Is GM's flagship obsolete?
The new CEO is a straight-talking all-American automotive executive who follows college football and does tae kwon do with his daughters. But is this really what GM needs?
Rising to the top of a company with close to a quarter of a million employees which was synonymous for decades with America’s industrial power deserves a pat on the back. But sympathies are also in order. Mr Henderson was told of his elevation at the US Treasury department on March 27 by his former boss, Rick Wagoner.
Minutes earlier, Mr Wagoner had received his marching orders from Steve Rattner, a former private equity investor who has become the public face of the Obama administration’s taskforce charged with reshaping the Detroit motor industry.
"It was painful, that was the first emotion I had,” Mr Henderson recalls. "Rick’s a friend, a mentor, a guy I’ve worked for virtually my whole career. It was an emotional day, a tough day.”
Mr Henderson has an unenviable job. GM – burdened by high costs, heavy debt and falling sales – is being kept afloat by government aid. Under terms imposed by the taskforce, Mr Henderson has until June 1 to wring concessions from bondholders and the United Auto Workers union, or preside over a bankruptcy filing.
In an industry where some of the most effective CEOs are outsiders to the sector – Fiat’s Sergio Marchionne and Ford Motor’s Alan Mulally – Henderson is a GM lifer long seen as the heir apparent to Mr Wagoner. Like several of GM’s former chief executives, he has a finance background. "I’m cursed by being an accountant. Everybody has to start somewhere,” he says.
But is Mr Henderson what GM needs when its survival demands fresh thinking?
The view in Detroit – at least in GM’s Renaissance Centre headquarters – is that the job could not be done by someone new to the sprawling company, which has manufacturing operations on six continents and complex relationships with government, labour, dealers and its bankrupt former supplier Delphi, all of which Mr Henderson understands. Admirers point to his flawless memory and ability to compartmentalise problems.
Countering this benign view is Washington’s flat rejection of GM’s February restructuring plan, largely the work of its new CEO. German government officials have also been privately scathing about the blueprint for GM and Opel’s future, dismissed as short on detail.
Mr Henderson was born in 1958 and grew up in Michigan. His father sold Buicks for GM, and his brother also works for the company. Mr Henderson’s real name is Frederick, but he has been known as Fritz. His mother wanted to name him after her father, Frederick Arthur, but her husband refused to have a son named Fred. They settled on a popular family name as a nickname. "If anyone calls me Frederick or Fred, it’s an automatic they don’t know me”, Mr Henderson chortles. "It’s a wonderful screening device.”
Mr Henderson joined GM in 1984. He defends his record by pointing out that he has spent much of his career as a multifaceted Mr Fixit. In 1997, a few months after taking the reins of GM’s Brazilian subsidiary the economy and currency collapsed, putting the business in peril. Mr Henderson produced a plan to generate cash, shore up dealers and soothe stakeholders. "The message was, ‘you’ve got to be calm and decisive and execute to the plan’,” says Brent Dewar, who worked with Mr Henderson in Brazil and is now head of GM sales and marketing in Europe.
Mr Henderson says his job is to keep people focused and to "see around the corner in terms of what might come next, thinking through what the moves are and trying to make sure the organisation is capable of [them]”.
His supporters contend that his bluntness is what GM needs after Mr Wagoner’s collegial approach. "You’ve got to break eggs to make an omelette, and he’s not afraid to break eggs,” says Ed Williamson, a GM dealer in Florida who knows the new CEO. Another person who has worked with him closely adds: "Fritz is about results.”
As head of GM Europe from 2004 to 2006, he is remembered for axing 12,000 jobs – mostly in Germany – without first going through the normal niceties of union consultations. Politicians, unions and newspapers reacted furiously, but GM shed excess capacity more quickly than its German and French rivals.
He showed a similar bluntness last month at meetings with the German government in Berlin to discuss a request for $4.4 billion in bailout funds from the German and other governments for Opel, GM’s flagship European subsidiary. "He came in with a bully approach,” says a person close to Opel. "He said, ‘If you don’t help GM, Opel will fail, and it will be your fault.’ I think a smoother approach would have been smarter.”
Even so, those who know him give him credit for not letting his intellect or rapid rise go to his head. In person, he is genial and talks fast and usually walks around the office without his jacket on. "He’s low-maintenance, he flies under the radar,” says Kurt Gulbrand, assistant athletic director at the University of Michigan, whose athletic programme Mr Henderson and his wife Karen support financially.
To avoid moving his wife and their two daughters from the family home in Miami, Mr Henderson commuted halfway around the world every fortnight as head of GM’s Asian operations. Returning to Detroit as chief financial officer in early 2006, his week ended each Friday evening on Northwest Airlines’ last flight to Miami. Fortunately those commutes are over – his family has now moved to Detroit. Earlier this year, Mr Henderson followed one of his daughters in taking up tae kwon do. According to Mr Gulbrand, the GM chief sometimes gets to Saturday football games, wearing a University of Michigan sweatshirt and cap. He does not ask for special parking or seating.
Besides seeking union concessions, GM needs to cull dealers and parts suppliers. Government bail-outs have brought other interests to the table. "In terms of bringing competing interests together, this is something I think I do well,” Mr Henderson says. He cites his time in Europe and dealings with GM’s partners in China and South Korea. He also has won respect from unions in previous negotiations.
That success, however, means little if he cannot quickly persuade the government that he has a credible plan that merits a bail-out. If not, his legacy will be as the executive who led "The General” into bankruptcy.
Copyright The Financial Times Limited 2009