{"id":52792,"date":"2012-08-22T11:45:13","date_gmt":"2012-08-22T15:45:13","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=52792"},"modified":"2012-08-22T11:45:13","modified_gmt":"2012-08-22T15:45:13","slug":"gm-readying-another-major-reorganization","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2012\/08\/gm-readying-another-major-reorganization\/","title":{"rendered":"GM Readying Another Major Reorganization"},"content":{"rendered":"
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GM CEO Akerson tis expected to soon launch a major corporate reorganization.<\/figcaption><\/figure>\n

General Motors appears to be heading towards a major reorganization, numerous sources indicate, one that Chairman and CEO Dan Akerson apparently hopes will shift the maker to a more global focus \u2013 and help it eliminate the sort of \u201cfiefdoms\u201d that have long stymied its efforts to become more efficient and competitive.<\/p>\n

GM has been taking a number of baby steps towards this new vision in recent months, such as a realignment of its design operations meant to focus more on individual brands than specific global regions.\u00a0 But the strategy has also suffered some unexpected setbacks, notably including the sudden ouster of worldwide marketing chief Joel Ewanick last month.<\/p>\n

A reorganization could yield huge benefits if it results in a leaner and more efficient GM.\u00a0 And CEO Akerson is clearly under pressure to improve things at a company that suffered a major drop in earnings during the second quarter \u2013 and which has seen its stock drop by as much as 40% since its November 2010 IPO.<\/p>\n

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Your Global Auto News Source!<\/figcaption><\/figure>\n

On the other hand, some observers caution that after years of turmoil, capped by the maker\u2019s 2009 bankruptcy and subsequent federal bailout, GM\u2019s leaders could trip the company into chaos if they\u2019re not careful. The massive and largely dysfunctional 1984 reorganization is a clear example of what could go wrong.<\/p>\n

Another reorganization now is \u201cboth risky to do \u2013 but risky not to,\u201d suggests analyst Jim Hall, of 2953 Analytics.\u00a0 \u201cThe question is why it has taken so long to recognize the trouble they\u2019ve gotten into.\u201d<\/p>\n

Since taking the helm at GM barely a year after it emerged from bankruptcy in July 2010, Akerson has billed himself as a no-compromise change agent.\u00a0 He has followed a no-excuses policy and repeatedly ousted, demoted or reassigned managers who haven\u2019t delivered.\u00a0 Most recently, that led to the departure of the hard-charging Ewanick who reportedly failed to follow company policy by trying to cover up the actual cost of a huge European soccer league sponsorship.<\/p>\n

But much of the CEO\u2019s attention has been focused on Europe and the near-collapse of the maker\u2019s Opel subsidiary. That was a major factor behind the 40% decline in GM\u2019s second-quarter earnings and, in turn, a significant reason why GM stock has been hovering in or under the $20 range lately, down from its $33 a share IPO price.<\/p>\n

Opel\u2019s losses are expected to run several billion this year \u2013 which would mark the 13th<\/sup> consecutive year in the red.\u00a0 Top management in German was unceremoniously ousted earlier this summer, Akerson assigning GM Vice Chairman and former Wall Street analyst Steve Girsky to get things straightened out.<\/p>\n

Girsky has made no secret of the fact he plans to reorganize the Opel subsidiary. He has already negotiated plant closings and other changes \u2013 though some of the moves will take several more years to implement.<\/p>\n

But few observers, either inside or outside GM, expect things to stop at Opel.<\/p>\n

\u201cThere are some big changes coming and it will impact the entire corporation,\u201d a ranking executive, asking not to be identified by name, tells TheDetroitBureau.com.<\/p>\n

Indeed, GM recently announced a major realignment of its global design operations and that, several sources stated, gives a clear indication of what is to come.\u00a0 The move was meant to put more of a focus on General Motors\u2019 individual brands \u2013 those that survived the 2009 bankruptcy.<\/p>\n

Some believe that Opel could eventually see itself become less and less important to GM while the carmaker puts more of a focus on Chevrolet.\u00a0 Its biggest global brand has been growing substantially, in recent years, both in emerging markets like China and more established regions such as Europe.\u00a0 About 60% of Chevrolet sales now come from markets outside North America.<\/p>\n

According to one executive with some knowledge of the process shaping the reorganization, \u201cWe\u2019re modeling what we\u2019re doing more after Volkswagen than Toyota.\u201d That fits because VW is a company that operates numerous brands \u2013 12 in total \u2013 and has gone through many of the challenges and changes GM faces.<\/p>\n

But specific details of GM\u2019s plans are a closely-held secret. Akerson, a former telecommunications industry executive, has shown little tolerance for the automotive world\u2019s tendency to let inside information leak out.\u00a0 In fact, the one-time Navy officer recently told GM employees during a corporate-wide conference call that such activities are tantamount to \u201ctreason.\u201d<\/p>\n

(Ironically, tapes and notes from the conference call quickly were leaked to the media.)<\/p>\n

What seems certain, according to chief analyst Rebecca Lindland, of IHS Automotive, is that, \u201cThere are a lot of questions about the competency of many of GM\u2019s leaders.\u00a0 So a reorg would likely cut very deep.\u201d<\/p>\n

That would fit with Akerson\u2019s stated goal of making GM a leaner, faster-acting company with less layers of management.\u00a0 The executive also appears to be trying to ensure that GM functions as a corporate whole rather than a collection of individual fiefdoms overseen by executives more interested in their own power than the corporate good.\u00a0 That was a problem similar to what Alan Mulally faced when he joined Ford Motor Co. six years ago.<\/p>\n

\u201cThere are definitely many opportunities to reassess and realign,\u201d says analyst Lindland.\u00a0 But, for his part, consultant Hall stresses that those who ignore the past are doomed to repeat it.\u00a0 And the last thing GM needs, he contends, is a repeat of what has come to be called \u201cRogerama.\u201d<\/p>\n

That\u2019s a derisive reference to the GM reorganization conceived by former Chairman Roger B. Smith and consultants McKinsey and Company, more than a quarter century ago.\u00a0 It also attempted to reduce layers and consolidate the empire by doing away with such corporate fiefdoms as Fisher Body.\u00a0 But the result was the virtual paralysis of the company for nearly two years.<\/p>\n

Considering the potential problems GM is facing, especially in \u2013 but not limited to \u2013 Europe, Akerson and his top management team likely have no choice but to make some major changes.\u00a0 But they also have to ensure that a reorganization frees the maker up to become leaner and more efficient and doesn\u2019t effectively shut it down.<\/p>\n","protected":false},"excerpt":{"rendered":"

General Motors appears to be heading towards a major reorganization, numerous sources indicate, one that Chairman and CEO Dan Akerson apparently hopes will make it more efficient and competitive. But the risky move might also paralyze the maker, as happened with a major 1984 reorg, reports TheDetroitBureau.com.<\/p>\n","protected":false},"author":2,"featured_media":50648,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[8],"tags":[],"make":[],"post-state":[],"category_old":[151],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/52792"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=52792"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/52792\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/50648"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=52792"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=52792"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=52792"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=52792"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=52792"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=52792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}