Ed Whitacre, former head of AT&T and the short-term transitional leader at General Motors, has been traveling the country promoting his first book, American Turnaround: Reinventing AT&T and GM and the Way We Do Business in the USA. This is interesting because lately it's become a fun pastime in certain quarters to bash the management for leading GM into the financial straits that caused it to declare bankruptcy in early 2009, forcing the government to rescue the famed American car company - a rescue which is likewise bashed.
Escaping the general discussion on this issue, however, is the fact that America also directly rescued Chrysler. And, had those two car companies failed, that would have taken out the American parts-supplier chain. Therefore, we effectively saved the Ford Motor Company too, as Ford's CEO Alan Mulally belatedly admitted.Whitacre seems to have wanted to put down for future historians how GM was saved, positioning himself not so much in the starring role but as the facilitator, putting in place the right people who returned GM to its glory days. The problem is that the villains of this piece were those at GM in the period before the bankruptcy - while the real heroes of the story, those same guys, are the primary reason GM still exists.Missed the SuperheroesFew were closer to the GM executives and board members, or had such a front row seat to the slow-motion wreck that occurred in Detroit from 2001 to 2009, than my friend David Welch. During that period, before the Bloomberg buyout, he was the Detroit Bureau Chief for BusinessWeek magazine and today is covering Wall Street for that combined publication. Before that, Welch was with the Star-Telegram. As he suggested in a column for BusinessWeek after GM's bankruptcy, General Motors still exists today and has a future for two reasons: The vehicles designed and brought to market by GM's design studio under the watch of vice chairman Bob Lutz, and the reorganization of General Motors during bankruptcy by Rick Wagoner's first replacement, Fritz Henderson.I'll add the third and unmentioned partner to the story of GM's survival, the dealer body selling GM products nationally. After all, it's really the new car dealers who purchase cars and trucks from the factory, not the public - they buy from the dealers. And for decades GM dealers were considered the cream of the crop and the most financially viable long term. Therefore, in good times and bad, it was the dealers who purchased GM's vehicles by the hundreds and thousands each year that kept the factories open, even purchasing GM products in years when, frankly, they weren't very good.Again, it's currently fashionable to lay GM's troubles solely at the feet of management just prior to the 2009 bankruptcy. But that attribution is in no way true.What is true is that Rick Wagoner, Bob Lutz, Mark LaNeve, Gary Cowger, Fritz Henderson and others inherited the problems that previous GM administrations had created. After all, GM went from almost 46 percent market share down to 37 percent during the 80s, when Roger Smith ran the company. While in the 90s his successor, Jack Smith (no relation), lost as much market share as Roger had. Moreover, it was in that 20-year period that GM's total debt was skyrocketing.You Don't Know Lutz?In Whitacre's book he states that Dan Akerson, prior to being named CEO of the company (a position he holds today), made it "crystal clear he was not a fan of GM cars." Whitacre also admitted that he had no idea what Bob Lutz did for the company, other than "weigh in with advice and opinions about anything he wanted, anytime he felt like it." That statement leads one to believe that it was Lutz's comments, not his propensity to offer them, that Whitacre found so distasteful. He immediately reassigned Lutz, which Lutz said made him "a minister without a portfolio."Let's set the record straight. Bob Lutz saved the Ford Motor Company in the early 80s when he was head of Ford of Europe. He saved Chrysler in the early 90s and, when Daimler purchased the firm in 1998, it was the most profitable car company per car built.As for the vehicles that failed to impress Dan Akerson, the GM products brought to market under Lutz's oversight include the last generation of the Malibu, lauded as GM's first successful car against the likes of the Accord and Camry. Lutz was also responsible for the Chevrolet Traverse, Buick Enclave, GMC Acadia, Buick LaCrosse, the second generation of the Cadillac CTS, the Chevrolet Camaro and HHR, the Cadillac SRX, the Chevrolet Equinox, GMC Terrain and many others. Those vehicles gave GM the far superior automotive reputation it now enjoys. Moreover, virtually every new vehicle brought out by GM since the bankruptcy was birthed during Lutz's tenure at the company.As someone with real first-hand knowledge of car companies with their financial backs up against the wall, near ruin and then being saved, Bob Lutz was one of the critical executives making smart decisions at Ford and Chrysler under the same circumstances GM suffered in 2009. Maybe his opinions on what to do should have mattered.Evidently Whitacre is not aware that the one GM vehicle he promotes as the best of what GM is capable of, the Chevrolet Volt, is totally Bob Lutz's baby. Lutz even had to fight GM's then-CEO, Rick Wagoner, to make that car a reality.Leaning on the ShovelAs for Whitacre's position that Fritz Henderson was brilliant in terms of numbers, facts and knowledge of GM's issues worldwide, but far too slow in executing a new organization for GM, again, Henderson put GM into bankruptcy - cutting out all of the money-losing operations while keeping the most valuable ones - and exited that bankruptcy in less than six weeks. Which is why David Welch wrote for BusinessW eek that everything right with GM today and its success is owed to Bob Lutz's vehicles and Fritz Henderson's reorganization of the company. Henderson is hardly the man Whitacre describes as being a "product of a broken culture incapable of changing fast." To be fair, Whitacre had nothing but praise for Henderson as an individual. Then again, because of his expertise, GM had to rehire Henderson as a $60,000 a month consultant.In interviews Whitacre does hold GM China in high regard. He says it holds extreme promise for the automaker's future; in just 15 years GM China has gone from no sales to retailing 2.8 million vehicles in 2013. That's slightly more vehicles than GM sells in the U.S. - where it had a 97-year head start. So why is it that former CEO Rick Wagoner is being held in such low esteem, when GM China was the company he started from scratch and made into a powerhouse car company during his tenure? In China GM beats Toyota and Honda handily and even edges out Volkswagen, which again had almost a two-decade head start.GM was not saved during Whitacre's nine-month stay at the company. No, he walked in after GM's crushing debt load had been eliminated, after Rick Wagoner's executives had rewritten the labor contracts (pre-bankruptcy), and after the new great GM vehicles had either come out or were in the process of being introduced. This was the state of GM on Whitacre's first day. Little debt, far lower labor costs, money-losing operations gone and a slew of hit products.It will be a decade before the jury can decide whether Dan Akerson's tenure as CEO solidifies and expands GM's success. Why? During their first years heading the company, CEOs Roger Smith and Jack Smith were both portrayed by the media as the saviors of GM. Only time has shown that each man's time at the helm actually damaged the public's love affair with GM vehicles and therefore its financial success.Who Really Saved GMThere's no doubt that Ed Whitacre is one of our greatest business executives of the past 30 years; no one can take away from him either that reputation or his many brilliant accomplishments. Moreover, watching him in recent interviews promoting his book, he has a good sense of humor and a real Texas graciousness to him. But neither his reputation and accomplishments nor those traits change the fact that he no more fixed GM in nine months than Rick Wagoner broke the company in 10 years. It was broken when Wagoner got it, and he did more than anyone else to fix it. He just ran out of time.Did Wagoner make mistakes? Absolutely. But what he did right was incredible too.Still, kudos to the real unsung believers in GM in good years and bad, who kept buying the cars no matter what, never lost faith in the darkest days of 2009, and kept the company open by buying its products even during the bankruptcy - when no one knew whether the public would ever turn out to buy GM products again.You would think that at least one person writing books about GM would mention the dealers. But they don't; so I will.© Ed Wallace 2013Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA, and is a member of the American Historical Association. He hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. E-mail: wheels570@sbcglobal.net, and read all of Ed's work at www.insideautomotive.com.Have more to add? News tip? Tell us
