Getting out of Dodge: Talent fleeing the Big 3 to escape declining morale

[nadepalma]

Source: http://www.businessweek.com/magazine...age_autos+lede

APRIL 17, 2006

Getting Out Of Dodge-
Top talent is fleeing the Big Three to escape declining morale and shaky prospects

Generous Motors it isn't. Not anymore. Just ask the several hundred General Motors Corp. (GM ) managers who were fired on Mar. 28. They were each taken aside and given a severance package, told to surrender their keys and badges, and allowed a month to turn in their cars. And while the hundreds of layoffs didn't amount to the "Black Tuesday" many managers expected, GM is just getting started. It plans many more such job cuts this year.

No sir, life in Motown isn't much fun these days. The rank and file of the United Auto Workers may be trembling in their steel-toed boots as GM and Ford Motor Co. (F ) gear up to impose tough new contracts and layoffs. But in the design studios, engineering labs, and corporate offices, the companies' white-collar professionals are experiencing the same kind of anxiety, gloom, and resignation as their blue-collar brothers and sisters.

GM Chairman G. Richard Wagoner and Ford Chairman William Clay "Bill" Ford Jr. exhort underlings to get jazzed about turning their companies around. But the troops are finding it hard to stay pumped. Executives get excited about new car projects only to watch them die before they get out of the studio. Middle managers find themselves reporting to a revolving roster of bosses. Pay, benefits, and perks aren't what they were.

And because the companies are erasing layers of management, the opportunities for advancement are dwindling. Many industry professionals believe the tough medicine will help their companies, but the turmoil is enough to wear down even the most determined optimist. "It's bad news after bad news," says a GM engineer. "It's not going to end anytime soon."

RESUMES ARE FLYING

Is it any wonder that more and more Ford and GM executives are thinking about hitting the road? Headhunters report a steady flow of résumés from top Motown managers. "Not a week goes by without a Detroit executive telling me: 'If you see something outside the industry, I'd love to look at it,"' says Brad Marion, who runs the auto practice at executive search firm Korn/Ferry International (KFY ).

Detroit's carmakers -- even relatively healthy Chrysler Group (DCX ) -- are already losing key talent. Ford lost its hybrid chief, Mary Ann Wright, to auto parts maker Collins & Aikman Corp. (CKC ) Levi Strauss & Co. snagged GM's chief financial officer for North America, Mary Boland. Dell Inc. (DELL ) got the auto maker's top quality officer, Annette Clayton. And Chrysler marketing whiz Julie Roehm fled to Wal-Mart Stores Inc. (WMT ). "If people at that level are leaving," says a GM product developer, "how bad are things going to get?"

It's hard to tell how worried Detroit should be. Kathleen S. Barclay, GM's vice-president of human resources, says they have no trouble filling the jobs. She adds that those who stay are undeterred, even energized, by the challenges. The auto makers also say turnover isn't much higher than usual. Still, one Ford executive concedes "if this keeps happening, the talent pool will get pretty shallow."

How things have changed since Detroit's heyday. The Big Three had their pick of the brightest stars. Just five years ago GM and Ford were cherry-picking talent -- swiping hot stylists from European carmakers and marketing bigs from the likes of Procter & Gamble Co. (PG ) and General Electric Co. (GE ).

Back in the day, Detroit also could afford to pay for its employees' loyalty: fat bonuses, union-caliber bennies, and a virtual guarantee of lifetime employment. It wasn't uncommon for Detroit professionals to stick around for 40 years. Or to find their sons and daughters climbing the ranks right behind them. That's Mary Ann Wright's story. "Ford took care of our family," says Wright, whose father was a Ford engineer. "I thought, 'God, I'm supposed to work for Ford forever."'

Wright found huge satisfaction taking the Escape hybrid sport-utility vehicle from lab to showroom. And she was geared up to roll out a fleet of hybrids by 2010. But budget cuts and management churn meant "we weren't getting anything done." Wright also endured constant sniping that hybrids were a waste of time. In September a colleague sent an e-mail essentially asking: Why bother?

Soon after, Wright told Bill Ford she was quitting. He asked her to stay, but she was adamant. "When you're not having fun," Wright says, "it's time to go." She resurfaced in February as Collins & Aikman's vice-president of sales and program management. Her new employer is a fraction of Ford's size and struggling to emerge from bankruptcy. But there are compensations; including bonus, Wright, 43, could make more than $600,000, possibly double her take at Ford.

For executives overseeing the wholesale downsizing at GM, going to work can be especially draining. As the company's CFO for North America, Mary Boland spent her days scouring financial data, looking for ways to slash costs. That included figuring out which plants to close and dealing with the knowledge that these decisions had real-life consequences for families and communities. "It has been many years of downsizing at GM, but the last couple of years took its toll [on me] physically and mentally," Boland says. "I want to give 110%, but I felt I couldn't keep up the pace."

