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 This year is shaping up as a test of leadership at GM, Ford and
Chrysler, five years after the U.S. auto industry's searing
restructuring. While the risks ahead are no longer life-threatening,
how the companies respond will set their direction for years to come
and signal whether the lessons of the financial crisis were embedded
deeply enough.
"It's a turn of an era," Xavier Mosquet, senior partner and managing
director at Boston Consulting Group, said in an interview. "Frankly,
it is a totally different, new type of competitive situation that is
emerging."
Analysts see 2014 as a transition year, with slowing growth in the
U.S. auto market and companies facing a renewed mandate to gain
ground overseas. The 2015 contract talks with the United Auto
Workers union also loom in the background.
In the weeks leading up to this year's Detroit auto show, GM, Ford
and Chrysler have all taken steps that highlight the leaders who
will help them face what Mosquet described as the most competitive
North American market in decades.
GM vaulted its product development chief, Mary Barra, to the top
spot last month. Ford CEO Alan Mulally ended months of speculation
by saying last week that he would not leave to run Microsoft Corp <MSFT.O>
. And on New Year's Day, Sergio Marchionne struck a long-sought deal
allowing him to merge Chrysler and Italy's Fiat, the two automakers
he has led since 2009.
These moves signal that GM, Ford and Chrysler will maintain the
strategies that have allowed them to emerge from the crisis with
stronger balance sheets and more attractive vehicles.
But their leaders will need to be more flexible. Analysts note that
the skills needed in a turnaround differ from those needed during
growth years, when a wrong bet can undercut a company's future.
"In fixing a company, the issues you have to deal with are very
apparent because they are the issues that make or break a business,"
independent auto consultant Maryann Keller said.
"When you're running a company, you've got options," she added.
"You're not fixing anything, it's not financially broken anymore,
but dealing with a very competitive market place is actually in some
respects harder."
ROLL CALL
Each U.S. automaker enters the year at a different stage of its
transformation, with Ford in first place, followed by GM and then
Chrysler, according to many analysts and industry observers. The
positions reflect the speed at which each company has been able to
restructure.
Mulally was hired in 2006 to lead Ford's turnaround by knitting
together its global business units to achieve economies of scale.
His push helped the No. 2 U.S. automaker avoid the federal bailouts
required by GM and Chrysler in 2009.
This year will be the busiest year of vehicle launches in Ford's
111-year history and marks the toughest test yet of Mulally's "One
Ford" strategy. It will also test the abilities of his presumed
successor, Chief Operating Officer Mark Fields, who has spent the
last year focused on improving quality.
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But the cost of Ford's new launches — including the highly
anticipated F-150 pickup truck that is expected to be unveiled at
the Detroit auto show on Monday — will dent Ford's profit this year.
Ford must also grow its operations outside North America and
convince investors of Fields' capabilities.
"In the case of Ford, the strategy has been defined and we're very
clearly in the execution phases of the strategy that oftentimes is
harder than crafting the strategy itself," Guggenheim Securities
analyst Matthew Stover said. "In the case of GM, I think they're
still crafting their strategy."
Under outgoing GM CEO Dan Akerson, Barra led an effort to simplify
and unify the No. 1 U.S. automaker's engineering and design
processes around the world to free up cash that GM can spend on
in-car technology and other new features.
The selection of Barra reflects Akerson's desire to shake up a
culture he said was bedeviled by "decades of poor decisions and
indecisions and no decisions.
Barra will have to make this change, while continuing her work to
shrink the number of vehicle platforms at GM, reverse losses in
Europe and cement the company's position in China, the world's
largest auto market. Other challenges include expanding into other
critical emerging markets elsewhere in Asia.
Meanwhile, Marchionne's slow-motion merger of Italy's Fiat <FIA.MI>
and Chrysler is yet another attempt at building global scale. His
agreement with Chrysler's minority shareholder allows Fiat to gain
full control of the No. 3 U.S. automaker and avoid an initial public
offering he publicly denounced.
Now he will focus on revamping Fiat's Alfa Romeo brand, a marque the
Italian automaker has attempted to revive several times with little
success.
However, what all three U.S. automakers have in common are the labor
talks each will face in 2015 with the United Auto Workers union,
which represents many of the companies' hourly U.S. workers.
Union leaders have already signaled a desire to claw back some of
the cost-cutting changes to wages and benefits they surrendered over
the last decade. High on their list is the potential elimination of
the two-tier wage scale that has allowed the U.S. automakers to
bring costs in line with rivals like Japan's Toyota Motor Corp.
<7203.
(Reporting by Deepa Seetharaman; editing
by Dan Grebler)
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