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A Flawed Look At Gm's Flubs


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A FLAWED LOOK AT GM'S FLUBS

COLLISION COURSE

Inside the Battle for General Motors

By Micheline Maynard

Birch Lane 306pp $21.95

There's an anecdote involving a BUSINESS WEEK reporter that gives an idea of just how myopic General Motors Corp.'s management was up until a few years ago. One day, the reporter was talking with Lloyd E. Reuss, then running GM's North American operations and soon to become president. Reuss asked her how she liked the 1988 Chevrolet Beretta coupe that she had bought a couple of years earlier. A bit embarrassed, she replied that the car had some quality problems--including the fact that one of its front doors had fallen off. Unperturbed, Reuss didn't miss a beat. "Well," he replied, "how's your gas mileage?"

Brick-headed. Inbred. Blind to customers' concerns. These and worse pejoratives describe the top management in the 1980s and early 1990s of the world's biggest auto maker. A difficulty in writing about GM is figuring out which managers to blame most for the production inefficiencies, lousy quality, and vats of red ink that have characterized the company's recent history. Another problem is deciding whether GM's current--much stronger--management, led by President Jack Smith, is taking the drastic measures needed to cement the company's recent turnaround.

In Collision Course: Inside the Battle for General Motors, Micheline Maynard makes a good stab at dissecting GM's problems. A veteran auto writer who has been responsible for much of USA Today's generally excellent coverage of the industry, Maynard is well qualified for the job. But her book is a disappointment. Many of the events she describes have been covered as well or better in press articles and in books such as Comeback: The Fall and Rise of the American Automobile Industry, a rival Detroit opus by Wall Street Journal reporters Paul J. Ingrassia and Joseph B. White that is now out in paperback. Worse, Maynard falls down badly in her analysis of Jack Smith's tenure.

Maynard devotes way too much ink to GM's past. The story of how a stifling bureaucracy paralyzed the company in the face of Japanese rivals has been well described. It's also well known how Roger Smith, CEO from January, 1981, to August, 1990, compounded GM's impotence through his aloofness, massive overspending on robotics, and introduction of dreary, look-alike models.

Far more vital is an assessment of GM's recent efforts to mend itself. The first go-around, under Reuss and Robert C. Stempel, Roger Smith's successor as CEO, was a disaster. According to Maynard, at the time of the ever-optimistic Smith's retirement, GM had sufficient production capacity for 9 million cars and light trucks annually--enough to supply three-quarters of U.S. demand in 1991--nearly twice GM's market share. Stempel and Reuss should have started slashing like mad, but they didn't.

Maynard goes too easy on Stempel, blaming Reuss for the worst of the duo's failings. She admires Stempel for his loyalty and decency, but those qualities--admirable as they are--kept him from being an effective leader in a time of crisis. It was Stempel, after all, who insisted on appointing his old pal Reuss as president; GM's board had doubts about him from the start. Stempel also engineered one of the dumbest labor contracts ever, a 1990 pact guaranteeing to pay thousands of production workers, whether there were any cars for them to build or not. And as CEO, Stempel went too slow in restructuring GM, delaying until the board forced him to act. He hoped an upturn would save jobs, but he only managed to put off the inevitable.

Jack Smith, who finally got the nod as CEO after the board forced Stempel and Reuss out in late 1992, has done better. Maynard puts together interesting tidbits about Smith's childhood in a close-knit Catholic family in Worcester, Mass., his two marriages, and his pre-CEO career. For instance, in 1986, in his first months as head of GM's European unit, he sometimes was so depressed he would fall into long silences during transatlantic phone calls to his brother, too miserable to speak. Knowing that makes his success in getting GM Europe on track all the more impressive.

In Maynard's telling, however, Smith's current business strategy never comes alive. She describes the steps he took to make GM profitable: closing plants, slashing headquarters staff, and bringing in tough purchasing manager Jose Ignacio Lpez de ArriortPound a to cut component costs. (Lpez later created a furor when he defected to Volkswagen). But she fails to come up with the deep, behind-the-scenes reporting that would give a sense of the executives' thinking as decisions were being made.

When Maynard finally gets to addressing the critical question--will it all be enough?--the book falls apart. ("Jack Smith would never have the audacity to compare himself to Our Lord," she writes in one especially ham-handed segue. "But as far as many people in GM are concerned, he has been most responsible for GM's resurrection.") Rather than attempting an assessment of Smith's prospects, she ends with a series of tests by which we will be able to judge whether he succeeds or not.

The upshot is that this is far from the definitive take on GM's comeback. As Maynard notes, the test of Smith's strategy will come in 1997 or so--whenever the auto market falls into its next funk. Maybe then someone will write a more telling appraisal of whether GM management has finally cured its myopia--or is still groping for the keys to success.BY THANE PETERSON


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