Editor’s Note: Legendary auto journalist and TTAC inspiration Jerry Flint died this week. Rather than write a sappy eulogy, we’ve decided to let Jerry speak for himself. What follows is a speech Flint gave to GM employees at Milford Proving Grounds in October 2000. It’s feisty, passionate and deeply insightful… the kind of speech that made Jerry famous, and paved the way for sites like TTAC. Moreover, it shows just how deep GM’s problems run, and serves as a timeless warning against the worst impulses of the business. Rest In Peace Jerry… we will always remember you at your best. [Courtesy: The Olds Zone Hat Tip: Ken Elias]
There was an auto executive, he was a very high ranking GM man. You all know his name but I won’t mention it because it might embarrass him. He’s not at General Motors anymore.
I once asked this man what he would do if he found himself the chief executive of General Motors. He said, and I quote, “I would fire 1,000 executives.” End of quote. I’m not sure whether it made any difference to him which 1,000 executives, if he had anyone in particular in mind, or any thousand would do. I just tell you this to start things off.
Fasten your seat belts, it’s going to get bumpy.
This talk will be divided into four sections. In the first, I will tell you something about myself. That’s long. In the second I will tell you the mistakes General Motors has been making. That’s longer. In the third part, I will tell you why General Motors makes these mistakes. That’s short. In the fourth part, much shorter I am afraid, I will suggest what you can do about it.
I was born in Detroit, in the city, in 1931. We lived on Willis between Second and Third, a few blocks south of Wayne University, which was a city university back then.
I went to the neighborhood schools, tough schools; it was a workers hillbilly neighborhood. As a boy, my father and I would walk miles from our apartment to the Fisher theater to see the movies, and we walked to save the nickel bus fare. We would always stop at the General Motors building to look at the cars, and the models. They used to have a contest. Young people would enter futuristic car designs, or make a copy of a Louis the 14th carriage. I loved that GM display, and dreamed of the day we would have a car.
We moved uptown and I went to Central High School, where by the way, a classmate was Sander Levin, now a member of the House of Representatives and brother to Carl, your senator. Then I came to Wayne University, worked as a copy boy on The Detroit News, as a writer for Motor News, the AAA magazine and on the college daily. When I graduated after 3 1/2 years, in 1953, I enlisted in the U.S. Army. The Korean War was on but I served in Europe, in intelligence, in what we called The Army Security Agency.
When I came home in 1956, I joined the Wall Street Journal in Chicago, and in 1958 transferred to Detroit. I worked for the Journal in Detroit until 1967, when I became the New York Times bureau chief in Detroit and I held that position until 1973, when I transferred to New York for the Times, working the national news, then as a financial editor, then the national labor writer. In 1979 I joined Forbes magazine as its Washington bureau chief, and in the 1980s transferred to New York where I worked in various jobs, including assistant managing editor. I retired in 1996, but now write columns, six a month, one for Forbes Magazine monthly called Backseat Driver, plus a weekly column for Forbes.com, plus as monthly column for Ward’s Auto World, The Contrarian, and a monthly column for The Car Connection.Com.
I haven’t just written about cars. I’ve covered politics, and am mentioned in the making of the President, 1968, by William White. Along the way I’ve done some foreign reporting, chasing Communists in Central America during the Carter/Reagan years. I’ve swung through Africa, Somalia, Nigeria, Angola, and South Africa.
Recently I was named one of the top 100 financial journalists of the century by TJFR, a financial journalists group. I was ranked along with the likes of Ida Tarbell (the great muckraker who brought down the Standard Oil Trust), B.C. Forbes (founder of Forbes Magazine), Barney Kilgore, the creator of the modern Wall Street Journal. I tell you this so you will understand that I just may know what I am talking about.