Yet she found it hard tearing herself away from an industry that had also employed her father for decades as a tool-and-die maker. Before becoming CFO in 2004, Boland, now 48, had worked at the company for a quarter-century. Finally, though, her family nudged her into taking the CFO job at Levi's.

"A PRETTY DEPRESSING PLACE"
When she finally took the plunge, Boland says, it was a big weight off her shoulders. Levi Strauss has completed its downsizing, having shifted its manufacturing offshore a few years ago. Now the company is looking for ways to grow rather than shrink.

Like Wright, Boland got a pretty decent package. She wouldn't give numbers, but says she got "a significant raise" to take the same job she had at GM. And every morning she wakes up in the tony San Francisco suburb of Tiburon, where she sips coffee and looks out over San Francisco Bay. Her morning commute takes her across the Golden Gate Bridge, a far cry from her old drive on Detroit's potholed John C. Lodge freeway. Says Boland: "Southeast Michigan is a pretty depressing place to be right now."

Detroit's rivals are only too aware of that, and they are taking advantage of the Motown malaise. The Japanese and Korean transplants are expanding, grabbing market share, and paying good salaries. So it's easy to see why Detroit professionals are going to work for the competition.

One is Joel T. Piaskowski. He's only 38, but he's the guy who designed the Buick Lucerne, one of GM's successful new models. Three years ago, Piaskowski quit GM and went to work for Hyundai Motor Co. in sunny Irvine, Calif. Today he's Hyundai's chief designer for North America, and other young Motown designers have followed in his wake.

GM wasn't in full downsizing mode when Piaskowski made the move. But he found it hard to make an impact. While GM was having trouble funding new car programs, Hyundai was adding models and even contemplating a luxury brand. Piaskowski saw an opportunity to put his stamp on an entire lineup.

Since he left GM, a dozen Big Three product developers have joined Piaskowski at Hyundai. And Cadillac designer Tom Kearns is now chief designer for North America at Hyundai sibling Kia. "I didn't recruit them," says Piaskowski. "They followed the buzz." And what about loyalty to his home town? Piaskowski's dad was a Chrysler designer, after all. "If it wasn't me," he says, "it would have been someone else." That's the last thing Detroit's auto makers need to hear.


By David Welch

[steverino]

Detroit's rivals are only too aware of that, and they are taking advantage of the Motown malaise. The Japanese and Korean transplants are expanding, grabbing market share, and paying good salaries. So it's easy to see why Detroit professionals are going to work for the competition.

One is Joel T. Piaskowski. He's only 38, but he's the guy who designed the Buick Lucerne, one of GM's successful new models. Three years ago, Piaskowski quit GM and went to work for Hyundai Motor Co. in sunny Irvine, Calif. Today he's Hyundai's chief designer for North America, and other young Motown designers have followed in his wake.

GM wasn't in full downsizing mode when Piaskowski made the move. But he found it hard to make an impact. While GM was having trouble funding new car programs, Hyundai was adding models and even contemplating a luxury brand. Piaskowski saw an opportunity to put his stamp on an entire lineup.

Since he left GM, a dozen Big Three product developers have joined Piaskowski at Hyundai. And Cadillac designer Tom Kearns is now chief designer for North America at Hyundai sibling Kia. "I didn't recruit them," says Piaskowski. "They followed the buzz." And what about loyalty to his home town? Piaskowski's dad was a Chrysler designer, after all. "If it wasn't me," he says, "it would have been someone else." That's the last thing Detroit's auto makers need to hear.

Gee, maybe it's not the funding of new products that's the problem. You can't get & keep people to design them.

[ponchoman49]

Now we see why it is important to support our own. Without that support the big 2 1/2 will wither and die with no more talent or funding.

[espo19047]

Just more negativity clogging up the ticker.
Why not start a doom and gloom section and put these stories there.

[SobeSVT]

Originally Posted by espo19047

Just more negativity clogging up the ticker.
Why not start a doom and gloom section and put these stories there.

Why? Would you really rather not read them?

[BurnOut]

While it's a rough thing to happen to an entire sector of the market, the automotive industry has been fortunate to escape this sort of thing until now... this same thing has occurred virtually every where else in the market.

The whole concept of, "My family has always worked for X, I'll work for X, and will be able to do so until I retire" is outdated... that's just the truth of it. Any more, it seems like the average person spends 3-5 years at a company before moving on in the name of career advancement, better pay, etc... it may be unfortunate, but that's the trend; and it was bound to catch up with the auto industry sooner or later.

