Once Upon a Car Part 18

Chrysler's attorneys and government advisors were, in fact, itching to get the Chapter 11 process rolling. The Section 363 bankruptcy was called a "quick rinse" for a reason. If all went well, the company could get out of court by the end of the summer, with $6 billion more in federal loans as its bankroll for a fresh start.

Chrysler would chart its new course without the help of the old guard. Tom LaSorda announced his retirement, and Bob Nardelli said he would leave Chrysler once it emerged from bankruptcy. He had rushed back to Auburn Hills after the grueling final days of negotiations in Was.h.i.+ngton. Nardelli wanted to be in the building, with his employees, when the president made his announcement. "This is really bittersweet for me," he said. "It's not the fate I would have chosen by any means. But it allowed us to save the company."

At the end of the first quarter, Ford said it had lost $1.4 billion, had seen its sales drop 43 percent, and was spending more than a billion dollars in cash every thirty days. And in the woefully weak auto environment of 2009, this qualified as very good news. So good that investors bid Ford's stock up 11 percent to $5 a share-triple the value it had had two months earlier.

The Ford Motor Company was the one bright light in Detroit's darkest hours. It had enough money to keep the new products coming. The company had convinced its lenders to accept cash and stock to lower its debt by nearly 30 percent, saving $500 million in annual interest payments. And the big research firm Auto Pacific had found in a study that 72 percent of consumers were more likely to buy a Ford product because the company didn't take government loans.

While Chrysler and General Motors were spinning their wheels under government oversight, Ford was gaining traction. "I don't take any joy in watching GM and Chrysler struggle," said Bill Ford. "I wish them well, but I wish us better. I want us to win."

And when Alan Mulally was invited down to D.C. to share his insights about the industry with the task force, he saw the One Ford plan up on the wall. "They were using the Ford plan in the restructuring of GM!" he said. "Can you believe it? They were implementing the Ford plan at GM!"

GM's first-quarter loss was $6 billion, and its cash burn was now an inferno, about a billion dollars a week. Steve Rattner and the task force were sweating bullets about the federal money that was going up in smoke. Still, the president had given GM sixty days to get deals with the union and its bondholders, and Henderson and Treasury were racing to make it happen. Gettelfinger was under excruciating pressure to do a deal.

In mid-May, Ron Bloom put a final offer on the table. The union would get a 17 percent stake in GM and additional preferred stock and warrants instead of the huge cash infusion specified in its contract for the health care trust. Gettelfinger resisted mightily. Over the past three years, the UAW had negotiated for thousands of hours with GM on health care. And now he had to cut a new deal under the gun and accept stock in a company in intensive care to cover the medical bills of hundreds of thousands of retired workers and their widows and loved ones? It wasn't fair. But he would not stand in the way of anything Obama was doing to save Detroit. Gettelfinger made his decision to accept the Treasury offer after a solitary walk through the streets of Was.h.i.+ngton. Afterward, he called Bloom and agreed to the terms. "Would we have liked to have gotten more? Probably," he said later. "But everyone is sacrificing here. We did the best we could."

The negotiations with GM's bondholders were just as tricky. The $27 billion in debt was held by a broad cross section of big and small investors. What was once considered a relatively safe investment had become a travesty because of GM's death spiral. The company was supposed to make a $1 billion payment on one set of bonds by the end of the month, but it couldn't even afford that. The president's terms required General Motors to get 90 percent of all the bondholders to agree to swap their debt for stock, an extraordinarily tall order. As the sixty-day deadline approached, a large contingent did agree to a deal that would give them up to 20 percent of GM's stock.

The matrix of negotiations had grown exponentially. The Canadian government was also kicking in billions in loans for GM. What would it get out of a deal? And Henderson was desperately trying to sell off GM's European operations (a monster deal under normal conditions) to prevent that part of the business from tumbling into bankruptcy as well.

The deadline was drawing near as GM stakeholders around the world tried to protect their financial interests. Every day brought new headlines about labor talks, worried investors, dealers on the firing line, political fallout . . . and the one overriding question that simply could not be answered: Would bankruptcy work? Though Chrysler was speeding through the process, GM was a different animal. The costs were numbing. The U.S. government was prepared to pump in another $30 billion (on top of more than $19 billion already loaned) and the Canadians an additional $9 billion. Would it be enough? It was impossible to know. Beyond that, could General Motors emerge from Chapter 11 as a government-owned corporation and have a reasonable chance to succeed as an automaker?

