Inside GM's Fight For Survival

A top executive describes what it's like trying to save the troubled auto giant

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At General Motors, they call it “the 60 days.” That's the window of time President Obama has given America’s biggest automaker to chart a bold new future - or declare bankruptcy.

Obama has set tough conditions that GM must meet by the end of May in order to get up to $25 billion in additional government aid. To show he means business, Obama also fired eight-year CEO Rick Wagoner. The new CEO, Fritz Henderson, must wring unprecedented concessions from unions and creditors, rapidly shrink the company, and convince buyers to stick with GM products. I spoke recently with Susan Docherty, North American Vice President responsible for the Buick, Pontiac, and GMC divisions, about what it’s like working for GM at the most precarious moment in its history. Excerpts:

You’re responsible for some of the “good” brands that GM plans to keep. How are you going about your job these days? Is it a crisis atmosphere, or does it somehow feel like business as usual? There isn’t anyone in our company treating this as business as usual. All of our employees listened to the president’s press conference [on March 30]. If Fritz says he’s giving a press conference, we all stop work and put on the TVs. Then we do a debrief and make sure everybody understands what the message is. We get it: We need to have a restructuring plan that goes faster and deeper.

[See what’s next for GM and Chrsyler.]

How is this affecting your division? Even though the entire company is restructuring, we still need to be selling Buick, GMC and Pontiac vehicles. My job is to generate revenue for this company. I need to figure out how we get consumers back into showrooms and get rid of what I call the FUD factor: fear, uncertainty, and doubt. Companies going through restructuring can fall off a cliff if they don’t continue to focus on generating revenue.

The irony is, as we’re going through all this, our products have never been better.

[See 5 reasons to buy an American car.]

Can you tell if the all the negative news has damaged your brands and driven away buyers? It’s too early to see if interest in our brands has dropped off completely from all the news. Obviously the economy is also keeping buyers away. The buyer behavior data come out quarterly, and we don’t have the first quarter’s data yet. But I don’t need to see any data to know that I need to get people back into the showrooms. We know that people need to know us, like us, trust us, and buy us.

Is there an acronym for that? K, L, T, B…. Geez, I don’t know. I’ll have to have a glass of wine and think about that one.

[See 5 reasons to shun American cars.]

The real wake-up call for us was the Congressional hearings in December. It was very clear from the questions they asked, and also from the questions the press asked, that the perception of our company and our brands was at least a decade old. People don’t know the vehicles we are building today. Before this crisis, we’d talk about the improvements we were making and a lot of people wouldn’t hear us. We have a chance for potential buyers to hear us now. For as difficult as this is, shame on us if we don’t find opportunity in this crisis. It wouldn’t hurt if the general press gave us credit for the great products we’re building.

Well here’s a personal opinion. GM has made a lot of predictions in the past that haven’t come true. Market share gains, profit levels, there are all kinds of examples. As recently as a year ago GM was saying, ‘we need all 8 of our brands,’ while critics were saying you only need 4, and now GM has finally said, ‘okay, we only need 4, or 4.5.’ So in the press we don’t know what to believe. Is 4 brands the right number? A year from now will it only be 3 brands? Well let me say this. Fewer, better, faster, always wins against a multi-brand strategy. In 2005 we had eight Buicks. Now we have three. We got it.

[See how some Americans are rallying behind GM and Chrysler.]

Do you really need GMC and Pontiac if Chevrolet and Cadillac are such strong core brands? Aren’t GMC trucks mostly just copies of Chevy trucks? Chevy and Cadillac are global brands, and there are some consumers in the middle who are not interested in a volume brand like Chevrolet. It’s not for them. There are also customers who can afford a Cadillac but wouldn’t choose a luxury brand either. There is clearly a need for premium offerings above a volume brand but below luxury. So with Buick and GMC, we have products that can meet that consumer need. The architecture of good – better – best works.

As for GMC, all of our GMC products are profitable. Pontiac has nowhere near the margins of GMC. That’s why we need to refocus Pontiac. Fritz has said that every vehicle in our lineup needs to pay its own way and that’s what we intend to do.

[See the cars that drove Detroit’s customers away.]

Are you doing any contingency planning for a bankruptcy scenario? On March 31 we launched the Total Confidence promotion, which we tested with consumers. We told them, if you lose your job, we’ll cover 9 months of payments [up to $500 per month], and by the way we’ll cover your warranty. And instead of saying ‘what’s the catch,’ like they usually do, they said, ‘oh really?’ They loved that.

But that’s the government covering the warranty, right? Right, but we’ve added it to Total Confidence. So it says, you have a “,fully backed” 5-year/100,000 mile powertrain warranty. “Fully backed” means backed by the government.

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Are you involved at all in the dealings with the government? I had tickets for my husband and I to go the Final Four. We have a 7 am meeting with [marketing chief] Mark LaNeve every other morning, and on the day we were supposed to leave for the Final Four, we got a request from the team in Washington that we needed to pull together a bunch of information for the President’s task force. By 8 am, I called my husband and said, ‘you need to find a friend to go with you.’ We worked for about 24 hours pulling all that together. That was one of several sleepless nights for my whole team.

This event is more than life-changing. There’s not anybody in the company who’s unaffected by this. We all know how serious this is.

[See 6 upsides to a GM bankruptcy.]

What was your reaction when Rick Wagoner resigned? I was at the Detroit opera with my daughter and husband that Sunday afternoon, and I got a message on my handheld from Mark LaNeve saying the news is reporting that Rick is leaving the company. And I looked at my daughter and my husband and said, ‘I have to go.’ For many people at the company, the only CEO they’ve ever known is Rick Wagoner. It was a very emotional moment for the entire team.

The next communication came the next morning from President Obama at 11:00 in the morning on March 30. He clearly articulated what he wanted from us. We heard him when he said we need to go deeper and faster and we need a new report in 60 days. Then Fritz Henderson held his press conference, and he said that what we’ve provided is not good enough. We got together and made sure we communicated all this to everybody on our team. Then right after that we launched Total Confidence. I don’t think it even sunk in until later in the week that Rick was no longer with the company.

That week at GM was one of the weeks everybody who works here will remember. You know how certain things happen, and you always remember where you were when you first learned about it? That’s how it felt. Everybody at GM is going to remember where they were when they learned that Rick Wagoner was asked to resign.


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General Motors
  • Rick Newman

    Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success and the co-author of two other books. Follow him on Twitter or e-mail him at rnewman@usnews.com.

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