Wednesday, May 23, 2012

General Motors' CEO wants to rev it up

NEW YORK — Dan Akerson is hardly a corporate diplomat.

The chairman and chief executive at General Motors Co. says publicly what other CEOs say in private: he disses competitors cars and laments his companys lumbering bureaucracy. Hes told reporters that Ford should sprinkle holy water on its troubled Lincoln luxury brand and has called Toyotas Prius hybrid a geek-mobile. His candor often rattles GMs public relations staff.

And you know what makes him really mad?

There is a resistance to change at GM, Akerson recently said.

By all accounts, though, the auto giant is moving at a faster pace under his leadership as he tries to overcome the resistance.

Akerson is not the first to complain about GMs bureaucracy. But for the first time in years, the automaker has somebody at the top with an outsiders vision and a will to make changes to keep profits flowing and return the company to the glory years of a generation ago.

GM now has a lineup of cars and trucks that is selling well, and it has turned a profit for nearly two years straight. The stock, although trading far below analysts targets, is once again catching the eye of portfolio managers.

Yet for Akerson, who took the CEO job 15 months ago, the work has just begun, and it hasnt gone totally as planned. Hes being tested by a federal investigation into Chevrolet Volt battery fires that broke out seven or more days after government crash tests. Leaking battery coolant likely caused the fires. Hes also grappling to fix GMs high-cost European operations, which are losing money.

Akerson was recruited by the federal government to join GMs board in 2009 just as the company was leaving bankruptcy protection. The government was majority owner at the time, and Akerson thought his management, financial and engineering skills hes the former head of XO Communications could help a company so important to the U.S. economy.

The U.S. Naval Academy graduate, who grew up in Minnesota, admits he knew little about cars in the beginning. But now he speaks with authority on everything from transmissions to batteries.

Would you recall all 6,000 Volts to strengthen the battery?

If we find that is the solution, we will retrofit every one of them. By the way, if someone wants to sell it back to us now, well take that too. Were quite confident that well find a solution.

Do you think the news about the Chevy Volt will harm sales of electric vehicles?

This car is safe. There is nothing happening immediately after the crash. I think in the interest of General Motors, the industry, the electrification of the car, its better to get it right now, when you have 6,000 instead of 60,000 or 600,000 cars on the road. Were not the only car company that has liquid cooled batteries out there. So we think this is the right thing to do for our customers, first and foremost, and it was the right thing to do for General Motors and the industry. (GM has said no Volts have caught fire in real-world crashes).

Are you moving past the early technology adopters on the Volt at this point, or has any data surprised you on who is buying this vehicle?

The average purchaser of a Volt is earning $170,000 a year. About a third of the customers havent been in a Chevy store in more than five years and half have never been in there. They arent just early adopters.

When are we going to see the electric car as the typical family car?

We want to ramp Volt production to roughly 60,000 in 2012. I think Prius in its second year did a lot less than that, half. By this summer we will (be in) what I call the second generation, where we will achieve certain scale and we should see an appreciable drop in the cost of the production of the Volt. So 2011 was kind of a year to get things aligned and make sure that the car was what we hoped it would be.

Youre gaining market share and your sales are going well. Why is your stock price so far below the initial public offering price? (GMs stock price closed Friday at $20.15, compared with its IPO price of $33 per share in November 2010.)

Thats bothering me. But at the same time, our industry when I look at Ford, I look at us were all down about the same amount, within a percent or two. I dont say that because I take pride in it, its just sometimes you cant fight city hall or trends in the marketplace.

I have a lot of sleepless nights, but I would say four out of five are on what I would call operational and practitioner issues and the others are about, Why is the stock not doing better?

So you dont spend a lot of time sleeping?

I rarely sleep past 4:30 or 5. Ive always been an early riser but I get up so I can talk to the folks in Asia before they get too far into their day. Its the best job Ive ever had. Its the most fascinating industry Ive ever been in. When I was in private equity, we saw everything. This is something. You go to the Detroit auto show, you might as well go to a fashion show in Paris, like the runway. Ive never been to one of those, but Ive watched them on TV. But its got all of that. The personalities and the egos in the industry, the cars, the shows and then its hard-core technology. Youve got to worry about supply-chain management. Its complex and interesting and exciting.

If you could wave a magic wand, what two things would you change at GM right now?

I want a miracle solution on Volt in the next week. Thats not going to happen. On a more serious note, it all starts and it ends with product. I want sustainable, differentiable product. The generation (of vehicles) that you see for the consuming public today is not just competitive, its very competitive. Were holding our own. Were taking share. Were profiting.

The second thing is, weve got to make sure that the culture evolves to one thats less hierarchal, flatter, more interactive, more participative. When I was at MCI, if we had 30,000 people in the company, we had 20,000 people who thought they were running the place. They wanted to make decisions. They were proactive. They were angry with senior management if they didnt move quick enough. And we need to instill that, a culture like that that leans forward.

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