By May 29, Henderson and his executives were ensconced at the GM Building on Fifth Avenue in New York, the company's financial nerve center for decades. The board was locked down there too. The U.S. government was shepherding GM into bankruptcy. But legally only GM's board of directors could approve a filing. A battalion of lawyers was on hand for meetings that went on around the clock. Thousands and thousands of doc.u.ments were reviewed and re-reviewed. There wasn't much time left.

Early the next evening, Henderson officially informed the board that the company's only path to salvation was Chapter 11. By now, the vote was a formality. General Motors was a basket case, about to be led into federal court by a U.S. president who refused to let it die. It once had represented the pinnacle of industrial power and prestige, its very name conjuring up images of stability and strength. Now it was a penniless burden to the people it once had towered over. So much wealth created over so many years, all gone now. If there was to be a comeback, it would have to start at the bottom, in bankruptcy, where failures go to get a second chance.

GM filed for protection from its creditors under Chapter 11 of the U.S. bankruptcy code at 7:57 A.M. on June 1. The main filing listed a.s.sets of $82 billion and liabilities of $172 billion. Its stock, once handed down by generations as the bluest of blue-chip investments, became instantly worthless. The voluminous court papers detailed the myriad reasons for the bankruptcy, but one sentence summed it up: "The transaction is the only realistic alternative for the company to avoid liquidation that would severely undermine the automotive industry."

Just before noon, President Obama addressed the nation from the White House. The United States government, he said, was investing another $30 billion in GM in bankruptcy and would come out owning 60 percent of the company. "Understand we're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them," he said. He realized this was hard for many taxpayers to accept while they were already beset by their own economic problems. "But I want you to know," he said, "that what you're doing is making a sacrifice for the next generation-a sacrifice that you may not have chosen to make, but a sacrifice you were nevertheless called to make so that your children and all of our children can grow up in an America that still makes things, that still builds cars, that still strives for a better future."

When Obama was finished, Fritz Henderson started walking from the boardroom high above Fifth Avenue to the press conference he had never wanted to attend. On his way he pa.s.sed a portrait of Alfred Sloan, the visionary CEO who had created the modern GM more than a half century before. If Sloan were there that day, Henderson thought, he'd have encouraged him to make the most of this opportunity to repair and rebuild their fallen company. And when he went on live television, the first thing Henderson did was apologize. "Give us another chance," he said into the cameras. "The GM that many of you knew, the GM that in fact has let too many of you down, is history."

Chapter Thirty-One.

Chrysler emerged from bankruptcy in mid-June, and GM came out a month later. These were remarkably rapid transformations. Two new companies were created. Then the sh.e.l.ls of the original corporations "sold" the best brands and plants and a.s.sets to the new ent.i.ties.

The court proceedings had trial-like intervals. Bob Nardelli and Fritz Henderson were called to the witness stand to testify how the automakers had ended up in bankruptcy and why it had been their only recourse for survival. But that was the legal process. What mattered was sc.r.a.ping off the decades of dysfunction and the legal obligations. The "new" companies came out clean and pristine, with sharply lower debt and loaded with taxpayer dollars. The "old GM" and the "old Chrysler" were junkyards laden with the rusted parts and pieces of an industry that had fallen on very hard times. There wouldn't be much demand for any of it. The nation was littered with shuttered auto plants. Since 2004, the Big Three had closed twenty-two major factories in the United States; only eight had found buyers. Most were just abandoned industrial hulks sprawled over hundreds of acres, left vacant while they awaited demolition, environmental cleanups, and willing developers. Now another sixteen plants would be added to the roster of the used up and discarded.

The new GM was hardly recognizable (which was the main point of Chapter 11). Pontiac, the legendary maker of muscle cars, was closed down. So were Saturn and Hummer. Saab, the little Swedish niche brand, was flung into the deep end of the pool to drown, only to be fished out by a European investor group. It wasn't just cars and trucks and brands that were disappearing. More than four hundred of GM's thirteen hundred U.S. executives were asked to resign or retire. The company got seven new board members, most of whom were handpicked by the government. They const.i.tuted a majority on the board (five holdovers remained) and would be the driving force for change at the top of the company.

