Editor’s note: This article was first published in August 2010, before the IPO. GM went public again in November 2010 and raised about 20 billion dollars, more than the 16 billion mentioned here. On 12 August 2010 GM had announced Ed Whitacre would step down as CEO on 1 September, though the article treats this as a rumor.
General Motors has filed all the paperwork it needs to return to the stock market before the end of this year. I thought this news was worth covering because it shows how important a good CEO is to a company. Ed Whitacre has managed to achieve at GM what hadn’t been achieved there even before the crisis began.
GM was an economic burden for the United States: it had to be bailed out by both the US and Canadian governments, leaving the government with 61% of the company. As we all know, GM filed for bankruptcy in June 2009, so this news amounts to a resurrection.
The government injected $60 billion to keep 250,000 direct jobs, and millions of indirect ones, from being lost in the middle of the economic crisis. That was when Ed Whitacre came in as CEO of General Motors. He took advantage of new business opportunities in emerging markets such as Brazil and China, cleared out ineffective senior managers, brought a new vision to the company’s manufacturing models and, for the first time, got the company to turn a profit: 3,000 million euros in the first half of 2010.
GM will offer $16 billion worth of shares, making it one of the largest IPOs in Wall Street history.
However, all of this could fall apart if certain rumors are confirmed: the man behind the company’s resurrection, Ed Whitacre, has said he wants to leave the company at the end of this year.
If that happens, shareholder confidence would vanish, and this plan to repay the bailout and return to the stock market wouldn’t be worth much if shareholders don’t trust the new CEO.
I think this story shows very clearly how important a good leader, manager or CEO is. No one is indispensable, but some people can single-handedly change the course of a company, and even the economy of an entire country.
Further reading
Featured image: Ray Dumas, CC BY-SA 2.0, via Flickr.
