Leadership in the Automotive Industry: A Conversation with Dean Emeritus Glen Urban
published: Dec. 9, 2013, recorded: October 2006, views: 1860
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Rick Wagoner’s outlook is optimistic, in spite of the bumpy road General Motors has traveled recently. With MIT Sloan Dean Emeritus Glen Urban, he discusses GM’s aggressive recovery plans in response to $10 billion in losses last year, and his determination to regain the public’s trust and confidence in GM cars.
Wagoner sees new global competition creating both challenges and opportunities. India and China have opened up markets “that this industry hasn’t seen ... since the 1930s, ‘40s and ‘50s.” But, continues Wagoner, “we have more than 400 thousand retirees,” all of whom are dependent on GM for benefits. “We cover about one million people in the U.S. -- 1% of people over 60 years old receive their health care from GM.” Given that people are living longer and costs of medical procedures and drugs have spiraled upward in the past few decades, GM’s billions in sales are eaten up by these “legacy” costs. GM also has more than 100 thousand hourly workers who get paid whether they’re building cars or not, unlike foreign auto manufacturers.
But Wagoner, even with Toyota breathing down GM’s back for the spot as number one auto maker, doesn’t seem to sweat it. After cutting thousands of jobs and negotiating with unions, GM will look “to grow in the right places.” For instance, the company has a unique partnership with a Shanghai auto corporation, and will soon be supplying 12% of China’s cars. In an aside, Wagoner mentions that the Chinese “insisted on the Buick brand” -- the last emperor drove a Buick, so it’s got a “good image” over there. This is in sharp contrast to American consumers for whom the Buick name has “become polluted.”
Wagoner’s a bit of a skeptic around current hybrid technology, having been stung when GM rolled out a model electric car in the 1990s that everyone admired but no one purchased. He’s throwing his weight behind improved fuel cells, which will be essential to a low carbon emissions car with a single propulsion system that can also compete with the internal combustion engine.
Wagoner looks around and sees “other industries that haven’t made it: steel, rubber, the airlines. They’ve dumped their historical obligations (to workers) and just said, sorry.” But he feels responsibility both to employees past and present and to the “serious, important work we’re doing.” If GM can cut back on liabilities, he says, and leverage its great assets, “we’ll come out the other side very well positioned.”
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