A New Game of Thrones at General Motors

http://news.gnom.es/news/a-new-game-of-thrones-at-general-motors

Bloomberg News

GM Chief Executive Dan Akerson, above in Detroit in June, challenged four lieutenants to revitalize GM in areas important to the company’s future.

General Motors Co. Chief Executive Dan Akersonhasn’t exactly said when he is leaving, but he has orchestrated a four-way contest among the leading internal candidates for his chair.

The field vying to run the world’s largest auto maker include two longtime GM executives, and two relative newcomers. Vice Chairman Stephen Girsky and Chief Financial Officer Daniel Ammann are veterans of Wall Street but have relatively few years at the company. North American operations chief Mark Reuss and global product development chief Mary Barra fought their way up GM’s bureaucracy, survived the company’s 2009 bankruptcy and together have 63 years at GM between them.

All are under 55, and thus could potentially lead the company for as long as a decade or more if, as many GM insiders expect, Mr. Akerson leaves by early 2015. That would mark a return to the kind of stability at the top that GM hasn’t had since the 2008 financial crisis put it on the fast-track to bankruptcy. Mr. Akerson is GM’s fourth CEO since the Lehman Bros. crisis.

Players in GM’s Game of Thrones

GM is one of several global auto makers preparing for a change at the top within the next two to four years. Succession tensions at French auto maker Renault SA led to the abrupt departure in September of CEO Carlos Ghosn’s heir apparent, Carlos Tavares. At Ford Motor Co., Chief Operating Officer Mark Fields appears to be lined up for a smooth takeover from CEO Alan Mulally.

At GM, the stakes are high and it isn’t clear which of the four internal candidates is ahead in the horse race. While the auto maker has regained profitability, its profit margins still lag behind Ford, which didn’t take a bailout from the U.S. government. Mr. Akerson has made it plain in public and in private that he isn’t satisfied with the pace of efforts to streamline GM’s bureaucracy. GM’s fortunes still depend largely on sales of trucks in the U.S. and its profitable Chinese operations, where it now sells more vehicles than in the U.S.

GM’s board of directors will make the final call, and could look outside the company, especially if shareholders exert pressure for a wider search after assessing the internal candidates’ strengths and weaknesses.

Mr. Akerson declined to comment, but a spokesman said the company has “succession plans in place for all our key leaders.”

Here are a look at the players in GM’s Game of Thrones.

Daniel Ammann

Bloomberg News

Daniel Ammann

Mr. Ammann, 41, got a close view of GM’s tangled finances when worked on the auto maker’s government-led GM bankruptcy as a managing director with Morgan Stanley. He was raised on a New Zealand dairy farm and owns a 1961 Cadillac that he bought with his first bonus check from Morgan Stanley.

Now, as GM’s CFO since April 2011, Mr. Ammann is attacking long-standing problems with the company’s internal financial scorekeeping systems that made it difficult for many GM front-line managers to know whether the cars they were selling made money.

Mr. Ammann scored points with Mr. Akerson, and many others in GM’s hierarchy, when he did away with an antiquated system under which different business units of GM sold vehicles or components to other parts of GM. In most cases, the divisions would hike the price and then be rewarded when they showed higher internal profits—even though the overall company might show a loss when the car was eventually sold.

Mr. Ammann lacks experience directly managing vehicle engineering, manufacturing or international operations, and that could be a big hurdle for him to overcome.

Mr. Ammann has gone out of his way to demonstrate his enthusiasm for cars—test driving vehicles at GM’s proving grounds and getting certified as a test driver at Germany’s Nürburgring racetrack. Last week, Mr. Ammann was the frontman for the introduction of GM’s redesigned large sport-utility vehicles, an highly unusual role for an industry “bean counter.”

Mr. Ammann declined to comment on his interest in becoming GM’s CEO.

Mary Barra

Bloomberg News

Mary Barra

Mary Barra, 51, is the most senior of the four executives lined up for the CEO post, with 33 years at GM. She was vice president of human resources until 2011, when Mr. Akerson reached outside GM’s engineering organization to name her head of global product development.

That move, and Mr. Akerson’s subsequent decision to expand her reach by giving her control of purchasing, have fueled speculation that Ms. Barra has a real shot at becoming the first woman to run a major auto maker.