As to the auto business, I was there when Ed Cole created the Corvair and there when John Delorean created the GTO that Ronny and the Daytonas sang about. I was there when Karl Hahn taught us to ‘think small’ about his beetle-shaped Volkswagen, and I was there when George Romney brought forth the compact Rambler and slew the dinosaurs in the driveway. I was there when the Edsel was born, and when Bob McNamara of Viet Nam fame created the little Ford Falcon, the first car to really kick Chevy since the 1920s. And better yet, I was there when Lee Iacocca introduced his Mustang. I was there when Soji Hatori brought Toyota here. Soji, by the way, dumped his Japanese wife and married an American blonde in a blimp over Los Angles. I was there when Studebaker owned rights to distribute Mercedes cars in this country, and I was there in Utah when Sherwood Egbert sent his lovely Avantis racing across the Salt Flats in a last doomed effort to save Studebaker.
I drove Ralph Nader into Detroit from the airport when he came with his new book, Unsafe at Any Speed, and I knew Haagen Smit, who explained smog, and Bill Mitchell who knew how to make cars look long and low for General Motors. I was there when Lee saved Chrysler with his K car and the minivan, and yes, I advised my readers to buy Chrysler stock when it was at 7 on its way down to 3. I was there when Tom Gale and Bob Lutz did cab forward, and saved Chrysler again, and yes, I told my readers to buy Chrysler again at 10.
I do all this name dropping so you know that I know the difference between cars made of steel and cars made of clay, and more important, that I know the difference between men made of steel and men made of clay.
OK, end of Part 1. Now I am going to talk about General Motors.
You won’t like what I have to say.
You are badly led, with an organization that just doesn’t work. I’m going to prove this to you, and my proof is an unparalleled number of errors, mistakes, and failures.
This isn’t a new theme with me. In Wards Auto World of May 1998 I raised the question of GM strategy. I noted that you had a strategy board that didn’t know anything about auto strategy
I wrote that your strategy board had decided that luxury sport utility vehicles had no place in the company’s own Cadillac division, thereby going about as far as anyone could to destroy Cadillac. This isn’t hindsight. Mercedes, BMW and Lexus all understood what was happening at the same time that GM rejected a Cadillac SUV, and they created SUVs, and so did Lincoln.
Quoting from that column on Saturn: “The board is taking seven years to get Saturn a second car, (it really took ten years) thereby leaving its most warm and fuzzy division to wallow in a small-car depression. Instead of investing in success, this board starved it.” end of quote.
You know, they took away the Saturn’s product engineers. They are out to make Saturn into another Oldsmobile. Look at the LS launch. First, the idea of forcing Saturn to use a German platform designed for a metal body on a car with a plastic body is ludicrous. It cost more and took longer to do than to get a completely new platform for Saturn. Then the car design was completely undistinguished, and the actual launch was the worst I have ever seen in 40 years. The result is that sales are one-third expectations in the first year and the factory lost a shift. I figure that is as $500 million a year loss.
This is the board that has never updated and will soon kill the Camaro. That should take a good part of the excitement from Chevrolet. GM executives don’t seem to understand that the art in the auto business is building desirable vehicles, not killing models and closing plants.
Your strategy board completely missed the trend to car-based all wheel drive vehicles, and is years behind the Lexus RX 300, the Honda CR-V and the like. Even Ford is in production of the Escape. How many more years must we wait for such a GM vehicle?
Now let’s go beyond that 2 1/2 year old article:
Your management built an all-new pickup truck without four doors, when Dodge and Ford and Toyota all had four-door big pickups. To this day no one at GM admits to have made that decision. It must have been someone they promoted. How could they build an all-new vehicle with three doors when they knew, they knew, their competitors would have four?
How could they be a door short on an all-new vehicle? Your company still, still, doesn’t have a four-door small pickup. That is unfucking believable. Ranger creams them. If Dodge Dakota had the capacity, it probably would outsell the Chevy S-10. I asked one of your highest-ranking executives why no 4-door S-10. He explained that since a new S-10 was coming a few years down the road, they didn’t want to spend the money. Your people never, it seems, have head the word “competition.” Now about a month ago you did begin production of a Chevy S-10 Crew Cab. That is a type of four door, but different from the usual design. In fact, this is a vehicle you build in Brazil, so you could have produced it here earlier. And it is priced $4,000 above the two door.
