GM execs defend Cadillac HQ move
General Motors Co.'s top executives on Tuesday defended the decision to open a new headquarters office for its Cadillac brand in New York City, while some outside the company questioned why Cadillac needs to shift to a New York address and the message it sends to Detroit.
Mark Reuss, head of global product development, purchasing and supply chain for GM, said he supports Cadillac's move of marketing and sales employees and the headquarters for the brand from Detroit to the Soho neighborhood in Manhattan.
"I think it's really good for Michigan because we're filling Cadillac with some of the best cars and trucks that we've ever built," he said Tuesday at the 2014 MICHauto Summit in Detroit, where he was keynote speaker. "Those cars and trucks aren't selling as well as we'd like to. And I think there's a piece of that brand that really needs to be elevated, very carefully cultivated, by the right group of people — and we've got the right group of people."
Reuss said it's time for "some fresh thinking" for Cadillac to support the product lineup, which has had declining sales this year despite good reviews.
Michigan U.S. Sen. Debbie Stabenow, D-Lansing, expressed disappointment that some Cadillac jobs are headed to New York. U.S. Sen. Charles E. Schumer, D-New York, on the other hand, was delighted.
"To have an iconic American brand like Cadillac choose Manhattan for their global headquarters is just another example that this city is a growing hub of innovation, that is attracting new businesses from artisanal food makers, to high-tech companies to major automakers," Schumer said in a statement. "New York continues to be a magnet for the best and the brightest companies and workers alike, and as Cadillac continues on its impressive growth trajectory as a global brand, I'm thrilled it will do so based in New York City."
Reuss said the move only involves about 50 people. He defended GM's commitment to Michigan, where it employs 46,000 people and has invested $5 billion since 2009.
LMC Automotive analyst Jeff Schuster told reporters Tuesday that the headquarters' move is a gamble for Cadillac and it will take years to know if it paid off. "An address in New York doesn't guarantee an image change," he said.
Schuster said Cadillac doesn't have a product problem, but needs to better align the perception of its products and the Cadillac brand.
"There's nothing that says that just because you move the headquarters to New York and you move marketing, essentially marketing, that it's going to resonate with the buyer, that's it's going to change the image," he said. "So it's really going to be what they do with that and not the move itself. And I don't think we're really going to know for awhile."
GM CEO Mary Barra, in New York City on Tuesday, said establishing Cadillac-brand headquarters in New York will help accelerate progress at the luxury brand.
"When you look at how important Cadillac is, we need to have that team dedicated — thinking Cadillac day in and day out," Barra told reporters after appearing on a panel at the Clinton Global Initiative's annual meeting. "When you think about New York, it's the perfect place to be. It's where a lot of luxury is defined. It's trend-setting — so I think it's going to be very, very positive."
Barra said the move will affect "about 100 people that I think are really going to craft the strategy."
She emphasized there are still "Cadillac people all over the world" and a lot of functions will remain in the Detroit area. Barra said the New York move is "definitely not about the image of Detroit" because the city is seeing big signs of positive growth.
The move isn't because BMW and Mercedes-Benz USA are headquartered near New York, she said, but more about the city's role as a trend-setter.
She said the company has a plan to turn the company around. "We've got to build the brand. We've got to regain customers' trust and really have them really understand the premium nature of the vehicle and that it does define luxury. We have work to do."
"I really think it's going to really accelerate what we want to accomplish on Cadillac," Barra said. "We are committed to growing Cadillac globally and I think this is an important step."
Johan de Nysschen, who joined Cadillac about a month ago from Infiniti Motor Co. Ltd., wants to expand Cadillac into new countries and segments. Barra said there would be some new hires for the new New York Cadillac office and some from Detroit, but said de Nysschen is "empowered" to make hiring decisions.
Ralph Gilles, Chrysler Group LLC's senior vice president of product design, said Cadillac's headquarters move to New York could be a good thing for the Detroit region.
"It actually creates a link from New York back to Michigan," he said. "Someone will be hired in New York, I'm sure. And as they get promoted, moving back to Michigan."
Lincoln marketing chief Matt Van Dyke noted that Ford Motor Co. in the late 1990s briefly moved its luxury brand headquarters to southern California. When the company rebranded itself as Lincoln Motor Co. about two years ago, it didn't consider moving its headquarters out of southeast Michigan.
"We certainly experimented with that, and the insight for us was having the same people work in a different location wasn't necessarily the answer," Van Dyke said after an Automotive News forum Tuesday in New York. "We have our own plan ... We have a Lincoln Design studio that we opened three years ago in Detroit. We really have the center of our acitivties there."
Lincoln has a marketing firm with about 50 people in New York working for it, along with a separate social-media team at contractor Hudson-Rouge, but no Lincoln employees are based in New York. "New York's just an epicenter for advertising and creativity," Van Dyke said.
Cadillac builds four of seven vehicles in Michigan. On Friday, GM said it will build its top-of-the-range, still-unnamed Cadillac at its Detroit-Hamtramck Assembly Plant beginning next year.
Detroit News Staff Writer Michael Wayland contributed.