Why Mary Barra Is GM's New CEO

GM said on Tuesday that its well-regarded global product chief, Mary Barra, will be the auto giant's next CEO. Barra will succeed Dan Akerson, who is retiring in January. Photo credit: General Motors Co. 

Well, that's certainly one way to change the subject: A day after the U.S. government said that it had sold the last of its General Motors (NYSE: GM  ) stock, GM announced that it was getting a new CEO.

Mary Barra, currently GM's global product chief, will succeed current CEO Dan Akerson on Jan. 15th, the company announced on Tuesday.

Akerson, who steered GM through its post-bankruptcy reconstruction and into an era of good profits and strong products, will retire. Originally expected to retire in another year, he accelerated his plans after his wife was diagnosed with cancer, GM said in a statement.

Barra, who is 51, will be the first woman to lead a global automaker. But she's not exactly a surprise choice: The 33-year GM veteran has shined in her current role, where she has played a huge part in GM's ongoing transformation.

After years of finance types, an engineer to lead GM
When Akerson appointed Barra to replace retiring Detroit icon Bob Lutz as GM's product chief early in 2011, it was hard to see what he had in mind. I said at the time that Barra was a capable executive who had a reputation as a bridge builder, but she seemed an odd choice to replace the charismatic Lutz, a "car guy's" car guy.

It didn't take too long for us to figure out what Akerson was thinking. Barra, an engineer whose GM career started with an internship in 1980, launched a sweeping global overhaul of GM's product development process, and of its global product plan. 

That overhaul has turned out to be huge: GM immediately realized substantial cost savings, has seen its product quality and customer satisfaction ratings go way up, and is on course to gain further savings and quality improvements in coming years.

Of course, it wasn't hard for Akerson and Barra to see what needed to be done -- Ford's (NYSE: F  ) global transformation gave them a great model. But making it work, getting GM's far-flung, quarrelsome fiefdoms to buy into the approach and make it happen, was another thing entirely. Many would have said that it was an impossible challenge.

Barra's overhauled product-development process has already generated several highly praised new products, including the 2014 Cadillac CTS. Photo credit: General Motors Co.

But Barra made it happen, and recent GM products like the Chevrolet Impala and Cadillac CTS show how well it's working. 

Now, she gets to run the whole show as GM's chief executive officer -- but not as president or chairman, two roles held by Akerson that will now be filled by others.

Other GM stars get new jobs
Akerson's seat as chairman of GM's board will be filled by board member Tim Solso. Solso, 66, was the chairman and CEO of Cummins until his retirement in 2011. 

GM's board had several strong internal candidates for the company's next CEO. Vice chairman Steve Girsky, CFO Dan Ammann, and North America chief Mark Reuss had all been discussed as potential replacements for Akerson. All three would have been plausible choices.

As it turns out, all three are on the move as well. Ammann, the former Morgan Stanley banker who has  shined as GM's chief financial officer, will become GM's president. He will continue the project of integrating and streamlining GM's far-flung global operations. 

Reuss will step into Barra's role as GM's new global product chief. It's the perfect role for Reuss, a dyed-in-the-wool car enthusiast whose father was once GM's president. Reuss will also lead GM's global purchasing and supply chain organizations, a role Barra took on earlier this year. Alan Batey, currently the global head of the Chevrolet brand, will succeed Reuss as GM's North America boss.

Meanwhile, Girsky is departing. He will move into a senior advisory role effective immediately, GM said, and will leave the company in April.

The upshot: a new era for GM
As a Detroit outsider who seemed slow to pick up the nuances of the auto business. Akerson was viewed dimly by many observers during his early days as GM's chief. But over time, his strengths became apparent, as he slowly but surely started to harness GM's massive potential. 

Akerson will be remembered for several significant achievements, starting with this big one: He identified and developed a superb team of understudies.

Now, the best of that team has been given the reins, and together they have a chance to give stable leadership to GM after years of turmoil. 

It'll take time before we know whether today's moves were the right ones, before we know whether Barra can unleash the potential of a post-"Government Motors" GM. But from here, these look like the right moves. I'd say that GM shareholders should be cautiously pleased by Tuesday's announcement.

