The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

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Thread: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

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    The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    The Wall Street Journal
    September 18, 2020

    Photograph Credit: General Motors Corporation

    Nearly a decade ago, Toyota Motor Corp. dethroned General Motors as the world’s largest car company, leaving some GM executives wringing their hands.

    Mary Barra wasn’t among them.

    When she took the CEO job in early 2014, she inherited a company that for decades was so large and unwieldy executives sometimes didn’t know whether parts of the business were making or losing money.

    On a visit to GM’s unprofitable operations in Thailand that year, she signaled a readiness to curb the company’s fixation on size. She criticized her Asia executive team’s five year-plan to introduce several new models, according to people who attended. GM soon announced plans to cut Thailand’s model lineup, rather than add to it.

    For years, the mantra in the capital-intensive car business has been that bigger is better. But in nearly seven years running GM, Ms. Barra has found success with an unlikely strategy: shrinking a company that for much of the 20th century was the nation’s biggest corporation by revenue and profit.

    Now, Ms. Barra is adamant that GM can still grow but in a different way than in the past: through new businesses built on electric and driverless cars. Those technologies cost billions a year to develop, and are likely a long way from paying off. GM could no longer afford to stay in markets where it doesn’t make money, Ms. Barra, 58, said in an interview.

    “We’ve had to make some tough decisions and move away from trying to be everything to everyone, everywhere,” she said.

    Under Ms. Barra, GM has exited Europe, Russia and India, places where most rivals compete. In February, the company disclosed plans to leave Thailand for good and pull out of Australia after 89 years.

    GM now makes cars or parts in just nine countries, down from 25 before Ms. Barra took over, and employs 164,000 workers today, 25% fewer than before. Her get-smaller approach is especially unusual because it came at a time of prosperity in the car business.

    The moves have, until recently, helped GM notch record operating income and profit margins. And the tidier global footprint aided the company through the early days of the Covid-19 pandemic, helping contain the fallout from global factory shutdowns as rival Ford Motor Co. struggled to contain overseas losses.

    The super-size argument goes like this: The bigger a car company’s sales globally, the greater its cost advantages, with the ability to command better terms from suppliers, whether on engine parts or ad campaigns.

    Mr. Sloan’s aggressive growth strategy spawned more than a dozen brands, hundreds of models and factories in dozens of countries. By the 1940s, almost one of every two cars sold in the U.S. was made by GM.

    Soon, GM had grown so dominant that it gained a reputation as a collection of warring fiefs. The heads of its various divisions operated like CEOs unto themselves, and squabbled over capital spending and marketing dollars, say former executives and historians.

    Mr. Akerson appointed Ms. Barra to lead GM’s huge product-development operation. She had begun her career as an 18-year-old intern inspecting fender panels at a Pontiac factory in suburban Detroit and spent much of her career in engineering roles inside GM’s factories. Still, Mr. Akerson saw the GM lifer as a change agent impatient with GM’s bureaucracy. As GM’s human-resources chief, she condensed a 10-page dress code down to two words: “Dress appropriately.”

    In 2011, in her first week as product chief, she had all the card-key security doors between her office and the engineering staff removed, viewing them as symbolic of how GM tended to work in silos.

    As talks advanced, the two executives made a one-day, round-trip visit to GM’s corporate offices in Germany to break the news that GM was selling its European business to a stunned Karl-Thomas Neumann, the division chief who had been trying to engineer a turnaround, people with knowledge of the visit said.

    “When you think about the resources that would have been needed to have a full lineup there, with no clear profitability in sight, we had to be real about that,” said GM President Mark Reuss, among Ms. Barra’s most trusted lieutenants.

    Late in the summer of 2018, a few hundred of GM’s top executives gathered at a historic brick building in Flint, Mich., GM’s first factory. Ms. Barra dispatched her then-finance chief, Dhivya Suryadevara, to warn that cost cuts would be needed, people who attended the meeting say.

    On Thanksgiving weekend that year, GM announced plans to let go more than 8,000 white-collar workers, the cuts hitting the engineering ranks hard. The company also outlined plans to close several North American factories and let go thousands more factory workers, which drew sharp criticism from President Trump.

    Ms. Barra in the interview said the changes were strategic and allowed GM to meld its electric-vehicle team with the broader engineering enterprise.

    In February, GM said it would end its Australian Holden brand, a once-dominant brand and staple of the country’s car-crazy culture, known for rugged pickup trucks and muscular sedans.

    Then, in early March, GM invited hundreds of dealers, analysts and journalists to its suburban Detroit engineering center. Ms. Barra made her biggest statement yet that GM was betting its future on electric cars.

    The CEO strolled the floor as visitors ogled a dozen future all-electric models, some several years from seeing the inside of showrooms—a rarity in an industry where future products are cloaked in secrecy. The models ranged from brawny pickup trucks to a Cadillac that one executive said would be priced above $200,000.