However, Ms. Barra still must deliver on the challenge Mr. Akerson has given her, which is to slash costs in a sprawling vehicle development organization that has struggled to deliver home-run designs. In 2010, GM’s product organization was working on 30 different basic car and truck architectures underpinning GM’s world-wide model lineup. Ms. Barra’s job is to trim that number to 25 next year and then to 17 by 2018.

Until recently, many GM vehicles were designed to accommodate the biggest engine available in the model line, even if only 20% of customers ordered it. The result, Ms. Barra says, is that many GM cars and trucks carried “scar mass,” or extra weight that undercut fuel economy. Vehicles were loaded with the same-sized engine block no matter how many cylinders were needed. For a four-cylinder, four holes were drilled and the rest was just unused weight.

Now, she says, GM designs vehicles with smaller, lighter front ends, that can be extended if needed should a customer choose a larger engine.

Ms. Barra is also a second-generation GM employee. Her father was a die maker at Pontiac for 39 years and she remembers when dealerships used to put paper on the windows to hide the new designs and how people would gather around the windows during an unveiling.

With a quiet personality unlike her brash predecessor, Bob Lutz, Ms. Barra is streamlining management in GM’s vehicle engineering units, cutting to one from three the number of executives overseeing a vehicle program and challenging designers and suppliers to reduce unique components.

Mr. Akerson has said that GM should earn profit equivalent to 10% of its revenues, up from about 7% now. Asked what share of that goal she has to deliver, Ms. Barra says, “I feel responsible for all of it.”

Stephen Girsky

Bloomberg News

Stephen Girsky

Stephen Girsky, 51, has officially worked at GM for a total of less than four years. But he has dealt with the auto maker and its unions for more than 25 years, first as an analyst for Morgan Stanley, and later as a private-equity fund executive and consultant to the United Auto Workers union during the GM bankruptcy.

A tough talking New Yorker, he is quick with a joke, often at his own expense. He offers blunt critiques of the auto maker’s lumbering process, such as when managers first said it would take years to install 3G wireless across the vehicle’s portfolio. Mr. Girsky challenged that view, won Mr. Akerson’s support, and the auto maker now plans to offer 4G in all of its vehicles next year—skipping 3G entirely.

Mr. Akerson put Mr. Girsky on the hot seat in late 2011, responsible for a wrenching overhaul of the company’s money-losing European operations. Mr. Girsky forced out more than a dozen top managers at GM’s core European unit, Opel, and personally negotiated a groundbreaking deal with German union leaders that allowed GM to close an unneeded factory in Germany.

Mr. Girsky prods his colleagues to look outside GM. He spurred an effort to to set up a special team to study the challenge posed by Tesla Motors Inc.’s electric vehicles and its unconventional sales and marketing tactics. He oversees the auto maker’s investments in companies that are probing alternative energy and other transportation options.

“Our 100 years of history caused us to see a wall a mile away,” Mr. Girsky said. “We would then study it, think about what we are going to do, ask ourselves what happens when we get to that wall, and then we hit the wall.”

Mark Reuss

Bloomberg News

Mark Reuss

Mark Reuss, 49, a second-generation GM executive joined in 1983 as a student intern, and is the closest of any of the four CEO contenders to embodying the traditional Detroit image of a “car guy.” If GM’s rank and file could vote for CEO, Mr. Reuss would be a favorite.

Trained as an engineer, Mr. Reuss ran GM’s performance car engineering operations and did a stint running GM’s Holden operations in Australia, and then was vice president of engineering before taking his current job, a position that corresponds to the job his father, Lloyd Reuss, held at GM before he was pushed out as part of a boardroom coup in 1992.

Although Mr. Reuss has deep roots in GM tradition, he is critical of GM’s old-line culture. “A focus on individual excellence can help return our company to something it is not and hasn’t been,” Mr. Reuss said.

Mr. Reuss’s chances at the top job hinge on whether he can boost GM North America’s market share and lift profit margins to match those of rival Ford. As of the second quarter, GM reported a $1.98 billion second quarter pretax profit in North America. But Ford generated $2.33 billion or about 16% more than GM, because its North American operating profit margin was 10.4% two percentage points higher than GM.

A key to closing that gap will be how well Mr. Reuss’s organization manages the transition of 89% of the North America vehicles over the next two years.

“I know my weaknesses, I know some of my strengths and I know I can contribute,” Mr. Reuss said. “Whether it is as the CEO or not, I want to contribute.”