Mary Barra Shows Willingness to Wield the Ax to Push GM Forward
(Bloomberg) -- Mary Barra has a vision for what the future of General Motors Co. will look like, and she’s not afraid to make tough decisions -- and wield the axe -- to get there.
Her move this week to close five plants and slash 14,000 jobs in North America -- where GM currently earns most of its profits -- is the most recent example in Barra’s four years as chief executive officer of her willingness to cut staff, vehicles and business areas that aren’t delivering decent returns.
She is taking much of the savings and plowing it into new technologies, such as electric and autonomous vehicles, betting GM’s future growth will come from selling rides in self-driving electric models, not building cars and trucks for emerging markets and finding new buyers in the U.S.
GM’s Cruise LLC unit is developing the company’s self-driving technology and plans to have a model ready to operate as a ride-hailing business starting late next year. GM bought the unit for $1.5 billion and is investing about $1 billion a year in it.
Barra’s gamble to cut the core business and bet on self-driving taxis “is a huge risk,” said Maryann Keller, a longtime industry analyst with a self-titled consulting firm in Stamford, Connecticut. “There is no proof that the technology will be ready in 24 months or that it will be a profitable business.”
Keller added that boosting electric-car output will be important for the Chinese market. Starting in January, all major manufacturers there must meet minimum requirements for producing new-energy vehicles.
Here are some of the changes Barra has made since becoming CEO in January 2014:
Her first big move was cutting back in Russia, idling a St. Petersburg plant in 2015 and halting sales of GM’s Opel brand and most Chevrolet models. The company still sells a few high-priced models that it exports into the country.
GM closed a plant in Indonesia in 2015 and fired 500 workers after reportedly losing about $200 million on the Chevrolet Spin.
Barra sold GM’s Opel business in Europe to PSA Group in 2017 for $2.2 billion and assumed more than that in pension liabilities to exit the market. The Detroit automaker acquired 80 percent of the German company in 1929 and purchased the remaining 20 percent in 1931.
Barra decided to scrap a $1 billion investment in India in 2017 and stop selling Chevrolet models there. The company’s market share was just 1 percent, and its cars made very little profit.
GM sold its South African commercial-vehicle manufacturing plant and other operations to Isuzu Motors in 2017 and phased out its Chevrolet brand there. GM began vehicle production in the country in 1926.
GM closed its Holden factory in South Australia in October 2017, ending more than a century of car manufacturing on the continent.
GM announced in February that it planned to close one plant and threatened to leave South Korea entirely if it didn’t get concessions from workers to stem losses. After several rounds of negotiations, the company said in April it had reached a deal to ward off a potential bankruptcy.
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