Dan Akerson: The CEO who took GM from the wake of bankruptcy to profitability
13 Dec, 2013, 0109 hrs IST, Bloomberg
Dan will be remembered as the man who took GM from the wake of its bailout and bankruptcy to profitability and independence.
Dan Akerson became the accidental car guy. He took the job of chief executive officer of General Motors by default, out of a sense of duty. Now the former telecommunications executive with no previous auto experience will be remembered as the man who took GM from the wake of its bailout and bankruptcy to profitability and independence.
Less than five years from GM’s government rescue, Akerson says the automaker’s biggest danger now is complacency. No one could have imagined that such a short time ago.
While the company had signalled earlier this year that it was changing his pay to allow him to retire within three years, the Tuesday announcement that he will step down on January 15 comes as a surprise to some. Privately, he’d been dealing with news that his wife was diagnosed with advanced cancer, the Detroit-based company said. “This personal situation kind of overtook us, overtook me,” said Akerson. He had previously thought about retiring in the second half of 2014, he said. “I need to spend all of my time and energy in fighting this disease with my wife,” he said.
In interviews over the years, Akerson, 65, often mentioned his wife, Karin. Last year, he told a story about the early years of his marriage, when he and his wife had such a bad experience with a Chevy salesman that they left the dealership and bought a Japanese car. “We were going to buy a Chevrolet, and the guy called her ‘the little woman,'” he recalled. “She got so angry, she was almost in tears and said, ‘I’m not buying a car at this place.’ It was the first Toyota I bought.”
Righting the Ship
Akerson, who became GM CEO just before its IPO three years ago, helped shepherd the fragile automaker through its final years under US government ownership and leaves with the stock trading near a record high. He’ll be succeeded by Mary Barra, the product-development chief.
“I always knew I’d be viewed somewhat as a transition CEO. We had to right the ship, get it under way, not take it across the ocean,” Akerson told employees.
He has spent the past three years working to complete a reorganisation that was begun in bankruptcy. He often said it would take more than a six-week court action to make the company globally competitive.
“Being CEO of General Motors is arguably the toughest auto job in the world, just given the size, the complexity,” Adam Jonas, an industry analyst with Morgan Stanley, said in October. “Akerson has done a fine job of righting the ship.”
Akerson,GM’s third CEO since US President Barack Obama’s auto task force ousted Rick Wagoner in 2009, did more than preside over the company’s return to public stock markets and the end of US government ownership. The automaker was profitable for every quarter he was in charge and it won back an investmentgrade credit rating from Moody’s Investors Service for the first time in eight years.
Healso ushered in a new period of optimism among investors, including Warren Buffett’s Berkshire Hathaway, State Street and J Kyle Bass’s Hayman Capital Management.
Under Akerson and Barra, GM is bringing out 18 new or updated vehicles in the US this year and 14 next year as the company transforms its lineup into one of the freshest in the industry from one of the oldest while also boosting quality to record levels, according to influential third parties, such as JD Power & Associates and Consumer Reports magazine.
“Post-bankruptcy GM has just gotten its stuff together,” Jake Fisher, Consumer Reports’ director of automotive testing, said in an October interview. “The vehicles that have been produced and designed” after bankruptcy have shown “marked change in terms of performance.”
Akerson’s vision for GM involved strengthening GM’s Chevrolet and Cadillac brands with improved customer service and consistent quality. At an employee event in June, after GM won JD Power’s top quality award, he told workers that it was his most memorable day at GM.
His tenure included disappointing sales of the Chevrolet Volt plug-in hybrid and having to defend the vehicle before US Congress after one caught fire three weeks after a side-impact crash test was conducted and the car was left in a field by the National Highway Traffic Safety Administration.
While NHTSA eventually ruled that the Volt posed no more of a fire risk than a conventional car, the damage to sales was done. Akerson’s darkest days came about 18 months ago. The stock reached a closing low price of $18.80 in July 2012 and that month he ousted his top marketing officer, Joel Ewanick, a high-profile executive seen as a change agent, over a disagreement about a Chevrolet sponsorship.
Akerson, a former telecommunications industry executive who later worked at private-equity giant, Carlyle Group, remained unsatisfied with GM’s performance, pushing several mid-decade goals that include boosting North America operating margins to match Ford Motor’s, stemming losses in Europe after losing more than $18 billion since 1999 and almost doubling sales in China.
On his watch, he oversaw decisions to pull Chevrolet out of Europe and to close the first assembly plant in Germany since World War II.
He was also grooming possible successors. Akerson, who will also step down as GM’s chairman, has said he preferred that his successor comes from within the company because it would be less disruptive. Along with Barra, other potential successors included Steve Girsky, 51, vice chairman; Mark Reuss, 50, North America operations president; and Dan Ammann, 41, chief financial officer.