New General Motors CEO has wrong goal

By DAVID MOON, Moon Capital Management, LLC
August 16, 2009

I’m not one of those folks who easily or haphazardly calls for people to be fired, especially in a public forum. For example, I think Lane Kiffin deserves a hands-off, non-scrutinized honeymoon from the press and UT fans.

At least until the Florida or UCLA game.

New General Motors CEO Edward E. Whitacre, Jr. has already consumed his grace period. He should be fired.

When the former AT&T chairman was named to the post in June 2009, he joked that he didn’t know anything about cars or the car industry. I assumed he was kidding.

Based on his comments following the company’s first board meeting after emerging from bankruptcy in July, I believe him.

After two days of discussions with his 13-member board, Whitacre faced the press and presented his vision and goals for the company.

“We just want to be Number 1,” Whitacre said. “Number 1 is the position we should strive for…an American company that employs hundreds of thousands of people.”

Here’s a news flash for the CEO who doesn’t know anything about cars. GM is already the Number 1 car company in the U.S. It has been for 78 consecutive years. For most of those years, it was the largest car company in the world.

A lot of good that did GM.

As a U.S. taxpayer and now shareholder of General Motors, I don’t give a rat’s rear about the company’s market share. I sure don’t want to hear my CEO bragging about how many people the company employs. GM’s mission is not to support the U.S. employment figures – or, at least, it shouldn’t be.

I want GM to make money. I want to hear the CEO say something like “our goal is to return General Motors to profitability. We’re going to keep the balance sheet clean and we’re only going to spend money on things that generate value for our shareholders.”

Whitacre sounds more like he works for the Department of Labor than the Board of Directors. Practically, I suppose he works for President Obama or some 25-year-old undersecretary of Treasury.

Too many executives become focused on making their companies big, rather than valuable. Those are not necessarily the same thing. That’s a pretty good description of Edward Whitacre’s career.

To say that Whitacre ran AT&T is potentially misleading. Once he graduated from college, he actually spent his entire career at Southwestern Bell, working his way up the corporate ladder, until becoming president in 1988.

Over the next eight years, he went on a spending spree, acquiring Pacific Telesis (PacTel), SNET, Comcast Cellular, Ameritech, AT&T, and in 2006, BellSouth.

Six months after closing on the BellSouth purchase, Whitacre announced his retirement. His work was done. He is a deal maker and an empire builder.

I don’t care if GM is the largest or number three auto maker in the world. There’s nothing wrong with being the largest, but that goal obviously didn’t work too well in the last eight decades.

And it’s the wrong goal for now.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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