The announcement that Mary Barra would become GM's next CEO was the biggest news of the week, but it was just one of many major developments at GM. Photo credit: General Motors Co.
It's rare for a company to make as much news in a week as General Motors (GM -0.17%) did this past week. (It's even rarer that most of the news is good for shareholders, or at least not bad.)
Any of the events of the last several days, which included some major shifts in strategy, a full-blown executive-suite overhaul, and the exit of the U.S. Treasury as a shareholder, would have been cause for considerable comment and debate among GM investors.
Taken together? This was one heck of a week. Let's run down the big developments in turn.
Monday: the end of "Government Motors"
Back in 2009, the U.S. Treasury Department received a huge stake in General Motors, partial repayment for the $49.5 billion in loans it gave GM to see the automaker through its bankruptcy and restructuring.
As we all know, the feds' stake in GM led to the derisive sobriquet "Government Motors" -- and a whole lot of partisan sniping aimed at GM in a persistent attempt to discredit the Obama administration's decision to save the automaker.
The sniping will surely persist, as the total value of GM's repayment came up about $10 billion short of the amount lent by taxpayers. But the nickname can be retired: the Treasury said on Monday that it had sold the last of its GM stock.
That meant that the old TARP restrictions on GM were lifted. And that led to a busy week.
Tuesday: a new CEO for GM -- and then some
The news that current CEO Dan Akerson would retire wasn't really shocking. Nor was the news that he would be replaced by GM's well-regarded global product chief, Mary Barra -- at least, not to those who had been watching GM closely in recent months. Akerson had repeatedly hinted that Barra was his chosen successor, and she was the most seasoned of a strong group of internal candidates.
The timing was a surprise, though. Akerson chose to retire ahead of schedule -- about a year earlier than most analysts had expected -- after his wife was diagnosed with "an advanced stage of cancer," GM said in a statement.
Some thought the timing of the announcement might have been GM's way of changing the subject after the government completed its stock sale. Apparently, the GM board approved the management shuffle in October, so the chosen date was no accident.
But it seems likely that Akerson simply wanted to stay on the job until Treasury's selling was completed, either out of a sense of patriotic duty or so he could hand his protege Barra a company that was free of those old restrictions.
Three other rising GM stars leveled up on Tuesday. GM's respected young (41) CFO, Dan Ammann, will become company president. He'll work closely with Barra, keeping his financial acumen in the executive suite while he gains operational experience that could put him in a prime position to be the next next CEO of GM, in a decade or so.
North America chief Mark Reuss will take over Barra's role, running GM's global product development efforts, as well as its vast purchasing operation. And Chevrolet chief Alan Batey will succeed Reuss as leader of GM's most important global region.
Ammann and Reuss were considered contenders for the CEO job, though it has been clear for several months that Barra had the inside track. Also considered: GM Vice Chairman Steve Girsky, who has led the Europe turnaround effort. He will remain on GM's board, but will leave his active role at the company in April.
Also on Tuesday: by the way, we're ending production in Australia
GM has had a manufacturing presence Down Under for decades, and its Holden brand has been as much a part of the Australian automotive landscape as Chevrolet is here in the U.S.
The Holden brand will continue on, but its Aussie factory won't. GM said in a statement Tuesday that "[a]s part of its ongoing actions to decisively address the performance of its global operations" (we'll revisit that phrase later on), it would close its Australian factory and cut back its engineering team in Australia, eliminating 2,900 jobs by the end of 2017.
GM's Holden factory in Australia is world-renowned for its rear-wheel-drive coupes and sedans. The new 2014 Chevrolet SS sedan, a Holden model reworked for the U.S. market, will give American drivers a taste of what Australian car fans have enjoyed for years. But with the factory set to close in 2017, the future of products like these is in doubt. Photo credit: General Motors Co.
The reasons? The same reasons that led Ford (F 0.66%) to announce a corresponding production halt earlier this year, and that have driven Toyota (TM -1.35%) -- Australia's only other domestic automaker -- to consider similar actions: rising labor costs, unfavorable exchange rates, and a flood of cheap imports from Asia.
GM and Toyota had previously sought help from the Australian government in return for commitments to stay, but that help wasn't forthcoming. Now, with only Toyota left (and considering a similar move), the future of car manufacturing in Australia is in doubt.
GM said it would take a charge of $400 million-$600 million in the fourth quarter as a result of the move, and more charges over the next few years as the job cuts play out.
Thursday: by the way, we dumped Ally Financial
GM said on Thursday that it had completed the sale of its 8.5% stake in Ally Financial, the bank once known as the "General Motors Acceptance Corporation," or GMAC.
For decades, GMAC was GM's in-house financing arm. GM sold off a majority stake in GMAC in 2006, as GM's finances were spiraling downward and GMAC's loan portfolio was getting troublesome.
Like GM, GMAC/Ally received a bailout under the TARP program, and the U.S. Treasury ended up with a large stake in the firm, with GM's holding reduced to a small percentage. GM has since created a new in-house financing arm, and the sale of its remaining stake in Ally closes another chapter from the "Government Motors" era.
(An amusing side note: Ford on Thursday put out a lengthy press release discussing the thousands of new manufacturing jobs it plans to create and its big expansion efforts around the world. I think the Blue Oval's PR folks were feeling ignored.)
Friday: by the way, we dumped Peugeot
Remember those "ongoing actions to decisively address the performance of its global operations"? Friday brought another one: GM said it had completed the sale of its 7% stake in beleaguered French automaker PSA Peugeot Citroen (PUGOY).
GM took that stake in Peugeot in early 2012, when a partnership with the French carmaker looked like a way to get economies of scale that would help GM's Opel subsidiary, which has lost billions in Europe's depressed new-vehicle market in recent years.
Since then, though, Opel has begun to recover while Peugeot has spiraled further. A last-ditch cash infusion from Peugeot's Chinese joint-venture partner and the French government is on the way.
That infusion might keep the company alive long enough to recover. It also provided GM with an opportunity to make an exit with a minimum of hard feelings.
The upshot: GM's overhaul just shifted into high gear
The story here is that GM, possibly prodded by its board, almost certainly prodded by its incoming CEO, has moved past the "Government Motors" era in a hurry, and has taken brisk action to cut out past strategies and prior decisions that aren't paying off.
The previous week's decision to give up on selling the Chevy brand in Europe was another one of those "ongoing actions to decisively address the performance of GM's global operations." There might be more next week, or next month, or next year, as Barra and her new team move to put their own stamp on GM's ongoing recovery.
And that's the best way to view this: As I've been saying for a few years now, GM continues to be a work in progress, all over the world. The company has come a long way since the dark days of 2009, but there's still far to go before it fully harnesses its huge global potential.
The good news for shareholders is that the effort to get there might just have shifted into high gear.
