Exclusive: Inside New CEO Mary Barra’s Urgent Mission To Fix GM – Forbes
Mary Barra, mother of two and the first female CEO of General Motors General Motors, sat silently while the parents of ten dead children unloaded their grief and anger on her. Some read prepared statements; others spoke off the cuff. One father unbuttoned his dress shirt to reveal his daughter’s face on the T-shirt underneath. All were strangers but shared a tragic bond: Their loved ones died in a GM vehicle.
Renee Trautwein’s daughter, Sarah, 19, completed only one semester at her dream college before her 2005 Chevrolet Cobalt hit a tree. The air bag didn’t deploy. Doug Weigel’s daughter, Natasha, 18, died in Wisconsin after the 2005 Cobalt she was riding in crashed into a ditch. Randal Rademaker’s 15-year-old daughter, Amy, perished in the same crash. Susan Hayes’ son, Ryan Quigley, 23, died in upstate New York when his 2007 Cobalt landed upside down in a shallow stream.
The similarities were eerie: Young drivers lost control; air bags failed to deploy; keys were in the “accessory” position; all were driving 2005 to 2007 Chevrolet Cobalts.
“I’m truly sorry for your loss,” Barra, a dark-haired woman who bears more than a passing resemblance to actress Sally Field, said again and again, wiping her eye at one point during the nearly two-hour meeting at GM’s Washington, D.C. office. The following day, Apr. 1, Barra would appear before a congressional subcommittee investigating why GM waited years to recall Cobalts and other vehicles that could lose power because of a faulty ignition switch; she met with the families at the request of their attorney, Robert Hilliard.
“I put myself in their shoes and thought they deserved to be heard,” Barra told FORBES in late May, just days before the company was set to issue a report on what caused the ignition disaster–and what they planned to do to stop it from happening again. “It was very difficult for them, and I think they needed to know that General Motors cared and that we listened.”
Much as the families wanted to put a face on the statistics–at least 13 killed in 31 accidents–Barra, too, hoped to put a face on what she calls “the new General Motors,” a company that has spent much of the past five years shedding a reputation for poor quality and mismanagement, not to mention the taint of a $50 billion taxpayer-financed bankruptcy.
Being the face of GM is not easy right now. Instead of celebrating her historic achievement as the first female CEO in a traditionally male-dominated industry, a feat that landed her at No. 7 on FORBES’ 2014 list of the world’s Most Powerful Women, Barra, 52, learned of the ignition recall on Jan. 31, just two weeks into her new job, and has been wrestling with it since. The original recall of 700,000 vehicles was announced on Feb. 7, and twice expanded, to a total of 2.4 million vehicles. Since then GM has stepped up its safety reviews and recalled some 13.6 million vehicles for everything from faulty tail lamps to potential seat belt malfunctions.
The crisis is an early, unexpected test of Barra’s leadership and has raised questions about whether the 33-year company veteran–or anyone–can really change the culture in an organization as vast as General Motors, a company that has run through five CEOs in the last six years. Since the recall was announced Barra has scrambled to stay ahead of the crisis, hiring an independent attorney, Anton Valukas, to lead an internal investigation and naming a new vice president of global vehicle safety, Jeff Boyer. Acknowledging that GM has both “civic and legal obligations” to victims, she tapped Kenneth Feinberg, who oversaw claims for victims of 9/11 and Hurricane Katrina, to help GM assess its options for dealing with families’ compensation claims. And, in surprisingly quick fashion, she reached an agreement with federal regulators on May 16 to pay a record $35 million fine–the maximum allowed by law–and to submit monthly reports on its safety review processes for the next year. Results of the internal investigation and Feinberg’s recommendations are due soon. So far GM’s board is happy with Barra. “The confidence has grown over a period of time, given the way that Mary has handled all the situations: testifying before Congress, meeting with the media,” GM Chairman Tim Solso tells FORBES. “She’s done a superb job, and the board recognizes that.”