The new chairman was Ed Whitacre, the retired chief executive of the communications giant AT&T. He was recruited intensely by Steve Rattner, who had scoured corporate America for a no-nonsense leader to ride herd on GM management and drive a stake in the heart of its insular culture.

"I told you no twice already," Whitacre said when Rattner kept pestering him to take the job. "h.e.l.l, I haven't had a suit on in six months." A tall, grizzled Texan with white hair and a steely glare, Whitacre had retired to his ranch in San Antonio to hunt, fish, and play with his grandkids. And at age sixty-seven, he wasn't interested in any job, anywhere. But Rattner was desperate. He didn't think Henderson could reform GM without a powerful authority figure holding him accountable. And the Obama administration had vowed to stay far away from the actual management of what its critics were already calling "Government Motors."

Finally Rattner wore down Whitacre by appealing to his sense of patriotic duty. "If helping with this company is important to the country," Whitacre said with a sigh, "I'll come do it." He didn't pretend to have any expertise in autos whatsoever. But "Big Ed" was one tough hombre of a manager, as Henderson would soon learn.

GM was dumping executives left and right. But Henderson needed to keep Bob Lutz, who postponed his retirement and segued into a new role as chief of marketing and communications. Who better to pitch GM's products than Lutz, Detroit's ultimate car guy?

Otherwise, Henderson was working nonstop to streamline the monolithic GM organization chart. He sc.r.a.pped the glacially slow automotive strategy board in favor of weekly meetings of a small executive committee. And he dipped deep into the GM talent pool for younger, hungrier executives such as forty-five-year-old Mark Reuss, who received a huge promotion from running GM's Australian division to become its head of global engineering. The company's crash landing in bankruptcy had sickened Reuss and countless other dedicated engineers and designers. "We lost our d.a.m.n edge," Reuss said bluntly. "I'm in the never-again business. We can never let this happen again."

When Reuss started his new job, he brought all of the top GM engineers from around the world to the Milford proving grounds for a two-day meeting. Their mission was to drive, critique, and systematically upgrade every GM car and truck. They met before dawn, ready to test-drive the newest products. Reuss, clad in a black-and-red leather racing jacket, addressed the group before they hit the road. "There has been fear in this organization, and people are afraid for their jobs," Reuss said. "But what we need to do now is trust each other, and be honest about our strengths and weaknesses."

Whitacre and the new board gave Henderson one hundred days to kick the cultural revolution into overdrive. But the CEO was under attack from the start. Two new directors, private equity honchos Dan Akerson and David Bonderman, were particularly caustic in their a.s.sessment of management's competence and strategies. Another persistent critic was, of all people, Steve Girsky, who was selected for the board by Gettelfinger to represent the union's health care stake. But no one fanned the fire under Henderson the way Whitacre did. "This business isn't that complicated, Fritz," Whitacre lectured. "You get good leaders, you set objectives, and then you get the h.e.l.l out of the way. If someone doesn't have the ability, then you get rid of them and get somebody else."

The board second-guessed Henderson's every move. "My biggest strength is I've been here twenty-five years," he said. "And my biggest weakness is I've been here twenty-five years." He took the blame for lousy cars in the past, poor sales in the present, trying to sell off the European business instead of fixing it, and on and on and on. Whitacre demanded speed, change, new faces, and one-page memos on topics that used to fill binders. "If it can't fit on one page," he grumbled, "I don't want it."

The new directors didn't choose Henderson; they inherited him. And he was torn apart beginning at their very first meeting, when he plunged into the day's agenda instead of articulating some brave, new corporate vision. Akerson, an executive with the big Carlyle Group private equity firm and a former U.S. naval officer, repeatedly chewed him out for lax discipline and shoddy quality. "You know, in the navy we used to X-ray every valve and seal on a nuclear submarine," Akerson told him. Henderson wondered what that had to do with building cars. ("Maybe this guy would listen," Henderson said, "if he ever stopped talking.") Bonderman was a brutal inquisitor, railing at management for overspending on engines instead of just buying them from compet.i.tors. Girsky bore in on the holes in the product plan. And Whitacre just hammered his mantra: sell more vehicles. "Our business is to sell cars and make money," he said. "This company should be growing, not shrinking."