    GM said it would spend $20 billion developing electric and driverless cars through mid-decade. It is targeting sales of 1 million electric-car sales annually by then. In Ohio, near a factory it closed last year, construction began recently with partner LG Chem on a battery-cell plant bigger than 40 football fields.

    In June, Ms. Barra sat with top executives inside GM’s design dome, a circa-1950s auditorium where generations of leaders have reviewed big Cadillac sedans with gaudy tail fins and Corvette sports cars.

    This meeting was different: Ms. Barra and her team sat at a large table, wearing masks, to decide which future vehicles were on the chopping block. Details of each model, from minor face-lifts to major new entries, were spread across large digital wall charts, including launch dates and sales targets.

    Some were delayed, others scrapped altogether. By the end of the meeting, all of the electric-vehicle projects on the board emerged untouched, along with a nearly $3 billion renovation of a Detroit factory and nearby facility to build them, Ms. Barra said.

    “The situation allowed us to look at things with a very clear eye,” she said.








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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Mr. Akerson appointed Ms. Barra to lead GM’s huge product-development operation. She had begun her career as an 18-year-old intern inspecting fender panels at a Pontiac factory in suburban Detroit and spent much of her career in engineering roles inside GM’s factories. Still, Mr. Akerson saw the GM lifer as a change agent impatient with GM’s bureaucracy. As GM’s human-resources chief, she condensed a 10-page dress code down to two words: “Dress appropriately.”
    Just gonna say it straight out: CEO Barra is the best thing that has ever happened to the C-Suite at General Motors.









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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    This meeting was different: Ms. Barra and her team sat at a large table, wearing masks, to decide which future vehicles were on the chopping block. Details of each model, from minor face-lifts to major new entries, were spread across large digital wall charts, including launch dates and sales targets.

    Some were delayed, others scrapped altogether.
    Think there's any chance the Malibu made it through this meeting? This may be the source of recent rumors regarding the upcoming demise of the nameplate.








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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Quote Originally Posted by Perian View Post
    Think there's any chance the Malibu made it through this meeting? This may be the source of recent rumors regarding the upcoming demise of the nameplate.
    From the sound of the article I feel like it's a goner....

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Quote Originally Posted by Perian View Post
    Just gonna say it straight out: CEO Barra is the best thing that has ever happened to the C-Suite at General Motors.
    .
    I agree, she's made hard and unpopular choices, especially on GMI, but she is positioning the company for success. Success not just for the quarter or this year but for the future. She's cut a lot, but look at the quality of what has come out under her. New Escalade interior is world class (when's the last time we've been able to say "world class" and "Cadillac" in the same sentence. The C8 is amazing. Maybe on a lesser plane, but the CT4 and CT5 are both really solid and shine in some area's.

    My only criticism is that she needs to figure out what is wrong in marketing.

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Quote Originally Posted by BlackGTP View Post
    I agree, she's made hard and unpopular choices, especially on GMI, but she is positioning the company for success. Success not just for the quarter or this year but for the future. Though she's cut a lot, look at the quality of what has come out under her. New Escalade interior is world class (when's the last time we've been able to say "world class" and "Cadillac" in the same sentence. The C8 is amazing. Maybe on a lesser plane, but the CT4 and CT5 are both really solid and shine in some area's.

    My only criticism is that she needs to figure out what is wrong in marketing.
    John McRoy of Autoline Daily said the C8 is the finest car he has ever driven and will be likely buying one. From a person who drives new cars every day of the year, that is saying a lot.

    Now if only he got rid of Gary Vasilash, that dude cannot hide his biases on a show,..

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Time will tell. Start up companies are now showing up and looking just as promising. Work is cut out for GM. If current GM pricing is any sign, it's no wonder why that new Ultium halo Cadillac will be $200,000.

    She's not doing anything more groundbreaking that should've already been done when she first walked into her new office.
    She's changing with the market, she didn't predict the market change. Two different things.

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Quote Originally Posted by Perian View Post
    Just gonna say it straight out: CEO Barra is the best thing that has ever happened to the C-Suite at General Motors.


    I think she has the ability make the hard decisions that no other CEO has been able to do.
    Only time will tell if her decisions were the right ones.
    GM still moves slower than the competition.
    Product development is getting better, but the competition isn’t sitting on their laurels either.
    THeir high margin products are big trucks, not the luxury division, because the luxury division continues to shrink. THat in an of itself is not a winning long term strategy.

    The other problem is, as GM shrinks, it eliminates brands long time GM fans have loved., thereby alienating them, as they find other, often better, alternatives in the market.
    As a company, it maybe stronger. But is it really better?

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Young people don't even think of GM when buying a car. Shrinking the customer base will bite GM in the butt in the years to come. She never should have killed off the Cruze. Doesn't have the stomach for a fight

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    GM should be able to grow its margins given its gotten rid of its money losing product lines.

