General Motors, Decline and Fall,

1980 – 2009

William Sundwick

Founded in Flint, Michigan in 1908, the corporation that ushered in the automobile age in America and came to dominate the nation’s industrial economy by the 1970s, declared Chapter 11 bankruptcy just after celebrating its centennial.

What happened?

In 1980, journalist/folklorist Ed Cray published his history of that corporation, Chrome Colossus: General Motors and Its Times. GM then held a 46 per cent share of the domestic U.S. auto market. Cray notes it had been over 50 per cent in the early to mid-1960s, inviting threats of anti-trust action from Congress, amplifying anger at GM manufacturing decisions concerning safety and lethargic pursuit of emissions reduction. The Boards of Directors in those days were confident they could ride over these assaults. They were right -- so long as sales and employment were strong and stock valuation high. I certainly felt no insecurity growing up as a teenager in a Flint GM family!

But there was an unseen threat building, starting in the 1970s, which should have foretold a deepening challenge to GM’s place in the automotive market.

It came from Japan, with its much younger automobile industry looking toward export markets, not just in the U.S., but around the world. The first Toyotas and Datsuns appeared on the West Coast in the late 1950s. A curiosity at first with little penetration even in California. But that penetration grew and went nationwide by the mid-70s. GM management did recognize that there was something peculiarly competitive about Japanese manufacturing. They sought to learn more about it via partnership with Toyota. NUMMI (New United Motors Manufacturing, Inc.) was formed in the early ‘80s at a closed GM plant in Fremont, California (since sold to Tesla). It produced both Chevrolets and Toyotas side-by-side on the same assembly line.

But NUMMI failed to change “The General.” What General Motors couldn’t understand was that the secret of Japanese manufacturing, and growing preference of U.S. consumers, had nothing to do with efficiency of the machinery in the plant. It was not the “culture” of employees (the old GM workers were rehired in Fremont). Instead, it was mainly the culture of management. The Fremont plant was run differently from other GM assembly plants, following the Japanese model. But apparently, corporate management failed to notice a fundamentally different job design. Workers in Fremont rotated among many different jobs, rather than simply tightening the same bolt every day for an eight-hour shift on thousands of cars.

GM had advance warning of this problem from the wildcat strike at Lordstown, Ohio in the early ‘70s – where sabotage led to slowdowns and generally low production quality of the new “import killer” small car launched there, the Chevrolet Vega. Production rates were punishing, workers took it out on the product. Yet corporate management took no notice. After the “experiment” at NUMMI, Japanese style “relational management” never spread to other plants. The Vega’s design was considered flawed, too, not merely its manufacturing quality. General Motors could not see its employees as anything more than cost centers, whether hourly and salaried engineers. The public could see the effects.

“Corporate culture” has become a popular trope over the last thirty years. It probably had its origin in the sad story of General Motors’ decline. The corporation had its beginning in the early days of the automobile, in an environment analogous to how we thought of Silicon Valley in the 1980s. It was where entrepreneurial ventures based on engineering advances were the foundation of economic growth. Billy Durant, the founder of the corporation, was the embodiment of that entrepreneurial, risk-all, American myth that surrounded figures like Steve Jobs in later times. Durant’s genius (some would call it recklessness) was his willingness to take a chance on a bevy of garage tinkerers he met in Michigan. The first of them was Flint mechanic David Buick, struggling with his own version of a horseless carriage. His Buick automobile was the brand that started General Motors. Durant, however, did not build the GM corporate culture. The myth of that industrial spirit was, instead, created by Alfred P. Sloan. Sloan led an ever more centralizing corporate Board through the 1920s and 1930s. The stable of brands assembled by Durant and his early associates had all been managed independently at the engineering and production level. They always had shared technology and parts, but Sloan made them mere “divisions,” subservient to the General Motors Board of Directors, directed jointly from Detroit and Wall Street. Sloan was the archetype modern corporatist.

Sloan organized the corporation around profit centers and marketing concepts. Any original ideas for products or engineering had to clear rigorous financial hoops – the “bean counters.” The overwhelming strength of the industrial engine this strategy created caused General Motors to be perceived as a key factor for allied victory when World War II came. Its then-president, William S. Knudsen, became FDR’s head of the War Production Board.