I’m sure they will sell some, but why are they years late in matching the competition. There is only one answer. Incompetence.
Just to repeat what I am doing now, I am listing dumb decisions by your management that proves they know nothing about the auto business. The EV-1. I am all for experimentation, but to spend $250 to $400 million for a 2-seater with a 40-mile range, are we out of our minds? That is the greatest car disaster ever, covered up by the press because it’s a green disaster. The EV-1 makes the Edsel look like a bases loaded home run in the last of the ninth of the seventh game of the World Series.
Once the then-chief executive of your company, Jack Smith, said to me, and I quote, “You don’t think we can do anything right.” I told him that I did think they did one thing right, they did a good job cutting manufacturing costs. And guess what? They’ve fired the man who did it, Don Hackworth.
And talking about strategy boards, did you know that the chief of design is not on the GM global strategy board, but your vice president of human resources is. That’s right: the global strategy board, the head of design isn’t on it but the head of the employment office is. Go figure.
Brand marketing. I don’t think much of brand marketing theories. To me they are just a way of avoiding the idea of building a better product. I suppose that if your idea of a new model change is putting six more raisins in a box of cereal, then brand marketing might be important. But even if I did believe, the idea that every single car model is a brand is incredibly dumb. No one in the industry believes this, except at GM. The idea that Chevy Impala is a separate brand, that Chevy Monte Carlo is a brand, that Cavalier is a brand, that Malibu is a brand is nutsy kookoo. You can’t have 75 brands within GM. It won’t work, but it has been the GM strategy. And what’s the result of this strategy? Falling market share every year this management has been in power.
Look at the numbers. Your management has lost an average 3/4 of a percent point of market share very year, from 35% to down toward 28% this year. My belief is that you are headed to 25% of the market. I would also predict that before long someone high will “take the fall” for this loss, which I put directly on the top management and its theories.
Supplier relations: Your company has the poorest supplier relations in the industry, and a reputation of mistreating suppliers, of trying to beat down their prices unfairly. If someone comes up with a great innovation, GM is the last company it will try to sell it to for these reasons. I have had the CEO of major suppliers say this. Yet this is how your management does business.
Another disaster was the strike of 1998, which cost GM, I believe, better than $2 billion in profit. General Motors provoked that strike. Look, I covered the UAW in Detroit. I knew Walter Reuther and Leonard Woodcock and Doug Fraser. I knew the company negotiators like Malcolm Denise of Ford and Earl Bramlett of GM. I was the labor writer of the New York Times. GM deliberately provokeded the strike. I’m not saying that was wrong. It is OK to provoke a strike, and GM had some justification But when GM was 24 hours from winning, the company surrendered. Apparently GM decided that winning would hurt the UAW’s feelings. Why provoke a strike unless you intend to win? Why surrender when victory is in your grasp. At a cost of $2 billion. The performance of your management was unbelievable here.
How about the dealer ordering system, which was installed by present management? The company has been in business since 1907, and it sets up a system that keeps dealers from getting the cars they need. This cost GM one-half of a percent of market share, which is 85,000 sales, or $2 billion in sales. How could your management install an ordering system that didn’t work? How?
Fit and Finish. Look, the quality of your fit and finish is the worst in the industry, excluding Koreans. Your executives know it, too, but what are they doing about it? I’ll know they are doing something when an executive vice president is given the public responsibility of improving fit and finish, and his bonus is on the line.
The dealers. You want to know something. The only reason you are still selling 28% of the market is your dealers. The biggest distribution system in the business. And your management hates them. They actually announced a plan to buy 15% of the GM dealers, to go into competition with their own dealers, and then when the dealers blew up, your chief executive said he didn’t know anything about it. Well, GM is disorganized but I don’t believe that Roy Roberts invented and publicly announced a billion-dollar acquisition plan all by himself.
Design: What do you want me to say? GM invented car design, Harley Earle, Bill Mitchell. I knew some of these people. Now, you have the Aztek. For God’s sake, why couldn’t they hire somebody. Ford did, Chrysler did, Mercedes and BMW did, they all do (not the Japanese-their designers really are Japanese). Now GM did hire someone from the outside, a French woman from Renault. Now I like French women, and I wish her well, I am sure she is talented. But please explain to me who buys French Renaults besides the French…and a few Spaniards. Who? Nobody. Why can’t GM find an American who understands the American culture, and who can create a PT Cruiser, or a Thunderbird? Why do they hire a foreigner?
I ask you, if you didn’t work for GM, would you drive a GM car?
Let’s get specific: How about that pickup truck design. You know, that’s where the money is, the T800 platform. The pickup is the heart of it. You used to be #1 in pickups, now you are behind Ford F-150 and Dodge Ram has scored big off Chevy. So you designed a new truck, darn good truck, too, except for the rattles. But when it came to design, they made it look like the old one. You know why? Because instead of relying on your designers to design a modern-looking truck, you took the designs to focus groups, and they picked the old look. So your new truck looks dated when it comes out, and in a couple of years will really look dated. And as noted earlier, they forgot to put four doors on it at first. These are the reasons I believe your Silverado sales are less than expected, why you are rebating it.
Then we have the Pontiac Aztek. I’m not going to dump on it, and I hope it catches on. I hear it’s a dud, but you never can tell. But have never, never seen such dislike of a vehicle design, never.
Look, even the future stuff, the show cars, they just don’t look right. I know it and you know it. Why hasn’t this management done something about it?
Oldsmobile: Look, Olds is dead. Your management is saying that they did everything possible and its up to the dealers and the customers to save Olds. Those are code words. Figure five years and gone. They did give Olds new product, but it was product without any design distinction, without any engineering firsts, a new engine that wasn’t better than the competition, and mediocre quality and inexperienced leadership. Hell, they fired the experienced leadership. Remember the Rock, John Rock. The head of Olds today used to sell Alpo dog food. You figure it out. Five years and dead. Why five years? It’s a legal strategy. Starve it to death so sales fall, so we can’t be sued.
Cadillac. Let’s not go over 15 years of disaster. Let’s just say that I’ve seen the new Catera, to be built in a new plant in Lansing. But where’s the new motor. The old German motor was one of the Catera problems, and they are putting that old engine in the new car, maybe with a horsepower boost. That’s not the way to save Cadillac. The car needs a great engine and it doesn’t have one. And I understand that rushing out the Escalade was to save the dealers, but long run it reinforced the idea that Cadi is a Chevy with thicker leather. BMW builds an all new X-5. Mercedes builds an all new ML 320. Cadi gets a redone Tahoe. If they could create new vehicles, and even new factories, why couldn’t GM? Some management.
True story: One of the most important businesswomen in America decided to buy an SUV. Her name is known to all of your directors. She’s big. She asked a friend of mine if he could get her some to test drive. He said he could and would get her a Cadillac Escalade. She said to him, and this is the quote: “Don’t insult me.”
The Escalade isn’t a bad vehicle. It’s quite OK. But the prestige of Cadillac is so low that a well-known person says that being offered a Cadillac to drive is an insult.
Which brings us to Powertrain. Would someone tell me what Powertrain has been doing for 20 years?
You know, a while back GM was the greatest engine maker in the world, the greatest. Then some jackass stuck Chevy engines in Oldsmobiles. Instead of saying, we’re sorry, it will never happen again and firing the idiot, GM solved the problem by eliminating divisional engines and setting up one big engine operation, Powertrain.
In my lifetime, in my lifetime, GM Powertrain has never turned out a world class four-cylinder engine in North America. Never.
The best Six, the 3800, is as old as Methuselah, so they are trying to sell an ancient engine to a generation that doesn’t want a two-year-old computer. There’s a little four-cylinder engine in the $10,000 Toyota Echo that has more technology than any GM engine today. Your first engine with variable valve breathing comes out next year. Let’s hope they can build it. The Japanese and Europeans have been building them for years; that’s why they are good now. We’ll see what happens to your new variable valve engines next year.