For years, the General Motors board had bent to Rick Wagoner's will. This group challenged Henderson on everything. The constant attacks on GM's products and reputation pushed Lutz over the edge. "According to our new board, everything we did was stupid," he said. "Bonderman used the word 'incompetent.' He'd say, 'If you have good people, how come you went Chapter 11?'" At one dinner meeting with the directors, Lutz stood up, threw his napkin down, and vented. "I have never felt so disrespected in my entire career by people who don't know anything about this industry!" he said, and then stormed out of the room. Whitacre calmed him down, but most of the directors couldn't have cared less. They were brought in to exorcise the old GM, which had fouled its own nest and left the taxpayers to pay the cleanup bill.

Whitacre wanted management to pick up the pace, get energized, and break free from the past. But he had never seen morale so low in any organization. "Everybody has a long face around here," he said in his slow Texas drawl. "People are afraid. I want them to get mad enough to show the world that GM really is a great company." He started roaming around the corporation, popping into offices unannounced, going to the plants, wandering the food court at lunch, getting to know people, pumping them up with little pep talks. "I want people to feel good," he said. "But I also want them to do their d.a.m.n job."

The most oppressive element in creating a new GM was the same thing that saved it-the government bailout. Henderson was determined to start the wheels turning for a public stock sale by 2010. The scrutiny and shame that came with being a ward of the state was demoralizing and was handicapping GM with consumers. "I'm optimistic that we can pay back the loans faster than people think," he said. It was possible. GM now had a superclean balance sheet, much lower costs, and a revved-up product team eager to put better vehicles in the showroom. The bankruptcy cleansing could make it an attractive buy for investors when the car market recovered.

But Henderson would never see the day when General Motors became a normal, publicly traded automaker again.

Steve Rattner wouldn't be around for that either. The task force chief abruptly quit his post days after GM came out of Chapter 11. The architect of the Detroit bankruptcies was ensnared in an investigation by federal and New York officials in an influence-peddling probe of the state's public pension fund. He had been on the job in Was.h.i.+ngton for all of six months. Now Ron Bloom, the unsung hero of the bailout negotiations, was driving the president's auto agenda.

Sergio Marchionne swept through Chrysler like an avenging angel. "I need to get this place detoxed," he proclaimed. Bankruptcy cleansed Chrysler's balance sheet; now Marchionne would purify its organization. He flushed out several veteran executives with ties to the Cerberus regime. One of the first to go was Jim Press, the old Toyota hand. "You're out," Marchionne told him. "You don't fit in. I've got to break eggs around here." Press protested. He had financial problems, he said, and needed a job. He asked for a chance to distribute Chrysler vehicles in international markets. Marchionne said maybe, and then fired him again. Press had nearly forty years of experience in the auto industry. But in Marchionne's new order in Auburn Hills, he was just dead weight to be thrown overboard. "Sergio is truly from h.e.l.l," Press said. "He'll look at you and smile, then turn around and stick a knife in your b.a.l.l.s."

Marchionne systematically went through the ranks, slicing off managers who didn't fit his plans and promoting ambitious young talent. "These are kids who sat there and watched the intelligentsia of this house destroy their future," he said. "Now they can make a b.l.o.o.d.y difference." They all reported directly to him-no intermediaries, no bureaucracy, and no traditional chain of command. He alone ran the show in Auburn Hills, just as he did in Turin, juggling multiple cell phones to keep track of the torrent of information and decisions at two auto companies on separate sides of the world.

He had stark plans for Chrysler, cutting back sharply on incentive spending and allowing its worst vehicles to wither in the marketplace. He would let sales sink until Chrysler settled to its natural, compet.i.tive level-all the way down to a miserably low 6 percent of the U.S. market. "I had to go find out how deep this d.a.m.n trough was," he said. "Let it go. Sink the thing."

GM pulled out all the stops to rebuild its reputation, including offering sixty-day money-back guarantees on its cars. Chrysler's product line was stripped, while Marchionne crafted a plan to build it back up with more fuel-efficient, Fiat-based models.

But Ford didn't need sales gimmicks or extended rehab. In the third quarter of 2009, the Gla.s.s House stunned the industry by reporting an unexpected billion-dollar profit. Dearborn was gaining market share by the day. Some of the improvements were due to the consumer backlash against its bailed-out Detroit rivals. But the engine driving its comeback was a lineup of better, more attractive models. U.S. auto sales in 2009 crashed to 10.4 million vehicles, the lowest level in more than twenty-five years. GM fell 30 percent; Chrysler dropped 36 percent. But Ford's decline bucked the trend, falling just 15 percent. And the trend line grew more positive with each new vehicle introduction.

