GM’s Whitacre Makes First Move

Newly minted CEO Ed Whitacre wastes no time in putting his stamp on General Motors Co., announcing key executive moves just three days after former CEO Fritz Henderson’s sudden departure.

The shuffle elevates the auto maker’s top engineer, Mark Reuss, 46, to president of GM North America; puts Nick Reilly, who had been head of International Operations, in charge of GM Europe; and moves Vice Chairman Bob Lutz out of marketing and back to a role related to product development and design.

The action sheds some light on the falling out Henderson had with Chairman Whitacre and the rest of the GM board over the last few weeks, culminating in what Whitacre described Tuesday as a mutually agreed decision for Henderson to resign.

In disclosing Henderson’s departure this week, Whitacre emphasized the need to move faster as a company.

Under Henderson, GM had yet to name a permanent head of GM Europe following the departure of Carl-Peter Forster after an earlier decision not to sell Adam Opel GmbH to a consortium led by supplier Magna International Inc.

Under Whitacre, Reilly, 59, got the job by way of executive order. A spokesman says a search is expected to continue for a new Opel CEO, who would report to Reilly.

In North America, Henderson had been relying on 77-year-old Lutz to revamp GM’s marketing and find a way to rebuild the company’s image with consumers.

Having come to GM from Chrysler, Lutz had served as a change agent at GM, reworking the product-development process and refocusing the auto maker on building competitive cars and trucks.

Many of the new vehicles developed under Lutz’s regime have garnered critical praise and are fetching higher prices in the market. Henderson appeared to be relying on Lutz to work the same magic on the marketing side. Lutz had been slated to retire this year when he agreed to stay on to oversee marketing.

But Whitacre is reaching down into GM’s ranks and promoting a younger team to new high-level jobs. Worth noting is Lutz now is being called an “advisor” on product development and design, suggesting his remaining tenure with GM will be less hands-on.

“I want to give people more responsibility and authority deeper in the organization, and then hold them accountable,” Whitacre says in a brief statement. “We’ve realigned our leadership duties and responsibilities to help us meet our mission to design, build and sell the world’s best vehicles.”

Whitacre wants to “give people more responsibility and authority.”

Recreating the post of North American president, which had been vacant since the departure of Troy Clarke earlier this year, restores the region as one of three profit centers (Europe and International the other two) in the GM hierarchy.

“There are now clear lines of responsibility and accountability” in North America again, GM spokesman Tom Wilkinson says.

Key members of Reuss’ North American team include Susan E. Docherty, 47, who is named vice president-vehicle sales, service and marketing, and Diana D. Tremblay, 50, named vice president-manufacturing and labor relations. Tremblay had been vice president-labor relations, a positioned now turned over to former small-car vehicle line director Denise C. Johnson.

Docherty earlier this year was named head of sales in North America. She and Lutz, as the marketing chief, reported directly to Whitacre as chairman of the board. The new position recombines the two disciplines, eliminating any chance of finger pointing if sales and market-share goals are missed.

“When those are separated, it makes it harder to have responsibility with one person,” Wilkinson says.

Thomas G. Stephens, who remains vice chairman-Global Product Operations, adds global purchasing to his organization. Robert E. Socia, vice president-global purchasing and supply chain, now will report to Stephens.

The move to combine purchasing with product development reflects the changing nature of procurement, Wilkinson says.

“It’s no longer about beating up suppliers to get the best price,” he says. “It’s more about cultivating suppliers and getting the next great technology.”

Karl-Friedrich Stracke is now vice president-(global) engineering, replacing Reuss and also reporting to Stephens. Previously, Stracke served as executive director-engineering.

Taking over as president-GM International Operations for Reilly is Tim Lee, formerly vice president-manufacturing and labor relations.

Whitacre’s actions may signal he expects to be in the top job for some months at least, as he re-jiggers GM’s executive ranks rather than wait until a new CEO is at the helm. He told employees earlier this week it could take a year to find the right person to fill the slot.

“I think people were encouraged by that,” says Wilkinson. “They’re going to take the time to find the right CEO. They’re not just going to fill the chair.”

In his role as chief engineer, a job he assumed just five months ago after heading GM Holden Ltd. in Australia, Reuss appeared to be one of the most aggressive at leading the called-for cultural change in North America.

Reuss spoke with reporters recently about encouraging engineers to not be afraid to point out quality and design issues, a problem that has plagued the auto maker and resulted in uneven quality and performance in its cars and trucks.

One of Whitacre’s marching orders is to perform better in quality rankings by publications such as Consumer Reports and other third-party organizations.

“Over my career, we’ve been a company that has continually downsized, reorganized, changed – it hasn’t been a growing, prosperous experience,” Reuss said. “And if everybody’s afraid to surface a problem because they’re afraid of (losing) their job, and they don’t think that telling about the problem…is going to help solve it – it’s going to be punitive, you’ve got a real problem.

“And I think we’ve had this problem.”

In addition to the executive changes, GM says board member Stephen Girsky, a former Wall Street auto analyst, will play a more significant advisory role at the company. Wilkinson says specifically how Girsky will work with the executive team remains unclear for now.

No other executive moves appear imminent, though Wilkinson suggests there likely will be some shuffling within the next couple of years as some of the older members of the team, such as Reilly and Stephens, look toward retirement.

Despite the shock registered by the events of the past week, the company has been “energized” by the actions, Wilkinson says.

“There’s pressure on Whitacre, too, to get this company on the right road again,” he says. “The message (the new CEO has sent) is, ‘You’ve got the tools, now go get the job done.’”

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