Incoming GM chairman Solso made tough calls as Cummins' CEO
EDITOR'S NOTE: This article has been updated to correct the spelling of General Motors CEO Dan Ammann's name.
DETROIT — In 2001, about a year into his tenure as CEO of then-struggling Cummins Inc., Tim Solso did the unthinkable: He axed one of the two U.S. heavy-duty engine platforms under development, one in which the company had invested nearly three years and tens of millions of dollars.
"To kill an engine platform at Cummins back then, it was like a sacred cow," says Jean Blackwell, who was then a vice president at the diesel engine maker. "Tim's message was: 'We need the right cost structure, and the customers have to want it.' People weren't used to hearing that."
The recent selection of Solso as General Motors' nonexecutive chairman didn't come as a shock to former colleagues, given the parallels between his 12-year tenure at Cummins and the path of post-bankruptcy GM. Both involved a struggle to change the culture of a once-dominant but humbled company, whacking away at a bloated cost structure and a renewed effort to focus on the customer.
GM's board views Solso, 66, as a steady hand to complement a capable but relatively green new executive team, according to two people familiar with the directors' thinking. Mary Barra, 52, takes over as CEO on Jan. 15 from Dan Akerson. Her No. 2 will be GM CFO Dan Ammann, 41, who will become president with broad operating oversight.
Still, it's unclear how assertive Solso will be. Other than a brief period after GM's 2009 bankruptcy, the company hasn't had a nonexecutive chairman in nearly 20 years.
GM did not make Solso available for an interview to discuss his new job, which also begins on Jan. 15
Former colleagues describe Solso, who joined GM's board in June 2012, as more visionary than hands-on.
He's unusually straightforward and lacks the polished veneer and scripted talking points of most CEOs, they say.
When Blackwell was interviewing for a job at Cummins in 1997, Solso, then president, told her candidly that Cummins "wasn't a shining example" of a good place for female executives to thrive.
Solso had no tolerance for bad actors and bullies in the company, former colleagues say. He had his executives read a business book titled The No A—hole Rule: Building a Civilized Workplace and Surviving One That Isn't.
The Oregon native was a psychology major at DePauw University in Indiana, about 80 miles from Cummins headquarters in Columbus, Ind. He's a Harvard M.B.A. and a Cummins lifer who held several management jobs before becoming CEO in January 2000 at age 52.
Current Cummins CEO Tom Linebarger, who worked for Solso for more than a decade before succeeding him in early 2012, describes his former boss as "a simple, humble guy." At Solso's ranch in Montana, he keeps a small herd of cattle and a chicken coop and rides around the property on a four-wheeler, Linebarger says.
"He lives modestly and likes simple stuff," Linebarger says. "If you try to take him to a fancy restaurant or ask him to pick out a good bottle of wine, he just has no idea. If he's at home and his wife is away, he'll eat, like, franks and beans for dinner."
Cummins investors during the Solso era earned enough to eat like kings. The company's shares rocketed from around $7 in early 2000 to $85 by the end of 2011, as Solso transformed it from a company on the ropes to an industry stalwart.
When he took over, Cummins' U.S. market share in heavy-duty truck engines had shriveled to the mid-20-percent range, from around 60 percent in the 1980s. It faced stiff competition from Japanese companies and revitalized domestic rivals such as Detroit Diesel. Cummins was losing money and bogged down with debt from acquisitions and international expansion that weren't paying off.
Solso slashed costs, closing or consolidating 14 plants. In addition to nixing the engine platform, he killed another sacred cow by closing an assembly line at Cummins' main heavy-duty assembly plant in its hometown.
"Those two moves just shook everybody," Linebarger says. "The message was: No, I'm serious. Things need to change."
Solso also embraced what previously had been an anchor around the necks of Cummins and other diesel engine makers: tighter U.S. emission standards that were forcing big r&d investments. Engine makers, including Cummins, had been fighting the EPA on the changes.
"He said: We're going to meet these new standards in the U.S. and around the world, and it's going to be a competitive advantage," Blackwell says.
Cummins improved its combustion technology to boost engine efficiency. In 2001 it created a division that develops and makes emission-control equipment. The unit has grown to $1 billion in sales, much of that total to rival engine makers, Linebarger said.
Eli Lustgarten, an analyst at equity research firm Longbow Research who has covered Cummins for more than a decade, says Cummins "became the emissions experts globally."
During Solso's tenure, Cummins nearly tripled its annual revenue, to $18.1 billion. In 2010, MarketWatch named him one of the five best CEOs of the decade, along with Steve Jobs of Apple and the leaders of Amazon.com, Starbucks and Google.
"Solso came in and said he was going to size the company appropriately, focus on r&d, take on the emissions challenge and listen to his customers," Lustgarten said. "He did what he said he was going to do."
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