Tech Services Happenings

As most of you probably know, the new CEO of General Motors, Fritz Henderson, was here last Thursday morning for a “Town Hall Meeting” (the biz school’s second such event) on the future of the auto industry. He was joined by local car-meister Mike Jackson, the CEO of AutoNation. I didn’t see many fellow TS-ers there, so I thought I’d give an overview for those of you who might be interested.

The first half of the program gave each of the speakers a chance to comment on all things auto. Mike Jackson went first, choosing to focus on the recent economic meltdown and how it brought about the auto industry bailout. He blames the housing crisis for much of the carmakers’ woes. First, he says, people who were getting too-easy credit on new homes expected the same on new cars. And while most car dealers resisted these demands, that pressure drove the industry to offer incentives on new cars that left them with very little profit. Then, when all the foreclosures began, people stopped buying cars. (The last thing someone losing her home thinks of is buying a new car, eh?) Flat sales and no profit proved a bad combination, and it all came to a head in the early fall of 2008. And though he said it was difficult for an admitted free-market Republican like himself to say so, Jackson thinks the government was right in stepping in. He thinks we’ve hit bottom, though, and believes car sales will continue to grow for at least the next 7 years—slow at first, then speeding up. He sees GM, under new CEO Henderson, as being a big part of that recovery.

Henderson, installed as CEO just 6 months ago, spent his time mostly pitching the new GM: its new cars, its new culture, and its new global perspective. He said he’s committed to increased fuel efficiency but cautioned that it makes more sense to improve the mileage of all GM’s gas-burning cars  rather than try to come up with one model to compete with ultra-efficient cars like Toyota’s hybrid Prius. (That sounded like a cop-out to me.) He also said that the company is leaner and meaner than before, the result of dumping many product lines and extraneous infrastructure. And he’s excited about the strategy of designing cars with the entire world in mind—rather than trying to retrofit American models to suit other countries’ roads, tastes, and environmental regulations. He finished by showing us four 15-second car commercials, the point of which I didn’t get. Just seemed to me like a chance to pitch his products to a captive audience.

A question-and-answer session followed. The first question had to do with Chevrolet’s upcoming electric car, the Volt. Henderson played down the issues of its high price ($40K!!) and low performance (less than 50 miles on a charge), framing the issue more as this being just the first step in a bright future of GM electric cars. He used the opportunity to repeat his commitment to higher mileage for conventional cars, saying that he saw that strategy as having more of an effect on overall gas savings. A related question asked whether people’s concern about fuel efficiency is tied to gas prices, which Jackson vigorously defended. It’s a sad commentary, but he said that if gas is cheap, car buyers would rather have useless, flashy features than a car with better mileage. As he pointed out, buying a car is an emotional decision.

I didn’t stay for much more, because the questions became increasingly business-oriented and I just couldn’t cut through all the buzzwords. But I sat next to a teacher from the biz school, and she seemed pleased by what she heard.

These town meetings have their drawbacks—e.g., your ability to ask “hard” questions is ameliorated by the fact that (a) you have to write them down for someone to pass on and possibly edit or “lose,” and (b) there is no chance to follow-up—but I’m glad Nova has them. It’s good PR for the school and fun to see these guys in action. And it has been guys exclusively through these first two town hall meetings. It’d be nice to see some women up there for a change. Can you do something about that, Ish?

If you were there and saw things differently, let us know. That’s what blogs are about!

–Mark