GM's Whitacre brings impatience to slow-moving GM

AP News
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Posted: Dec 15, 2009 5:33 PM

At his first meeting with General Motors' top executives after being named chairman last summer, Edward Whitacre Jr. candidly, perhaps unintentionally, issued a warning to then-CEO Fritz Henderson.

"I don't know how to be a chairman and not a CEO," a person at the meeting remembers Whitacre saying. "I'm a guy that likes to be in charge."

Six months later, the former chief executive of AT&T Inc. is running America's largest automaker after his board forced out Henderson on Dec. 1.

Despite his claims that he knows little about cars, the 68-year Texan is clearly comfortable being in charge of General Motors. In just two weeks as CEO, Whitacre has transferred the chief financial officer to China, fired the Chevrolet and Buick-GMC brand managers, combined sales and marketing and consolidated control of its core North American market under one executive.

Whitacre seems impatient to spur the plodding culture of GM, where decision by committee, an isolated upper management and fear of risk produced mediocre cars for years. He wants to increase GM's sales and market share while shifting the company's focus from trucks to cars. He also aims to repay $8.1 billion in U.S. and Canadian government loans by the end of June. Henderson's target was late 2011.

"We've seen plenty of evidence that he has a very short time horizon and impatience," says Gerald Meyers, a former chairman of American Motors Corp. who now teaches at the University of Michigan.

Whitacre, who speaks in a folksy drawl, needs to reverse the losses that forced GM into bankruptcy protection last June. The automaker lost more than $80 billion in the four years before bankruptcy. Its U.S. market share has fallen to 20 percent. Back in 1962, before GM was worried about Toyota or Honda _ or a resurgent Ford _ it was more than 50 percent.

Recently, the 6-foot-4-inch Whitacre didn't hide his disdain for GM's bureaucracy. His message to about 800 workers at in a Detroit suburb: Make decisions. Take risks. Move fast. Be accountable.

"We don't want something on a desk three weeks or three months while we wrangle," he said.

He needs the work force to heed his message. At stake are billions in government loans and 45,000 U.S. jobs at a company that once was synonymous with American industrial might.

GM's shift from trucks is already under way. Trucks account for 57 percent of U.S. sales compared with 60 percent in 2006. GM has launched six new vehicles since July _ all cars or car-based crossovers _ that are selling well and have been favorably reviewed by critics.

In his telecom days, Whitacre showed an instinct for correctly calling changes in the market. He recognized early on that wireless technology was going to transform the phone business, says Victor Schnee, a telecom industry analyst at Probe Financial.

GM's prior management, on the other hand, failed to adjust to market changes. During the 1990s, GM made billions on high-profit pickup trucks and SUVs but management was caught flat-footed when buyers switched to smaller vehicles this decade. The company chose to invest millions in a clever hybrid system for trucks and SUVs instead of cars. When gas prices spiked to $4 per gallon in 2008, GM sold about 10,000 hybrid trucks, while Toyota sold almost 160,000 Prius hybrid cars.

Although it seems the right time for a decisive outsider, the 101-year-old automaker is now in the hands of a man who spent his career running telephone companies.

The differences between telecom and autos present Whitacre with a big challenge. AT&T provides services and no longer makes anything, while autos have thousands of parts and take two or three years to design and build, says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

The board's lack of knowledge about autos could hurt the company if it makes unrealistic demands on employees, Cole says.

Whitacre will require decisiveness from his team, and in the past has shown little tolerance for those who questioned his authority.

"If you don't take orders, Whitacre doesn't want you," says Dave Burstein, editor of the DSL Prime broadband industry newsletter and a longtime telecom industry watcher. While running Southwestern Bell and then AT&T, Whitacre "demanded total loyalty and obedience," Burstein says.

"Executives at a very senior level with 20 years at the company feared his wrath."

Whitacre retired from AT&T in 2007 with a package worth more than $161.6 million. He was recruited for the GM chairmanship by a member of the old company's board. The pick was blessed by the Obama administration.

Whitacre said he turned the job down, but relented because the country needs a healthy GM.

Now he's working 14 hours a day five or six days a week as CEO. Instead of a comfortable retirement wearing jeans on his Texas ranches, he dresses in suits and lives at a Marriott hotel in GM's downtown Detroit headquarters.

William Daley, the former U.S. Secretary of Commerce and a president at SBC from 2001 to 2004, says Whitacre has a commanding personality, but tempers it with a "big heart."

"There is no question, that when Ed Whitacre's around, that's the force in the room. If you don't get that, you have a big problem," says Daley.

He believes that Whitacre will take his time looking for a CEO, but then step away in a matter of months. When he left as AT&T CEO, Whitacre didn't look over his designated successor's shoulder as chairman.

Whitacre also has departed from the old GM CEO ways, often showing up by surprise outside the executive suite to talk about the business.

Last week he visited a pickup truck factory in Flint, Mich., where he helped install a hood.

"He can be very tough, but not mean, not nasty to people," Daley says.

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Associated Press Writers Ken Thomas in Washington and Michelle Roberts in San Antonio, AP Technology Writer Peter Svensson in New York and AP Auto Writer Dan Strumpf in New York contributed to this report.