The news feeds coming out of Detroit - an aging and soon to be erstwhile capital of Automobiles, encapsulate the extremes. The top two auto companies, General Motors and Ford Motor Company are hogging the bandwidth of automobile news for different reasons. Ford, which will soon undergo a leadership change, is making all the right noises for nearly half a decade now. General Motors, in contrast, is being embroiled in one controversy to another.
It was during the Great Depression, that General Motors took the number uno position from Ford. It is ironic that, it took another depression-like state of the economy for reversal of fortunes. Though GM still holds an upper hand in terms of volume as compared to Ford; as we roll into the twilight of this decade, that landscape is poised for a change.
Nearly a decade ago, both the companies, and largely the whole of auto industry, were at cross roads. The economy, at that time, was booming; but one could feel the stress it was put into. Everyone knew that the bubble was about to explode, but everyone was having too much fun to care!
What got Ford into the drivers seat, was the decision they got in 2006 when they appointed an "outsider" in Alan Mulally. Mulally drove home a simple plan of "One Ford", unifying Ford's global market under the Blue Oval. A wise man once said - " For success, you need to spend 5% percent of time in strategizing and 95% of time in execution". Mulally, it seems, was communicating the same. From the decision to forgo the Federal money and to sell off or minimize the holdings in non-Ford brands, Mulally's plan began fructifying since early part of the decade The bourse in New York, goes on a cheer when the ticker reads symbol "F". With a market cap of now $161B and $7B in profits, Ford has regained its glory days.With a more streamline and globalized vehicle production, Ford is poised to leap further. Dubbed as the savior of the "American Icon", Mulally's name will be whispered in the same breath of that of Steve Jobs.
In contrast, GM has faced steady headwinds for quite some time now. May be they were slow to recognize the impending and looming crisis, both inside and outside the company. For the past decade, it has seen four leadership change as compared to one at Ford. One leadership change, the ouster of Rick Wagoner was explicitly asked by the Govt of United States which was pumping money at that time to keep the behemoth from a wipe out. The final bill stood at close to USD 12 Billion. Situation was desperate at that time for GM, that it explored the possibility of merging with the other two of the Big three-on different occasions. Going into the new decade, fortunes hasn't turned around to that level of Ford's. It returned to profits in the early part of the decade; but the expenditure of $12B on GM will be remembered as a dark spot which will take some time to rub off.
The current trips, outside of Detroit, of the two firms CEO's has parallels to the current state of the firm. Alan Mulally will bid good bye to Ford, is glob trotting for farewells and earning the appreciation and good will of its employees. In contrast, Mary Bara is trotting to Washington to appear before sub-committees and earning their ire over the mishaps of faulty ignition switch. Barra, a lifer herself at GM, has promised to change the "deep underlying cultural problems" at GM - the same that Bill Ford recognized a decade ago at his firm. May be she will take a leaf out of Mually's book or seek his advise. Now that Mulally has time from July 1st, but he will be "slow" to oblige if GM comes calling!