But, after the war, that old, inherently conservative, midwestern corporate culture returned -- unable to focus its marketing on anything but the ego-enhancing product differentiation that Sloan had pioneered starting in the 1920s. The five automotive brands that GM successfully hawked during the postwar years (Chevrolet, Pontiac, Buick, Oldsmobile, and Cadillac) were distinguished mostly by size and flash – what would today be called “bling.” All were built on a similar platform with more engineering in common than unique. Chevrolets and Cadillacs were built during the period to be fundamentally the same, different enough only to make a convincing argument that the higher-priced brand was somehow “better.” This was, of course, illusion – manufacturing standards and quality control were identical at all GM plants.

GM corporate culture could not grasp the reason for the increasing success of Japanese imports through the 1970s and ‘80s. It was not their cars’ designs, but a combination of several factors. There was the above-mentioned relational style of management in plants (and with suppliers); the uncomfortable fact that legacy costs were low at the much younger Japanese firms (not as many retirees collecting pensions and benefits); and, yes, a less risk-averse product-planning style, greater willingness to take chances on new designs without the relentless bottom-line calculations, the Wall Street side, that dominated GM decision-making. It was the old company, Toyota the young company!

When the UAW chose to strike General Motors in 2007, the walkout lasted three days. But three days lost production was not enough to change GM’s ways. Market share in the U.S. by then was down to only 20 per cent, a far cry from thirty years earlier. The public had caught on, even if management had not. GM was a global enterprise, but European market share was declining as well, and China was just getting started. South American (primarily Brazilian) operations were significant, but not on the scale of North American or European. When Wall Street was hit by the 2008 crash, the General finally took off his stars and filed for Chapter 11 bankruptcy in 2009, the corporation’s 101^st anniversary. Only a massive U.S. government bailout saved GM from liquidation.

Arising from the ashes, the “new” General Motors, General Motors Company, LLC, promised to be leaner and better – not necessarily meaner. But global market share, even after selling off subsidiaries, and shuttering brands (Hummer, Opel, Pontiac, Saab, Saturn, others), has not revived over the ensuing decade. By 2019, U.S. market share had eroded even further, to about 17 per cent. Had the General learned anything?

CEO Mary Barra has flirted with new products, especially electric vehicles, and claims the company will transition completely to EVs (well, 70 per cent by 2040), but we’ll see. The plug-in hybrid Chevy Volt was discontinued in 2019, with no replacement named. Lordstown, site of the painful wildcat strike decades earlier, was not reconfigured, but closed – then sold to a start-up who will manufacture all-electric pickup trucks there soon. Will the GM Cruise Division, formed to manufacture autonomous vehicles at its Hamtramck plant, ever see the light of day?

If I were a prudent investor, I would not buy GM stock.

How Did Cars Become Totems for Advanced Industrial Civilization?

Personal experience from mid-century America

William Sundwick

Origins

It started in Germany. When Gottlieb Daimler and Carl Benz, acquaintances from a start-up engineering firm, invented a light-weight internal combustion engine (ICE in today’s parlance), they apparently realized that it was ground breaking, even in the 1880s. They made early marketing attempts in Britain, the U.S., and South Africa … all with some success. There seemed to be widespread nascent demand for autonomous transportation throughout those parts of the world where there was enough infrastructure (roads and streets) to support a flourishing bicycle and carriage trade. It was autonomous, in those days, not because it didn’t require a human driver, but because it didn’t need a horse!

In the United States, and Europe as well, the ICE was a big hit early, with a small army of machine shop innovators, all with the same abiding faith that autonomous transportation would be the game-changer in the next century. They were right, of course. The environment that encouraged their innovative spirits was far less complex than the one that we know from Silicon Valley in the late 20^th century. But, like that latter day technological revolution, it needed tools, and preceding breakthroughs, to facilitate it. Instead of semiconductors and integrated circuits, the early engineers relied on lubricants and bearings. Instead of a telecommunications grid, they relied on dense populations geographically connected by thoroughfares. Developments in both periods required inventors who were not only creative, but had mastered a concrete body of engineering knowledge. They weren’t yokels!