Secure your future with these rock-solid dividend stocks
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.


Read/Post Comments (9) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 11, 2013, at 12:58 AM, SkepikI wrote:

    JR- your opening line was the attention getter for me. Being both a cynic and a Government Motors critic, Clever Distraction is my view. The rest gives me pause and keeps me thinking about my curmudgeonly bent.

    I wonder how much of our $10 Billion she will return...that's the only transformation I give a fig about.

  • Report this Comment On December 11, 2013, at 9:59 AM, TMFMarlowe wrote:

    @Skepikl: The timing surely wasn't a coincidence. I suspect it has been a done deal for a while now, but there are good reasons wholly aside from the change-the-subject issue why they might have waited to announce it.

    And that doesn't mean that this isn't significant news. I have yet to meet Mary Barra, but I consistently hear great things about her. And moving Ammann up to a somewhat more operational role that keeps the two of them working closely together while he gets more experience was an inspired move. The proof of the pudding will be in the eating, but I think GM's board did very well here. The contrast in management approach with GM's pre-bankruptcy history is just enormous. Maybe I should do an in-depth article on that.

    As to that $10B, you know where I stand. But I continue to think it's small potatoes compared to some of the bank stuff, and I can't figure out why the folks who get so exercised over GM aren't even more upset about the likes of JPM.

    Thanks as always for stopping by.

    John

  • Report this Comment On December 11, 2013, at 2:41 PM, SkepikI wrote:

    <The contrast in management approach with GM's pre-bankruptcy history is just enormous. Maybe I should do an in-depth article on that.>

    I encourage you to do just that. I believe your WRITING has been particularly good of late and I would like to see a well researched article with just that proposition adequately supported by facts. It might even change my mind.... ; - ) not likely...

    <I can't figure out why the folks who get so exercised over GM aren't even more upset about the likes of JPM.> Well, I could speculate on that but it would be idle speculation along the lines of they actually believe they can affect GM with their purchases and opinion, and JPM not so much. BESIDES: How do you know for a fact that they don't? I see lots of bank invective - most of it directed at BOA, but plenty for JPM and Chase and Citibank.

  • Report this Comment On December 11, 2013, at 2:42 PM, SkepikI wrote:

    Oh and then there is the obvious. They KNOW for a fact GM got $10 big ones out of their money, and they are confused and uninformed about the total damage of JPM, etc.

  • Report this Comment On December 11, 2013, at 3:05 PM, WhiteHatBobby wrote:

    Who would have imagined a lifer who worked 39 years at a GM die stamping plant (now deceased) and the former CEO would each have their children running the company at the top levels?

    And what does it say when a life-long factory worker's child now controls the firm?

  • Report this Comment On December 12, 2013, at 10:50 AM, TMFMarlowe wrote:

    @WhiteHatBobby: It says that GM is becoming a very different kind of company from the Old GM we used to know. That's why I own the stock.

    Thanks for reading.

    John Rosevear

  • Report this Comment On December 15, 2013, at 11:33 PM, SkepikI wrote:

    <can't figure out why the folks who get so exercised over GM aren't even more upset about the likes of JPM.>

    JR: You may wish to follow the more recent article featured re JPM and Bernie Madoff from Reeves... I predict the commentary will change your mind...

  • Report this Comment On December 16, 2013, at 12:00 PM, solwiz wrote:

    In this article you have twice used the word "shined", as Mary Barra shined as.... Now, this is one of those English-major arguments, as "shine" without the d, is used in two way: You "shine" your glassware. You "shine" at oratory. Fine. English is full of these double meaning words. The problem comes with the past tense: "Shined". In this case, she "shined" her glassware, but correctly, she "shone" at oratory. Just an amusing aside.

  • Report this Comment On February 21, 2014, at 3:52 AM, thidmark wrote:

    "is used in two way"

    Two is plural, so it should be "two ways."

    Just an amusing aside.

Add your comment.

DocumentId: 2759630, ~/Articles/ArticleHandler.aspx, 7/24/2014 1:02:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement