This whole GM suckage thing didn’t just happen overnight. It’s been a long time coming.
1904: William C. Durant, the grandson of a Michigan governor who served during the Civil War and who became a millionaire in the horse carriage business, takes control of Buick.
1908: Sept. 16, Durant forms General Motors Corp. as a holding company by incorporating Buick.
1970 -1979: GM embarks on an unprecedented program to redesign its entire lineup for better fuel economy. Weight and exterior size would be reduced, vehicle interior room and comfort would be retained. Then-GM Chairman Thomas A. Murphy called it “the most comprehensive, ambitious, far-reaching, and costly program of its kind in the history of our industry.”
• The first “downsized” cars were GM’s 1977-model full-size autos — about a foot shorter and 700 pounds lighter than their predecessors. They proved an instant hit and were followed by redesigned 1978-model intermediates, 1979-model personal luxury cars, 1980-model front-wheel drive compacts, 1981-model front-wheel drive subcompacts, 1982-model front wheel drive mid-size models, and the U.S. industry’s first compact truck. 1985 saw the first front-wheel drive luxury cars roll off the production line.
1980: GM is in the red for the first time in more than half a century, with record losses of $762.5 million.
1981: GM’s new CEO Roger Smith’s (of Roger & Me fame) in-house cost-cutting measures, including the closing of inefficient plants and the sale of the company’s New York City office building, resulted in a $333.4 million profit–a one-year turnaround of more than a billion dollars.
1982: Further consolidation and modernization of GM facilities, layoffs and wage concessions from unionized employes, along with improved auto sales, sent GM’s profits for the year to $962.7 million.
• Smith negotiates contract concessions with the United Auto Workers and cuts planned raises for white-collar workers. After unveiling a more generous bonus program for top executives that provoked an angry response from the union, Smith was forced to back-pedal.
• GM10, has been called “The biggest catastrophe in American industrial history.” Beginning in 1982, and costing $7 billion, the plan was to replace all midsize cars produced by Chevrolet, Pontiac, Oldsmobile, and Buick. The plan was huge in scope, calling for seven plants that would each assemble 250,000 of the cars, or 21% of the total U.S. car market. It was badly executed from the start, but the 1984 reorganization wrought havoc on the program and it never recovered.
1983: $3.8 billion in profits, on sales of 4.1 million cars, eclipsed half the company record (set in 1978) of $3.5 billion in profits on car sales of 5.3 million.
• GM’s chief executive, Roger Smith, called 1983 “the turnaround year we have been working for.”
1984: Smith takes on the massive GM bureaucracy with disastrous results. A sea change in how GM would market and build cars in the future, the 1984 reorganization was intended to streamline the process and create greater efficiencies; the reverse actually occurred. Combining the nameplate divisions, Fisher Body, and GM Assembly into two groups, C-P-C (Chevrolet, Pontiac, Canada) to build small cars and B-O-C (Buick, Oldsmobile, Cadillac) to build large cars, the effort was subsequently criticized for creating chaos within the company. The reorganization virtually stopped GM in its tracks for 18 months, and never really worked as intended, with the CPC division building Cadillacs and BOC building Pontiacs. The reorganization added costs and created more layers of bureaucracy when the new Groups added management, marketing and engineering staff, duplicating existing staff at both the corporate and division levels. Almost ten years elapsed before the 1984 reorganization was unwound and all car groups were combined into one division.
1989: The year before the last of the GM10s is launched, GM is losing $2000 on every one of the cars it produces. When asked by Fortune why GM10 is such a catastrophe, Roger Smith replies, “I don’t know. It’s a mysterious thing. I’ve said I’ll take my share of the blame on all those things. I was part of the team.”
• Roger Smith and GM President Robert Stempel reiterate that a “turnaround” in “product quality” and “customer service” had been underway for “some time.”
1990: During his tenure Smith made sweeping changes at GM, which was losing market share to foreign automakers for the first time. He instituted several initiatives that included forming strategic joint ventures with Japanese and Korean automakers, launching the Saturn division, investing heavily in technological automation and robotics, and attempting to rid the company of its risk-averse bureaucracy. Unfortunately, none of Smith’s tactics including making a better product for at a more affordable price. Smith’s transformation failed to earn consistent profits for GM, while its share of the US market fell from 46% to 35%.
