General Motors Expected to Shift Top Jobs Tonight
CAPPING a desperate, two-year cost-cutting program, General Motors Corporation is expected to announce another sweeping realignment of its top management this week.
The changes, if approved at tonight's board of directors' meeting, should make it easier for GM president and chief executive officer John Smith to streamline the troubled North American Automotive Operations (NAO). Analysts say the shuffle could position GM, after losing billions of dollars since the late 1980s, to earn record profits. There ``could be a few surprises,'' one source says, but none like the move in 1992 to oust then-chairman Robert Stempel and his management team. And there aren't likely to be new cutbacks - good news for 320,000 beleaguered United States workers, who have born the brunt of GM's cost-cutting efforts.
The most visible change will be the expected promotion of Richard Wagoner to NAO president. He was chief financial officer and director of international purchasing operations. ``He's a team player'' who will be quarterback to coach Jack Smith, says David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan, Ann Arbor.
Mr. Smith ``has been frustrated because things just aren't happening fast enough,'' notes Detroit-based analyst Steve Morrison of the AutoPacific Group.
Not surprisingly, GM's turnaround has been one of the most costly in corporate history. In three years, GM has closed a score of plants and cut more than 50,000 jobs. Well-established power bases have been eliminated. Since resistance from management has been strong, GM has yet to achieve the goals Smith outlined. Mr. Wagoner engenders the loyalty needed to motivate GM's troops and get the corporate-restructuring program moving quickly.
Another winner will likely be Michael Losh. Vice president and group executive in charge of North American sales, service, and marketing operations, he is expected to become CFO.
Several executives are vying to replace Mr. Losh, among them Phil Guarascio, general manager of marketing and advertising. Earlier this year, Mr. Guarascio rejected a seven-figure offer to move to Turner Broadcasting as head of worldwide sales operations. At the time, associates said he did not move because he was promised a promotion at GM. The board may, however, turn to an outsider to run its marketing efforts.
Since the board revolt began in April 1992, almost all of the old guard has been swept aside. Last week, Robert O'Connell resigned, effective July 1. He had been demoted from CFO, but his brilliance with numbers won him a post as head of financial subsidiary General Motors Acceptance Corporation.
The GM board may also announce the retirement of William Hoglund, executive vice president of corporate affairs and staff support. After the 1992 crisis, he was elevated to the informal post of corporate senior statesman.
The latest changes underscore how much more GM has to achieve. Consider some findings from a new report by Detroit consultant James Harbour: Chrysler Corporation earned $858 for every vehicle it built in North America last year; Ford Motor Company profits ran $323 per vehicle; but GM lost $189. In 1991, though, GM lost $1,740 per vehicle. And overall, NAO losses were adding up at the rate of $750 million a month.
Mr. Harbour found that GM's factories were becoming more efficient in recent months and had the fastest productivity gains of any assembly lines in North America.
But GM has only begun, he says. It still needs to tackle design and engineering operations and inefficiencies built into its outdated management structure. That's the goal of the shuffle.
``GM hasn't addressed the cost of product development,'' the part of the business that has made Chrysler the most profitable carmaker in the world, Harbour says.