By on August 11, 2010

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.

Sorry.

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.

That’s it.

My last words:
Never Give Up,
Never Surrender,
And don’t let them take you alive.

Any comments or questions?

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60 Comments on “Jerry Flint (R.I.P) Lays Into GM, October 2000...”


  • avatar
    educatordan

    It’s almost as if they didn’t want to be saved. It’s like pulling up to the Titanic an hr into a 2+ hr sinking and being told; “Everything’s fine, we don’t need you. Keep moving, we’ll see you in New York.”

    • 0 avatar
      geeber

      It was all part of the “perception gap.” Not only did we fail to realize how awesome GM cars really were compared to the competion, we failed to realize the brilliance of GM management.

      The fact that their plans regularly failed and produced further erosion of market share was the result of Consumer Reports, wacko environmentalists, The New York Times, etc.

  • avatar
    mikey

    One line stands out. “there seem to be no penalty for failure” Even at my low life position at GM I can vouch for that.Plant Managers that coudn’t manage a Hot dog,or keep thier hands of the female help,get promoted. Dock superviser that couldn’t make a decision if his life depended on it,gets a steady days office job.

    The late Mr Flint, in his riveting piece echoes my own views,incompetant management,drove GM to the edge.

    • 0 avatar
      Lumbergh21

      Sounds like working for the government. Since you can’t fire people for incompetence, they put proceedures in place to limit the damage those incompetents can do. Two problems, the incompetents still find a way to muck up the works and the competent employees are hamstrung by the lack of freedom to make decisions. In a division of the government that is responsible for protecting public health, this is a serious problem. The second similarity is politics trumps all. The employees best adept at playing the political game get promoted, resulting in incompetent leadership at best. Those of us in the field actually trying to protect public health have to work around nonsensicle requests and requirements. When they do recognize a problem they address it through focus groups and other buzz words, producing more paperwork requirements and less work. I guess as an engineer with no experience in car design or manufacture but with plenty of experience in governemnt work, I would fit right in GM’s corporate structure.

  • avatar
    WaftableTorque

    I’ve been reading his Forbes articles since the Ford Explorer debacle in 2000. The archives only go back to 2000, though he had great articles before that.

    He wasn’t afraid to speak his mind, even if it wasn’t politically correct. He was a journalist who wasn’t afraid to make predictions; occasionally he was wrong, but he always held himself accountable and would admit he was wrong. Wow, accountability, imagine that.

    As much as he laid one against the domestics, he was their biggest cheerleader. He was pro-bail out, and didn’t believe that cutting auto divisions would help any cause. But I don’t think there’ll be a journalist who knew the players of the industry as well as he did.

  • avatar
    NN

    wow. This was before the Bob Lutz era, of course. For all the grief Maximum Bob got, he did take responsibility for products, and turned out some good ones. He’ll be missed.

    • 0 avatar
      tced2

      Bob Lutz was running Chrysler at the time. Lee Iacocca was the most visible person but Bob Lutz was president of Chrysler and in charge of actually running the place.

  • avatar
    Da Coyote

    Sad, but true. GM has been my example of putrid quality when teaching grad school engineering for years. When confronted by students, I challenged them to show me any GM car in the parking lot where I could not identify at least 5 major fit/finish problems within one walkaround. I never lost.

    They got what they deserved, and I hope and pray that the govt gives up on them. Let the capitalist system come and pick through the remains of what was a great company and perhaps start again.

    This time, they might try to hire more than one engineer, and hire only one MBA. Oh, and there’s a big diff between management and leadership. GM had neither.

    • 0 avatar
      mikey

      Fit and finish?…I can take a walk around just about any new vehicle and find fit and finish issues. Take a good objective look at a Jetta, check deck lid, to quarter fit,have a good look at interior trim.

      Granted, GM had some fit and finish issues,but the imports were far from perfect.

    • 0 avatar
      moedaman

      Gee mikey, do you have an anti-foreign vehicle response system? Da Coyote didn’t even mention foreign vehicles. Maybe he feels that Ford makes superior products?

      My father worked at GM for 25 years (Pontiac Truck and Bus) as a skilled trade worker and not management. From what he told me was that GM was a poorly run company that had ball-less management and a union that took full advatage of that ball-lessness. It’s surprising that it still has as large a market share that it currently has.

    • 0 avatar
      mikey

      Right,moedamaen, Da Coyote didn’t mention foreign cars,but it did single out GM for poor fit and finish, as compared to what? Ford. He challenged his students to check fit an finish on all GM cars.

      My point was, and is, in fairness we should look and ALL the vehicles and perhaps compare fit and finish,objectivly.

      Everything your father told you about GM, is right on the money. Yes, the union did take advantage of managements incompetence,and the rank and file, like your father and myself,are reaping the benifits. Kind’a explains why I don’t jump on the TTAC union bashing band wagon, eh?

    • 0 avatar
      gslippy

      @moedaman: “ball-lessness”. I will begin using that word now. Thanks!

  • avatar
    OldandSlow

    Man, that was an ass chewin and a half. Jerry Flint didn’t mince words on that one.

  • avatar
    Contrarian

    It’s as if he actually worked there!

    He lost me a bit when he recommended JT Battenberg, although that’s a minor point though (with the benefit of hindsight) I always enjoyed his articles. He’ll be missed.

  • avatar
    sportyaccordy

    … and now they’re being subsidized. Failure is success.

