Credit should go to CEO Mary Barra for her bold reshaping of an auto company that for decades could claim to be the world’s largest, writes Jennifer Wells.
Let the other guys talk about the financial hit General Motors took -and will continue to take -as a result of the company’s six-week strike.
Here’s what I’m looking at.
I’m looking at chief financial officer Dhivya Suryadevara, who became the company’s first female CFO 18 months ago when she replaced a guy named Chuck. (Full name: Chuck Stevens.)
I’m looking at the way Suryadevara smoothly steered the company’s quarterly conference call Tuesday alongside CEO Mary Barra, the first female CEO of a major automaker, as the duo parsed the company’s third-quarter results, which, by the way, beat analysts expectations by a wide margin. Exclusive of introductory remarks made by the investor relations spokesperson, the only executive voices heard were those of these two women.
I’m looking at Barra’s response to a question about investment in electric vehicles from a Morgan Stanley analyst. Barra’s answer: that across the next five years the company will likely spend more on research and development and capital expenditures for electric vehicles (EVs) than it will on legacy internal combustion autos. “I believe it will be EVs,” was Barra’s reply, adding that the whole-vehicle labour component would be “somewhat less” for the electric platforms.
I’m looking at the company’s goal of zero emissions, zero crashes and zero congestion.
And the race to an electric pickup.
I have written numerous columns on the tragedy of GM’s planned assembly exit from Oshawa and the failure of union leaders to secure new-vehicle commitments for the storied plant. But credit should go to Barra for her bold reshaping of an auto company that for decades could claim to be the world’s largest. Until the financial crisis came along, that is, followed by the bankruptcy filing, the bailout, a fresh public offering, et cetera.
Barra stepped into the top job in January 2014, and was slammed two weeks later with the faulty ignition crisis. Some observers speculated that the “car gal,” as she was dubbed by her predecessor, had been set up for the fall. Or maybe she would be shoved off the glass ceiling. Yet here we are, months away from Barra’s fifth anniversary running the show, and she has survived the faulty ignition crisis and appears to have won the support of the investment community.
Oh all right, here are some numbers: For the third quarter, GM reported net income of $2.3 billion (U.S.) on net revenues of $35.5 billion. Losing what the company defined as “about two weeks” of vehicle production in the third quarter from the strike is estimated to impact negatively earnings per share by about $2, or $2.8 billion in total , once full year results for 2019 are taken into account.
The evolution within the automotive industry is happening far faster than observers expected when Barra took over as CEO. The company has to steer toward what it calls an all-electric future -a very long horizon, Barra noted -while introducing new internal combustion autos as the evolution unfolds. So on the one hand GM is investing a further $300 million into its assembly plant in Orion Township, Mich., a plant that can manufacture EVs, internal combustion cars and autonomous vehicles at the same time, while sexing up gas powered vehicles with its anticipated launch early next year of its Corvette convertible and Stingray coupe.
Big Barra decisions include making the call three years ago to virtually ditch Europe, selling off the money-losing Opel and Vauxhall brands to French automaker Groupe PSA (Citroën, Peugeot), which has turned the brands around through an aggressive introduction of new models.
Adopting the corporate lingo, present “headwinds” for GM include ongoing volatility in China and South America, and what Suryadevara deemed “moderating” economic growth in North America.
Production is back this week across all of GM’s North American facilities. A big win for labour is the $3-billion investment in the Detroit-Hamtramck plant, giving that plant an electric vehicle and battery future. That investment, which turns back the automaker’s announcement last November that the plant would close at the end of this year, pushes beyond what the company had initially costed for its transformation-for-the-future plan. A big win for GM is the confirmed closure of the assembly plant in Lordstown, Ohio, and transmission plants in Maryland and Michigan.
These are strategic Barra moves as she pushes the company toward its electric future. She believes in global warming! She’s betting that EV manufacture will be profitable for the big auto company during her tenure. Five years ago that would have seemed like a crazy bet.