The "Drive One" advertising campaign had taken root. Customers testified in TV spots why they had traded in their Toyota for a Ford. While GM and Chrysler were undergoing emergency surgery, Ford was pumping iron, getting healthier and more confident with each monthly sales report. "This isn't a turning point," Alan Mulally declared. "This is a proof point of the strategy we've been following for three years."

And Mulally was on the road spreading Ford's wings, announcing plans for a new plant in China and an expansion of its fledging Indian operations. The One Ford strategy was more than an idea and a goal. The company was blending its geographic operations and products, accelerating development of cars with the Blue Oval that could be built and sold the world over.

The U-turn at Ford was so startling that its union workers rejected another round of concessions that had been granted to GM and Chrysler on their way to bankruptcy. Rank-and-file UAW members voted down the givebacks in part because of Ford's sunny financial results. Some union locals even protested Mulally's executive pay by printing up fake dollar bills with his picture on them. But a little backlash from the factory floor was a small price to pay for Ford's burgeoning success.

"You better send someone else to L.A.," Henderson said to one of his communications executives. "The next board meeting is coming up, and I've got a bad feeling about it." He was scheduled to make a major speech at the Los Angeles auto show, but GM's chief executive sensed that his time was running out. The new directors just had no use for him. Henderson had been CEO for all of eight months. He had stepped into the breach when Wagoner was fired, piloted GM into and out of bankruptcy, and presided over the nascent stages of its resurrection as a government-owned automaker. It was not enough to save his job.

On Tuesday, December 1, the GM directors told Henderson to resign. They reached their decision by a unanimous vote in executive session after another contentious board meeting. Whitacre broke the news to him afterward. The company wasn't changing fast enough, he said. Henderson's effort and commitment were admirable, but GM needed a clean break from the past. "It's not your fault, Fritz," he said.

Henderson agreed. "I never really had a chance, did I?" he said.

Whitacre became the new chief executive and chairman, chosen by the new board picked by the U.S. government to shepherd GM into a new era. "It was never in my game plan," he said. "But the board asked me if I would step up and do this and I volunteered." His first press conference that evening lasted about five minutes. "I look forward to working with the entire GM team as we now begin the next chapter of this great company," Whitacre said. He did not take questions.

Bob Lutz packed his bags in a rush to take Henderson's place at the L.A. show. When he took the stage at the Los Angeles Convention Center, he tried to keep his emotions in check. But he couldn't help himself. Henderson was a friend and a teammate. Somehow all GM had ever accomplished meant nothing. It had become the pariah of the automotive industry, and now Henderson had taken the fall. Usually when the chief executive is canned, the topic is off-limits for his colleagues to even reference in public. But this one hurt too much to let it pa.s.s.

"Fritz was and is an outstanding executive, and I'm very sorry to see him go," Lutz said to the standing-room-only crowd. "He guided General Motors through perhaps the most difficult period in its history. I think all of us were surprised, and the whole GM team is genuinely saddened over what transpired."

Back in Detroit, Henderson gathered together his senior executives and office staff. Some were crying, others red with anger. It wasn't fair, they told him. Henderson choked up. "Don't feel bad for me," he said. "I'm deeply disappointed that I won't be here to see it turn around, and it will. It's okay. You guys need to give Ed and the company all you've got." Then he broke down and let the tears come. "What I'm going to miss most," he said, "are the people."

The following day, Whitacre convened a group session of executives. He started a.s.signing new jobs, essentially reconfiguring the top management of the company in four hours. Mark Reuss was b.u.mped from head of engineering to chief of all North American operations. New leaders were named in marketing and international operations. Girsky became a special advisor to Whitacre. And Lutz lost all his operational responsibilities. The last link to GM's storied and troubled past was now a roving advisor to designers and the new product boss, Tom Stephens. No one in the company reported to Lutz anymore.

Chapter Thirty-Two.

The car zoomed around the Ford test track in Lommel, Belgium, taking the curves at high speed, accelerating like a bullet down the straightaways, stopping on a dime. It was sleekly aerodynamic, very fuel-efficient, loaded with the latest technology, and destined to be sold in every market around the world. The new Ford Focus would be the company's first truly global car, built to the exact same specifications in America as in Europe and Asia. The new vehicle platform was designed to yield two million small vehicles a year, saving billions of dollars in costs.