Another shared characteristic of both these revolutions, the early 20^th century autonomous transportation revolution and the late 20^th century digital revolution, was the existence of a widespread climate of economic opportunity. The industrial revolution, by the beginning of the last century, had advanced far enough, in Europe and North America, to cause governments in all the leading industrialized states to start taking actions to increase opportunities for entrepreneurship, by freeing capital for younger, less entitled, participants in those emerging industrial economies. In the late 20^th century, we saw similar enabling political momentum through the release of venture capital.

In both cases, consumer demand was hard to contain once unleashed. That consumer demand was always about empowerment … the power of enhanced freedom of movement, or the power of being able to find out so much more about one’s world, rapidly and without the need to travel (if you chose to take advantage of it). Today’s FOMO behavior disorder (“Fear Of Missing Out”) is the result of too much information being presented all at once, so much that many cannot digest it rationally, instead panicking, in a fit of nervous thumbing of their smart phone keypads. The earlier autonomy granted by personal transportation resulted in serious changes in housing patterns, suburbs, increasing traffic congestion, pollution, highway deaths, etc.  Power is very addicting! Not necessarily for the common good … 

Car Culture

We hear a lot about “car culture” as a sociological phenomenon of the mid- 20^th century, mostly. This was the period when innovation in the technology was slowing, as the auto industry was becoming more mature. But, the impact of the automobile on the consumer, the future car buyer as well as the existing car owner who felt the need to “upgrade,” began to take the appearance of a bizarre psychosocial game. At this point, cars became the “totems” of an advanced, some would say decadent, industrial civilization. Anthropologists define a totem as a sacred object which represents something dear to the culture, hence venerated by the entire tribe. Much the same way that continuously “advancing” personal information technology has become the totem of decadent post-industrial society in the 21^st century. The fix for the resulting addiction is to continually chase after the next new thing, the next upgrade. The motivator is social status, or self-image, or some other psychological boost, but never practicality nor prudence. It is the eternal quest of the aspirant. In mid-century America, at least, we were, all of us aspirants, indoctrinated into that quest for upward mobility as the basic “American Way.” If you could afford it, you had to show it … and compete with your neighbors for the newest, flashiest extension to your ego.

My personal journey through the “car culture” of the second half of the twentieth century saw me as a young lad, in elementary school, wanting to grow up to be a “car designer.” I made endless drawings of hypothetical cars, based on what I read, even then, in the automotive press, like the Peterson Publications or Road & Track. As the only child of a GM engineer, who, like most of the engineering staff in his plant, needed to maintain corporate and professional standing by trading cars every year, we always had new cars in our driveway to provide grist for my imagination. We bought a new Cadillac each year during the mid-50s, enabled by generous corporate discounts; my father claimed he never lost “much” when he traded each year.

In high school, Dad directed me to read Alfred P. Sloan’s “My Years with General Motors”, a classic tome in B-school circles, I gather, although I never pursued that path myself. Sloan impressed upon my young mind the incredible achievement of General Motors, having invented not the automobile, itself, but the method for marketing them to the world! It’s not a stretch to say that “car culture” WAS invented by General Motors in the 1920s!

In Sloan’s view, it was all about the concept now known as market segmentation. What GM did was to convince the world that they needed a new car … one designed just for them, to make them whole, and they needed this new car to be changed out frequently! It was a new car that was a veritable expression of their soul. And, their soul was different if they chose a Buick, or a Pontiac, or a Chevrolet. And, as they changed themselves, confronting new challenges, new roles in life, they naturally needed a new car! The evil genius of it all … an idealized representation of the striving of all “good Americans”. Clearly, anthropologists would call the automobile a “totem” for that industrial culture.

What Sloan didn’t anticipate, and would not become apparent until the late 20^th century decline of GM, were the limits to the growth of aspirations … at least within the realm of personal transportation. People just got bored with their cars, and everybody else’s cars, too. Cars became appliances, practicality ultimately trumped sex appeal and ego. Car culture died.

