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Exit of GM's Fritz Henderson: Four messages

The unexpected departure of GM CEO Fritz Henderson signals the board's impatience with the pace of change – especially compared with Ford.

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In the process, director pay has also been rising, according to a survey released this week by BDO Seidman.

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"That is the result of more demand on board members to become very entrenched and very familiar with the details of the company," Mr. Ramirez says. In some instances lately, GM's board had been at odds with Henderson.

3. GM is navigating politics as well as business.

The Obama administration said Tuesday in a statement that "the Administration was not involved in the decision." That statement is consistent with what the White House has said from the get-go of its expanded GM rescue this spring – that it wants to leave operations to the company.

But the firm is largely owned by the US and Canadian governments, which put up the money that allowed the firm to restructure in bankruptcy, and hired Whitacre in June. And Obama's automotive task force has shared Whitacre's bias toward speedy changes. Whitacre said Tuesday that GM's goal is "a return to profitability and repaying the American and Canadian taxpayers as soon as possible."

4. GM’s road ahead is tough.

Even if GM succeeds in streamlining operations speedily (it is in the process of downshifting from eight brand names in its garage to four), and rebuilding trust with car buyers, the company won't be out of the woods. Time is of the essence, not just because Whitacre says so, but because the Asian invasion that began with Japan and South Korea is far from over. Competition from China and India will be ramping up in coming years.

Some analysts are optimistic that GM will turn the corner and remain a global industry leader. It has lots of talent and technological know-how. But even if GM gets back into fighting shape, it's "going to still face tremendous competitive pressure," says Don Grimes, a University of Michigan economist who follows the automobile industry.

See also:

With Fritz Henderson gone, should an outsider head GM?

Exiting bankruptcy, GM promises transformation

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