Fritz Henderson Ousted and It’s Cause of Opel

On Tuesday, Fritz Henderson suddenly “resigned” from his position as the CEO of General Motors.Henderson was ousted after a grueling two-day board meeting convened by Ed Whitacre.GM’s board (now comprised of government lackies and union members) has long hated the prospect of being led by yet another GM lifer. So from the get-go Fritz’s future at GM was tenuous.After the fall out, I now sort of feel sorry for Fritz Henderson simply because he was doomed to failure. Henderson became default CEO of GM after Rick Wagoner’s government led departure late last year.Under Henderson’s tenure GM has gone through bankruptcy, the shedding of four brands and the elimination of 21,000 factory jobs and 137,330 jobs at U.S. dealerships.GM’s market share has tumbled under Fritz as well. The automaker lost 2.4% of market share in the past nine months. Whitacre and the board have long been bullish on market share performance, wanting to maintain a 19.5-20% market share level for the foreseeable future.GM has also lost another $1.2 billion since exiting bankruptcy and plans to have negative cash flow for the rest of 2009. But those negative performance metrics aren’t the reason Henderson was canned.The decision to get rid of Fritz was one part corporate politics and two parts managerial failure.The cash burn and market share loses were expected to occur throughout 2009, what wasn’t planned was the embarrassment of failed divestments. The failed attempt to transfer ownership of Saturn Distribution Corporation to Penske Automotive forced GM to scuttled the brand and once again put the automaker in the light of the news media.Soon after, GM reversed a decision to sell off Opel – which angered 80 million odd Germans. Most recently, Saab’s expected selloff to Koenigsegg also failed. The collapse of the Koenigsegg deal has all but sealed Saab’s fait. Saab is already in bankruptcy and without financing it will stay there permanently.Opel is Why Henderson is LeavingThe Opel deal is really the meat and potatoes of this schism between Henderson and Whitacre. Henderson was on the pro side of shedding Opel, Whitacre was against. Fritz Henderson, who was in charge of rightsizing GM’s financing, saw Opel as a money losing unit that the automaker could do without.But the problem with the deal in Whitacre and the board’s mind was that Magna and Sberbank where only offering up a measly $650 million for a division that controls nearly 10% of all European car sales. Not only that, but ripping Opel out of GM jeopardized the long term viability of the company.GM would lose about 1.5 million of unit volume and tens of billions in revenue. Most importantly, it would lose the German expertise in chassis engineering – Opel is responsible for the compact and midsized platforms currently deployed on the Chevy Malibu and Chevy Cobalt.In the near future, Opel designed chassises are expected to make up the core of GM’s lineup, deployed on the following vehicles: Chevy Volt, Chevy Orlando, Chevy Cruze, Chevy Malibu, Chevy Impala, Cadillac XTS, Buick Regal, Buick Lacrosse and Buick’s small sedan.Not having Opel would have also reduced GM’s cash flow, which invariable inhibits the speed with which they can repay the US taxpayer. Also those Opel chassis comprise the core of GM’s fuel efficient vehicles. While the agreement between Magna and GM would have allowed product sharing for 5 years and would have banned Opel from America for longer – GM’s board couldn’t lose such a valuable entity.Once Whitacre and the board undermined Henderson’s decision on the Opel deal, Fritz’s credibility for leading GM was reduced to zero. Since early November, marching orders have essentially been channeled through the board with Henderson’s rubber stamp. As top managerial management repositioned (my guess) themselves away from Henderson it was all but certain he had to leave. That’s just the way corporate politics work.During the two-day marathon meeting with the board, I’m sure Henderson fought hard for his job. Apparently, by leaving so suddenly and without informing GM’s media department, the automaker suffered one last fumble under Henderson at the LA Auto Show. Henderson who was supposed to deliver a keynote address was awkwardly replaced by Bob Lutz.Now the search for a new CEO begins or so Whitacre says. GM won’t find another Alan Mulally (current CEO of Ford) because of the compensation restraints placed on the automaker by accepting government bailout money.My guess is Whitacre (who is now chairman of the board, CEO and president) will be the interim CEO until GM repays its government loans. The board loves Whitacre and so does Obama’s automotive task force.Whitacre successfully turned AT&T back into a corporate Goliath. Here’s hoping he can do the same thing with GM.

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