Thursday, May 11, 2006

GM's man on a mission

Thursday, May 11, 2006

GM's man on a mission

Fritz Henderson, the industry's unflappable fix-it man, is attacking his toughest challenge yet -- saving GM

Bill Vlasic and Brett Clanton / The Detroit News

On the morning of Oct. 14, 2004, the chairman of General Motors Europe shocked the automotive world by announcing the largest job cut in the history of the German auto industry.

By that afternoon, thousands of angry workers had launched a wildcat strike at one of GM's oldest European plants. Yet the more the pressure built, the calmer Fritz Henderson seemed to become.

"We are doing the right thing," Henderson told nervous members of his executive team. "We have to stay the course."

Six days later, the workers abandoned the strike, paving the way for GM Europe to slash 12,000 jobs and start on its long road back to profitability.

But that restructuring was just the warm-up for Frederick "Fritz" Henderson. As GM's new vice chairman and chief financial officer, Henderson is emerging as the critical player in Chairman Rick Wagoner's turnaround plan for the company's troubled North American operations.

Since becoming CFO in January, Henderson has been GM's top gun in attacking a daunting set of challenges.

In short order, he has closed the sale of a majority stake in GM's finance business, led negotiations on the largest employee buyout program in company history, and spearheaded talks on GM's role in the reorganization of bankrupt Delphi Corp.

And he's done it under a microscope, as GM struggles to restore its credibility after admitting to a rash of accounting errors that is the subject of ongoing investigations by the Securities and Exchange Commission.

A stunning $10.6 billion loss last year stirred fears of a GM bankruptcy, but the company's perilous state only seems to stoke Henderson's competitive spirit.

"I really like being part of doing something that many people do not think can be done," he said in a recent interview with The Detroit News.

His beleaguered boss, Wagoner, has so far survived a torrent of criticism from Wall Street analysts, investors and the media. But GM watchers -- both inside and outside the company -- see Henderson, 47, as a potential successor down the road.

"He is the internal candidate," said John Casesa, a former senior auto analyst at Merrill Lynch. "He has plenty of intellectual horsepower and he's very, very direct."

Overhaul in Europe pivotal

The powerful German labor union, IG Metall, found that out during the 2004 strike.

Henderson had been chairman of GM Europe for just four months before unveiling his sweeping plan to restructure its operations. Workers hardly knew his name before they were demonstrating in the street to protest his actions.

But the overhaul would prove to be a pivotal event in the German auto industry when it was followed by similar cutbacks at Volkswagen AG and the Mercedes-Benz unit of DaimlerChrysler AG. Last month, GM Europe reported a first-quarter profit for the first time in six years.

Even the leaders at IG Metall were impressed.

"I think Fritz is absolutely, 100 percent a business man," said Klaus Franz, chairman of the union's Opel Works Council. "But he's a hard-fighting man. There is no question about that."

Henderson is probably the most-traveled auto executive in the world. In the past decade he has headed GM's operations in Brazil, and served as president of both its Latin America/Africa/Middle East unit and its Asia-Pacific division before landing in Europe.

Whether stationed in Singapore or Switzerland, Henderson has mostly lived out of a suitcase. He's been to at least 45 countries on assignment for GM, often traveling alone to get a ground-level view of GM's far-flung operations around the globe.

His father worked for GM

But now, all those roads have led back to Detroit, where Henderson was born in 1958. The son of a career GM sales manager in the Buick division, Henderson recalls moving 11 times as a youth because of his father's job.

"I'm enormously proud of my dad, but I didn't ever want to work for GM," he said. "I didn't even want to interview with them."

A University of Michigan graduate, Henderson lettered as a pitcher on the U-M baseball team that featured future major leaguers Rick Leach and Steve Howe. A bit of a bulldog on the mound, Henderson said he had one favorite pitch: "Strikes."

Gifted with an extraordinary memory, Henderson posted one of the highest scores ever recorded on the state of Michigan's exam for certified public accountants. After two years with the firm Price Waterhouse, he won a scholarship to the graduate program at Harvard Business School.

A family friend sent Henderson's resume to GM's fabled Treasurer's Office in New York, where generations of GM senior executives got their start. "I got a call that was, why don't you come and visit us?" Henderson recalled. "I thought, what's the harm?"

Immediately, he saw the possibilities that awaited him at GM. "I didn't want to be an accountant or a consultant," he said. "I thought I could be a good leader. I wanted to run companies."

He quickly moved up

He joined GM in 1984 and hit the fast track. Within five years, he was director of mortgage banking at General Motors Acceptance Corp., followed by a promotion to vice president of finance at GMAC. In 1994, he eagerly took over as head of operations at GM's sprawling Automotive Components Group, the parts-making division that eventually became Delphi.

The parts unit was in the midst of a frenetic global expansion program, and Henderson caught the attention of GM's chief executive at the time, Jack Smith. "That was a baptism of fire for Fritz, and I thought he was doing a terrific job," Smith said.

From Delphi, Henderson was dispatched to GM Brazil as managing director. Shortly after arriving in 1997, the Brazilian economy collapsed. A healthy business plunged into crisis almost overnight. After a weekend of pouring over the numbers, Henderson called his top deputies into a meeting.

