June 11 (Bloomberg) -- It’s a billion-dollar conundrum for an auto company: how to save money while introducing 18 new or refreshed vehicles in 12 months in the U.S.
If resurgent General Motors Co. is going to achieve Chief Executive Officer Dan Akerson’s goal of continuing to increase profit this year and next -- and significantly ramp up margins - - that will have to be done. And the person in charge of doing a lot of it is Grace Lieblein, 52, in her new role as head of GM purchasing.
Lieblein has prepared for the job with top roles in Brazil and Mexico after doing engineering work in factories and introducing new models. Her background goes much farther back. She grew up in the Los Angeles area, where her father, a Cuban immigrant, worked at a GM plant and cars were always part of her life.
“A car wasn’t a commodity,” she recalled in an interview. “There was passion around it.”
While Lieblein never worked in purchasing before taking over the department, her experiences in other parts of the company give her contacts and insights that can help the group better bridge the needs of product development and manufacturing while saving money.
Her time in Brazil was instructive as she gained knowledge of auto-parts makers while the unit was beginning production of nine new models in 20 months. While there, she integrated purchasing and logistics with product development globally, said Jaime Ardila, president of GM South America.
“I have never seen those two areas working more closely together than I did during her tenure,” he said in a telephone interview. “That will have prepared her well and I think she will make a significant contribution in integrating those teams in the U.S.”
Lieblein, who started the new role late last year, aims to cut material and logistics costs while helping GM introduce new vehicles that should help boost profit and market share this year and next. The Detroit-based company wants to save $1 billion by optimizing material costs and better logistics, Chuck Stevens, chief financial officer for North America, has said.
Heading GM’s Brazil operations is one of the few positions within the company were an executive oversees manufacturing facilities in a large market while also dealing with product engineering and development, gaining insight into both ends of supplier involvement, Warren Browne, a former GM executive in Brazil, said May 30 in a telephone interview.
“Brazil is a big, autonomous organization where leaders can perform,” Browne said. “It’s really the manufacturing and engineering that allows for that overall global look at how suppliers are required to deliver products to a company that’s self-sufficient and produces.”
Akerson is counting on the new products being introduced, including a redesigned Chevrolet Silverado pickup and Cadillac CTS sedan, to help the company build on its success this year. GM has reported 13 straight profitable quarters, returned to the Standard & Poor’s 500 Index and it has gained 0.2 points of U.S. market share after falling to an 88-year low last year. At the end of last week, the shares closed at the highest level in more than two years.
GM expects 2013 and 2014 to be “good years,” Akerson told reporters in January.
Lieblein inherited a challenging situation in Brazil when she arrived after a previous assignment running GM’s operations in Mexico. GM’s Brazil market share fell in 2011 and the automaker’s South American operations lost $122 million before taxes as the company’s product lineup grew stale against aggressive competitors.
“Basically everything has changed except one model down there and they’re going through a similar process” in the U.S., Guido Vildozo, an industry analyst with IHS Automotive, said May 23 by telephone. “Her exposure to all of these different challenges down in Sao Paulo and in Brazil are key to helping her build her relationships with suppliers moving forward.”
Lieblein has been with GM for more than 30 years, taking her on a career path that began as a student with what was once known as General Motors Institute, now Kettering University, in Flint, Michigan, to running a purchasing department with 5,100 employees and 3,000 direct suppliers.
Her early assignments with GM weren’t glamorous. She started out beginning an ergonomics program in assembly plants in Lansing.
She made her mark as the chief engineer on the sport utility vehicle program that included the GMC Acadia and Buick Enclave, which went on sale in 2007.
That job helped her better understand what customers are looking for in vehicles and prepared her for a sales role in Mexico and Brazil, she said.
“It was an engineering role, but you were the integrating body,” she said.
She took over Mexico operations in January 2009 a few months before GM went through its bankruptcy reorganization in the U.S., an experience that taught her to focus on what drives profit. She spent 2 1/2 years in Mexico before heading to Brazil.
“Brazil prepared her very well for her new assignment,” Ardila said earlier this year. “This is a very complex environment where she was involved in negotiations all of the time on the labor front, with suppliers, with dealers, with the government.”
The nine new vehicles in Brazil that she introduced included the Chevrolet Cruze sedan, S-10 pickup and Onix compact car.
“When I got there and I looked at that schedule, I thought, ‘Oh, there’s no way we’re going to be able to do this,”’ she said. “But we did.”
It wasn’t without challenges. The first new model, the Chevrolet Cobalt, was delayed six to eight weeks, she said.
“The whole enterprise wasn’t ready to move,” she said. “That’s one of things that kept me up at night: being able to launch with quality and on time. After that we really looked at how we were launching the vehicles. We asked for help where we needed it. We’ve got this great global company and one of the things I made sure was that we were using it.”
While Lieblein ran Brazil, GM made a push to supply more of its parts closer to its plants, Vildozo said.
“Localization was a key element to the work that they were doing, trying to bring everything close to home,” he said. “I’m wondering if perhaps this is something that they’re going to try to push aggressively” elsewhere.
Lieblein is working with Mary Barra, head of GM’s product development, to carry out Akerson’s goal of making GM the world’s most profitable automaker.
GM’s North American profit margins have averaged 7.4 percent during the past three years and the company aims to reach 10 percent by mid-decade.
To do so while increasing spending on new models, the company has announced an effort to cut fixed costs in North America by $1 billion through a slew of back-office efforts and streamlining manufacturing. Stevens, the North America finance chief, has said GM can do better with material costs and logistics.
“We just do not get enough economies of scale and leverage off our global business model,” he said March 27.
This isn’t the first time GM has looked to revamping its purchasing operations. When it was still General Motors Corp., the automaker brought Jose Ignacio Lopez de Arriortua from its European operations in 1992 to be its worldwide purchasing chief. Lopez alienated some suppliers by rewriting contracts and extracting cost savings.
Lopez was set to be promoted in 1993, but instead left for an executive post at Volkswagen AG. VW agreed in 1997 to buy $1 billion of GM parts over seven years and pay $100 million to settle lawsuits related to Lopez’s departure from GM. Lopez resigned from VW in late 1996.
This time, GM has started bringing suppliers into program development to “get the best ideas, the best solutions,” Stevens said. “We still have a huge opportunity to optimize our supplier footprint.”
While those are goals Lieblein is reaching for, in the immediate future, she’s working with the company as it starts bringing out the Silverado pickup to dealers this quarter.
Lieblein has had retired GM engineers, with years of experience in bringing out new products, working with suppliers to help navigate and troubleshoot any problems that might arise during the pickup launch.
“There are always challenges in launches,” Lieblein said. “A flawless launch doesn’t mean that stuff isn’t going to happen. A flawless launch is how the team reacts to that.”
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