    Meanwhile, its entry into the technology sector will force it to learn to play with agility. That remains to be seen, but if they can learn, this is an under valued company.

    What I would like to see is how they monitize all the data they collect and how they play in the space, especially Onstar.

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Quote Originally Posted by Perian View Post
    Just gonna say it straight out: CEO Barra is the best thing that has ever happened to the C-Suite at General Motors.
    The fact global regions were allowed to lose money into perpetuity, is rather mind-blowing, but it's always sold as, what the future potential holds.

    So GM eliminated all of their money-losing BU's (business units) and replaced it with one, EV's? What's the difference, "this time" they are right?


    Quote Originally Posted by Perian View Post
    Think there's any chance the Malibu made it through this meeting? This may be the source of recent rumors regarding the upcoming demise of the nameplate.
    Seems like it would have been easier to make a profit on the Impala or LaCrosse, so I doubt the Malibu made it..............

    But this brings me back to my "grocery-store" example, if you walked into a grocery store where only the high-margin items remained, what would it look like? Who would shop there?


    Quote Originally Posted by BlackGTP View Post
    I agree, she's made hard and unpopular choices, especially on GMI, but she is positioning the company for success. Success not just for the quarter or this year but for the future. Though she's cut a lot, but look at the quality of what has come out under her. New Escalade interior is world class (when's the last time we've been able to say "world class" and "Cadillac" in the same sentence. The C8 is amazing. Maybe on a lesser plane, but the CT4 and CT5 are both really solid and shine in some area's.
    You say she's not playing for quarterly numbers, but why? If it doesn't make money today it's gone, that is definition of short-sighted.


    Quote Originally Posted by BlackGTP View Post
    My only criticism is that she needs to figure out what is wrong in marketing.
    Well, they finally have a CMO, but I'm not sure she knows what she is doing, I'll give her a temporary pass, with what's going on right now.


    Quote Originally Posted by mbukukanyau View Post
    GM should be able to grow its margins given its gotten rid of its money losing product lines.
    They are just spending whatever saved on EV's...............

    It's like the drunk that quit, smoking, drinking and paying for girls drinks at the bar, now he just sits home and smokes weed, at the end of the day, it's all up in smoke!


    Quote Originally Posted by mbukukanyau View Post
    Meanwhile, its entry into the technology sector will force it to learn to play with agility. That remains to be seen, but if they can learn, this is an under valued company.
    "If they can become something they currently are not, then they will be worth more!" - Enlightening..............


    Quote Originally Posted by mbukukanyau View Post
    What I would like to see is how they monetize all the data they collect and how they play in the space, especially Onstar.
    It's only been 30 some years............ hey-wait, I thought they were getting rid of all their money losing operations!?
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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Quote Originally Posted by mgescuro View Post
    GM still moves slower than the competition.
    Product development is getting better, but the competition isn’t sitting on their laurels either.
    THeir high margin products are big trucks, not the luxury division, because the luxury division continues to shrink. THat in an of itself is not a winning long term strategy.

    The other problem is, as GM shrinks, it eliminates brands long time GM fans have loved., thereby alienating them, as they find other, often better, alternatives in the market.
    As a company, it maybe stronger. But is it really better?
    GM has alienated our family. From piss poor warranty denials to products that just don't have that "value" they used to we've moved on.

    The only and I mean only new vehicle we're thinking about is a Silverado RST but that's a maybe 3 percent chance.
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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    Quote Originally Posted by Ed753 View Post
    The fact global regions were allowed to lose money into perpetuity, is rather mind-blowing, but it's always sold as, what the future potential holds.

    So GM eliminated all of their money-losing BU's (business units) and replaced it with one, EV's? What's the difference, "this time" they are right?




    Seems like it would have been easier to make a profit on the Impala or LaCrosse, so I doubt the Malibu made it..............

    But this brings me back to my "grocery-store" example, if you walked into a grocery store where only the high-margin items remained, what would it look like? Who would shop there?




    You say she's not playing for quarterly numbers, but why? If it doesn't make money today it's gone, that is definition of short-sighted.




    Well, they finally have a CMO, but I'm not sure she knows what she is doing, I'll give her a temporary pass, with what's going on right now.




    They are just spending whatever saved on EV's...............

    It's like the drunk that quit, smoking, drinking and paying for girls drinks at the bar, now he just sits home and smokes weed, at the end of the day, it's all up in smoke!




    "If they can become something they currently are not, then they will be worth more!" - Enlightening..............






    It's only been 30 some years............ hey-wait, I thought they were getting rid of all their money losing operations!?
    Just wait... until next year.... and... coming soon.

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    Re: The Incredible Shrinking GM: Mary Barra Bets That Smaller Is Better

    I will forever miss Holden


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