Alan Mulally-type figure as the company’s new CEO, and attracting a candidate with the necessary experience and ability will be vital to the company’s future prospects.”
And difficult, adds Challenger. While the position will receive a great deal of interest from highly qualified executives, the very best of the lot will approach it cautiously.
“There have been two (CEOs) to leave in a year, so there is going to be concern there may be a revolving door and it is a no-win situation,” Challenger says, noting companies newly owned by the government such as GM are risky to an executive’s reputation, and their ability to affect change is often limited.
“To get the very best, that will be difficult,” he says.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, MI, discounts the effect Henderson’s departure will have on GM and does not foresee difficulty finding a replacement.
“It’s not that big of deal,” says Cole, who also suggests GM recruit a Mulally-type. “This is just a bump in the road. They need to get someone who will foster a team-like atmosphere, who expresses the objectives clearly, empowers people and then gets out of the way.”
– with Tom Murphy in Los Angeles.