Through it all, Barra has tried to keep some semblance of normalcy. She wears a Fitbit but doesn’t always get her 10,000 steps in. She admits she’s not athletically inclined (“It would be an affront to sports,” she says) and spends most of her free time sitting in the bleachers, watching her daughter play lacrosse, her son soccer. And yes, she felt horrible when she missed her son’s Junior Prom because she was out of town, though she has seen lots of pictures. “My kids told me the one job they are going to hold me accountable for is mom,” she says.
Mostly, though, she’s focused on running America’s largest car company, which–despite the recall and all the negative headlines–has a lot going for it right now. GM is currently producing the best vehicles in its history, winning a string of awards from Consumer Reports, the Insurance Institute for Highway Safety and others. GM’s four U.S. brands–Chevrolet, Buick, GMC and Cadillac–now rank highest in customer satisfaction with dealers. GM sold 9.7 million vehicles globally last year, earning a net $3.8 billion on revenue of $155.4 billion. Earnings before taxes and interest were $8.6 billion, or 5.5% EBIT margin, up from 5.2% in 2012. New product launches like the 2015 Cadillac Escalade and the Chevy Colorado pickup should bolster Barra’s arsenal even more. And while there are problems–a slowed Chinese market, the stalled European economy–Barra is optimistic.
“I think from the product perspective we’re there, but we still have work to do” to restore the company’s reputation, Barra says. “Rebuilding takes time.”
But as the costs of the ignition-switch debacle mount–recalls, suits and potential fines could wipe out most of 2014′s projected $5 billion profits–the risk is obvious. To survive, and thrive, Barra must get her “new” GM to finally– finally–emerge from the shadow of the old. And she needs to do it soon.
The most powerful woman in the history of the auto industry came to the business the way so many others of her generation did in the mid-1980s: through osmosis. Born Mary Makela, Barra grew up in Waterford Township, Mich., a middle-class suburb north of Detroit, where local car dealers turned the arrival of new vehicles into small holidays, covering the windows to make a big production out of unveilings. Her father worked as a die-maker at GM’s former Pontiac division, wearing the same ubiquitous blue GM uniform as all the other Scout leaders, coaches and fathers in the neighborhood. Her dad tooled around in a red Pontiac Firebird convertible, which she loved. “All of our dads worked at the Pontiac Motors division,” said Navistar CEO Troy Clarke, a former GM executive who lived in Barra’s neighborhood and graduated from the same high school. “We basically grew up in an area where the people you were supposed to work with lived.”
As kids both Barra and her brother Paul (now a doctor) excelled in math and science, and after she graduated high school in 1979 she landed a slot at the General Motors Institute (now Kettering University) in Flint, Mich., a cooperative trade school founded in 1919 and run by GM from 1926 to 1982. She was sponsored by Pontiac, which meant the company paid for her education while giving her real-world experience. One of her first assignments as a co-op student was working at a Pontiac metal-stamping facility, a harsh, noisy plant where huge industrial presses smashed flat sheets of steel into car parts. “It was the kind of environment that could frighten off a lot of people, including men,” says Clarke, who also worked there early in his career.
Far from frightened, Barra loved it and became hooked on manufacturing. After graduation in 1985 she went to work full-time at GM as a quality inspector in a Pontiac plant, helping churn out the midengine Fiero sports car. In 1988 GM paid for Barra to get her M.B.A. at Stanford. Her roommate there, Catherine Malcolm-Brickman, recalls Barra’s proud parents and new husband, Tony–who also worked for GM–dropping her off at the dorm. One of her most vivid memories of Barra was the night an earthquake struck during the 1989 Giants-Oakland A’s championship. Huddled in the dark, terrified, with a bunch of friends, Barra chuckled. “Well, I guess there’s no World Series tonight,” she said, triggering a wave of laughter. “She was able to steel herself,” says Malcolm-Brickman. “At the end of night we held together.”
That duality–the cool, analytical engineer who could also keep her warmth and wits in a crisis–burnished a growing reputation as she rose in the company . In 1999 GM group vice president for labor relations Gary Cowger assigned her to improve communications with plant-level employees amid tense national labor negotiations. Under Barra memos went from “talking about birth announcements, retirements and bowling scores,” as one former employee put it, to honest talk about which plants were making money, which were not and why they had to work the weekend to keep the company going. “Until then people didn’t believe it.”