But what Derrick Kuzak cared about was how it drove. And when the new Focus finished its workout on the track, Ford's product chief allowed himself a small, satisfied smile. "When I drive the vehicle, I am the customer," he said. "And we have exceeded our own expectations."

The formula was no different now from when it was Henry Ford cranking out Model Ts in Detroit in the early 1900s. A hundred years later, Ford had been headed down the same ugly path as GM and Chrysler. Their rivals crashed in a heap and had to beg the American people for help. But Ford didn't need a rescue. Its road to recovery was painful but simple: Listen to the customer. Start fresh. And stick to the plan. The Blue Oval rose out of the maelstrom of an industry that collapsed under its own weight. And its comeback echoed the advice once uttered by its legendary founder. "Failure is only the opportunity," Henry Ford once said, "to begin again more intelligently."

Fifteen hundred Chrysler workers roared when President Obama walked out onto the floor of the Jefferson North a.s.sembly plant on Detroit's east side. More than a year had pa.s.sed since the company had come out of Chapter 11, and Chrysler's outlook had changed dramatically. New products were on the way, including the Jeep Grand Cherokee, which was rolling off the line at Jeff North. GM and Chrysler had turned the corner. Ford was making big money. And the president was taking a victory lap. "The fact that we're standing in this magnificent factory today is a testament to the decisions we made and the sacrifices that you and countless stakeholders across this country were willing to make," Obama said. "So today this industry is growing stronger. . . . You are proving the naysayers wrong, all of you!"

The president had hit a sweet spot-an economic success in the manufacturing hub of the industrial Midwest, Downtrodden old Detroit had risen. The workers beamed at the sight of him, shaking their heads, giddy at the idea that the president had come to Chrysler to praise them. Robert Shoulders, a second-generation autoworker with sixteen years on the job, reveled in the excitement. This was blue-collar, hardworking, get-your-hands-dirty Detroit. Those people who blasted the auto industry bailout? They weren't welcome here. "This is no tea party," he said. "It's hot chocolate in here!"

Sergio Marchionne watched from the side of the stage. He had made sure the plant was spit-s.h.i.+ned for the president. And when Obama extolled Chrysler, its products, and its comeback, even this tough Italian taskmaster got a little emotional. "Fourteen months later, and the heart is beating," he said. "I can only tell you as a CEO, when you see this sort of thing, it's the best feeling on the face of the earth."

Ed Whitacre sat across the breakfast table from Ron Gettelfinger. The sun hadn't even come up in downtown Detroit when the chairman and chief executive officer of General Motors met the president of the United Auto Workers in the humble Motown Coney & Grille, just up the road from Solidarity House. The restaurant was a favorite of the guys coming off their s.h.i.+ft at the Chrysler plant. Gettelfinger had been a regular since he was elected to lead the union seven years before. But he had never had a meal quite like this-not at the Motown or anywhere else. "I cannot believe that the chairman of GM would come have breakfast with me in this diner," he said. Whitacre just laughed. He didn't care how GM's top dogs had dealt with the UAW in the past. He wanted to get to know Gettelfinger better, break down some barriers, and work together on saving this thing called GM.

Whitacre wasn't a complicated man. He had been born in the small Texas town of Ennis, the son of a railroad worker, and his first job had been climbing telephone poles and running wire for Southwestern Bell. After a slew of promotions and corporate mergers, he'd ended up running mighty AT&T. But Whitacre never forgot the value of serving the customer, which he'd learned on the dusty streets of Dallas, fixing phones, providing service, getting a job done. He saw no reason to change now that he was in charge of America's biggest car company. "It's a people business first and foremost, and it comes before everything else," he said. "If people are not satisfied with their job and don't have a desire to excel, well, you just can't make them."

Whitacre hit it off with Gettelfinger, who was so tickled by their meeting that he had Steve Girsky take Whitacre's picture with Gettelfinger and the diner's owner, and then had it framed and hung on the wall. Girsky had been around GM a long time-as a Wall Street a.n.a.lyst, an advisor to Rick Wagoner, a UAW strategist, and now a board member and Whitacre's right-hand man. He was more than happy to take this photograph. "Ron was devastated by everything that's happened in the industry," Girsky said. "Then all of a sudden the chairman of GM shows up, just to talk things over? I mean, how unbelievable is that?"