Flint, Michigan

I read Sloan’s words at a time when I was desperately trying to have a bigger impact on my world. I wanted to impress, not just the cute girl in my chemistry lab, but my peer group in Flint, Michigan. My tribe. Theirs was, to be sure, a culture of “gearheads,” in the early ‘60s. Quite a different group were those that I considered my real peers, far too nerdy to get any attention from girls in those days. I didn’t appreciate it at the time, but we all would eventually do just fine, once leaving the culture of Flint. At the time, we saw no hope for Flint, even in those prosperous days of the sixties. However, the culture continued to haunt me long after leaving the area, to join the “bicoastal cosmopolitan elite” in the DC metro region. Even now as I write, I think of relatives left behind. I may even occasionally shed a tear for those who never had the opportunity to get out, to grow like I did. Is it survivor’s guilt? Or, what about the distinct possibility that many (including my relatives) voluntarily chose to stay in Flint! Perhaps there was more to the community than cars and upward mobility. I believe they would say so. Thinking of all this, it seems the least I can do is pay homage to those totems of that bygone culture, as though I were still a believer in the religion …

My experience leaves me, then, with real pangs of nostalgia. I think of those left behind. I think of the better times my hometown knew when there were simply more gearheads around. I think of my first car, a 1956 Pontiac with its paint job from factory hijacked 1963 Buick Riviera sliver fleck custom color (unusual to see silver cars back then). I think of its racing carrier rear axle (4.11:1, not designed for fuel economy!). I think of jack rabbit starts from traffic lights, to “beat out” the high school friend in the next lane, driving his mother’s station wagon!  Power. I think of going to dragstrips in Florida after college, just to watch … and hear the sounds, and smell the smoke. I never had the courage to compete in junior stock classes, with my 1969 Opel Rallye Kadett, but could vicariously experience it in the gallery. The earlier childhood dream of becoming a “car designer” had given way to a more impersonal fantasy of simply imagining, and making lists, often with detailed description, many different real cars, current and historic, equipped and modified in real (or, realistic) ways -- knowledge of which I gained mostly by reading, and from oral histories related to me by high school friends and college buddies, and older relatives back in Flint.

It was a rich world of my imagination, with the cars becoming literal characters in some primitive drama. I was totally enthralled by the film “American Graffiti.” It seemed to represent that fantasy world of cars, almost perfectly. I probably identified most with Ron Howard’s character, Steve, exactly as George Lukas would have intended. 

After “American Graffiti”

I was lonely in those days! Since I had not yet grasped the meaning of human intimacy, it seemed that cars were the closest approximation. But, they weren’t exactly sexy to me, they were just there, with individual characters and personalities … like people. Like people in my life.  I continued my childhood practice of touring all kinds of auto dealerships, at new model introduction time, collecting brochures, trying to convince salesmen that I was truly in the market, but not seriously (“early looking”, but this posture was not possible for luxury make dealers, since I was much too young to be convincing for that market). I went to auto shows, where I could touch and sit in even those luxury and exotic makes. I went to museums, and classic car shows, where I could commune with those historical origins of car culture.

Then, after finally deciding to “get a life”, I managed to briefly recreate my enthusiasm by channeling my oldest son -- when he, too, seemed to pass through a “car nut” phase in adolescence. Perhaps the enthusiasm was mutually supported. He picked it up from me, I renewed it through him. To this day, he proudly promotes Subaru, and its branding, to friends and in-laws. He and his wife have now owned three “Subies”, and he claims to have convinced his sister-in-law to get one, too.

Stay Tuned

The Internet was here in a big way, now. It would not be possible to avoid diving into the world of cars once again, images and blogs from many different sources, instantly available …. different kinds of cars: classic cars, antiques, customs, hot rods, exotics, even advertising copy for ordinary cars (automobile marketing remains a discrete field unto itself, I maintain).

The logo for this “Totems” page of my blog is an example of advertising copy for the 1942 Willys Americar (downloaded from TOCMP). Willys is a make that most people alive today remain totally unaware of. They built passenger cars for the mass market from the 1920s (as Willys-Knight or Overland) into the 1950s. Always located in Toledo, that wonderful rust belt city is still home to the successor brand, Jeep. But, the Willys brand always struggled, never built any market share, except through the “Jeep” nameplate, which outlived the parent company by several decades!  Just a taste here of posts to come.

My library of automotive images will likely be the subject of future posts. An individual photo, or small collection, would be the starting point for an essay on some obscure corner of the world of cars. Or, the hot topics for the 21^st century; e.g., we now have a different definition of autonomous transportation. How about alternative fuels? Can’t wait? Stay tuned …