[autofan]

From firsthand experience, I can tell you that for many designers and engineers who work at GM's Tech Center, the facility itself and the geographic location are as much of the problem as the corporate culture. Warren Michigan is about the dullest, most lifeless place on earth and GM's Tech Center, built in the 1950s, is a pit. There are some new buildings there but the Design Center is overcrowded, not having expanded in all of those years. There are other design facilities located at the opposite end of the Tech Center's square mile, but how inefficient not to have it all in one place? There is nothing exciting about being there because the buildings are all spread out and quite frankly, ugly and outdated. Look at DCX's gleaming headquarters and design centers in Auburn Hills or even Ford in Dearborn; they are both far more attractive and cohesive. Not to mention virtually any competitors in virtually any other part of the world. Designers especially need to be exposed to the latest fashions, technology and culture to be inspired and they want to work in a facility that reflects that. I think GM has GREATLY underestimated how undesirable it is to work in such an old, rundown, dull, lifeless place. I hope that some of the cash GM is getting from the sale of GMAC, etc., will go toward new state of the art design facilities or this flood of defectors will just continue.

[BurnOut]

autofan- I agree with you, but I think that the problem is bigger than that... Detroit (and a lot of the areas surrounding it) is just a pit. I don't mean to be insulting, but when a lot of the import brands have facilities in places that don't have a 5+ month cold season, etc..., it's a big quality-of-life draw. There's a REASON that the "rust belt" is shrinking... because the industries that have been traditionally located there are diminishing, and new industries haven't come in to replace them. Why?? Because the new industries are going to places that have better weather, better scenery, cleaner air, nicer roads, etc...

I understand HOW Detroit became Motor City, but not why it has remained so when other locations offer lower (corporate) taxes, better weather, and less polution.

Again, not trying to be insulting, but it's just my $.02 based on some input that I have gotten from friends who have left the Detroit area (and therefore the domestic manufacturers) for areas like southern California (not really my cup of tea, either, but certainly more attractive than Detroit). BTW- these folks are still in the automotive business... working for import manufacturers.

[momo67]

I agree with the points made about Warren. Believe me, I work in Warren and it ain't pretty. let's see, London, Paris, Milan, California, ... Warren?! Maybe for a bricklayer, but not a designer. I'm not saying GM should move their design center to some chi-chi part of the country, but if they're going to be in metro Detroit, they need to move to a more affluent/stylish/ sophisticated area like Birmingham or Royal Oak. Yes, there are nice areas near Detroit.

As for the Business Week article, I couldn't help noticing that 3 of the 4 people featured were women. I'm met Mary Ann Wright once- very smart, petite blonde. They few female execs at the Big 3 are very visible so they're the first ones to get poached by head hunters. Am I mixing metaphors? Anyway, 20% of Nissan execs have already bailed because they don't want to move from Cali to TN. It happens all over the place. They didn't mention Kathleen Ligocki who moved from Ford to become CEO of Tower a couple of years ago. They're bankrupt now, but that's another story. If you leave to double your salary, that's not bailing out it's just a smart career move.

[espo19047]

Originally Posted by SobeSVT

Why? Would you really rather not read them?

Its info I'd rather look for. I dont need to be bombarded with the same negative press I would see in the morning paper. I'm here for the "inside news." Besides people leave for a higher salary all of the time that is hardly bailing out...

[wolverine]

Originally Posted by autofan

I hope that some of the cash GM is getting from the sale of GMAC, etc., will go toward new state of the art design facilities or this flood of defectors will just continue.

It probably will, but the problem is that the new state of the art design facilities will be built overseas.

[autofan]

Originally Posted by momo67

I agree with the points made about Warren. Believe me, I work in Warren and it ain't pretty. let's see, London, Paris, Milan, California, ... Warren?! Maybe for a bricklayer, but not a designer.

Exactly. But I think GM could make do with being in southeast Michigan, even Warren. But they MUST make the place state of the art, architecturally stunning, beautifully landscaped, etc. Make the place so cool that people WANT to work there. The rest of the area could very well benefit as a result. Chrysler has done that in Auburn Hills and the surrounding area has flourished. Check out the link for some pics (I didn't post them here since they are copyrighted) and then look at the pic of GM's Tech Center.

http://www.greatlakesap.com/DaimlerChrysler/

[2648562]

Designers are practically a dime a dozen... but Tom Kearns was the lead designer of the current CTS (and God knows what else that's great at GM), which makes him the man--which makes his loss (or defection) kind of troubling.

[Whirling_Dervish]

Originally Posted by 2648562

Designers are practically a dime a dozen... but Tom Kearns was the lead designer of the current CTS (and God knows what else that's great at GM), which makes him the man--which makes his loss (or defection) kind of troubling.

So what happens with Art&Science now?

This topic reminds me of my recent thread about Honda's engineering environment. Giving how its done elsewhere, who would blame people for leaving?

[1999 White C5 Coupe]

A close friend, a Chevrolet dealer parts manager for 30+ years, has told me for years he could tell when there were "early signs" of labor trouble - because sheet metal parts would start arriving with damage on the inside of the carton.

I wonder how many vehicles will be built with substandard work and parts due to the current climate - which will affect the consumer and GM's reputation?