GM's Europe Chief Steps Down. Why?
Now this was an unexpected development in General Motors' (NYS: GM) ongoing European saga: GM announced Thursday morning that Karl-Friedrich Stracke, president of GM Europe -- a key member of the team appointed to fix the mess -- would be stepping aside, effective immediately.
Stracke will be moving to a new role, taking "special assignments" for CEO Dan Akerson, GM said in a terse statement. Meanwhile, Akerson's right-hand man, Vice Chairman Steve Girsky, will fill Stracke's old role until a permanent successor is named.
A key player in an important effort
On the surface, this is a strange move. Ackerson put Stracke, a longtime GM rising star, in charge of GM's troubled German subsidiary, Adam Opel AG, early last year and promoted him to the company's top spot in Europe just this past January. Stracke was widely seen as playing a key role in Akerson's full-court press to overhaul Opel, and recent developments at least hinted that real progress was being made in the effort to turn around a business unit that has lost more than $16 billion since 1999.
But now he's out, seemingly kicked upstairs to a vague role, while Girsky takes the helm of GM's most troubled division. Girsky, like Akerson, is an industry outsider with a Wall Street background who joined GM in the wake of its bankruptcy. But unlike Akerson, Girsky came in knowing quite a bit about the car business. At one point, he was a senior auto industry analyst at Morgan Stanley, and his network of contacts in the global auto industry is said to be very wide.
Girsky's an exceptionally smart and capable executive, and when the story of GM's renaissance is finally told it will likely have his fingerprints all over it. Europe has been at the top of his agenda since last fall, when Akerson made him the head of Opel's supervisory board, and he has been widely seen as the driver of an intense, ongoing effort to turn the long-troubled unit into a sustainably profitable business.
That effort seemed to bear some fruit late last month, when GM announced that Opel's board had approved a turnaround plan. The announcement of the plan was criticized in some quarters (including this one) for seeming to shy away from factory closings and other hard decisions, but it seemed to represent at least some progress on a problem that has frustrated many GM stakeholders for a long time.
But now we hear that Stracke is out. And as I write this on Thursday morning, it's unclear why.
An abrupt move with no real explanation
GM's statement announcing the move was a classic in the "raises more questions than it answers" genre. Stracke was effectively running Opel, intimately involved in the troubled German carmaker's day-to-day operations. That's not a role Girsky is likely to take on long term.
But the statement gave no reason for the move. Stracke wasn't fired, exactly. The statement included a complimentary bit from Akerson, "Karl Stracke worked tirelessly, under great pressure, to stabilize this business and we look forward to building on his success." And Stracke himself was quoted as saying that he was "looking forward to taking on new challenges" for GM and Akerson. But while he wasn't fired altogether, this was clearly an abrupt move. Stracke had been scheduled to address an industry conference in Munich early Thursday, but was replaced at the last minute by another Opel executive.
Opel's problems are dramatic, but the difficult economic situation in Europe has been hard for most of the continent's carmakers. Rival Ford (NYS: F) , whose operation in the region has been seen as relatively healthy, recently warned that it expected big losses in Europe. And GM partner PSA Peugeot Citroen (NASDAQOTH: PEUGY.PK) announced Thursday that it would be closing a major factory near Paris and cutting 14,000 jobs amid mounting losses. But Opel's losses are chronic, and its problems go deeper, and Akerson has been determined to fix the troubled unit once and for all.
It's likely that more details on Stracke's departure will emerge in coming days, but right now, the backstory here remains a mystery. It's always possible that Stracke has some personal issue -- health, family -- that led him to ask for a reduced role effective right away, of course, but the timing of his departure in GM's drama raises questions.
Good or bad? Hard to say right now
Specifically, it raises this question: Was Stracke's departure a concession of some kind to Opel's powerful unions? Negotiations between Opel's management and union leaders on the specifics of the restructuring have been ongoing for some time. If this was a concession, it was a big one and it should lead to more big developments in the coming days.
But for GM shareholders, whether this move represents progress on one of the company's biggest challenges -- or a significant setback -- remains, as of this moment, an open question. Stay tuned.
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At the time this article was published Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at@jrosevear. The Motley Fool owns shares of Ford.Motley Fool newsletter serviceshave recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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