CEO Dan Akerson Navigates GM’s Make-or-Break Turnaround
Following the company’s watershed IPO, the executive is focusing on better vehicles, streamlined brands and bigger profits.
Joe Pugliese
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E-mailAkerson is in his shirtsleeves in a new-looking armchair he admits to having barely used, talking animatedly about the new GM — about a makeover designed to ultimately leave the company as orderly as this office. For decades, of course, auto executives have occupied space in the glass-towered Renaissance Center overlooking downtown Detroit, but it is Akerson, a 62-year-old former U.S. Navy officer, boxer and private-equity specialist, who has been handed the mandate for the company’s renewal.
IN MY OWN WORDS:
Dan Akerson, Chairman and CEO, GM
The best management advice I ever got is...people make the company. Build the best team possible and give them rope to run.
The best lesson I bring from my former positions is…understand the business, conceptualize where you want to be in five years and execute with precision.
I believe when leading people it is important to…exhibit integrity and lead by example.
A perfect day outside work is spent...with my family.
Before GM’s 2009 bankruptcy, the company was saddled with a history that tied the hands of Akerson’s predecessors. Union contracts had guaranteed high wages and benefits and secure jobs, which had led to runaway costs as well as overproduction that forced dealers to discount heavily to sell vehicles. Billions were diverted into poorly considered acquisitions, says Akerson. Debt spiraled. GM had failed to sufficiently prepare for an era when high gasoline prices made consumers seek out small, fuel-efficient vehicles instead of the SUVs and large sedans that Detroit had focused on producing during its boom years. In 2008, when gasoline rose to more than $4 a gallon and a credit crunch left consumers unable to get loans, GM’s sales fell precipitously with the market, compelling the company to file for bankruptcy protection and pursue a government bailout.
But these days, Akerson, who took over as CEO in September 2010 and in addition became chairman at the beginning of this year, says he is focused on putting things right. “Our risk profile today is much less risky than it was before,” he says, playing out his role as the cost controller that Wall Street and the government want to see turn this company around. “If you look at where we are today, as painful as it was, we had to get our costs down. The pain and embarrassment of bankruptcy allowed this company to come out of that with a relatively clean balance sheet.”
GM reported a profit of $4.7 billion on $135.6 billion in revenue for 2010, the company’s first profitable year since 2004 and largest since 1999. Its retail sales of passenger cars were up 76 percent in February over those of a year earlier — with new vehicles such as the plug-in hybrid Volt making a strong debut, the Cruze compact selling better than expected and Cadillac up 60 percent over the first two months of last year, the company reports. New vehicles featuring the latest technology are a key part of the turnaround strategy, as is a new relationship with labor and with dealers nationwide, Akerson says. The sale of Saab, coupled with the elimination of Hummer, Pontiac and Saturn, concentrates manufacturing on just four makes — Buick, Cadillac, Chevrolet and GMC — cutting capacity and streamlining the manufacturing and supply chains in the name of global cost efficiencies, he explains. All this, Akerson says, puts the company on a new track toward profitability and ultimately an exit ramp from government ownership.
“The IPO was a turning point,” he says of the November 2010 common and preferred stock issuance, which raised $23 billion and lowered the U.S. government’s ownership stake to about one-third from two-thirds. “It reintroduced GM to the American public.” When it was going into bankruptcy, Akerson says, only 16 percent of Americans had a positive view of GM; now 65 percent do.
Press play for a clip of GM executives celebrating the company’s recent IPO at the NYSE.
