CarVersation » opinion

“The End of Saab…” by Richard Johnson

Madison — Mon, 28 Dec 2009 06:12:41 +0000

If this truly is the end of Saab, maybe it’s just as well Bob Sinclair isn’t around to see it.

Sinclair, who died in May at age 77, made Saab a success in the United States. As head of U.S. operations in the 1980s, he pushed his reluctant Swedish bosses to add content and luxury to their cars.

We forget just how well Saab was doing in this country a couple of decades ago, nearly hitting sales of 50,000 units before the October 1987 stock market crash. Saab was quirky, but also cool.

Think how hard it is these days to take a brand upmarket. You have to marvel at Sinclair, who retired in 1991. In fact, Saab may be the last brand to make a successful transition from downmarket to upmarket — here or anywhere.

In December 1989, General Motors was cash-flush and distressed that it had lost out to Ford in bidding for Jaguar. So GM acquired half of Saab. Several years later, it bought the rest.

You can trace the beginning of the end of Saab to the January 1990 press conference in Trollhattan at which GM was introduced as Saab’s 50 percent shareholder. David Herman, an American GM executive installed as CEO, was perplexed when a Swedish journalist asked him what the Saab brand stood for. I remember that the reporters and Saab employees kept remarking about that.

GM kept getting it wrong in Trollhattan. At first, the U.S. company was too hands-off. So what you got were years of indecision. It took almost 15 years for GM to become serious about leveraging its economies of scale to help slow-growing Saab. Early in this decade, Rick Wagoner finally decided that in trying to safeguard Saab’s brand character, GM had been overly deferential.

So six years ago, GM folded Saab’s independent product development and manufacturing operations into Opel’s. But that didn’t work, either. It seemed as if Saab was never more than an afterthought at GM.

I can’t help thinking that an independent Saab, led by independent thinkers like Bob Sinclair, would have done much better these past 20 years.

Column courtesy of Automotive News.

“GM Needs a Phe-Nom of Its Own” by Richard Johnson

Madison — Thu, 03 Dec 2009 19:22:54 +0000

In the new Detroit, it’s all about the CEO, all about having the right guy in command at the right time.

We are in the era of the outsider hero.

The relative calm at Ford Motor Co. these days is attributed to Alan Mulally’s arrival in September 2006.

Chrysler Group’s future is bound up in the style and personality of Sergio Marchionne, who as an outsider transformed Fiat and now tries to do the same in Auburn Hills.

The board of General Motors Co. wants a Mulally or Marchionne of its own. The company never has really had someone like that. That’s why Fritz Henderson had to go.

Henderson was an insider, a GM lifer. The board wants a superman.

True, Henderson was a different kind of insider. He spent much of his career overseas fixing GM’s Asia-Pacific and European businesses. He gained a reputation as a fast-moving, somewhat unconventional turnaround specialist before coming to Detroit in 2006 as CFO.

But Rick Wagoner was once a smart gate-crasher from overseas operations, too. Eventually, GM’s Detroit culture grinds you down and takes over your reputation.

Although GM did not specifically rule out promoting from within, it is clear the new board wants to find a little magic out there somewhere. It needs a phe-nom.

That doesn’t mean bringing in an illustrious auto industry star, a Jim Press. Whoever takes over from acting CEO Ed Whitacre likely will be someone we’ve never heard of.

Mulally was all but unknown to the auto industry when Bill Ford snared him from the No. 2 spot at Boeing. Marchionne was an even bigger mystery when he moved to Fiat in 2006 from SGS Group, the Swiss inspections, auditing and certification services company.

Henderson was way more than a just bean-counter, but there was no evidence that he was a true revenue builder.

In former times, revenue builder meant product specialist — a Bob Lutz. But the new General Motors needs more than that as it prepares to go public in a year or so.

It needs more than a car guy, or even proven turnaround idol. It needs a confidence-builder, an inspirer. That can make all the difference.

