GM CEO Ed Whitacre Steps Down After $1.3 Billion Profit
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by Jeff Gilbert, WWJ AutoBeat Reporter
General Motors posting it’s best profit in six years, and getting its fourth CEO in two years.
“Effective September 1st, I will step down as CEO of GM,” the announcement from Chairman and CEO Ed Whitacre, at the end of a conference call to discuss the company’s $1.3 billion dollar second quarter earnings.
Whitacre will be replaced by Dan Akerson, who’s currently a General Motors board member. Akerson, who’s 61, is currently a managing director with the Carlyle Group, a public equity firm. He had served as chairman and CEO of Nextel.
Akerson has been on the General Motors board of directors since the company emerged from bankruptcy last summer.
“I think it would be premature for me to discuss my plans or vision for the future of G.M.,” said Akerson. “That being said, it’s probably fair to say that we–Ed and I– share a common vision of the goals and objectives of the company.”
Analysts say that Akerson and Whitacre share one common trait, no auto industry experience.
“That may not matter for right now,” says WWJ’s John McElroy. “GM’s gotta do its IPO. It’s gotta get the government to sell all it’s stock. It’s got to incorporate this credit firm they just bought. Those are all the kinds of things that somebody with a good background in finance and banking ought to be able to do. “
Bob Lutz, a former vice chairman of GM who retired earlier this year, told the Associate Press in an e-mail that Akerson doesn’t need auto experience to run GM because it has a solid management team of industry experts. But he does need to listen to that team, Lutz said.
“He’s very strong, very opinionated, not always right, and needs to work on listening skills,” Lutz said. “If he can bring himself to trust his now-outstanding senior executive group and lead rather than direct, I think he’ll do an outstanding job.”
Ed Whitacre, Lutz said, had no industry experience but focused the company on designing and building world-class cars and trucks.
Whitacre was called out of retirement to become GM’s chairman last summer. He took over as CEO, when Fritz Henderson was ousted by the board of directors in November.
“It was my public duty to help return this company to greatness, and I didn’t want to stay a day beyond that, really,” said Whitacre.
Whitacre will remain in the chairman role at General Motors until the end of the year, when Akerson is also expected to take that job.
The announcement of his departure comes on the day that G.M. announced it’s second consecutive quarterly profit, as it works to emerge from government ownership. But, the company not yet ready to confirm reports that it’s ready to file the paperwork for an initial public offering of stock.
The $1.3 billion dollar second quarter profit follows an $865 million profit in the first quarter.
“We’ve obviously taken costs out of the system,” said GM Chief Financial Officer Chris Liddell. “We’ve restructured our balance sheet. We’re doing a number of different thing. There’s no one single thing that’s allowed us to post these results.”
Liddell telling WWJ Autobeat Reporter Jeff Gilbert that the company is also seeing much better results in the marketplace.
Liddell refusing to talk about a possible initial public offering in either his WWJ interview or General Motors analyst/media conference call later in the morning. However, analysts say GM has to show that it can keep the profits coming. Liddell says they should be able to do that.
“The chances of sustained profitability given this or slightly better economic conditions is reasonably good,” he said.
Despite concerns that the economy may be slowing, G.M. is not changing it’s forecasts of a slow recovery.
GM employees telling WWJ Reporter Pat Sweeting that they are getting used to all of the changes at the company.
“I think they’re headed in the right direction right now,” said worker Sam Meehan. “Obviously, the economy is still struggling along. It’s going to be more so a function of what the economy is, than what CEO they bring in.”
General Motors bankruptcy helped the company cleanse billions of dollars in debt. In recent years the company has closed several factories and cut thousands of jobs.
“We’ve managed to lower our break even point to essentially the bottom of the market,” said Liddell. “So even if we saw a dip down from current levels, we wouldn’t necessarily be as profitable as we’ve been in the last couple of quarters, but we’d be better to withstand it much better than we could have a couple of years ago.”
Liddell was seen by many to be in line to become GM CEO. Incoming CEO Dan Akerson indicating that he planned to leave the current General Motors management team in place.
“I continue to be impressed with the strenght of our company, the quality of our products and the dedication of our employees, dealers and other stakeholders.”
© MMX WWJ Radio, All Rights Reserved. The Associated Press contributed to his report.