Whitacre had two goals for GM. First, management needed to restore the pride and accountability in the company. Then it had to get the government out of its affairs as soon as possible.

The first task was straightforward. Whitacre was a big believer in managing by walking around, whether it was donning jeans and a sweats.h.i.+rt to work a few hours on an a.s.sembly line in Flint, nosing through the GM tech center unannounced, or prowling the offices of the Renaissance Center and asking employees what they were doing right at that minute. When he convened his senior executives for their Monday-morning meeting, the agendas were one page and no more. "Are you executing the plan?" he said. "The success of this company depends on the things you do. So go do it. n.o.body is going to be fired for trying something around here. n.o.body is going to get run off. Just go out and do it."

Freeing GM from the stigma of government owners.h.i.+p was much harder. Whitacre ran out of patience and energy before it happened. He ended up serving as CEO just about as long as Fritz Henderson did. He left in August 2010, tired of living in a condo in Detroit and dragging himself back and forth to see his family in Texas on the weekends. By then, GM was profitable again. The bankruptcy, the federal money, and the pent-up power of its engineers and designers and blue-collar workers had made GM a leaner, far more effective compet.i.tor. The company got a break when Toyota became ensnared in a series of disastrous recalls tied to the unintended acceleration of its vehicles. When Toyota's sales plunged, GM benefitted. And the better the company performed, the closer it got to an initial public stock offering that would allow the Treasury Department to begin selling off its 60 percent owners.h.i.+p stake.

Whitacre badly wanted to stay through the stock offering. But the GM board and the company's lawyers were adamant that the CEO who took the company public needed to steer its course afterward. How could investors come back to GM without feeling confident about its long-term leaders.h.i.+p? So Whitacre left reluctantly and turned the reins over to Dan Akerson, one of the directors picked by the government in the waning days of bankruptcy. "I wish I were five years younger," Whitacre said. "I think this company is going to sell a lot of cars and make a lot of money."

On November 18, 2010, Akerson rang the bell to open trading on the New York Stock Exchange and kick off the largest initial public stock offering in American history. After months of planning and management road shows for investors, 457 million shares in the new GM sold for $33 a share. The U.S. government cashed in nearly half its stake, reaping $13 billion of the $50 billion it had invested in General Motors. By the end of the year, taxpayers owned just 26 percent of GM and were poised to sell off another big chunk in the summer of 2011.

Two weeks later, Akerson stood in front of hundreds of cheering workers at GM's Hamtramck a.s.sembly plant smack in the middle of Detroit. Most of them had never seen him before. After all, he was their fourth CEO in less than two years. But it wasn't the man they were applauding. It was the car-the Chevrolet Volt, built right there in the heart of "the D" and ready to go on sale. In the end, it was all about the car-designing, engineering, a.s.sembling, and selling a product that consumers wanted to own and drive. And when the Volt came out onstage, the applause was deafening. It was the most technologically advanced, fuel-efficient plug-in hybrid car ever made. And it was their baby.

"It's the beginning," Akerson said, "of a whole new auto industry."

What Jim Farley really wanted to do was kick the daylights out of General Motors. "I'm going to beat Chevrolet on the head with a bat," he said with a slightly wicked smile. "And I'm going to enjoy it."

There was a saying going around Ford: GM was like the kid who was born on third base and yells out, "Hey, Ma, I hit a triple!" Farley and his fellow Ford executives and workers were ready to rumble. They were on a hot streak and didn't care if Dan Akerson had a million Volts to sell. GM had gotten a bailout, but Ford had much more. In 2010, the company reported its best year in more than a decade-$6.6 billion in profits. The Blue Oval was s.h.i.+ning brighter by the day. The only way the company's success could be better was to have some old-fas.h.i.+oned compet.i.tion with the guys on the other side of town.

This was like the glory days again-Ford versus GM, let the better car company win. "We're going to beat on them, and it's going to be fun," said Farley. "f.u.c.k GM. I hate them and their company and what they stand for. And I hate the way they're succeeding. Ford is back because people trust us. And that is a powerful message. I'm a car guy. I wake up each morning thinking about cars. Watch out. We're only going to get better."

