The dose of Fresh Energy and The Ability of their CEOs to think differently has worked well So Far for The “Detroit Three’. But can these so called ‘Ousiders’ continue to spell Magic for them in The Long run as well?
It has been more than 20 months since the Detroit majors General Motors (GM) and Chrysler took the Chapter 11 route to overcome their woes that stemmed from the devastating recession that had hit the world in 2008 unlike Ford that chose to chart its own comeback. Today, while Ford has surprised many by coming out of the woods at an astounding pace, GM is taking its share of time via planned restructuring, and is doing well. No doubt, Chrysler is still striving hard to regain its past stature, but it has certainly managed to come a long way since then.
Though, some of the growth, especially in Ford’s case, came at the expense of Toyota, which stumbled throughout much of the last year as it struggled to deal with numerous safety recalls that damaged its reputation and led to record fines by federal officials, overall it was the cost-cutting measures taken up by the ‘Detroit Three’ that worked off well for them in 2010. While Ford and Chrysler have reported their largest growth rates in 2010 (a 17% increase in unit sales each), GM’s unit sales increased by 7%. What’s more? Two of the three companies even reported a profitable 2010, their first profitable year since 2005, with combined unit sales of cars and light trucks by all three topping 5.6 million (a 19% increase from 2009, the worst year for these auto giants since 1982).
Sounds astounding at a time when Detroit’s three top bosses – Alan Mulally, CEO, Ford Motor Co., Dan Akerson, CEO, GM and Sergio Marchionne, CEO, Chrysler are not the real ‘car-guys’ who have ruled the Detroit in the past. Coming from totally different backgrounds (except Sergio Marchionne who has the experience of running FIAT before he got to Chrysler) they are not the veterans who live and breathe automotive engineering & design. While GM’s top boss is a former naval officer and private equity boss, Mulally joined Ford as chief executive only in 2006 after spending 37 long years at Boeing. Even the Canadian-Italian chief executive of Chrysler was trained in accounting and rose through a series of jobs outside carmaking, before being recruited by the Agnelli family to run FIAT in 2004. “There are several advantages of having people with such diverse experience at the helm of affairs. Not only do they bring experience from other industries, having no past record with auto companies also allows them to try new things to drive growth,” Laurie A. Harbour, President, Harbour Results, a US based operational and financial advisory firm tells B&E.
While with Akerson at the top GM is now following the consumer focused approach, Ford under the leadership of Mulally has enhanced its focus on new markets with its “One Ford” strategy. As far as Chrysler is concerned, Marchionne’s magic may take more time than initially expected to reflect in the balance sheet of the company, but he has ensured that Chrysler sustains and makes a quick comeback.
Though, some of the growth, especially in Ford’s case, came at the expense of Toyota, which stumbled throughout much of the last year as it struggled to deal with numerous safety recalls that damaged its reputation and led to record fines by federal officials, overall it was the cost-cutting measures taken up by the ‘Detroit Three’ that worked off well for them in 2010. While Ford and Chrysler have reported their largest growth rates in 2010 (a 17% increase in unit sales each), GM’s unit sales increased by 7%. What’s more? Two of the three companies even reported a profitable 2010, their first profitable year since 2005, with combined unit sales of cars and light trucks by all three topping 5.6 million (a 19% increase from 2009, the worst year for these auto giants since 1982).
Sounds astounding at a time when Detroit’s three top bosses – Alan Mulally, CEO, Ford Motor Co., Dan Akerson, CEO, GM and Sergio Marchionne, CEO, Chrysler are not the real ‘car-guys’ who have ruled the Detroit in the past. Coming from totally different backgrounds (except Sergio Marchionne who has the experience of running FIAT before he got to Chrysler) they are not the veterans who live and breathe automotive engineering & design. While GM’s top boss is a former naval officer and private equity boss, Mulally joined Ford as chief executive only in 2006 after spending 37 long years at Boeing. Even the Canadian-Italian chief executive of Chrysler was trained in accounting and rose through a series of jobs outside carmaking, before being recruited by the Agnelli family to run FIAT in 2004. “There are several advantages of having people with such diverse experience at the helm of affairs. Not only do they bring experience from other industries, having no past record with auto companies also allows them to try new things to drive growth,” Laurie A. Harbour, President, Harbour Results, a US based operational and financial advisory firm tells B&E.
While with Akerson at the top GM is now following the consumer focused approach, Ford under the leadership of Mulally has enhanced its focus on new markets with its “One Ford” strategy. As far as Chrysler is concerned, Marchionne’s magic may take more time than initially expected to reflect in the balance sheet of the company, but he has ensured that Chrysler sustains and makes a quick comeback.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