Column courtesy of Automotive News.

“Whitacre Must Lead…” by Peter Brown

Madison — Thu, 03 Dec 2009 19:19:47 +0000

Five things about still another changing of the guard at General Motors:

1. Fritz Henderson did a heck of a job as the bankruptcy/reorganization CEO of GM. He dumped $90 billion in liabilities from an utterly failed financial wreck.

Fritz systematically went after all GM’s creditors and — with, of course, a massive assist from the Obama administration and U.S. bankruptcy code — cleaned up the company’s balance sheet.

He’s the finance guy’s finance guy. There were no mysteries for him in this radical remaking of GM’s finances.

During the humiliating rinse of GM, his regular press conferences kept the country informed. I think he assured people that they could buy GM products, and the company has performed pretty much in line with this terrible market. (Bankruptcy buddy Chrysler Group has grossly underperformed this terrible market.)

Henderson leaves a company with a clean balance sheet, competitive costs and some fine cars and trucks.

But long term, he was always doomed. Fritz Henderson is the turnaround finance guy. The company no longer has a cost problem. It has a revenue problem. It needs stronger brands, including more great vehicles, better sales and higher prices. His many achievements around the globe were pretty much on the expense side, not the revenue side.

His departure surprises nobody. The timing, yes. The departure, no.

2. Ed Whitacre, now chairman and placeholder CEO, needs to be dynamically conservative in his new role. Occasionally, executives from outside the car industry have done remarkable things at car companies. Think of Alan Mulally at Ford and Sergio Marchionne at Fiat. (We’ll see about Marchionne at Chrysler.)

These two guys strode in and imposed solid business discipline on their huge organizations, and they drove strategy. But they didn’t design cars and write ads. The auto industry really is different.

Ask Steve Feinberg at Cerberus how easy it is to make a fortune with a car company. And when John Smale, late of Procter & Gamble, became an activist chairman at GM, he imposed P&G brand management on GM. The results were catastrophic.

Salty-snack managers became heads of car lines. Car models were confused with brands, and brands such as Chevrolet and Oldsmobile suffered, sometimes to the death.

Whitacre must lead, impose business discipline and ask good questions. But if he has delusions of adequacy about being a car guy, if he gets into the details and tries to turn GM into AT&T, the clean balance sheet could get soiled fast.

3. Henderson and Whitacre have been extolling the virtues of speed. Do things fast. Decide fast.

More important is to decide right and execute.

Traditionally, Toyota thrived with a painfully slow decision-making culture. But once the company arrived at consensus, the company executed fast and nearly flawlessly.

GM’s culture didn’t fail so much because decisions were slow but because too many were off-base. It is an insular culture. GM people talk only to each other. They are most incurious about what others think and know. They don’t ask questions. They too often have a tin ear about the buying public.

Right now, GM people are bragging about their new culture. Yes, they’re critical of the old GM and of the ways of the past. Great. But it’s still all navel-gazing within GM.

For the two decades I’ve been covering the company, starting with Roger Smith’s regime, I’ve heard GM executives criticize the GM of the immediate past. Where has that led? Bankruptcy.

It’s no great trick to look at your own company and criticize the past. The trick is to be curious, explore, know the customer and come upon solutions for the future. There’s no evidence that the new GM will be a leader in that.

Whitacre needs to drive that kind of cultural change.

4. In his short statement at his no-questions press conference, Whitacre said GM needs to accelerate offering the best cars and trucks, “which will also mean a return to profitability” and faster payback of U.S. and Canadian taxpayers.

Far more important than the speed of the payback is the foundation of the company. Hurtling toward a short-term profit is not going to make GM beloved by consumers. The balance sheet and cost structure are OK. Now get the culture right, the cars and trucks right and the marketing right. Profitability will take care of itself, and the taxpayers might even make a few bucks.

5. Nobody will accuse this GM board of being pet rocks.

Column courtesy of Automotive News