In his corner office on the top of the Gla.s.s House, Alan Mulally had a new favorite picture on the wall. It was an advertis.e.m.e.nt for the Ford Motor Company that had appeared in the Sat.u.r.day Evening Post in 1925. He liked to read the script, written by Henry Ford himself, and contemplate the headline: "Opening the highways to all mankind."

It was the first thing Mulally saw when he came into the office every day at 5:15 A.M. and turned on the lights. "Opening the highways to all mankind," he said, cheris.h.i.+ng the words. "Isn't that something? We are standing on the shoulders of Henry Ford. It was his original vision. We're relevant again. We're making things people really care about. It's a whole different feeling to be wanted."

He walked to the window and looked out at the city of Detroit in the distance. Sometimes he thought about that summer day in 2006 when he'd hugged Bill Ford in his driveway, talked about the Blue Oval in his living room, and dreamed out loud about the future. He had never doubted it would come true. It was all in the plan.

Author's Note.

The idea for this book arose from my coverage of the American auto industry as a reporter for the Detroit News and, since January 2008, as the Detroit bureau chief for the New York Times. The primary source materials were compiled from more than one hundred interviews done specifically for this book. I also drew on interviews and research conducted during the course of my reporting for the Detroit News and the New York Times. Among the other sources of information used extensively were corporate doc.u.ments, federal court records, SEC filings, and transcripts of hearings, speeches, and press conferences.

The bulk of the interviews were conducted on a background basis, with the understanding that the information would be used but not attributed to a specific source. Also, every interview was done with the agreement that the material compiled was specifically for this book and not for publication elsewhere. Conversations were reconstructed based on the recollections of at least one partic.i.p.ant; others involved were asked about the accuracy. The author a.s.sumes sole responsibility for the versions of events as portrayed in the book. If a quote was used from another publication, the source is credited as such.

Reporting for the book was done primarily in Detroit, New York, Chicago, Los Angeles, and Was.h.i.+ngton, D.C., as well as in several cities and towns with automotive plants in the United States.

I am very grateful to all those people who generously gave their time and trust to me during the reporting process. The list of individuals who cooperated is quite long. But I would like to specifically thank the following people: Bill Ford Jr., Alan Mulally, Mark Fields, Jim Farley, Rick Wagoner, Fritz Henderson, Bob Lutz, Ed Whitacre, Steve Girsky, George Fisher, John Bryan, Carlos Ghosn, Dieter Zetsche, Tom LaSorda, Bob Nardelli, Steve Feinberg, Jim Press, Sergio Marchionne, Steve Rattner, Ron Bloom, John Casesa, Jennifer Granholm, and Kirk Kerkorian. And I owe a special thanks to Jerry York, a good friend and trusted source, who died in March 2010.

This book could not have been done without the aid and encouragement of many friends and colleagues. I want to thank Larry Ingra.s.sia and other editors of the New York Times for allowing me to take two unpaid leaves of absence during the reporting and writing process. I also owe a great deal of thanks to Adam Bryant, my editor during my first two years at the newspaper, and to my reporting partners in Detroit, Nick Bunkley and Micheline Maynard. At the Detroit News, the following people were instrumental in my understanding of the auto industry and the events chronicled in this book: Mark Truby, Sue Carney, Brett Clanton, Christine Tierney, Sharon Terlep, Bryce Hoffman, and Charlie Tines. Words cannot express how grateful I am for the advice and help provided by my literary agent, Jane Dystel. And thanks to Henry Ferris, my editor at William Morrow, for his extraordinary patience and understanding in seeing this book through to completion.

Most of all, I want to thank the people who were so supportive during this long, arduous process: my dear friend Molly Feely; my wonderful children, John, Dan, and Katie; and my loving parents, Robert and Nancy Vlasic. I could not have done this without you.

About the Author.

Bill Vlasic is an award-winning business reporter with more than fifteen years of experience specializing in the automotive industry. He is currently the Detroit bureau chief for the New York Times. He previously worked as a reporter for the Detroit News and as a correspondent for Business Week. He is also the coauthor of Taken for a Ride, about the ill-fated 1998 merger between Daimler-Benz and Chrysler. Vlasic is a winner of the Gerald Loeb Award for excellence in financial journalism and has been recognized for his reporting and investigative journalism by the a.s.sociated Press and the Society of American Business Editors and Writers. He lives near Detroit, Michigan.

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