• Robert Stempel assumes the top slot at GM and assures the American Public that GM’s “entire focus” is on customer satisfaction.
1991: Faced with mounting financial losses, GM discloses plans to shutter or idle 21 U.S. and Canadian assembly and manufacturing plants over four years, as well as 74,000 hourly and salaried job cuts.
1992: Robert Stempel is basicaly forced to retire by the board of directors at the same time GM announces that “fundamental changes” in its business are underway. Market share dips below 30 percent.
1994: The New York Times reports new president and CEO, John F. Smith Jr, as saying that GM’s North American operations “had ‘absolutely’ turned the corner.”
2000: Despite a complete product overhaul during the 1990s, GM announces plans to phase out Oldsmobile, the oldest automotive brand in the U.S. market. The last Olds, an Alero, will roll off an assembly line in Lansing, where the brand was founded, in 2004. GM acquires remaining stake in Saab.
2003: GM releases a print ad apologizing for how badly they suck (no, seriously). ”Thirty years ago, GM quality was the best in the world, twenty years ago, it wasn’t. The hard part [was] breaking out of our own bureaucratic gridlock, learning some humbling lessons from our competitors.” After a “painful” decade of effort, they’re now back up to snuff, putting out great cars, etc., etc. The ad cites positive consumer-satisfaction research and recent automotive awards, presumably the hook for the campaign. “The road to redemption has no finish line,” the copy concludes. “But it does have a corner. And it’s fair to say we’ve turned it.”
2005: Billionaire investor Kirk Kerkorian begins amassing a major stake in GM, forcing some restructuring moves, but eventually sells it after failing to convince GM management to later pursue an alliance with Renault-Nissan. Major credit rating firms downgrade GM and Ford debt to junk — a first in modern times.
• GM reports its biggest quarterly loss in more than a decade – $1.1 billion for the first quarter of 2005. ”General Motors is a broken company,” said Peter Morici, an economist and professor of business at the University of Maryland’s Robert H. Smith School of Business. “If you sell an inferior product and you expect a premium price, you’re going to go out of business. That’s General Motors’ problem.”
• GM announces plans to close or eliminate shifts at nine assembly, stamping and powertrain plants and cut 30,000 hourly workers’ jobs in the US and Canada by the end of 2008. CEO Rick Wagoner is quoted as saying the moves would reduce structural costs by $6 billion and bring the company’s expenditures “in line with our major global competitors.” He continued: “In short, they are an essential part of our plan to return our North American operations to profitability as soon as possible.”
• In Wagoner’s address to GM stockholders, he complained that companies such as Toyota, Honda, Mitsubishi and Nissan have an unfair advantage over GM in the U.S. market because their production facilities aren’t saddled with union-mandated health insurance and pension costs. Likewise, even vehicles imported from Europe generate higher profits because of national health-care programs and government-backed pensions there.
2006: Bob Lutz, GM’s vice chairman and the head of the company’s global product development team, fought strongly against the government changing the 30-year old CAFE standard which regulates fuel effeciency in cars. He is also quotes as saying, ”As long as [gas] is around $2 per gallon here, people will exercise their freedom to buy the vehicle they want, V8 engine and all,” he said. “Forcing us to alter the fleets to hit some theoretical average won’t change what consumers want, or what they’ll buy.”
• GM sells 51 percent of GMAC to a consortium led by Cerberus Capital Management, raising $14 billion over 3 years. Saturn launches an ambitious renaissance with the introduction of four key vehicles: the Sky roadster, Outlook crossover, Aura sedan and Vue compact crossover.
2008: GM edges out Toyota to remain the world’s largest automakers ranked by 2007 sales of 9.37 million units, a title GM has held for more than 77 years. GM marks its 100th anniversary in September.
2008: Remember that apology from 2003? GM is hoping you don’t remember it because they’re using it again: “While we’re still the U.S. sales leader, we acknowledge we have disappointed you. At times we violated your trust by letting our quality fall below industry standards and our designs become lackluster.”
So basically if you’ve bought a GM car in the past 25 years, they’re really sorry you wasted your money but they’ll do better next time, they promise. Do they really deserve a “next time”?
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