UPDATE: Whitacre Brings Union, Dealmaking Experience To GM
09 Juni 2009 - 10:00PM
Dow Jones News
Edward Whitacre, who cobbled back together much of
telecommunications giant AT&T Inc. (T), will try his hand at
revitalizing another American icon as chairman of General Motors
Corp. (GMGMQ).
Whitacre, 67, will assume the post when GM emerges out of
bankruptcy later this summer. A cowboy from Ennis, Texas, he's a
savvy dealmaker with the ability to work with large unions, which
should benefit the troubled automotive giant. He also is expected
to tap into his experience dealing with the shifting telecom
landscape in order to steer GM through the auto industry's own
mercurial state.
"It's a very smart pick," said Scott Cleland, chief executive of
telecom consulting firm Precursor Group who has known Whitacre for
15 years. "He's somebody who's seen a lot and been through a
tremendous amount of change."
There are, however, questions over what a life-long telecom
worker - he started in 1963 as a facility engineer at Southwestern
Bell - will bring to a car company struggling to shed its ingrained
corporate culture. It's also unclear how much influence he'll be
able to bring to Chief Executive Fritz Henderson and the
government-controlled company, which faces steeper problems than
Whitacre has encountered.
But Whitacre is known as a quick study and for his ability to
run efficient and organized meetings. He is expected to bring some
badly needed focus to GM.
"There won't be any more of those day-long meetings, I assure
you that," said James Ellis, the former general counsel to AT&T
who worked with Whitacre for nearly two decades. "I think it's a
challenge he's certainly up for."
One asset he brings is the ability to negotiate with unions.
When Whitacre retired, AT&T employed more union workers -
mostly under the Communications Workers of America - than the
entire U.S. auto industry.
"He's someone who's been able to straddle the needs of running a
profitable business with working well with unions," Cleland
said.
Whitacre, however, will be tested when he deals with the United
Auto Workers union, a powerful force whose demands have long
weighed on U.S. auto makers.
"We wish him well in GM and believe he will be the same unifier
and visionary there as our nation recommits to U.S. manufacturing
and the automotive industry in particular," said Larry Cohen,
president of the CWA.
Whitacre's dealmaking abilities, meanwhile, are well-known in
the telecom industry. He is credited with rebuilding a large part
of the original Ma Bell. Shortly after taking the reins of
Southwestern Bell in 1990, he went on an acquisition spree and
scooped up Pacific Telesis, SNET, and Ameritech, culminating in the
purchase of AT&T in 2005. A year later, he acquired fellow Baby
Bell BellSouth and the remaining stake in Cingular Wireless,
putting all of the businesses under the revived AT&T name.
"Ed Whitacre is an extraordinary leader whose vision and
boldness helped transform AT&T into the world's largest
communications company," said Randall Stephenson, chief executive
of AT&T and Whitacre's successor.
While AT&T's resurrection centered on getting bigger, his
goal at GM is likely the opposite - getting trimmer and more
efficient. Whether it is buying or selling, Whitacre's dealmaking
experience will prove vital as GM looks to divest some of its car
lines.
"He's very shrewd about value," Cleland said. "He's a good
negotiator. Those skills work whether you're building up or paring
down."
Still, the market dynamics are different enough to pose a
challenge. While the number of power players in the telecom
industry is diminishing, the auto industry is flooded with
competitors. In addition, overseas rivals have established their
dominance in the U.S., a threat Whitacre never had to deal with at
AT&T.
To survive, GM badly needs to instill an attitude of innovation
into its car development. Whitacre was known to have had an eye on
the future. He drove AT&T's initiative to upgrade its network
to offer a faster Internet connection and an Web-based television
service. He had coveted BellSouth because it would give AT&T
full control of the wireless business, which now drives nearly all
of the company's growth.
Some believe Whitacre can bring that push for change to GM,
which hasn't been known to move with the times nearly as
quickly.
"I think he's the right man at the right time at the right
place," Ellis said.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020;
roger.cheng@dowjones.com