The power behind the throne at GM
The Treasury's Ron Bloom is keeping a watchful eye on the new General Motors.
By Alex Taylor III
The hallway leading to the conference room on the third floor of the U.S. Treasury Department in Washington, D.C. is lined with oil portraits of past secretaries, and the conference room itself is sufficiently ornate to serve as a setting for treaty signings and other momentous affairs of state.
Ron Bloom, the head of Treasury's auto task force, seems totally out of place here -- yet totally comfortable. A longtime labor unionist, Bloom affects the demeanor of a working man, with his bargain-basement suits and barber-college hair cut. Yet he graduated from Wesleyan College, holds a Harvard MBA, and once worked for Lazard Freres, so he knows how the other half lives.
Bloom combines a razor-sharp mind with the confidence of someone who represents GM's largest shareholder -- the U.S. government -- and who knows exactly what buttons to push to make sure that taxpayers get their money worth.
In an interview (Bloom spoke on background and asked that he not be quoted directly) he revealed that he is making his influence felt in multiple ways. First of all, he talks directly to GM's new chairman Ed Whitacre, and had a hand in vetting the selection of the other outside directors.
Bloom also talks with CEO Fritz Henderson -- but not exclusively, the way a traditional investor might. He indicated that he has an ongoing dialogue with members of top management and does not feel constrained by organization charts to go through one level to get to another.
Bloom is too discrete to say what exactly he has been talking about, but he is up to speed on the big issues. GM's negotiations to sell its Opel operations in Europe have been especially sticky, and he has helped manage relations with the German government.
One recurring theme through the interview was the necessity for post-bankruptcy GM to focus on execution.
GM knows how to build great cars and trucks, Bloom believes, but it has to prove it over and over again by actually doing it.
GM knows that its stodgy, complacent culture needs changing, Bloom is convinced, but it has to actually take the steps that will lead to change; the culture will not change by itself.
The executive ranks have been thinned, which Bloom worries will not necessarily lead to better results. GM will have to make sure someone picks up the duties of the departed managers so no job goes undone.
Bloom expects Henderson to become more aggressive in shaking up GM. To date, Henderson has been constrained by limits on executive compensation in promoting and recruiting talent. Blue says a pay and benefit proposal has been presented to the special master of the bankruptcy court that, once approved, should make it easier.
He still foresees the government being able to start cashing out its investment next year. Like others, he realizes that GM has a hard job ahead of it convincing customers that most of its cars are competitive again. But the government has timed its investment well.
Stripped of much of its overhead, GM is ready to compete like a younger company. And after a year in the doldrums car sales are picking up. There will be a payback period from the cash for clunkers program where sales will dip, but after that washes through, the overall trend should be up.
Consumers can't stop buying cars forever. And when they return to the showrooms, Bloom expects GM to be ready to cash in.