Harry Wilson's unfinished business at GM

DETROIT -- Ask Harry Wilson what's wrong with General Motors, and his answers will contain familiar echoes -- of GM's own top executives.

Wilson, the former Obama administration auto task force member who surfaced this past week seeking a seat on GM's board and calling for an $8 billion stock buyback, believes GM is hurt by persistent mistrust among its suppliers, for example, which he says stifles innovation and profitability.

"Talk to suppliers," Wilson, a 43-year-old director at electronics and interiors supplier Visteon Corp., told Automotive News last week. "They'll argue that it's more or less the old GM."

Now here's GM product chief Mark Reuss on that subject last fall: "Ultimately, [suppliers] don't believe we absolutely value their contribution from an efficiency or technology standpoint."

Another example: Wilson doesn't think GM has done enough to reverse losses in Europe and Asian markets outside China. And he thinks GM must do a better job monetizing innovations such as OnStar. Both are among the top priorities for GM CEO Mary Barra and company.

Wilson's quest for a board seat is about far more than GM's inert $25 billion cash stockpile, he made known last week. But beyond that issue, Wilson and Barra's team essentially are saying the same things. Progress has been made since bankruptcy, but not enough and not quickly enough.

It's the speed of GM's progress that's unacceptable to Wilson, a hard-charging Harvard MBA who in the past did little to hide his impatience with GM's plodding culture. Should he get voted onto the board -- a real possibility given large investors' frustration over cash return -- Wilson could ratchet up the already intense pressure on Barra & Co. to boost profitability, just as industry growth in the U.S. and China shows signs of slowing.

He wants a more aggressive timetable for GM to achieve its goals, which include pulling Europe out of the red next year and hitting 9 to 10 percent global profit margins by sometime after 2020. He also wants tougher, more transparent "interim milestones" to prove it's on the right path.

"Most of GM's peers have done a demonstrably better job improving margins post-crisis," said Wilson, who is representing four private equity firms that own about 2 percent of GM shares. "We think these challenges are fixable if the company does certain things."

Barclays Capital analyst Brian Johnson figures GM could meet Wilson halfway.

"We believe there is a fair likelihood that GM enacts some sort of share buyback (perhaps $4 billion)," he wrote in a client note last week, "to show investors that it is enhancing shareholder value."

Wilson's quest personifies the skepticism of critics who aren't convinced that an executive team composed largely of GM lifers can drive the change necessary for GM to meet its goals and avoid regressing. For those critics, the recall crisis over the past year has only underscored the risks.

There's also an element of unfinished business in Wilson's surprise board bid.

In his 2010 book Overhaul, Steven Rattner, who led the auto task force, describes Wilson as an "alpha male" and "tough as nails." As a 37-year-old corporate restructuring specialist, Wilson was chief architect of the GM overhaul, according to Rattner's account. He advocated jettisoning Saab, Pontiac, Saturn and Hummer, Rattner recalled, and pressed to cut GM's cost base deeper than others sought to ensure its viability in the next downturn.

After the restructuring was complete, Wilson "hated the idea of letting GM go," Rattner wrote. Wilson proposed assigning an internal consultant -- himself -- or an ongoing government monitoring group to look over the shoulders of the board and executive team "so they won't [screw] up what we did," the book said.

For now, the debate is over how big a dent GM can and should make in its nest egg, which includes $25.2 billion in cash and securities and another $12 billion in available credit.

GM, which this month boosted its dividend 20 percent and hinted at future cash return, has no shortage of cash needs. It could face more than $1 billion in Justice Department fines over its handing of the deadly ignition switch defect. It needs more capital and a healthy credit rating to expand GM Financial. It will spend more this year on vehicle development, partly to elevate the Cadillac brand.

Wilson says he gets all that and backs GM's "fortress balance sheet" approach. But he asks: "Should they have one moat and 6-foot walls or eight moats and 12-foot walls?"