Yesterday, GM’s new boss (president Barack Obama) announced he was firing The General’s CEO and six members of GM’s Board of Bystanders. The new chief executive in chief also elevated BOD member Kent Kresa to the top slot. Kresa, who came to GM from the world’s least consumer-focused industry (unless you count killing them), replaces Rick Wagoner as GM’s new Chairman of the Board. You may remember Kent from from last May, when Kresa told the Wall Street Journal that Red Ink Rick was good to go. I mean, stay. “Management has a handle on the situation.” At the time, I wrote that the former Northrop CEO’s faith in Wagoner’s unspecified turnaround plan reflected “Kresa’s seat-of-the-pants, high stakes poker management style, and faith in political influence peddling.” But really, who IS this guy? Why is Kresa sitting pretty after sitting schtum? A little help from TTAC’s Best and Brightest in the Google department, and some thoughtful analysis, would be most appreciated.
Who cares ? The fact is that the Govt. is now running GM. Or trying to. American Leyland, here we come.
speedlaw:
That will still be true after they file for Chapter 11. There’s a bad moon on the rise.
This all makes more sense after watching the Top Gear episode last night with the segment: “Did the Communists ever build a good car?”
I’m sorry guys, but didn’t we want the Fed to steer the ship a little. I don’t understand all the shock and horror associated with the resignation of Rick Wagner. Is forcing bankruptcy any less evil than forcing a change in CEO? Didn’t we all agree that Red Ink Rick’s time had come?
Regarding the selection of Kresa, can’t really say what special gifts he holds except he’s got some free time and a proven track record with a large manufacturing company.
Another Big swinging Dick or Rick, or Eloise who really cares…it’s about the illusion of competence. I’m sure Kent has a lot of experience knowing how to use corrupt procurement officers and retiring 4 star generals who are more than happy to have taxpayers absorb multi-billion dollar cost over runs on shoddy, unreliable products. Sounds like just what General Motors needs.
Kresa: “I will commit GM to building the types of “green” cars that you tell us to build, Mr. President”
Obama: “That’s good, because the last guy wouldn’t. I’ll give you 60 days and billions of additional working capital to convince me”
Robert, we get it, you don’t like Obama.
Anyway, Kent came out of DARPA in the 70’s* as (probably) a payoff to become a VP and then moved on up to CEO. He resigned from Northrop due to age restrictions.
*During the development of the B2, a program which had been started by *gasp* Carter.
montgomery burns
It’s not that I don’t like Obama. Seems like a nice young man to me. It’s that I don’t like the president of the United States running a car company.
Enough about me, how about Kent?
that guy was on the board of Northtrop when they developed the B2? damn he’s old, but still younger than some of the Chassis GM still use….
(The pic) Uhm, RQ4A Global Hawk. We like it! We liked it so much that we even delivered one into the Pentagon on sept11! Could I get a fully loaded RQ4B? Wait a minute, it`s an UAV. I don`t need a leather seat! Strangely enough `fully loaded` always has different meanings, whether you are talking about cars, jets or whores.
His real name is Kaiser Soze.
We already know GM’s going to be forced to build at least a couple of the small, fuel efficient crapboxes that we supposedly want as Americans. So really in the grand scheme of things, does it matter who’s running the thing if he’s just a puppet for the Federales anyway? Find someone who’ll be a good yes man for the Obama administration, who will forge ahead with the plan to build Prius and Corolla copycats, and lead GM into bankruptcy. Sounds like the plan to me.
Robert Farago:
Lenders and equity investors routinely put conditions on their loan or investment. Some times with a BoD seat or stipulations on location and size of facilities and retention of key people. In this case the first loan had stipulations that were not met and a condition of the second loan was to get rid of Rick. I’d think you’d be happy that Rick is gone and that the administration is acting on a problem they inherited. But enough of that.
Kent was head of a company that can’t possibly fail. It’s the only company that can build aircraft carriers for instance. His whole career has been in insulation from failure. That makes him perfect for this job.
The link between Kent DARPA and Northrop. Coincidence? I think not.
Kent Kresa was elected president of Northrop Grumman in 1987 and has been the company’s chairman and CEO since 1990. He joined Northrop in 1975 as vice president and manager of the company’s research and technology center, and served as a corporate vice president and general manager of the company’s Ventura Division, as group vice president of its aircraft group, and as senior vice president for technology development and planning.
Prior to joining Northrop, Kresa was employed by the Defense Advanced Research Projects Agency, where he was responsible for applied research and development programs in the tactical and strategic defense arenas, and by MIT’s Lincoln Laboratory, where he worked on ballistic missile defense research and reentry technology.
http://www.aiaa.org/Aerospace/Article.cfm?issuetocid=214&ArchiveIssueID=27
Northrop Corp. President Kent Kresa yesterday acknowledged that his troubled defense firm has suffered “flaws and failures” but said it has “undertaken a massive and thorough company-wide effort to correct our weaknesses.”