All you hear is Northstar Northstar Northstar. BMW, Mercedes, Toyota, Honda wouldn’t have Northstar in their cars. No variable valve breathing. What GM needs is a new small block V-8. Where is it? Don’t ask me.
In fact, you are buying a six-cylinder engine from Honda for Saturn. Saturn was created to prove that Americans could build as good a product as the Japanese. Now they are buying Honda engines for Saturn, which proves that this management not only can’t build a better engine, it’s given up trying. In Heaven you can hear Ed Cole and Boss Kett sobbing. GM has to buy engines from a competitor
They don’t even have a five-speed automatic for their own cars which are front wheel drive. They are getting one, when the competition is getting six speed automatics. GM will get its five when the competition is getting a six speed. Actually, GM did make five speed automatics for rear wheel drive cars, and sold them to your competitors. Believe it or not, you helped your competitors whip you.
This management is so inept that its own wholly-owned subsidiary, German Opel, revolted. Did you know that? The board of directors of German Opel, appointed by GM, revolted. They blamed Detroit for stripping Opel of resources for GM’s globalization, thereby wrecking Opel quality. The American head of Opel, Dave Herman, agreed with the Germans, so GM in Detroit, in effect, fired him, ordered him transferred to Moscow. The German board said no, you can’t fire Dave Herman unless we say so and fuck you guys in Detroit. Unprecedented. It took a half-year to straight this out, and they are still mad.
And while we’re on this, how about this “alliance” strategy? GM spent billions buying 20% of Suzuki, half of Isuzu, 20% of Fiat, 20% of Subaru. Remember, I’m supposed to be a good financial reporter, voted one of the century’s best.
Well, this alliance strategy makes no sense at all to me. Did you know GM has owned part of Isuzu since 1971, that’s 29 years? What have they gotten from it? They’ve been in Suzuki since 1981. 19 years. What have they gotten from it? In profits? Nothing. They get to sell the Geo Tracker. They don’t even get the good Tracker. You get the old one. Billions down the ratholes and they call it a strategy. Well, it is, a losing strategy.
Here’s am aside:
This year’s General Motors annual report said “It’s no secret that, in recent times, General Motors has been thought of by some as the ‘product laggard’ in the industry. We don’t think that description has ever been fair. However, that image is going to change.”
Well, I’m the one they are talking about. And they say it’s isn’t true but it’s going to change. Why, with the same people leading the team? They are doing the best they can. It just isn’t good enough.
The other day I saw the new SUV the GMC Envoy. That’s the new Jimmy, like the new Blazer will be called the Trailblazer. That Envoy looked good, darn good. But the version I saw had only two rows of seats, no third row option. GM will build an extended wheelbase version for a third seat. That extended seat version will be the same length of the GMC Yukon that has a third seat. You’ve got to understand, the extended wheelbase Envoy and the Yukon, both the same length, will sit three feet apart in the showroom.
Why do that? Why not build one Envoy, an inch or two longer if need be, with an optional third seat. If it’s not comfortable, the salesman sells the Yukon. You know, that is what Ford is doing. The new Explorer will have a third seat option, with no $200 million spent for an extended wheelbase version.
The same thing will go for Chevy extended wheelbase Trailblazer and the Tahoe. Ain’t there anyone in RenCen who knows how to play this game?
How about the advertising? Remember the Cadillac Ducks? All that money spent to introduce the Catera with stupid and silly ads. How about the new Cadillac advertising theme? “The power of &.” I don’t know anyone that knows what it means. And they never fire an ad agency.
I will say the Onstar ads with Batman are terrific. Super. I don’t understand how they got them. I figure they’ll fire the guy who did them.
There’s so much. It goes on and on. They talk about a major effort to build a five-day car; you can have it built-to-order and delivered in five days. What, you need a five-day Cavalier? The major reasons for not having what the customer wants are corporate. That is, they want V-8s and you don’t have enough V-8 capacity, so you give incentive money to sell sixes. They want silver paint jobs, but the company bought white paint and wants to use it up. Sure, they should make it faster to get a car built-to-order, but that’s no big deal.
