How GM, Ford Flipped Positions In Less Than 5 Months

May 15 2014, 5:24am CDT | by

Here’s why the auto industry never gets boring.

At the end of 2013, General Motors and Ford Motor seemed to be at opposite ends of the spectrum. Detroit-based GM was basking in the glow of a historic transition. Mary Barra had been named the first woman to head a U.S.-based automaker. The company was applauded.

Dearborn, Mich.-based Ford had questions whether its executive handover would go smoothly as Alan Mulally seemed to be going through his version of “The Long Goodbye.” An heir apparent, Chief Operating Officer Mark Fields, was in place. But there were questions just when and how Mulally would leave. Mulally was reported to be courted by Microsoft as a possible CEO and the Ford boss never quite put that to rest.

Now, GM has the uncertainty because of a continuing recall controversy while Ford’s executive lineup has been resolved. One got caught up in a crisis years in the making. One defied decades of its own history. Things change.

Barra, figuratively, didn’t have enough time to get the GM CEO seat warm when the automaker recalled ignition switches associated with accidents, injuries and deaths. Worse, the bad news came out in dribs and drabs. The problem had surfaced years earlier but GM didn’t do a formal recall until this year. The number of deaths was first put at six, then it went up to 13. The amount of first-quarter expenses for the recalls expanded.

The CEO testified before Congress and faced many press questions when she was made available to reporters. A bad sign:  Saturday Night Live did a parody of her congressional testimony. Management Rule No. 1: Having comics pretend to be be you on Saturday Night Live is almost never a good thing.

The latest news occurred May 14 when The Wall Street Journal reported GM’s board hired a law firm to review the flow of information to directors concerning product defects. The Journal also reported that the board meeting “at least weekly” with Barra to “monitor her overhaul of the company’s operations.” GM declined to comment to the Journal about its story.

The GM recall story is a long way from being resolved. In turn, that ensures GM’s uncertainty will continue — a much different story line for the company compared with the end of last year.

At Ford, executive transition was supposed to be ongoing story throughout 2014. But it didn’t work out that way.

First, Mulally finally, definitively said he wasn’t going to Microsoft in a January interview with The Associated Press.

On May 1, Ford announced Mulally’s retirement with a firm end date, July 1. Thus, the CEO is leaving before the end of 2014 (which was the previous plan). He won’t remain on the board as new boss Fields takes the helm. At other companies, CEOs have run into turbulence when their predecessors stayed on as directors.

Whatever happened behind the scenes, Ford did something very un-Ford like. Executive intrigue at Ford has filled books and countless news stories over the decades: Henry Ford II firing Lee Iacocca because he didn’t like him (1970s version); Donald Petersen alienating the Ford family, leading to him being forced out early (1980s and 1990s version); outgoing Alex Trotman calling Bill Ford Jr. “Prince William,” which wasn’t intended as a compliment (1990s); and Bill Ford deposing Jacques Nasser as CEO before hiring Mulally from Boeing to rescue the company (2000s).

In the end, whatever it took, Ford pulled off a smooth transfer. When a company goes against its historic grain in a positive way, goodwill usually increases.

But this isn’t the final word for either company. Automakers deal with issues that are often years in the making, which GM knows all too well with its faulty ignition switches. GM and Ford could well switch positions yet again. Who knows what the story lines will be five months from now?

 
 

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