Series Of High Level Executions Paint A Picture Of GM in Turmoil

Bertel Schmitt
by Bertel Schmitt
series of high level executions paint a picture of gm in turmoil

Panic at RenCen. It’s not that people are leaving GM. It’s how they leave. Two weeks ago, Opel chief Karl-Friedrich Stracke presented numbers to Dan Akerson. Akerson fires him. Opel gets two interim chiefs in a week. Last Thursday, Opel’s new design chief Dave Lyon doesn’t even start his job. Today, media in the U.S. and Ger many report that Lyon had been escorted from the building and to a waiting car by GM’s head of personnel. A day later, global marketing chief Joel Ewanick suddenly leaves. Instead of wishing him all the best for his future endeavors, GM spokesman Greg Martin puts a knife in Ewanick’s back: “He failed to meet the expectations the company has of an employee.”

It took them two years to come to that uncivilized conclusion? Ewanick was hired as U.S. marketing chief in May 2010. Apparently, he exceeded expectations, because half a year later, Ewanick was promoted to global chief marketing officer. The leaked reasons for Ewanick’s ouster. Facebook and soccer, don’t ring true. In a normal company, when a marketing chief decides not to put ads on Facebook and to ditch football for soccer, a Facebook and football loving CEO simply would call the marketing chief and ask whether he’s serious. The same day, there would be a comment that the marketing chief was misquoted, in a normal company.

It all looks like Dan Akerson is panicking. The GM stock is at an all-time low. GM is losing market share. When July numbers will be announced this week, GM won’t look so good, industry oracles say. Mass executions always are great to deflect criticism – for a while.

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  • Athos Nobile Athos Nobile on Jul 30, 2012

    Unless someone has a real "deep throat" connection within RenCen, I don't think we will know what's really going on. If the CEO is getting rid of people that doesn't meet their KPIs, then he's doing what he's getting paid for. We can discuss all day about the reasons, but only, maybe 10? people know really what's going on. Is this a case of damned if you do and damned if you don't? Move on guys. @Robert.Walter, spot on man.

  • Oldyak Oldyak on Jul 30, 2012

    had to skip the politics..... How can u build a world class car with labor rates that are probably 20% higher than your competitors? Somewhere cuts and sacrifices must be made to match their prices.. That worries me.

    • See 2 previous
    • Doctor olds Doctor olds on Jul 31, 2012

      @Herm- GM never paid UAW workers anything close to $75/hr. At one time, GM's total cost for labor amounted to $73/hr, but that included $7Billion a year in cost for UAW retiree health care. The 2007 contract with tier 2 jobs have brought labor costs down to less than $50/hr, still approaching twice what the average worker actually makes.

  • Buickman Buickman on Jul 31, 2012

    IMO this management change shows that Akerson is holding executives accountable for performance. this is a significant improvement from the GM of old. I don't know Mr Batey but word is he has a no nonsense approach and, if I'm not mistaken, he and Mark Reuss were quite the success story working together in Australia. let's hope they are able to work some magic here in the US.

  • Alluster Alluster on Jul 31, 2012

    "He failed to meet the expectations the company has of an employee." Code for either inappropriate behavior/harassment of a fellow worker, or something to do with money. If it was performance they would have said so. Note how they were not talking about his role as a marketing exec. Its funny GM is being criticized for doing exactly what they were criticized in the past for not doing. In the past there would be no accountability, never a sense of urgency, and no feet were held to the fire. Now, incompetent people are either being let go or leave on their own, unable to stand the heat anymore. Dan Akerson is slashing Ad budgets, white collar workers, platforms and engine choices. Everyone's favorite Toyota OTH has done nothing about losing billions in their home market. $13 Billion lost in the last 4 years, compare that to Opel losing $4B in the same period. Toyota has no way out, unlike Opel which is waiting for contracts to expire in 2015 to burn the house down. They can't/will not lay off anyone in Japan, nor are they willing to shift production outside of Japan. The Yen has been flirting all time highs for a while now. The Govt's teats have gone dry and can no longer prop up their dying auto industry. Nissan was smart to shift most of their production elsewhere. Honda did too, to an extend. Toyota is just stuck in this quagmire and there is no way out in the near future. Don't be surprised if all the top execs at Toyota take the honorable route and launch themselves onto swords. "GM is losing market share." Reason: Transaction prices and MSRP's. You cant increase prices across the board and expect to maintain the same market share. They had to choose between market share vs profits and it seems they have chosen the latter. A billion dollars MORE in profit for 1Q 2012 in North America while losing market share at the same time. On an average a Sonic is $4500 more than an Aveo, the Cruze is $4000 over a cobalt, the 2012 Malibu sold at around $20,000 is slowly being replaced by one starting at $26,000. The bargain basement Equinoxes/Torrents have been replaced by the much better, much pricier Equinox/Terrain averaging $5000 to $7000 more per sale. Segment topping ATP's across most segments. Cruze, Sonic and Equinox have the lowest incentives for their segment, even lower than the new Civic and CR-V that came out later. Buick's fleet sales are down to 9% from 20% last year. Buick's ATP is up $13,000 per car over the last 4 years. The base Lacrosse was raised in price to match the V6 with the addition of E-Assist. There is a huge resistance for pricier Chevys and Buicks with people used to seeing them heavily discounted. Sales are obviously going to suffer with this pricing strategy. They would just have to tough it out and wait for consumers to realize the new, pricier products are worlds ahead of their predecessors.