Getting Out Of Dodge

Top talent is fleeing the Big Three to escape declining morale and shaky prospects

Generous Motors it isn't. Not anymore. Just ask the several hundred General Motors Corp. (GM ) managers who were fired on Mar. 28. They were each taken aside and given a severance package, told to surrender their keys and badges, and allowed a month to turn in their cars. And while the hundreds of layoffs didn't amount to the "Black Tuesday" many managers expected, GM is just getting started. It plans many more such job cuts this year.

No sir, life in Motown isn't much fun these days. The rank and file of the United Auto Workers may be trembling in their steel-toed boots as GM and Ford Motor Co. (F ) gear up to impose tough new contracts and layoffs. But in the design studios, engineering labs, and corporate offices, the companies' white-collar professionals are experiencing the same kind of anxiety, gloom, and resignation as their blue-collar brothers and sisters.

GM Chairman G. Richard Wagoner and Ford Chairman William Clay "Bill" Ford Jr. exhort underlings to get jazzed about turning their companies around. But the troops are finding it hard to stay pumped. Executives get excited about new car projects only to watch them die before they get out of the studio. Middle managers find themselves reporting to a revolving roster of bosses. Pay, benefits, and perks aren't what they were.

And because the companies are erasing layers of management, the opportunities for advancement are dwindling. Many industry professionals believe the tough medicine will help their companies, but the turmoil is enough to wear down even the most determined optimist. "It's bad news after bad news," says a GM engineer. "It's not going to end anytime soon."


Is it any wonder that more and more Ford and GM executives are thinking about hitting the road? Headhunters report a steady flow of résumés from top Motown managers. "Not a week goes by without a Detroit executive telling me: 'If you see something outside the industry, I'd love to look at it,"' says Brad Marion, who runs the auto practice at executive search firm Korn/Ferry International (KFY ).

Detroit's carmakers -- even relatively healthy Chrysler Group (DCX ) -- are already losing key talent. Ford lost its hybrid chief, Mary Ann Wright, to auto parts maker Collins & Aikman Corp. (CKC ) Levi Strauss & Co. snagged GM's chief financial officer for North America, Mary Boland. Dell Inc. (DELL ) got the auto maker's top quality officer, Annette Clayton. And Chrysler marketing whiz Julie Roehm fled to Wal-Mart Stores Inc. (WMT ). "If people at that level are leaving," says a GM product developer, "how bad are things going to get?"

It's hard to tell how worried Detroit should be. Kathleen S. Barclay, GM's vice-president of human resources, says they have no trouble filling the jobs. She adds that those who stay are undeterred, even energized, by the challenges. The auto makers also say turnover isn't much higher than usual. Still, one Ford executive concedes "if this keeps happening, the talent pool will get pretty shallow."

How things have changed since Detroit's heyday. The Big Three had their pick of the brightest stars. Just five years ago GM and Ford were cherry-picking talent -- swiping hot stylists from European carmakers and marketing bigs from the likes of Procter & Gamble Co. (PG ) and General Electric Co. (GE ).

Back in the day, Detroit also could afford to pay for its employees' loyalty: fat bonuses, union-caliber bennies, and a virtual guarantee of lifetime employment. It wasn't uncommon for Detroit professionals to stick around for 40 years. Or to find their sons and daughters climbing the ranks right behind them. That's Mary Ann Wright's story. "Ford took care of our family," says Wright, whose father was a Ford engineer. "I thought, 'God, I'm supposed to work for Ford forever."'

Wright found huge satisfaction taking the Escape hybrid sport-utility vehicle from lab to showroom. And she was geared up to roll out a fleet of hybrids by 2010. But budget cuts and management churn meant "we weren't getting anything done." Wright also endured constant sniping that hybrids were a waste of time. In September a colleague sent an e-mail essentially asking: Why bother?

Soon after, Wright told Bill Ford she was quitting. He asked her to stay, but she was adamant. "When you're not having fun," Wright says, "it's time to go." She resurfaced in February as Collins & Aikman's vice-president of sales and program management. Her new employer is a fraction of Ford's size and struggling to emerge from bankruptcy. But there are compensations; including bonus, Wright, 43, could make more than $600,000, possibly double her take at Ford.

For executives overseeing the wholesale downsizing at GM, going to work can be especially draining. As the company's CFO for North America, Mary Boland spent her days scouring financial data, looking for ways to slash costs. That included figuring out which plants to close and dealing with the knowledge that these decisions had real-life consequences for families and communities. "It has been many years of downsizing at GM, but the last couple of years took its toll [on me] physically and mentally," Boland says. "I want to give 110%, but I felt I couldn't keep up the pace."

Yet she found it hard tearing herself away from an industry that had also employed her father for decades as a tool-and-die maker. Before becoming CFO in 2004, Boland, now 48, had worked at the company for a quarter-century. Finally, though, her family nudged her into taking the CFO job at Levi's.


When she finally took the plunge, Boland says, it was a big weight off her shoulders. Levi Strauss has completed its downsizing, having shifted its manufacturing offshore a few years ago. Now the company is looking for ways to grow rather than shrink.

Like Wright, Boland got a pretty decent package. She wouldn't give numbers, but says she got "a significant raise" to take the same job she had at GM. And every morning she wakes up in the tony San Francisco suburb of Tiburon, where she sips coffee and looks out over San Francisco Bay. Her morning commute takes her across the Golden Gate Bridge, a far cry from her old drive on Detroit's potholed John C. Lodge freeway. Says Boland: "Southeast Michigan is a pretty depressing place to be right now."

Detroit's rivals are only too aware of that, and they are taking advantage of the Motown malaise. The Japanese and Korean transplants are expanding, grabbing market share, and paying good salaries. So it's easy to see why Detroit professionals are going to work for the competition.

One is Joel T. Piaskowski. He's only 38, but he's the guy who designed the Buick Lucerne, one of GM's successful new models. Three years ago, Piaskowski quit GM and went to work for Hyundai Motor Co. in sunny Irvine, Calif. Today he's Hyundai's chief designer for North America, and other young Motown designers have followed in his wake.

GM wasn't in full downsizing mode when Piaskowski made the move. But he found it hard to make an impact. While GM was having trouble funding new car programs, Hyundai was adding models and even contemplating a luxury brand. Piaskowski saw an opportunity to put his stamp on an entire lineup.

Since he left GM, a dozen Big Three product developers have joined Piaskowski at Hyundai. And Cadillac designer Tom Kearns is now chief designer for North America at Hyundai sibling Kia. "I didn't recruit them," says Piaskowski. "They followed the buzz." And what about loyalty to his home town? Piaskowski's dad was a Chrysler designer, after all. "If it wasn't me," he says, "it would have been someone else." That's the last thing Detroit's auto makers need to hear.

By David Welch

    Before it's here, it's on the Bloomberg Terminal.