Obama/Barra Embrace Shows GM is Still Government Motors

Barra SOTUThe Obama Administration may have sold the last of the taxpayers’ shares in General Motors, but it appears that politics will continue to play a powerful role in the management of the company. New GM CEO Mary Barra did not seem too concerned about appearances when she attended the State of the Union as Obama’s guest. Her predecessor Dan Akerson in previous months had gone to great lengths to distance GM from the federal government.

With President Obama praising Ms. Barra in front of the nation, the field is once again set for GM to take the stage during upcoming elections. Democratic presidential hopeful Hillary Clinton also jumped on the bandwagon, giving kudos to both Ms. Barra and the auto bailouts in general when she spoke at a recent car convention. The political attention given to the appointment of a female CEO leads to the question that no one seems to want to ask. That is, was the appointment of Mary Barra as CEO of GM driven by those same politics?

Ms. Barra may be a wonderful person and end up doing a stellar job as GM CEO, but was she really the right choice for the demanding position? Not many people are qualified to head up a major US corporation, particularly one coming off of a bankruptcy that cost taxpayers over $10 billion. Is Mary Barra truly the visionary and “car guy” that the Obama-appointed management at GM made her out to be?

Not to criticize Ms. Barra’s individual performance at GM, but let’s face it, she is a GM lifer and was part of a regime that bankrupted GM the first time around. The portrayal of Ms. Barra as a “car guy” like Bob Lutz is also not entirely accurate. While she does have an engineering background, she was the head of Human Resources prior to being promoted by the Obama team at GM to vice president of global product development. That move, in itself, was questioned by some.

When Barra was given the VP role of global product development in early 2011, Bloomberg News quoted auto consultant Maryann Kellar, giving this analysis:

Promoting Barra is a risky move for Akerson, because GM hasn’t replaced leadership in product development with the kind of expertise that Lutz brought to the company, said Maryann Keller, founder of Maryann Keller & Associates, a consulting firm in Stamford, Connecticut.

“The appointment is strange,” Keller said in a telephone interview. “Why does GM have anything that people are excited about? Because of Bob Lutz. I’m not sure that she has the background for this job.”

The global product development promotion for Ms. Barra set the stage for the more recent CEO promotion, giving GM the opportunity to trumpet Barra’s “car guy” role. In fairness, Ms. Barra’s background at GM prior to becoming head of Human Resources was in the engineering field. But does that really qualify her to be CEO?

Did the Obama-appointed management at GM groom Mary Barra for the CEO job as far back as 2011 and was that decision made for political reasons? Given the political influences seen at GM since the 2009 taxpayer-funded bankruptcy, it is not hard to imagine that being the case.

Regarding product development at GM, the focus since our government took over the company seemed to be centered on green car development, with the Chevy Volt taking center stage. If you haven’t been paying attention, the taxpayer-subsidized car has been a failure and never lived up to the initial hype. 2012 sales for the vehicle were even lower than in 2011. Worse yet, while GM focused on Obama’s favorite car, the competition extended its lead in more mainstream segments.

Ms. Barra must take some responsibility for the failed rollout of the 2013 Chevy Malibu. The products being developed and rolled out on her watch lagged the competition. In addition to the Malibu, the all-important truck offerings lost ground as well. All of the awards in the world will not help sales if the company does not build vehicles that offer better value than the competition. That becomes clear when considering that GM has lost US market share over the past few years and is no longer the largest producer of vehicles sold worldwide.

Mary Barra now has a tough job ahead of her. Can she change a company that has been mismanaged for years, a company that had a failing corporate culture which was followed by a political culture? We will eventually get the answer to that as we watch the direction GM now takes. If Barra focuses on politically-popular but commercially non-viable vehicles like the new Cadillac ELR (a costly version of the Chevy Volt), GM will continue to lose ground.

The current economic environment for car sales is positive and can hide a multitude of missteps. In a cyclical and highly competitive auto industry, that can change quickly. It remains to be seen if politicians will still be praising Ms. Barra and GM for a successful turnaround or if shareholders will eventually need to change the management to one more concerned with profits than politics to truly unleash the potential and value at GM. If she is to be successful, Ms. Barra should avoid crappy politics while living up to her pledge to have GM stop building crappy cars.

Mark Modica is an NLPC Associate Fellow.