Chevy Move Shows CEO’s Jabs to Get GM Into Fighting Shape
As General Motors Co. (GM) chief executive officer, Dan Akerson, a former boxer, has avoided a hallmark of old GM: Trying to solve problems with a knockout punch. He displayed his style of relentless jabs by promoting Alan Batey to lead the Chevrolet brand globally.
Yesterday’s announcement that Batey, the U.S. sales chief, is moving into a new post is just Akerson’s latest tweak to GM since becoming CEO in 2010. Along with creating a similar role to make Cadillac a global brand and management changes to the top levels of product development, manufacturing and information technology, GM looks quite different than when he took over.
“These are much more quiet actions that are more likely to bear fruit, in my opinion, than the ‘We’re going to throw a hand grenade in there and dynamite the whole place,’” said Maryann Keller, an industry consultant, who has been a vocal critic of Akerson’s early days as CEO.
Batey’s appointment may be the linchpin of GM’s reorganization under Akerson, who began about a year ago signaling the need for a new corporate structure to allow GM to better compete on a global basis against Toyota Motor Corp. (7203), Volkswagen AG (VOW) and Ford Motor Co. (F)
“To have global brands, you have to have a global perspective, a global, unified vision,” Akerson told reporters today at a company event in Warren, Michigan. “I go around the globe and I just see the anomalies all over in how we position the product.”
Akerson, 64, has said he wanted to eliminate warring fiefdoms within the company and, people familiar with his thinking have said, was looking to reconstruct GM around global functions to move away from regional controls.
While yesterday’s announcement doesn’t abolish regional controls, it does elevate the Chevy brand leader to the highest ranks of GM management, the executive operating committee, and he reports directly to Akerson.
The geographic units remain measured by whether they generate profits or losses and “that’s why the region structure still stays in place,” Akerson said.
GM needs to keep regional leaders on the ground who understand local markets and tastes while having an overarching brand leader who can devise a strategy that applies to multiple countries, Keller, who is based in Stamford, Connecticut, said in a telephone interview.
“This has a shot at working,” she said. “It makes a lot more sense, because if you put the right person in place that person is going to be the one to understand what the goal is and get people motivated to actually buy into it.”
Akerson has set several ambitious mid-decade goals that include boosting GM’s North American operating margins to 10 percent, ending losses in Europe and increasing sales in China. He also wants to remake Chevrolet and Cadillac as global brands that compete in mainstream and luxury markets around the world.
A former telecommunications-industry executive, Akerson hasn’t been shy in complaining about the need for changes at GM after its 2009 bankruptcy reorganization.
He rose to CEO in 2010 when Ed Whitacre decided he didn’t want to steer GM through an initial public offering that year.
As a board member, Akerson “said he thought GM was one of the worst companies he’d come across in his entire life,” Whitacre, 71, wrote this year in his book “American Turnaround.” “And he was not a fan of GM cars -- he made that crystal clear.”
Akerson likes to tell people that in some ways GM’s quick trip through bankruptcy wasn’t long enough to address all of the issues that needed fixing.
“To correct systemic issues that permeated the company for 10 years, 20 years and 30 years, it’s taken awhile to do that,” Akerson told analysts and investors gathered in suburban Detroit this month.
Past GM efforts have often involved major revampings. An April 1992 announcement of changes to GM’s North American operation, for example, ran three pages, including a detailed organization chart in small type.
“Grand, sweeping reorganizations, we know, don’t work,” Keller said.
“General Motors has always been the company that’s looked for the dramatic awakening, the dramatic transformation. Throughout its history, it was going to cure its problems by acquiring its way out, or reorganizing its way out of a problem: Let’s buy EDS, let’s buy Hughes, let’s invent Saturn, let’s reorganize the company. All of this stuff never really addressed the very basic issue of how do you manage this company.”
Batey’s selection as head of Chevrolet is evolutionary, not revolutionary. Batey, 50, has led GM’s U.S. sales operations since June of last year and became interim global chief marketing officer in August after Joel Ewanick was ousted after a disagreement about a Chevrolet sponsorship.
Batey’s career, which began as a mechanical engineering apprentice with GM’s operations in the U.K. in 1979, has included leadership roles in Europe, Asia, Australia and the Middle East. In the U.S., he was sales leader for Chevy before to taking over as sales chief last year.
Since Akerson named Bob Ferguson global head of Cadillac in October, Batey has essentially been performing many of the duties of Chevy global leader. Batey led an effort to create a new ad slogan for the brand, announcing in January that “Find New Roads” would be its global slogan.
Chevy’s worldwide sales totaled 4.9 million vehicles last year, according to yesterday’s statement about Batey’s appointment. The figure was 3.6 million in 2002, Batey told analysts earlier this month. Chevy is sold in more than 140 countries, while a decade earlier it was just in 70, Batey said.
GM gained 2.3 percent to $32.55 at the close in New York. The shares have risen 13 percent this year, compared with a 12 percent increase for the Standard & Poor’s 500 Index.
Sixty-three percent of Chevy sales were outside of the U.S. last year up from 27 percent a decade earlier, Batey told the analysts. Yet Chevy isn’t one of Interbrand’s Top 10 global brands, a list that includes Coca-Cola Co. (KO), Apple Inc. and Toyota, Batey said.
Batey’s comments about the brand also foreshadowed his new position.
“A lot has happened in 10 years, how do we now take it to the next level?” Batey said. “We believe we need to do that by unifying this brand.”
One of the challenges for Batey will be positioning Chevrolet in Europe where GM also sells vehicles under the Opel brand. He will get help from Thomas Sedran, who was named today as head of Chevy operations in the region, effective July 1, a move from his role as Opel strategy chief. He replaces Susan Docherty, who is leaving the company.
“We’re taking a hard look at Chevrolet in Europe,” Akerson said. “We need a fresh perspective.”
Sedran understands the conflicts between Opel and Chevrolet in Europe and will work to make changes, Akerson said.
“We’re committed to Opel,” he said. “We’re going to assess Chevrolet and its relationship not only in terms of price but content and positioning and in what markets do we want to have them to compete.”
Akerson’s piecemeal reorganization may be paying off. He’s overseen 13 quarters of net income that boosted its stock to a two-year high earlier this month. The company has returned to the Standard & Poor’s 500 Index and is introducing redesigned high-margin models in the U.S., such as the Chevrolet Silverado and GMC Sierra full-size pickups.
“When we first came out of bankruptcy, we were playing a lot of defense,” Akerson told analysts this month. “Now, we’re playing offense.”
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