By Ben Klayman
DETROIT, July 19 Dan Ammann wants it understood
he's not one of the gray-suited "bean counters" who once
dominated, and nearly destroyed, General Motors.
To drive home the point, the chief financial officer is
ready to challenge the automaker's resurgent "car guys" on their
own turf: a three-mile test track where his gray-metallic
Corvette Z06 reaches a blistering 150 miles per hour. Every lap
is a message - this is not the same hidebound finance department
that almost ran the top U.S. automaker into the ground.
"You have to have a point of view on how the organization
actually goes about making cars," Ammann told Reuters. "You've
got to be out there and really immerse yourself in the business
before you can make a difference."
The 40-year-old, former Wall Street banker acknowledges GM
has further to push to change a corporate culture once marked by
arrogance, insularity and bureaucracy that has stifled the
company for decades. And that's on top of such concerns as
ongoing losses in Europe, slowing industry demand in China and
GM's $134 billion in pension obligations at the end of 2011.
Some industry officials believe the issues are so entrenched
the most likely scenario is GM never eliminates its underlying
"They have not wrestled their management challenges to the
ground," said Steve Rattner, the former head of the U.S. auto
task force. "GM is making a lot of money. It's just not making
quite as much as Ford on a percentage basis because it
still has some inefficiencies that need to be wrung out."
Despite a record profit of $7.6 billion last year, GM's
operating margin of 3.8 percent still trailed such rivals as
Hyundai (10.4 percent), Volkswagen (7.1
percent) and Ford (5.4 percent).
The near collapse of GM and its U.S. government-led
bankruptcy filing in 2009 put a spotlight on the failings of the
finance team, which federal officials viewed as hapless during
In 2009, GM settled accounting charges with U.S. securities
regulators related to multiple financial restatements dating
back to 2000. That was a far cry from the five decades starting
in the late 1950s, during which seven of nine GM CEOs came up
through the finance department.
Ammann, one of only about 30 GM executives certified to
drive at high speeds at the company's Michigan track, is
determined to restore the reputation of the money guys.
He has led a revamp of a department once considered the
cradle of GM's chief executives, moving to simplify how success
at GM is measured and the data used for decisions.
"We have a window of opportunity to bring some fundamental
change to this company," he said, "and it's a relatively narrow
If Ammann, CEO Dan Akerson and other top officers fail,
shareholders fear a repeat of mistakes that led to GM's $50
billion U.S. taxpayer bailout. Get it right and GM remakes
itself into a nimble, aggressive competitor, a process Akerson
concedes his successor could inherit.
"You don't change the culture of a 100-year-old company in
two years," Akerson, a Navy veteran and former telecom
executive, said in an interview. "It takes arguably five to 10
years, but you have to start. Every long journey starts with a
To help speed its transformation, GM named Ammann CFO in
April 2011, about a year after hiring the New Zealand native as
treasurer from Morgan Stanley.
Identified by Wall Street as a candidate to succeed Akerson
as CEO, Ammann was no newcomer to GM's problems as he advised
the automaker during its bankruptcy and restructuring when he
was head of industrial investment banking at Morgan Stanley. His
personal history with GM also predates his employment as he owns
a light blue 1961 Cadillac Series 62 convertible.
Ammann, who grew up on a dairy farm and loves to sail his
Tornado Olympic-class catamaran when he's not spending time with
his wife and 7- and 5-year-old daughters, feels the corporate
pressure. He has changed about half of the 15 executives who
report directly to him, hiring from General Electric,
United Technologies and Deere. On Wednesday, GM
hired Michael Lohscheller from VW to be CFO of its money-losing
Opel unit in Europe.
He also has worked to reshape the 4,200-person global
finance team, pushing his team to provide the information
someone without a finance degree can understand.
In a meeting last month, Ammann spoke to 20,000 GM product
development employees for 30 minutes about operations, pensions
and the importance of GM's stock price as a daily report card
from Wall Street. He used three slides to make his points
instead of the 15 it might have taken in the past.
"We've never had a problem of not having enough data, but we
haven't always done a good job of distilling it down to what's
really important," Ammann said, citing cases in the past where
company analysts would generate five-year sales predictions down
to the last vehicle rather than preparing for possible
Ammann's drive to simplify is echoed by the likes of Tim
Stonesifer. The Shanghai-based CFO of GM's international
operation was lured in by a headhunter about 14 months ago.
The 44-year-old Stonesifer, who had worked at GE for 18
years before shifting to another company, recalls paperwork
hitting his desk during his first week requiring eight different
signatures. He has cut that total to two.
"My rule of thumb is if you have more than one signature,
then probably people aren't really looking at it," he said. "We
don't want folks spending any more time than they need to on the
Ammann and other executives are also working to overhaul the
kind of old thinking where GM historically operated as numerous,
smaller fiefdoms -- and often in petty turf wars -- rather than
as the $150-billion behemoth it is. They want people thinking
about what's good for the company, rather than for their
particular region or division.
Even fans on Wall Street said shareholders are in for a
bumpy ride. GM's stock debuted at $33 a share at its fall 2010
initial public offering, but currently trades under $20, cutting
the company's market capitalization by more than a third.
"For real investors who have a time horizon and can afford
to be wrong at various points in the short term, the GM story
can offer an exceptional return," Morgan Stanley analyst Adam
Jonas said. "But if you want to sleep at night, this is the
Founded in 1908, GM rose to dominate the global auto
industry under the stewardship of pioneering CEO Alfred Sloan.
By the mid-1950s, the company had 514,000 employees and
accounted for about half of U.S. car production. Its sales were
twice as large as the No. 2 corporation, Standard Oil.
However, complaints inside GM about a failure to execute
echo through the decades. Former U.S. presidential candidate
Ross Perot, who sold his company Electronic Data Systems to GM
in 1984 but later left the board in frustration, famously said,
"Revitalizing GM is like teaching an elephant to tap dance."
GM still suffers from a laundry list of problems. Current
and former employees describe too many managers operating under
too much bureaucracy and a lingering arrogance that some find
strange given the company's missteps. Almost three years after
deciding not to sell its money-losing operations in Europe, for
instance, GM is only now looking at combining the warehouse
operations of Opel and Chevrolet in that region to save money.
GM executives say they already have gone on the attack when
it comes to cutting costs and streamlining operations.
Core vehicle platforms account for almost half of the
company's volume, up from a meager 30 percent in 2010, and GM
wants to get that to more than 90 percent by 2018. In addition,
GM aims to halve its engine families globally over the next
decade from 20 in 2009.
In March, GM announced a consolidation in its global
advertising budget meant to save $2 billion over five years. In
Europe, GM forged an alliance with French automaker Peugeot
designed to eventually save another $1 billion
GM has a reputation for failing to execute successfully on
its plans, notably the costly and ultimately unsuccessful
alliance with Fiat. Former executives describe a lack
of urgency to change or accountability to perform, mistrust
among competing managers and a feeling of being stuck in an era
when GM dominated the market.
Critics argue that below the top executives like Ammann the
same old cadre of middle managers who helped drive GM over the
cliff in the first place remain. Some said the company should
have cut the top 1,000 officials during the 2009 restructuring,
while others say executives like Ammann must instead drive their
message more forcefully to managers below them.
"Dan Ammann is the 'real deal,' and has already done a lot
to strip stupid thinking and analysis out of the finance group,"
former GM Vice Chairman Bob Lutz said. "But 'bean counter-itis'
and short-term thinking are ever present, at many levels, and in