E-Business, China, your management puts its hopes in all these fantasies. Meanwhile, Toyota is going to outsell your cars in California. Last year, you registered 182,000 cars in California. Toyota registered 161,000. You were just 21,000 ahead. When will they pass you? And they are catching up in trucks, too. Your management doesn’t know that beating Toyota in California is more important than dreaming about China.
And there’s no modern GM convertible, either. Chrysler sells 60,000 Sebrings. Ford Sells 40,000 Mustangs. Good business. But it’s more than that. The convertible is the spirit of a company. That’s why Toyota builds them. You have the ancient and soon to die Camaro and the two-seat ‘Vette.
Do we have to go on?
Everybody makes mistakes. But your management makes so many of them. The proof of their incompetence is in the number of mistakes. There is absolutely no reason to think that this will change. The same people who made the mistakes are still in charge, and they haven’t admit
End of Part 2.
Part 3, a much shorter segment. Why these things happen.
Listen carefully: You have a management that doesn’t know much about the American car business. It isn’t that they are bad people or dumb people. I assume they are smart. They just don’t know much about the American car business. Look at their resumes. The chairman and former CEO was the former treasurer who made his bones negotiating the joint-venture deal for the Fremont plant with Toyota. As a reward was made boss of GM Canada and then GM Europe, and he did a good job, a good job. But he had no American car experience. And in Europe, he had top people around him; they knew the business. That wasn’t true here.
Your new CEO likewise was a financial official, who did a good job in Brazil and a good job in Europe, but had little American car experience, until he was made president of North American operations. His on-the-job training was running North American Auto Operations. He lost market share very year and was promoted to CEO. Most of the disasters that I’ve described, and the fall in market share, came on his watch. Yes, you did make profit here. It would be amazing if you couldn’t make a profit in a 17 million-car year. What happens when it goes to 13.5 million and you have 25% share?
Look, I don’t have anything against financial people. One of the best officers I knew, Bill Hoglund, the man who turned around Pontiac, you know, ‘We Build Excitement,’ was a financial man. But he had cars in his heart, and that’s what counts, what’s in your heart, not what you studied in graduate school.
Your president today of North American operations was selling eye wash five years ago. Actually I like Ron Zarrella. He is terrifically smart, and a quick study. But he doesn’t have any experience, the knowledge you get from seeing how things really work. If he had great backup, that might be OK. But the backup is awful. They don’t know the auto business, either. Ron is like a quarterback just out of college, playing for the NFL in his first year, and with no protection. He’s going to get sacked an awful lot.
It’s one thing not to know the business. But worse, your management doesn’t like people who do know something about the American car business. Look at the top-flight people who have gone. JT Battenberg, one of the best, gone from GM. Don Hackworth, who once headed Buick and then manufacturing, going. Lou Hughes, gone. Mike Losh, the CFO who once headed Pontiac and Olds, gone. John Rock, who saved GMC, bounced. Ed Mertz of Buick, gone. My impression has been that they actually consider knowledge of the business as some kind of disadvantage.
But worse is the management system they have set up. You don’t have a working system.
Gentlemen, and ladies, again, I am supposed to know something about managements.
Let me tell you a story. Years ago, in the 1950s, Pontiac was going down, and GM sent over Bunkie Knudsen to take over. He took over 60 days before Job 1. He went down to the styling shop to see what he had coming in 60 days.
Pontiac was an old man’s car then. It’s styling symbols were two wide chrome stripes running down the hood, we called them suspenders, and the Pontiac Indian head on the hood.
It was only 60 days before Job 1, and Bunkie couldn’t do much, so he said take off the suspenders and the Indian head.
Well, one day I asked the vice president of Buick, you remember, Ed Mertz, if he could walk in 60 days before Job 1 and strip chrome off his car. That was in the day of The 4 Phase System of new car development. You remember the 4 Phase system; it started at Phase Zero and ended at Phase 3. I want you to know I never thought much of a company with a 4 Phase System that starts at Zero and goes to 3. Anyway, I told Mertz the Knudsen story and asked if he could go into design 60 days before Job 1 and strip off chrome.
