The directors of General Motors Co. know exactly the kind of leader that they're looking for to replace departed chief executive officer Fritz Henderson.
The problem is, he works across town at Ford Motor Co.
That would be Alan Mulally, who parachuted into the CEO office at Ford in 2006, leaving his job as executive vice-president at Boeing Co.
By the third quarter of this year, he had piloted Ford back into profitability after a big loss in 2006.
Now that GM's directors have shown the door to Mr. Henderson – an insider and lifetime GM employee – their best hope is to find a Mulally clone to take on the Herculean task of turning GM around so it can climb out of an even deeper pool of red ink than Ford spilled.
Although Mr. Henderson made a start on such a massive turnaround by shedding four of GM's eight North American divisions and cleaning up a horrific balance sheet through a Chapter 11 bankruptcy process, it will take someone from outside the company to finish the job, auto analysts said Wednesday.
“What they need is an outsider with large-scale industrial experience – better if he or she has a turnaround track record,” said long-time industry analyst John Casesa, now managing partner of consulting firm Casesa Shapiro Group LLC.
Mr. Casesa's prescription for GM sounds similar to what Mr. Mulally has done at Ford:
Allocate capital to the parts of the business with the most promise, such as China;
Repair the product launch cadence and development plan so the remaining brands –Chevrolet, Buick, GMC and Cadillac – are offering differentiated vehicles consistent with brand strategies;
Solve the problems at major GM parts supplier Delphi Corp., which is emerging from Chapter 11 bankruptcy itself;
Help restructure battered financing arm GMAC, which was devastated by the U.S. real estate crash and also required a capital infusion from the U.S. government;
Stitch together GM's global operations in North America, Europe and Asia to generate economies of scale.
“The question is, can an insider be as effective in making that happen?” Mr. Casesa said. “If it requires changing people or changing attitudes or changing structures, it's just easier for an outsider to do it. Mulally made it happen because he was not beholden to friendships.”
The fruits of Mr. Mulally's efforts to tear down the silos of Ford North America, Ford Europe and Ford Asia to create what he calls “one Ford” went on display Wednesday when the auto maker introduced a new North American version of its European-designed subcompact, the Ford Fiesta, at the Los Angeles Auto Show. When it goes on sale next year, the Fiesta will end Ford's absence of more than a decade in the subcompact market in Canada and the United States.
“[Mr. Mulally] came from a very complex industry in aerospace, so he has a basic understanding of the complexities of manufacturing,” said David Cole, chairman of the Center for Automotive Research, an industry think tank in Ann Arbor, Mich.
The auto industry is the most sophisticated manufacturing business in the world, although it seems relatively simple from the outside, Mr. Cole said, noting that few members of the GM board have much auto experience.
“If somebody comes in and says ‘You take two years to do a [vehicle] – you should be able to do it in six months,' they don't know what they're talking about,” he said.
The contrasting financial positions of the two auto makers were evident in their third-quarter financial results. Ford posted a profit of $992-million (U.S.). GM lost $1.2-billion between emerging from Chapter 11 protection on July 10 and Sept. 30.
Mr. Casesa noted in a separate interview with Bloomberg News, however, that GM was able to cleanse its balance sheet during the restructuring and is now in a net cash position.
Ford, which rode out the storm on its own without government help, is carrying debt of about $1,000 a car.
Note: This story has changed from an earlier version.
