GM is York's largest fix-it task

Earlier successes include Apple, IBM and Tyco

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February 10, 2006|By JEFF GREEN | JEFF GREEN,BLOOMBERG NEWS

DETROIT -- Jerome York, a former Chrysler Corp. engineer, said he was derided as "the car guy" when he was helping Lou Gerstner cut $7 billion in costs to turn around International Business Machines Corp. in the mid-1990s.

Now, after financial-repair jobs at computer makers IBM and Apple Computer Inc. and at fire-safety and valve conglomerate Tyco International Ltd., York is back in Detroit for what may be his biggest fix-it role: General Motors Corp.

As he joins the troubled automaker's board, York, an adviser to Kirk Kerkorian, GM's fourth-largest shareholder, is prescribing what he says worked at IBM and Chrysler. "They succeeded in taking a clean-sheet-of-paper approach," York said in a speech last month. "No sacred cows allowed. Tough decisions were made, and results came very, very fast."

Executives who have watched him at work say the diminutive York, 67, a one-time gymnast and U.S. Military Academy cadet, is tough, analytical and decisive.

"He has a knack of going into troubled situations and being able to see through the forest and see where the opportunity is," said Edward Breen, chief executive officer of Bermuda-based Tyco. "A lot of people can figure it out and then they're afraid to pull the trigger. If you go back over Jerry's career, it's very obvious he had no trouble pulling the trigger."

Since York joined the board at Apple in 1997, the value of the company's shares have soared more than tenfold. During his tenure as a Chrysler director from 1992 to 1993, the shares of the automaker, now a unit of Germany's DaimlerChrysler AG, more than doubled. Tyco's shares have climbed 73 percent since York was named to the board in November 2002 to help end losses that totaled $9.2 billion that year.

York, named to GM's board Feb. 6 as an independent director, will call on skills honed in almost 20 years of restructuring companies to help GM CEO G. Richard Wagoner Jr. retool auto operations. York says Detroit-based GM is burning through $24 million a day after racking up $8.55 billion in losses during 2005.

In York's first day as director, GM adopted much of an agenda he called for in a speech Jan. 10 to auto analysts in Detroit. Wagoner said GM would cut its $1.13 billion annual dividend in half and cut pay for its top executives and the board of directors.

York said the automaker needed those actions as part of an "equality of sacrifice" plan while demanding concessions from its unions.

"Jerry is tough, and he's going to do it the right way," said Ralph Whitworth, who was Waste Management Inc.'s chairman when York was on the board of the Houston-based company in the late 1990s. "He is by far the finest in terms of being able to analyze business solutions that I've ever worked with."

York, who has an engineering degree from Massachusetts Institute of Technology and a master's degree in business from the University of Michigan, is CEO of Harwinton Capital Corp., a private investment firm he founded in 2000. It is based outside Detroit in Rochester Hills, where York lives. He remains a board member at Apple and Tyco.

He held jobs at GM, Ford Motor Co. and Chrysler from 1962 to 1993. He is also a former board member at MGM Mirage, owned by Kerkorian's Tracinda Corp., and was chairman and CEO of Micro Warehouse Inc. from 2000 to 2003.

At Waste Management, when York and Whitworth worked to straighten out accounting problems in the 1990s, York would often avoid slide presentations and sketch financial charts on yellow legal pads. He would pass around the drawings to show directors how to cut costs or identify problems, Whitworth said.

At Chrysler, York helped reorganize the way the No. 3 U.S. automaker designed and developed cars and trucks that led to hits such as the Ram pickup and the Dodge Intrepid, said Thomas Stallkamp, who was head of purchasing for Chrysler in the 1990s and later vice chairman of DaimlerChrysler.

Along the way, York helped cut $3 billion out of Chrysler's expenses, change its health care system and develop new cost-cutting initiatives with suppliers, he said in his January speech.

"He likes fixing things," said Stallkamp, now a partner at the New York private equity firm Ripplewood Holdings LLC, describing meetings where York prescribed advice while smoking tiny cigars. "He's always looking for more of a challenge. He works well in a crisis."

York's next stop after Chrysler was a stint as chief financial officer of IBM from 1993 to 1995. He was a key part of CEO Gerstner's plan to restructure the world's largest computer maker, said Rob Enderle, president of Enderle Group, and an IBM executive when York was CFO.

"Jerry really drove the turnaround at IBM," said Enderle. "When you're dealing with a heavy bureaucracy where nobody wants to move, you need someone that can wield the cutting knife with a surgeon's skill. So many folks come in and try to fix something like that and it's like watching someone with a hatchet."

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