He said, “Sixty days before job 1? Hell, that’s Phase 5.”
Gentlemen, I have not found one man in GM who could by himself order a piece of chrome stripped off a car. Your management has created a system without power or responsibility, or with power and responsibility so diffused that it takes forever to get anything at all done. Even the VLE have to hold meetings to strip off a piece of chrome.
You could say your CEO has power, but he says he doesn’t know anything about design or engineering or marketing so why would he do anything.
Look, the division chiefs are nothing anymore. They aren’t vice presidents; they have no power over quality even. A division like Cadillac has about 50 people on the payroll. They probably will be eliminated in time and the division chief, too.
The brand-marketing boss is supposed to have power, but as far as I can he or she has power over the advertising. The VLE is supposed to be the boss, but they aren’t vice presidents, and they report to manufacturing and manufacturing never wants to change anything.
As far as I could tell, the most powerful car guy was Don Hackworth, but he’s gotten his head chopped off.
And there seems to be no penalty for failure. Has anyone been fired for that Saturn disaster? I figure the worst launch on top of the worst platform decision, which was, by the way, forced not by Saturn people but by top management of GM. Have they shaken up design for those boring products? Have they changed the brand management for the market share loss? Did they ever fire anybody for lousy advertising? There is no penalty for failure.
How can anyone who knows something about the American car business, about cars, get to the top, or even the #2 position, of GM. I don’t see the pathway up. Engineers don’t count for anything anymore in this company as far as I can tell. You know, even Fred Donner, the ultimate financial man at GM, who set up the last management system about 40 years ago, felt that while there should be a financial man on top, the #2 should know something about cars. Not today.
I recall John Rock, then a vice president of Oldsmobile, said to me, “This system won’t work, but it will take them 10 years to find out.”
Your board of directors. I believe there is only one person on the entire board who likes cars, and it’s not Jack Smith, the chairman, either
The stock price: it is as high as it is because of Hughes, bought by Roger Smith. Without Hughes I figure GM could be selling at 35. And you can thank Carl Icahn, the old raider for pushing it up 12 points by announcing a raid. Now he’s gone. Where will it go?
Enough, end of Part 3
Part 4. What can you do about it?
Well I hope someone made a tape of this speech. If not, I can give you a copy of my text. Each one of you should drop a note to each member of the board.
You could do it in a round robin, if you wanted. That is, everyone signs the same note, in a circle. That’s a round robin. No one stands out. Tell them you don’t know if I’m right or wrong but you’re worried about GM.
Urge them to set up a committee of outsiders, men who know the business, to study GM and report back with a plan of action in 60 days. Make suggestions about who should be on this committee.
How about Bill Hoglund, ex GM executive vice president. How about Roger Penske, how about Lee Iacocca, or Bill Mitchell or Bob Eaton or Bob Lutz or JT Battenberg or Maryanne Keller.
The board must order that all records and minutes be made available immediately to the committee. They must order that all officers make cooperation with the committee their first, their first priority. That’s anyone obstructing, delaying or acting in any way uncooperatively shall be suspended by the committee awaiting board action. Who could they hire if they went that way? Believe me, there are people out there who could lead General Motors back to Glory. And throw another shrimp on the barbie. That’s a hint about one of them.
The committee should have the right to interview people outside of GM for positions within the company. The committee members must be paid terribly well for their work, too. That’s because if they do it for free no one will respect the report. They only respect what they overpay for. You can call this “The Committee of Public Safety.” What else can you do? Go to church and pray. Your company is going down to 25% of the market. That’s not terrible. You can make money at 25%, Ford does. But I don’t see leaders coming up the pipeline. All I see is more stretch goals.
When you write to your board members, tell them that’s you don’t understand how a company that depends on products, has no upward mobility for product people. None of the top executives are product people. Write slogans on walls, too. Victory or Death, Beat Ford, V, Sic Semper Tyrannis.
My last words:
Never Give Up,
And don’t let them take you alive.
Any comments or questions?