Who is running General Motors (GM)? Is it Frederick (Fritz) A. Henderson, the GM veteran that the Obama Administration chose to replace Richard Wagoner Jr.? Or is it Team Obama?
This is a question worth pondering. Yes, GM needs a major shove to right itself, but too much meddling by the federal government could complicate a turnaround. "Henderson is going to have to stand up to the Treasury Dept.," says Sydney Finkelstein, a management professor at the Tuck School of Business at Dartmouth. "It would be a mistake if he thinks he can't make a decision without preapproval."
To a certain degree, Henderson has little choice. By the end of May, and with the threat of bankruptcy hanging over him, he must execute a plan shaped by the Treasury Dept. that is aimed at making GM viable. But Henderson, who is known for telling it the way he sees it, may feel compelled to push back if Obama's team asks him to implement strategies that are more aligned with long-term Washington policy goals than with selling cars. He also will need to educate a task force filled largely with auto industry neophytes. Henderson says his interaction with the task force so far has mostly involved "getting them up to speed" on a complex industry. "They were drinking from a fire hose," he adds.
In the coming weeks, Henderson, 50, will have to win his minders' trust. After all, he has worked at GM for 25 years and is a creature of the automaker's insular culture. As chief operating officer and Wagoner's heir apparent, Henderson executed several strategies that failed to turn around GM. His fingerprints are all over the restructuring plans the government deemed insufficient. And like Wagoner, Henderson wouldn't countenance killing any of GM's brands until the government suggested doing so.A Hard Bargain
Henderson is already saying the "right" things, including an assertion that bankruptcy, once unthinkable inside GM, is now "more probable." But if he is to have real influence—not to mention keep the job he was groomed for—he will have to prove that he can wrest sufficiently deep concessions from the union and GM's bondholders. Henderson brings useful experience to the challenge. He helped negotiate a 2007 labor agreement that slashed wages for new hires and set up a health-care trust that would have put GM on a much sounder footing had the economy not imploded.
All the same, Henderson will be hard pressed to keep GM out of bankruptcy. First, he has to revise GM's sales projections (the feds thought they were too high) and then use a reduced, government-approved sales forecast to figure out how much debt GM can carry in the future. Since Treasury hasn't given GM a debt-reduction target, Henderson told BusinessWeek, he plans to keep negotiating it down until Obama's task force thinks he has cleaned the balance sheet.