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New GM chief Kent Kresa has been here before

The interim GM chairman pulled Northrop Grumman back from the brink of extinction.

March 31, 2009|Peter Pae

As the new interim chairman of General Motors Corp., Kent Kresa is on somewhat familiar ground.

While little known outside the aerospace industry, Kresa is considered one of its giants, having transformed a sputtering Los Angeles company on the verge of bankruptcy into one of the world's largest military contractors at the forefront of weapons development.

By the time Kresa retired in 2003 after 13 years as chairman of Northrop Grumman Corp., the company had grown from a marginal military contractor with $5 billion in annual revenue to a thriving, $28-billion enterprise with 120,000 employees. It is now one of the largest private employers in Southern California.

On Monday, Kresa was named to lead GM's board after its longtime chairman and chief executive, Rick Wagoner, was forced out by the federal government amid calls for restructuring the automaker. Kresa, who last week turned 71, had been a GM director since 2003.

Kresa, a longtime Los Angeles resident, is expected to preside over the remake of the GM board, but it wasn't clear what role he may have in restructuring the company itself.

In a statement, the Treasury Department said GM was "embarking on a process with the goal of replacing a majority of the board over the coming months." It added that "when complete, these changes will bring fresh thinking and new vision to the company while maintaining a degree of continuity in the current challenging environment."

Kresa became the second top former aerospace executive to take the helm of an automaker in recent years. Alan Mulally, who is credited with turning around Boeing Co.'s struggling commercial airliner business, became chief executive of Ford Motor Co. in 2006.

The situation Kresa faces at GM won't be much different from what he found in 1990 when he was named to head Northrop, a company that was on the brink of extinction, analysts said.

At the end of the Cold War, Northrop, which for decades had focused on aircraft manufacturing, lost two major bids for new fighter jets and its biggest moneymaker, the B-2 stealth bomber project, was curtailed by budget cuts at the Pentagon. Originally slated to buy 132 of the high-tech aircraft, the Air Force bought 21.

"It was a company that was overtaken by changes around it," said Loren Thompson, defense policy analyst for the Lexington Institute. "It had to drastically retool its product and its culture. GM is in the same place today."

In a 2002 Times interview, Kresa said Northrop came dramatically close to shutting down altogether. "We could just go out of business and give money back to our shareholders or we could reinvent ourselves," Kresa said at the time. After extensive internal studies and heated debates, "it became clear to us we could take the latter path."

In a dazzling decade of deal-making, Northrop acquired 16 companies, culminating with the 2002 acquisition of TRW Corp. and its crown jewel, Space Park in Redondo Beach, where some of the world's most advanced spacecraft are developed and built.

The former metal-bending enterprise that had to rely on a handful of Pentagon programs was by then an electronics and information technology powerhouse with interests in virtually every aspect of the nation's military.

"He completely transformed Northrop," Thompson said of Kresa. "He changed the products, the market strategy and the culture. In the end, he produced a very successful enterprise that looked nothing like what he had taken over."

Some analysts at the time dubbed Kresa "a stealth CEO," a play on words with Northrop's radar-evading bomber and his shy demeanor that belies an intense competitive streak.

Kresa, once a budding child actor, gave up show business because, he said in an interview, he couldn't stand being rejected. His father, Helmy, was a songwriter and the principal arranger for Irving Berlin. Among his father's more familiar works is the soundtrack for Martin Scorsese's film "Raging Bull."

As a former aerospace executive, Kresa also brings experience in government relations that few can duplicate, and that analysts believe is much needed amid rising criticisms of the government's bailout of GM and Chrysler.

Ford has not requested any government aid.

"He knows how to deal with the federal government as much as anyone you can find," said Paul H. Nisbet, a veteran aerospace analyst with JSA Research Inc. "Not only has he done it with huge defense programs, but he's worked in government."

Indeed, before his career at Northrop, Kresa was a strategic planning executive for the Defense Advanced Research Projects Agency, a top-secret research and development lab for the Pentagon. He earned his bachelor's and master's in aeronautics from Massachusetts Institute of Technology.

As a Northrop executive, Kresa spent many days and nights prowling the halls of Capitol Hill lobbying for funding of major weapons programs as well as working with the Pentagon and the White House on major military initiatives.

"He isn't a flamboyant marketing guy," said Jon B. Kutler, president of Century City-based private aerospace investment firm Admiralty Partners. "He is a very methodical, block-and-tackling kind of person."

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peter.pae@latimes.com

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