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Mary Barra GM’s New CEO – Breaking the Glass Ceiling or Déjà Vu All Over Again?

I am still trying to figure out whether putting Mary Barra in as CEO of General Motors is a good or a bad thing. Of course, that’s hardly politically correct; since she’s a woman we should all be applauding her promotion. Unfortunately it’s not that simple.

The good news is that she is a “product guy”, something that GM has sorely lacked in its CEO over most of its corporate life, where most have been finance types. So maybe they will finally get a car culture like the Germans and actually produce cars that people love. That’s the hope anyway.

The bad news is that she has been in GM for 33 years. That places her squarely in the Old Guard. I don’t know that’s where a shareholder would want her to be from.

Consider this. If you look to see who have been the most successful CEOs of auto manufacturers outside Germany, they have all been outsiders. Think Mullally at Ford, Marchionne at Chrysler/Fiat, Ghosn at Nissan/Renault. Auto manufacturers headed by insiders haven’t done so well, namely Peugeot and even yes Toyota which has not had a great run recently; its CEO is not a car person either and owes his position to his pedigree rather than any love for technology. Maybe you can lump Tata in this category of insider-run auto companies as well, especially after the failure of the Nano.

I don’t think it’s being an insider that is the only issue. The Germans have used insiders as CEOs but they have almost all been engineers and car guys. If you try an insider from finance in an auto manufacturer, the evidence is that you’re putting the product at risk, GM being the ultimate exemplar.

But I think there’s another issue too. It has to do with the unions. Nope, this is not an argument to say that unions wreck everything, in fact far from it. However where you have a confrontational relationship between management and the unions, things don’t seem to work out well, as in the US. In the case of the German auto companies, their post-war (US-imposed) labor law in Germany, led to a relatively cooperative relationship between the two. I think that plus the engineering and product-oriented cultures in Germany have made the big difference.

So let’s look at GM today. Mary Barra is an engineer and ‘car guy’; that’s the bullish case. But Bob Lutz was a car guy too and how far did that get GM, overall? And Ms. Barra lives in an organization that has been obsessively finance-oriented since the year dot; by my count 8 of its 12 CEOs were finance types and these were mostly recent too. I think that the amount of change implied by moving to a car-oriented culture is going to be a stretch for the olds and bolds.

Yes, sure, Cadillac has made an amazing turnaround and is now building some great cars like the 2014 CTS, the Impala has made mincemeat of analysts who poked fun at GM, and the new Corvette Stingray is an enthusiast's dream. Maybe they should spin these out before they get crushed by the accountants? Or just perhaps GM is going to become a real car company, for people who love cars. That’s the good case for Mary Barra.

But when you have been in the place for 33 years, how easy is it to cast out the many motes in your eyes concerning the way things are done in Motown? I read she’s a team player; in my book that’s bearish; we want a Marchionne not an Inmelt. A woman can be just as tough as a man, maybe more so, but I don’t get the sense that this is the case here. Mary Barra is no Margaret Thatcher (or so it looks right now).

GM has only just been resurrected from the dead. It was tough sledding while it lasted. The good news is that the government is out of it, although only after having lost big-time on the deal (for the taxpayers). GM as a whole is making money. But it’s still losing its shirt on its business in Europe so the bailout didn’t change that any. Yep sure they are finally abolishing Chevrolet in Europe and Holden Down Under, but why only now?

So just because it’s making money we can’t assume all is hunky-dory in GM. After all, without a bailout GM would have croaked, a result of a bloated internal culture focused on bean-counting not technical innovation. Akerson fixed the financials like he was supposed to, but the rest of GM looks mainly intact to me, i.e. pretty much the total pre-bailout organizational package, pretty much fully-optioned. The unions haven’t gone away either.

Who thinks things have changed in Detroit just because the government took it over with an aircraft carrier load of cash and a hedgie who is a whiz-kid in financial engineering? It doesn’t look to me like there’s been some huge Pauline conversion here. I don’t know that a 33 year veteran of the GM trenches has what it takes to do a Marchionne on the GM Old Guard.

And if Ms. Barra doesn’t manage to tame the beast, maybe it’s going to revert to the state that brought our not-so-proud citizenry Government Motors. Are we looking at a Welch-toughie to Inmelt-blandie type transition here? Could GM’s stock actually, gulp, do yet another round-trip to zero?

Look, maybe I am being my usual overly-skeptical self. Appearances to the contrary, I would be the happiest guy alive if we could see the changes needed at GM being achieved by a woman. Long live the shattering of the glass ceiling, say I.

But from where I sit the omens don’t look so hot. I wish Mary Barra all the best in her new position. My humble advice to her would that you don’t make an omelet without breaking eggs. There’s still a bucket load for the breaking at GM. I just hope she can do it.

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Monday, 19 November 2018

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