Sign GM is firing on all cylindersMay 24, 2013: 11:34 AM ET
The Detroit giant is moving its treasury staff to the Midwest.
By Doron Levin
FORTUNE -- General Motors Co.'s decision to move its treasury staff to Detroit from its historic home in New York is another sign of the automaker's restructuring as well as a subtle shift from a management philosophy that helped GM rule in an earlier time.
The move, affecting 70 GM (GM) workers, will take place next year. Dan Ammann, chief financial officer, said in a statement that finance workers will be integrated into "our core business operations." Prior to GM's 2009 bankruptcy, the automaker's New York finance staff was regarded as an elite within the company, a breeding ground for CEOs and other top executives. Rick Wagoner, the CEO who lost his job as a result of GM's collapse, as well as his predecessor Jack Smith, served in the Treasurer's New York office. So did the late Roger Smith, who retired in 1990.
The two Smiths and Wagoner were heirs to a corporate culture in which financial management was ascendant from the 1950s on. During that period GM grew to dominate the U.S. automotive market and became the largest, richest, and most sophisticated publicly owned corporation in the world.
More often than not, decisions by GM's finance staff took precedence, often overruling initiatives by GM's manufacturing, marketing, or design staffs to make changes or improvements that could affect GM's bottom line. As one former non-GM automotive CEO explained it: "They went to New York for the same reason that Willie Sutton robbed banks. That's where the money was." In its heyday, GM was known in corporate circles as much for brilliant financial management as for fine automobiles -- many alumni of GM's finance staff went on to senior positions in banking and other corporations.
GM's finance staff for years was located in the GM Building on 59th Street and Fifth Avenue, overlooking Central Park. The location afforded close proximity to major investment and commercial banks, underwriters of loans to GM, General Motors Acceptance Corp., as well as stock offerings. Maryann Keller, a longtime automotive analyst, said GM believed it could recruit trainees from Harvard Business School -- Wagoner was a graduate -- more easily to work in New York than in Detroit.
Founded in Flint, Michigan in 1908, GM grew mainly by acquisition of independent carmakers like Cadillac and Chevrolet, as well as parts makers, which often necessitated complex financings, borrowings, and stock swaps. GM's founder, Billy Durant, lost control of the company twice due to poor financial mismanagement.
Alfred Sloan Jr., GM's longest serving and most illustrious CEO, was an east coaster and an engineering graduate of the Massachusetts Institute of Technology. He maintained a GM office at 30 Rockefeller Center, travelling frequently to Detroit. Sloan came to GM when his New Jersey-based company, Hyatt Roller Bearing, was acquired by the automaker. His fortune helped to endow the Sloan-Kettering Institute for cancer treatment and research, based in New York.
By consolidating GM's Treasury staff in Detroit, Ammann will centralize the financial management function at headquarters, allowing some autonomy to the automaker's Asian, European, and South American subsidiaries.
GM's last two CEOs came from outside the company entirely, a repercussion of the bankruptcy. But two prospects to succeed the current CEO are longtime GM. Their backgrounds are in manufacturing and in product development, rather than finance.
Moving the Treasury to Detroit from New York suggests that GM's future is more heavily dependent on the quality of its vehicles than on the quality of its financial transactions.