Former White House car czar Steve Rattner joined Bloomberg Television’s Margaret Brennan via phone this morning, to talk about Ed Whitacre’s stepping down as GM CEO.
Here are the key highlights from the interview, courtesy of Bloomberg Television:
On the management changes at GM:
“Ed Whitacre was very clear both when we asked him to become chairman and when he agreed to become CEO that he was not looking for another long-term career and he would do it as long as necessary until a suitable successor could be found and until the company was back to good profitability. Both of those objectives having been reached, it is a fine time for Dan Akerson to come in. he will have a long run as CEO and is a terrific guy.”
Ratner on his feelings about GM leadership:
“I personally have an enormous amount of confidence in both Ed Whitacre and in Dan Akerson. I was central to the decision to ask Ed to be chairman and put Dan on the board. I’ve known Dan for a long time and have a lot of respect for him. In particular because the economic environment is a challenge, it is important to have really strong leadership at the helm… It was a very broken culture there before and Ed has made enormous strides in fixing it. I know Dan very well and I am confident he will move in the right direction.”
On the biggest challenge for Akerson:
“Europe is a challenge certainly but the news today about Europe was a bit better than we might have guessed. Instead of a $500 million loss in the first quarter, it is down to a
$200 million loss and probably even less when you adjust for some restructuring costs…They need to continue to execute. I don’t mean to sound simplistic but they have been growing their market share in North America for their core brands. They certainly returned to profitability, as you said. Their Chinese business is doing great. They just need to keep moving. I would not call it a disappointment but if you look at them compared to Ford, you can see that Ford remains more profitable even though it is a somewhat smaller company and it didn’t have the benefits of bankruptcy in terms of cost reduction. GM needs to continue to move that needle in an upward sloping direction. I think they can do it.”
On whether GM is in the right position to return to the public markets:
“It depends on at least one factor beyond our control which is the state of the markets. We have had a rough couple of days. This would not be the day you’d want to price an IPO. Certainly, we have to have some stability and upward momentum in the market for this to go well. I would also concede that filing an IPO is perhaps a tad earlier than people would like in an ideal world, given the company has only had two profitable quarters. But Ed Whitacre has been very clear on the importance of getting government ownership down, to hopefully zero, before too long and the White House has been equally clear about its desire to get out of the car business. There is a lot of impetus behind this IPO.”
On when it is the right time for GM to go public
“These kinds of decisions are a series of choices. By definition, the longer any company waits to go public, the more valuable the equity is and the easier it is to sell that to the public. There are very good reasons why GM should go public sooner. Ed Whitacre believes strongly that government ownership is a stigma and the White House believes strongly it should be out of the car business. Given the extraordinary turnaround, frankly faster and better than what we had imagined, I think the IPO could be very successful if the overall market cooperates.”
On whether there was political pressure in the change of leadership:
“No, the White House… we established a set of rules that once these companies returned to private hands in terms of having outside boards of directors, that we would no longer be involved in these kind of decisions. My clear understanding is that the White House was not involved in the decision to have Ed Whitacre replace Fritz Anderson and I would be stunned if they were involved in this decision. There were very, very clear firm lines established.”
“Every piece that the government sells brings the company further away from being Government Motors. They paid back all loans and got some attention for that…In order to get the government completely out, you have to start getting out. With a stake this size, it is unlikely that it could ever be sold in one fell swoop. We set up a series of guidelines and perimeters for the government getting out, we said within eight years. Given how well the company is doing, I think it will be much sooner than that. The government, I predict, will sell as fast as it responsibly can. I commend them for that decision.”
On the management team in place at GM:
“Ed Whitacre put in place a very strong team of people around him with very, very complementary skills…. They were a very strong group. I am sure that Dan will make his own decisions about personnel. I would be surprised if there were major changes. Dan has been on the board since the company was privatized. He was therefore I’m sure very involved in all of those personnel decisions and I suspect he is very comfortable with them but time will tell what he decides to do. Some people have questions about why the board didn’t go outside and do more of a search and so forth. But having Dan Akerson on hand, who’s to been involved in this for over one year, and is an incredibly strong and tough manager which is exactly what this company needs, is a great decision.”
