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Oracle of Delphi

GM's CEO lost credibility in Opel mess

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There were so many reasons for the departure of Fritz Henderson from the top spot at taxpayer-owned General Motors Co., it's tough to pick just one.

Could it be Chairman "Big Ed" Whitacre's "take charge" personality? Or the embarrassing end of the once-golden Saturn brand? Or the near end of Saab? Or that little matter of pulling off an initial public offering next year while still losing money?

And how about ex-government car czar Steven Rattner calling for "new blood"? No doubt, all those issues figured in, and there's little question that GM's current leaders want the old insiders out.

But from a business standpoint, the one factor that made Henderson look the worst was Opel.

Henderson got his job eight months ago because he knew GM and he knew cars. An outsider, the thinking went, lacked his perspective on what the company needed to keep as it slashed operations through a federally funded bankruptcy.

So it's difficult to fathom why Henderson would want to unload Opel, the German automaker with a history as long as its parent -- and a design record arguably surpassing it. In fact, Opel's Ruesselsheim R&D Center and small-car platform represent a big part of GM's future.

Most Americans who think of GM as the quintessential Detroit automaker probably haven't looked at the company's latest financial results. GM is seeing its best growth outside of North America, and its continued path out of the depths depends on expanding its international business.

In China, GM has a surprise hit in the Buick Regal. Under its skin, that car's an Opel.

From Russia to Latin America, consumers are embracing GM-badged vehicles with Opel roots. The U.S. is getting the Regal next year, and GM already sells the German-engineered Chevy Malibu and Buick LaCrosse in North America.

Considering that GM needs Opel more than Opel needs GM, maybe Henderson pushed to dump it for the wrong reasons. Was he so eager to prove that his new GM could make a quick decision, unlike the old GM, that he didn't look past the end of his nose?

To be fair to Henderson, Opel loses money, and cutting a money loser that can't be fixed quickly is taking a page straight from Reorganization 101.

In an interview last month, right after GM reversed course and decided to keep Opel, GM Vice Chairman Bob Lutz said the decision to part with it was a fine balance between near- and long-term considerations, no matter how short-sighted it looks in retrospect.

"If your entire focus was how do we cut our losses the fastest (or) how to get a perennially money-losing operation off our backs ... we definitely would have gone through with the deal," Lutz said. "Four or five months ago, we would have done it."

When GM's board reversed the decision last month, overruling Henderson, his credibility as a corporate leader went "dead," said Daniel Dooley, principal at MorrisAnderson & Associates, a Chicago-based financial workout firm with long experience in the automotive industry.

After campaigning for Opel's sale, then publicly flip-flopping, Henderson lost all authority. As Dooley put it, "Business guys don't do that."

The move touched off an immediate wave of anger in Europe, where heavier-than-hoped-for layoffs loom. Henderson, a veteran of GM's overseas operations, flew across the Atlantic to make peace.

"Fritz Henderson is over there," Lutz said at the time. "They're meeting with everybody."

To no avail. At least Henderson collected some frequent-flier miles on his way out.

In the end, it may be all for the best, Dooley said: "This is a cultural purge that needs to happen at GM."



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