Brett Dewar, now head of field sales, service and parts for GM North America, was one of them.

"The plan was so far-reaching (that) honestly, I thought it was too much," Dewar said. "It was so broad-based and so pervasive in changing what we did with dealer inventories."

For the next eight months, Henderson gathered his senior managers every morning at 9 a.m. for a strategy session. Dewar marveled at Henderson's decisiveness, how he would crystallize problems and set a course to solve them. Early on, the execs knew to make their points, and make them fast. "You weren't allowed to give the weather report," Dewar said. "He was looking for all of us to have crisp, clear, detailed information and a good sense of what was going on."

Henderson spent little time agonizing over moves that went wrong.

"I'm not in the business of second-guessing," he said. "I'm in the business of finding solutions."

He left Brazil in 2000 with a track record in a turnaround, not to mention fluency in Portuguese. From there, he moved to Miami as president of GM's Latin American unit that also includes Africa and the Middle East. Within two years, he was in Singapore as head of GM's growing Asia Pacific unit.

He lived out of a suitcase

His life was one of constant travel, hopping commercial flights from China to Japan to Australia. He left his wife and two daughters behind in Miami, flying home twice a month for weekend visits.

"Missing my family was the hardest part of the job," he said. In Asia, he dug into the delicate restructuring of Isuzu Motors, one of GM's key Japanese partners. By the time he landed in Europe in the summer of 2004, Henderson knew that fixing broken businesses was in his blood. "It's fun, it's exhilarating, it's invigorating to be part of a turnaround," he said. "That's the part of the business that I really love."

GM Europe needed radical surgery to bring its labor costs in line with its shrinking market share -- a smaller version of the same challenge the automaker faces in North America.

Henderson took a deep dive into the financial statements, the product plans, the manufacturing operations and the distribution system. Cutting 12,000 jobs, he knew, would trigger a firestorm of protest. "But we had to get competitive," he said. "We knew this is what we had to do."

During the six-day strike, Henderson and GM were repeatedly accused by labor leaders of using "bulldozer tactics" on innocent workers. But when the walkout ended and the jobs were reduced through buyouts and retirements, the union changed its tune.

"At the end of the day, I think he managed the restructuring in a sensitive way," said Franz.

Last November, Henderson took a call from Wagoner. GM's respected CFO John Devine had surprised the company's board by electing to retire when his contract expired in 2006. Wagoner asked if Henderson would take the job.

"I told Rick I was proud to do it," he said. "I had not thought about being CFO, but this company needed me."

It was the business equivalent of parachuting into a raging forest fire. But GM insiders say Henderson brought a dose of vigor to an executive suite hammered by mounting losses and the fallout from Delphi's bankruptcy.

'I'm 100 percent focused'

He comes across as unassuming and open, a compact man with a trim mustache and a bit of a twinkle in his eyes. But when the topic turns to GM's turnaround, Henderson exhibits a laser-like intensity. He speaks quickly, makes points, and has a scary command of the facts and figures related to GM.

"Do you have a photographic memory?" he was asked. "Almost."

To some people inside GM, Henderson comes across as cocky or too sure of himself. That observation brings a laugh from him.

"I'm 100 percent focused on this job, and I'm not interested in getting off track," he said. "People appreciate decisiveness. That's why you get the job -- to decide."

He made one of his most difficult calls yet on March 16, the day GM was scheduled to file its 2005 annual report.

For weeks, teams of auditors had combed through 20 million documents, digging deep into GM's books to uncover accounting errors that were the subject of ongoing SEC investigations. But just hours before the filing, a bombshell landed directly on Henderson's desk.

There was a problem, he was told, with obscure accounting rules for cash flows at GM's mortgage business. If the reporting was flawed, it would taint the entire document.

"Tell me more," Henderson said. "Tell me more."

After huddling with his staff, Henderson recommended that the filing be delayed. A press release was issued and, by the next morning, banner headlines in newspapers across the country were flogging GM's latest accounting mishap.

Inside GM, the mood was grim. "There wasn't a single person involved that wasn't very unsatisfied," Henderson said.

But once the decision had been made, Henderson moved on. "It didn't serve much purpose to be angry," he said. "We had a problem. We fixed it."

With his family still living in Florida, Henderson's daily life revolves around GM.

He's picked up by a driver at his Birmingham condo at 6:30 a.m. and is at his desk at the Renaissance Center in Detroit by 7. He works until 8 p.m., goes out for a quick dinner, and then settles in at home with the day's newspapers and correspondence. He always makes time to answer every e-mail he receives -- even when they number in the hundreds.

There is a straight-ahead way about Henderson, a resoluteness that gives him an air of unshakeable confidence. He firmly believes Delphi's current problems can be resolved without a strike, GM's newest products will stabilize its U.S. market share, and that GM's accounting woes will "never, ever happen again."

He shrugs off speculation about succeeding Wagoner as chief executive some day. "People don't believe it, but I don't really think too much about it," he said.

There are, he said, other priorities. "The objective here is to win," he said. "And that's what I want to do."

You can reach Bill Vlasic at (313) 222-2152 or


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