The Los Angeles-based defense company, which builds the B-2 “stealth” bomber and is competing to produce the Air Force’s new generation stealth fighter jet, has been the target of dozens of government investigations alleging mismanagement and fraud.
Kresa appeared before a House Government Operations subcommittee three days after a senior Air Force official revealed details of an internal review that sharply criticized the management of every Northrop weapons program it …
You have to pay for the full article but it’s mostly about mismanagement and cost overruns on the B2 project.
http://www.highbeam.com/doc/1P2-1152695.html
Northrop was also prime on the Coast Guard deep water project disaster.
The WSJ has an article reporting on the replacement of at least six GM BOD members:
http://online.wsj.com/article/SB123844960840571093.html
“Mr. Kresa and Philip A. Laskawy, Ernst & Young’s retired chairman and CEO, tried for two years to persuade fellow GM directors to replace Mr. Wagoner and other key executives, recalled a second person familiar with the situation.”
That might have something to do with the choice. Thank goodness they are finally getting rid of failed Kodak CEO Fisher as “lead outside director”. Fisher was an absolute disaster for Kodak. Another failed CEO on the GM board is former Compaq guy Eckhard Pfeiffer.
More from the WSJ article: “The decision by President Barack Obama’s auto task force to replace most GM directors came amid some pressure by company bondholders and other industry experts who had advised the task force in recent weeks, according to people familiar with the discussions. During one meeting, the board was described as “a collection of failed CEOs,” and the group was blamed for not prompting GM management to move faster in restructuring the company.”
Wow, sounds like those guys could have written a Death Watch or two.
david540 :
March 31st, 2009 at 7:30 am
Another Big swinging Dick or Rick, or Eloise who really cares…it’s about the illusion of competence. I’m sure Kent has a lot of experience knowing how to use corrupt procurement officers and retiring 4 star generals who are more than happy to have taxpayers absorb multi-billion dollar cost over runs on shoddy, unreliable products. Sounds like just what General Motors needs.
Lol, sad but true. Sounds like Cook County Machine Politics writ large.
His qualifications probably include being a good little chairman while the government eases GM into don’t-call-it-bankruptcy in order to minimize the collateral damage to the markets it would cause.
It’s not that I don’t like Obama. Seems like a nice young man to me. It’s that I don’t like the president of the United States running a car company.
I agree it’s not about you, but what are the alternatives? Leave Wagoner in place? For how much longer and until what event/situation? Or call the prior ‘loan’? IMO this is the least devastating option with a glimer of hope. Mike Jackson is quoted in today’s WSJ thusly: “I think they (the Feds) nailed it”.
We are at or near peak oil. Ahead lies great uncertainty about energy supplies. The US has a totally moribund automotive industry. The world is in the grips of a depression. Most people are still in denial about all this stuff.
What I heard Obama say on more than one occasion was that the obvious companies of the future are those that can produce energy inexpensively and sustainably, and that will help the US get off the foreign oil treadmill. Overseas decisions on supply are highly unlikely to be in the best interests of the United States.
The free market is dithering about nearly everything, and seems more interested in discussing semantics, socialism versus communism versus fascism against good old American capitalism.
We can talk a blue streak about philosophy until the cows come home, but it won’t put the meal on the table tomorrow.
The Administration appears to have some more far-sighted thinkers than the general population has. Meanwhile, a borrower, GM, has shown itself inept in the extreme for years, and even in this economic time, utterly unable to grasp the fact that things have gotta change, and fast. Couldn’t even provide a plan to its lender, the USA, that was any good. It’s high school level crap.
Your PTFOA shot it down. Meanwhile GM is in a $50 billion negative equity hole. Bankrupt in effect. The lender of the last 17 billion has merely said, this plan won’t do, because I want my money back, and there is no chance of that with this “plan”.
Just like defaulting on a house mortgage, the banker has said changes are required in the way you earn your money. Get rid of the owner and terrible board members and try again to come up with a viable plan. Against our better judgement, we are going to fund you for 60 days while you come up with a viable plan.
Now, just so you know Mr. Henderson and Mr. Kresa, here’s what we as bankers think is important and should be in your plan. Well, it has to be greener than Hummers, and even Impalas, because simple logic dictates that. You’re broke, we lent you money, now try things our way or no more money and you can go bankrupt. We have a plan to keep our country less dependent on oil imports, and we need your assistance.
Simple to me, and furthermore, I see nothing wrong with it. It’s not illegal, and for the present maintains jobs, with an outside promise of more jobs in the future, depending on where this depression gets us all.
But the chattering classes are still worried about philosophy. Who cares who Kresa is? I’m sure he’s a bit more focused on his job today than the six utter failures booted off the BOD yesterday.
As jurisb has pointed out time and again, the US needs to make products and create wealth. Money is not wealth. And just because the great unwashed want an SUV and everything to be just like 2005 again, won’t make it happen.
