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The Honolulu Advertiser
Posted on: Wednesday, January 2, 2008

GM turns focus to next 100 years as it celebrates centennial

By Katie Merx
Detroit Free Press

Hawaii news photo - The Honolulu Advertiser

General Motors Corp. Chairman and CEO Rick Wagoner presides over a company that now sells more vehicles overseas than in North America.

ASSOCIATED PRESS FILE PHOTO | December 2007

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DETROIT — As General Motors Corp. begins the celebration of its 100th year this week, the automaker hopes to focus on the technological and business promise of its next century as much as it commemorates its storied history.

GM has been a large force in shaping the American automobile and global commerce, and its executives today have their sights set on making vehicles that redefine personal transportation for the next century.

They've already promised to sell the first mass-produced, long-range electric vehicle. And next week, Chairman and CEO Rick Wagoner will address the Consumer Electronics Show in Las Vegas to share the automaker's vision of the vehicle of the near future as a safer, more fuel-efficient transportation appliance.

"The company has had a huge impact on the industry, a lot of industry firsts, so we're looking forward to the next hundred years to try to do some more of that — same things in a very different context," Wagoner told the Detroit Free Press. "A lot of the first century was about the U.S. and developed markets. The way it looks right now, it's really going to be a very different geography for our business as we go forward."

GM is keeping specific plans for its celebration, GMnext, under wraps until tomorrow.

MARKETING PIONEER

While Henry Ford gets credit for standardizing assembly-line production of automobiles, GM founder William (Billy) Durant — a high school dropout — largely gets credit for how America sells them: by giving consumers an array of brands, models and colors from which to choose.

In a little more than a year after starting GM on Sept. 16, 1908, he added Oldsmobile, Cadillac, AC Spark Plug, the Oakland Motor Car Co. (which later became the Pontiac brand) and the Rapid Motor Vehicle Co. (now known as GMC).

His strategy was bold, but it did not succeed at first. Within two years of its formation, GM faced bankruptcy. Durant was ousted as part of a deal in which bankers took control in exchange for bailing out the automaker.

On his own again, Durant started Chevrolet and in 1915 surprised the GM board with the announcement that he had accumulated a controlling interest in the automaker once again.

But his autocratic style drove away key managerial talents, such as Henry Leland and Walter Chrysler. (He did, however, hire Alfred Sloan, who would soon become CEO, and Charles Kettering, who would become the automaker's first director of research.)

Sloan took over as president and CEO in 1923, adding the title of chairman in 1937, and remained at GM until 1956. He has since been credited with leading the corporation through some of its most dominant days and establishing many of the tenets of finance and management that became corporate standards.

Some call Sloan the grandfather of the U.S. corporate bureaucracy, but author David Farber, who wrote the book "Sloan Rules," said he was even more: the first celebrity CEO.

SHAKING THINGS UP

Although Sloan admired risk takers, GM still coddled people averse to risk, Farber said.

"GM has gone through periods during which its leadership placed way too much emphasis on business as usual," Farber said. "Sloan, at least during his most successful years at GM, knew that the company had to be willing to shake up the car market. He hired the legendary Harley Earl to do just that."

Credited with establishing the automotive design profession, Earl was first commissioned to design the 1927 Cadillac LaSalle. The vehicle was a hit, with curves rather than corners and a long, low stance that set it apart from the upright Model T.

The success persuaded Sloan to hire Earl as the automaker's first vice president of design. Earl stayed for 31 years, approving the first use of tailfins on an automobile in 1948 and introducing the Corvette in 1953.

During the same era, GM broke ground around the world, buying or establishing operations in Germany, India, China, Brazil and Mexico; lost its battle to keep out the newly formed UAW in the 1936-'37 sit-down strike in Flint; and in the late 1930s and early 1940s supported the World War II effort. By 1942, the automaker converted 100 percent of its operations to military production.

In the 1950s, GM introduced important breakthroughs, including automatic transmissions, power steering, power brakes and fuel-injected engines as it rolled out exciting cars, like the first Corvettes and Bel Airs.

But by the 1970s, a 67-day national UAW strike, an oil embargo and stricter emission rules took their toll on the U.S. auto industry. The energy crisis pushed many Americans to smaller, more fuel-efficient foreign cars, prompting GM to institute massive layoffs.

The start of the 1980s was equally inauspicious, with GM reporting its first annual loss since 1921. That was followed by extensive plant closings that wiped out tens of thousands of jobs.

Flint, Mich. — the birthplace of GM, Buick and the UAW — lost more than 30,000 GM jobs during the 1980s and 1990s, a story chronicled in Flint native Michael Moore's 1989 movie "Roger & Me," a polemic against controversial GM Chairman Roger Smith, who died last month.

Following Smith's tumultuous administration, GM's board handed the reins to car guy Robert Stempel in 1990, who failed to impress directors more concerned with GM's deteriorating financial performance in North America.

As power shifted in the early 1990s to G. Richard Wagoner Jr., GM went on to buy the bulk of South Korea-based Daewoo Motor Co.'s automotive assets. The low price paid — a fraction of what was expected — and GM's ensuing ability to make decent, low-priced cars that could compete in developing economies won the automaker kudos.

But growing buyer incentives in the U.S. market ate away at profits, and GM has repeatedly stumbled financially. It lost $10.4 billion in 2005 and $39 billion in the third quarter of 2007, the latter because of a write-down required by accounting rules.

STILL LAGGING AT HOME

Heading into its second century, GM is still losing market share at home, its stock price is perilously low and management can't reliably promise profits.

And yet it is widely seen as the strongest of Detroit's automakers.

It has award-winning cross-over vehicles and sedans to complement its pickups, SUVs and Corvette. Chevrolet is the nation's best-selling brand. And GM is selling more vehicles overseas than at home as it stretches the Chevy bow tie across China, India, Europe and elsewhere.

"We'll be 100 years young and setting ourselves up for the next 100 years in some pretty impressive ways," said Larry Burns, whose job as vice president of research and development and strategic planning is geared toward planning for that future. "Would we like to have had the last 20 years to have played out differently? For sure we would, but nevertheless we're still hanging in there. ... And we're really excited about the future."

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