By Tim Higgins and Bryant Urstadt
Dan Akerson, the chairman and chief executive officer of General Motors (GM), arrives at the company’s Technical Center on Nov. 13 to address about 1,000 engineers and designers. The sprawling, multibuilding campus in Warren, Mich., is about 15 miles north of downtown Detroit and includes a planetarium-like laboratory for studying secret prototypes under shadowless lighting. The helicopter landing pad used by former Vice Chairman Bob Lutz, the self-appointed king of the “car guys,” is here, too. The Tech Center isn’t GM’s headquarters, though it almost was: In 2009, GM was ready to move to Warren, abandoning downtown Detroit to the hustlers and hockey fans before political considerations scuttled the plan.
Yet the Tech Center is the heart of the company, the seat of a $15 billion product-development operation. It’s where GM created the latest Chevy Impala and Silverado, called America’s best sedan and pickup, respectively, by Consumer Reports in 2013, and the Cadillac CTS, which Motor Trend named 2014 Car of the Year. J.D. Power & Associates (MHFI) recently named GM No. 1 in its annual Initial Quality Study—the first time any American automaker has landed the top spot in 27 years. Privately, Akerson basks in these accolades—he’s called the J.D. Power award one of his proudest achievements. At this meeting, however, he’s his usual stern, admonishing self. He warns employees not to lose sight of what still must be done. “I’ll tell you what,” he says, “you’re only as good as your last launch.”
Sitting onstage with Akerson, asking him questions in her genial Michigander accent, is Mary Barra, his top product officer and the person to whom most people at the Tech Center report. “I’ll let you shoot, Mary,” says Akerson.
“This is a great opportunity because generally he’s asking me questions,” Barra tells the group to laughter.
The two talk about positioning Cadillac against Audi (NSU:GR) and BMW (BMW:GR) to shore up the company, which may not always be able to rely on pickups and SUVs for high-margin sales. “If you don’t attack your own business model, trust me, somebody else will,” says Akerson. They talk a lot about Tesla Motors (TSLA), an automaker Akerson follows closely, openly admiring the electric-car company’s ability to build a Brand.
A month later, on Dec. 10, Akerson announced his plan to retire in January to care for his wife of more than 40 years, Karin, who was diagnosed with advanced cancer. With Akerson’s full support, the company named Barra CEO; Tim Solso, the former CEO of engine maker Cummins (CMI), will become chairman of the board.
Barra, 51, is the first woman to run GM, and the first woman to run any major automaker. Even more remarkable to employees and close watchers of the company is her pedigree: engineer by trade, GM lifer by birth. She began 33 years ago as an intern, and her first job out of school was as a plant engineer at the assembly factory in Pontiac, Mich.; her father spent 39 years at the same division making dies. She’s an affirmation of everything GM has done right, but also a company woman from the troubled years.
As Barra takes charge, GM is looking stronger than it has in decades. It’s in its third straight profitable year and feasting on the fruits of bankruptcy, which in its case include lower labor costs, less debt, and the elimination of weak brands and redundant dealers. Brian Johnson, an analyst with Barclays (BCS), expects it to earn about $6 billion in 2013. As the automaker sees the benefits of all the products it’s launching and additional cost reductions, its profit could reach $10 billion in 2017, according to Johnson. In 2010, GM had the second-biggest initial public offering in U.S. history; shares are trading at a high; the company returned to the Standard & Poor’s 500-stock index; and it won back an investment-grade credit rating for the first time in eight years from Moody’s (MCO).
Warren Buffett has been buying the stock. China, where Buick is a status symbol—it was the ride of China’s last emperor—is now the company’s biggest market.
Warren Buffett has been buying the stock. China, where Buick is a status symbol—it was the ride of China’s last emperor—is now the company’s biggest market.
And GM is no longer “Government Motors.” On Dec. 9, the day before Akerson announced his retirement, the Department of the Treasury, which had been selling about 1 million GM shares a day as the year was ending, declared it had sold the last. The federal government will recoup about $39 billion of its $50 billion investment. Supporters of the Obama administration’s decision to take over GM, who now include Akerson, contend that the jobs saved at both the company and its huge network of suppliers more than repaid U.S. taxpayers. According to the Center for Automotive Research in Ann Arbor, Mich., the takeover preserved 2.6 million jobs in 2009 at automakers and companies that depend on the industry. The center calculates that a collapse would have eliminated $284 billion in personal income in 2009 and 2010 and cost the federal government $105 billion in unemployment benefits and reduced Social Security contributions. GM says it has invested $8.8 billion in U.S. facilities since 2009 and created 25,500 jobs for new and existing workers.
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