General Motors have named Mary Barra, whose career began on the factory floor, to succeed Dan Akerson as chief executive officer, making her the first female CEO in the global automotive industry.
Akerson, CEO since 2010, turned 65 in October and his wife was recently diagnosed with an advanced stage of cancer, GM said in a statement. Dan Ammann, the chief financial officer, was named president of the company.
Akerson is retiring January 15, and he'll be replaced as chairman by Tim Solso, the former CEO and chairman of engine-maker Cummins Inc.
Barra, 51, who started at the Detroit company as an intern more than 30 years ago, has been in charge of product development and quality of all GM cars and trucks for 22 months, fostering collaboration and wringing costs out of the supply chain. The daughter of a Pontiac die maker takes the helm after the US government sold its stake in GM, giving her full freedom to take on domestic and Japanese manufacturers whose price competition threatens profit.
"Given her role in product development, it makes a lot of sense," David Whiston, an analyst with Morningstar Inc, said overnight (NZ time) in an interview.
"She can wear a lot of hats now and as the chief decision maker in the company, she can be well informed enough to make decisions on product development and engineering but also on the budget side of things, keeping that balance between what engineers want and what marketing people want."
As the first female CEO of a global automaker, Barra joins Ginni Rometty at IBM, Indra Nooyi at PepsiCo, Marissa Mayer at Yahoo, Hewlett-Packard's Meg Whitman and Ursula Burns of Xerox as women who have risen to run major US corporations.
She beat out Mark Reuss, 50, president of GM North America, Ammann, 41, and Vice Chairman Steve Girsky, 51, all of whom were considered potential CEOs.
Reuss replaces Barra as executive vice president for global product development, purchasing and supply chain. Girsky will become a senior adviser until leaving the automaker in April 2014. He will remain on the board.
Succession is "one of the most important risks at General Motors for an investor with a medium- to long-term horizon," Adam Jonas, an analyst with Morgan Stanley, said in an interview earlier this year. "Leadership in the auto industry — one leader can make tens of billions of difference. We've seen that."
Barra began with GM in 1980 as a student at General Motors Institute (since renamed Kettering University) in Flint, Michigan, and landed her first job as a plant engineer at Pontiac Motor Division, where her father worked for 39 years. There were few women and even fewer 18-year-olds.
"It was a rougher environment," she said in an interview in March. "It makes you harder."
Her big break came when GM put her in a program for high-potential workers and gave her a scholarship to get an MBA from the Stanford Graduate School of Business. She became an executive assistant for then-CEO Jack Smith, a perch that gave her a window into how the company worked. She recalls visiting senior leaders at GM to talk about diversity and women's issues while she was pregnant.
Barra has played a role in GM management for a generation. Her career has included time as vice president of global manufacturing engineering, head of GM's Detroit Hamtramck Assembly Plant and executive director of competitive operations engineering. Before becoming GM's first female product chief, she was the company's top human-resources executive.
Most recently she led the company's US$15 billion vehicle-development operations, a high-profile role that's given her sway over the look and feel of the full line of GM cars and trucks. She was promoted to that position in early 2011, less than six months after Akerson became CEO.
Some of the new vehicles to come out under her include the Chevrolet Impala, the first US sedan in at least 20 years chosen by Consumer Reports as as the best on the market, and the Cadillac CTS, picked as Motor Trend's car of the year.
Some of her other achievements aren't easy to see.
Akerson asked her to cut costs by aligning purchasing and product development, two powerful units that had long been at odds. In one early example, GM engineers and suppliers found savings by redesigning knee air bags so that they could be used in more vehicles without having to design different dashboards for each model.
"If it's customer facing, why does it have to be?" Barra said of the conversations she's had with engineers. "And then if it's not, why can't it be common for the globe? Some components and subsystems depend on the size of the vehicle, the performance you're looking for. But if you start with questioning 'why can't I have one solution?' then you get engineering thinking completely differently."
Akerson presaged Barra's appointment earlier this year when he predicted that a woman will eventually run one of the three largest US-based automakers.
"The Detroit Three are all run by non-car guys," Akerson said in September in Detroit. "Someday, there will be a Detroit Three that's run by a car gal."
He declined to identify any contenders at the time, saying only that "there are an unbelievable number of talented women in automotive, certainly at General Motors."