There are tough choices ahead. You may or may not get American Leyland, but judging by the report cards on GM and Chrysler from the PTFOA, they have folks with more brains than Detroit, and who didn’t piss around using marketing speak in their rejections — people able to write clear plain English.
As for Obama being a nice young lad, from my perspective as an old engineer, he seems to be doing better at school than you! Nothing like the back-handed compliment, eh?
The Administration appears to have some more far-sighted thinkers than the general population has.
How is subsidizing a Labor Union out of political favoritism ‘far-sighted’?
I too don’t like the fact that the president canned Wagner. But Wagner should be gone, and it was all too clear that he wouldn’t go on his own and the BOD didn’t have the balls to fire him. And like was said earlier, a lender can set conditions for his money.
I work for Northrop Grumman. Does that make me an expert on Kent Kresa? Of course not. However I can correct some errors in previous comments.
– Defense contractors are for-profit. They have employees and stock holders, just like GM. They are not the government. Some people don’t seem to understand that.
– Carter did not start the B-2 program. He started the F-117.
– No defense contractor is “too big to fail.” just ask General Dynamics. NG’s shipbuilding could easily pass to another contractor. Shipbuilding is an extremely high risk enterprise.
– As with most large contracts, the Coast Guard fiasco was the largely the result of inadequate requirements specifications by the government. I hate to tell you all this, but most civil servants are borderline incompetent. It just comes with the territory.
Basically, I have no idea what CEOs do. I imagine their greatest skill needs to be finding good people to manage under them, and on down the line. In that regard, Kresa basically saved NG from being gobbled up by the then-larger Lockheed Martin. He managed some useful acquisitions (e.g., TRW) and made the company financially sound with continuous growth. There’s a good chance he can do the same with GM, but I’m not holding my breath.
P-D That is charged political talk. You need to stop taking sides and look at the problem at its current state.
Gubbmint tried to prop GM up. GM failed to demonstrate worthiness (as MANY people here said they would fail). Gubbmint says change or go bankrupt. GM said, “whatever you want sir and thusly, no more Rick.” They want Kresa in, so GM said, “whatever you want sir.”
I don’t see this as propping up unions. As a matter of fact, I don’t see how you could call that propping up unions. Do this or go bankrupt doesn’t exactly protect the unions you know.
Sigsworth- maybe Kent`s plan is to use some reverse-engineered parts from retrieved spacecraft and use a zero-point energy engine to revive GM.Or use a scramjet or ramjet as an interim solution:) Anyhow, how is X47c doing?
– Carter did not start the B-2 program. He started the F-117.
DARPA had started work on stealth technology in the late 60’s early 70’s. By the time Carter took over they felt the technology could be advanced enough to go into production. Because the B1 project (like so many others) seemed to be in disarray Carter Canceled the B1 in 1977 seeking to use that money for what turned into the Advanced Technology Bomber in 1979. Reagan campaigned on the idea that Carter was soft on defense by canceling the B1 and it became a promise to restart B1 production. Reagan had no idea and Carter could not say that there was an advance bomber (officially announced in the summer of 1980) under way.
– No defense contractor is “too big to fail.” just ask General Dynamics. NG’s shipbuilding could easily pass to another contractor. Shipbuilding is an extremely high risk enterprise.
I don’t think the Pentagon would let the only shipbuilder in the world capable of building a Nimitz class carrier go out of business. Pass to another company sure, but not go out of business.
– As with most large contracts, the Coast Guard fiasco was the largely the result of inadequate requirements specifications by the government. I hate to tell you all this, but most civil servants are borderline incompetent. It just comes with the territory.
Navy/Coast Guard screwing up, agreed. Building ships that break in half are NGs problem though.
I’m sticking to my point that Kresa has spent his whole career cocooned, insulated from failure. He’s perfect for the job!
Kresa was one of a small dissident group of board members who tried to force out Wagoner. That’s why he’s being appointed chairman.
Wagoner is gone. His enablers on the board will soon be gone as well.
Interesting, we will likely find out one day whether he actually supported RIR or not. Seems to be the code to support the CEO until there is enough support to can the guy. Likely a good idea, but I would love to see support for a failure used as a reason to can the supporters. Might start getting people to take things more seriously.
state controlled production quotas using public finance, should be familiar terrian
I don’t see this as propping up unions. As a matter of fact, I don’t see how you could call that propping up unions. Do this or go bankrupt doesn’t exactly protect the unions you know.
I call this ‘propping up the Unions’ simply because, in the 5 odd months this process has been going on, the UAW have yet to make a concession of any substance. In fact, their last position taken on this was ‘not my problem’ and ‘we have a contract’. Until I see a serious concession from the UAW, I’ll continue to look at this Bail Out as little more than a Transfer Payment made out of political favoritism – Cook County politics at its finest. I suspect other people will look at it the same way.
Kresa is responsible for building Northrop Grumman into the defense powerhouse that it is today. The guy is brilliant. If he would have been the guy running GM for the last 10 years instead of just one of the Board of Bystanders, GM would not be the mess that it is now.