GM announced the changes a day after the US government disclosed the sale of the last of its share of GM. Bailouts from the George W. Bush and Barack Obama administrations gave US taxpayers a stake in the automaker while helping GM avoid liquidation. The company reorganised in a 2009 bankruptcy that helped it reduce debt, trim labour costs and sharpen its focus on only the strongest brands.
After a US$50 billion US government bailout in 2009, GM has made about US$26 billion in profit over the past 15 quarters, while making some of its best vehicles ever. The company is bringing out 18 new or refreshed cars and trucks this year and 14 next year. It's part of GM's effort to transform its lineup into one of the industry's newest from among the oldest.
Still, GM is nowhere near as profitable as global competitors such as Volkswagen and Toyota. Jonas, the analyst at Morgan Stanley, has said GM's operations are much more complex — and expensive — than those of its major rivals.
In her role as head of product development, Barra has sought to make GM more profitable by following the example of Billy Durant, who founded the company more than 105 years ago: Cut costs by building a wider variety of cars and trucks that use the same parts.
Trained as an engineer, Barra has worked to achieve that goal while avoiding the product disasters of the 1970s and '80s, when the company earned a reputation for slapping Chevy, Cadillac, and Oldsmobile badges on similar-looking cars to save money. There wasn't much difference between a Chevy Cavalier and a Cadillac Cimarron, which Time magazine declared one of the 50 worst cars of all time.
During her time at the company, Barra has worked in engineering and run an assembly plant, among other product-centric roles. When Akerson appointed her senior vice president of global product development in 2011, though, she had just spent a year and a half as GM's head of HR, which did not sit well with the car guys in the company and around Detroit.
"The fact that she's leaving Human Resources to take on The General's most important task certainly has the scent of Old GM's corporate politics on it," wrote the Truth About Cars, an industry blog.
Despite her engineering bona fides, Barra "had a difficult time getting credibility because she was in HR before," Rebecca Lindland, a former industry consultant, said in an interview earlier this year.
One of Barra's most high-profile moments came in 2009 after then-CEO Fritz Henderson put her in the HR role to help groom a new generation of leaders as the company worked to come out of bankruptcy. She allowed employees to wear jeans, a simple change that shook up the company's culture.
"Our dress code policy is 'dress appropriately,'" she announced in a memo quoted in the Detroit Free Press at the time.
Barra had been attacking GM's bureaucracy, slashing the number of required HR reports by 90 percent and shrinking the company's employee policy manual by 80 percent.
In her product-chief role, she has worked to reduce manufacturing complexity, or building more models using fewer "platforms" — industry-speak for the basic structure and parts that can be tweaked and repurposed for multiple vehicles.
The idea is to use as few platforms as possible, which speeds up development and lowers costs. VW is pushing to reduce its 15 platforms to five by 2019, with more than 55 per cent of its vehicles based on just one of those platforms. The German carmaker says this will cut its costs by 20 per cent.
In 2010, GM had 30 platforms. Barra said earlier this year that the company is on track to reduce that to fewer than 10 by 2020, which should help reduce development costs by US$1 billion a year. She added that GM can save an additional US$1 billion by avoiding the stop-and-start of vehicle-development programs that plagued the company during the lead-up to bankruptcy.
"Bringing her into this role, gives the company somebody who has had the exposure to the international product lineup," Maryann Keller, principal at auto industry consulting firm Maryann Keller & Associates in Stamford, Connecticutt, said Tuesday on Bloomberg TV.
Barra also cut layers of management. GM used to have three executives overseeing the development of every vehicle. Barra later cut that to one. GM had tried the one-vehicle-one-boss approach when it developed the Chevrolet Volt plug-in hybrid. The speed with which the Volt went from concept to production was impressive, though its sales weren't.
All those efforts are meant to widen profit margins, the ultimate yardstick of an automaker's success. Akerson said he wants to match the best margins in the industry.
As a high-ranking female executive, she has personally experienced the changes in Detroit's macho auto-industry culture.
"You started to see an enlightening," she said in another interview this year. "And with some people, they'd even say, 'My daughter just graduated from college and I want her to have these opportunities.' "
When she ended a meeting this year at 4pm to pick up her daughter, others thanked her for it.
"One of the guys said to me, 'I'm so glad you said that because I'm meeting my wife.' A lot of women's issues are men's issues as well."
GM isn't the same company it was when she joined. Four of GM's 14 board members are women, as are six of its 24 officers.
"I'm not blind to the fact that sometimes it's probably helped" being a woman in the car industry, Barra said. "Sometimes it's probably hurt."