  • avatar
    Detroit-Iron

    What happens when it goes to 13.5 million and you have 25% share?

    Wow.

    • 0 avatar
      segfault

      Exactly, and we’re way past that point now–I think the figures now are closer to 10.5 million and 19-20% share. So GM’s market share has continued to decline at a rate of at least 3/4% per year.

      At that rate, If I live into my mid-fifties, I’ll get to see GM’s market share decline to 0%.

  • avatar

    There is a book in my den titled “The Dream Machine” written in 1976 and inscribed by it’s author, Mr Jerry Flint. It reads “for Buickman – who knows more about selling cars than just about anybody – when better cars are built, Buickman will sell them.” Over the years Jerry and I exchanged hundreds and hundreds of emails and each year on my way to the GM shareholders’ meeting in Wilmington we would talk as I drove through Pennsylvania.

    Even though he would hang up on me when the argument wasn’t going his way, I’ll miss him and his late night sarcasm and wit.

    Regardless of his Forbes column name, he took a “Backseat” to no one when it came to understanding and writing about the US auto industry. RIP my friend.

    • 0 avatar
      mtypex

      So, when is Buickman going to start selling those Hyundais?

    • 0 avatar
      educatordan

      I’d buy a CPO Azera from him.

    • 0 avatar

      http://cincinnati.carsoup.com/used/detail.asp?year=2009&vehicleid=9518702&vehicletypeid=1&makeid=32&modelid=7144&invtypeid=2&ud=5&redirtype=InBound&delta=1

      let me know what you think.

    • 0 avatar
      educatordan

      Nice but looking for something with more like 50,000 miles cause of my budget. I know Azera owners aren’t exactally hoons, they’re more like LeSabare owners.

    • 0 avatar

      what is your zip code?

    • 0 avatar
      educatordan

      I appreciate your your salesmanship, Amigo. (Saying that as the son of a John Deere lawnmower salesman who has a list of repeat customers almost as long as yours.) But I’m perfectly able to search autotrader myself (which is where Hyundai put’s their CPO) and have been glad to see GMs CPO site improved. That is one sign that they “get it.” I also have a local Buick & GMC dealer in which I know the family that owns the francise (taught a few of the kids and grandkids.) If you ever move to Gallup, NM though man, I’m sure you’ll be my favorite salesman in no time. Although if you’re in Ohio I could send my father your way… but I don’t know when he’s gonna be in the market.

    • 0 avatar

      Superman lives in Metropolis, Batman in Gotham City, Buickman in Flint.

  • avatar
    Buick61

    Are you sure this was from late 2000? They already knew that the 2004 Saturn Vue was getting a Honda engine at that point? The Vue, itself, wasn’t even out yet.

    • 0 avatar
      geggamoya

      He also mentions the “ancient and soon to die Camaro” a few paragraphs earlier.

    • 0 avatar
      Darth Lefty

      Aztek was MY2001. Plans for things such as engines get made long before the model goes on sale, so it makes sense to me.

      I had forgotten about the Batman Onstar commercials!

    • 0 avatar
      geeber

      Flint talks about Oldsmobile as if the announcement that it will be discontinued has not been made yet:

      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.

      GM formally announced that it was killing Oldsmobile on December 12, 2000.

      I remember reading this speech in the fall of 2000. And it was well known before 2004 that GM would be using Honda V-6 engines in the Saturn Vue.

    • 0 avatar
      TomH

      I was working with Saturn in 2K and the Honda V6 motor deal was well known.

  • avatar
    Revver

    Really great stuff. With a detail or two changed, could’ve been written this morning…which says a lot about both Mr. Flint’s clear understanding of the business and GM’s inability to change.

    At times I’ve seen TTAC defend itself against “GM bashing.” It’s Mr. Flint’s story of walking into GM’s building as a child that hits home. When you see a manufacturer go from world leader to desperate follower who buys its competitor’s engines to survive you look for the causes.

  • avatar
    oboylepr

    “I ask you, if you didn’t work for GM, would you drive a GM car?”

    Hell no! And didn’t during the years I did work for them.

    Nothing much has changed at GM except that Bush, Obama, Flaherty and harper have been suckered into pouring (my) good money into that bottomless rathole. RIP Jerry, they should have listened but they didn’t.

    • 0 avatar
      mikey

      I believe you mentioned once, you worked as a superviser at GM Oshawa. Now you tell me you drove a non GM.

      Here is a little secret, oboy. Every blue collar,and your fellow white collars,were very aware of that fact.

      Perhaps that would explain your, “less than positive” experience working with us.

    • 0 avatar
      Lumbergh21

      My brother-in-law is a design engineer with Delphi, and he bought his last GM four years ago. He’s no longer drinking the kool-aid. I guess that makes him a traitor or intelligent.

    • 0 avatar

      mikey, about five years ago or so I often drove right by the Arlington plant. I was amused by the number of SUVs in the parking lots… and, the fact that 5 out of 6 weren’t Tahoes, Yukons, and Escalades. In fact, most vehicles in the lot weren’t even GM. So many traitors… at least the UAW goons were kept busy, bashing so many heads…

      For extra credit, drive by a GM dealership sometime. Take a look at what the employees are driving. Yes, you’ll see a few GM cars, maybe even some new ones. By and large, are all driven by the accounting staff (or receptionists) who took advantage of special pricing.

      In my experience — having worked pretty much all sides of the car sales game — salespeople and service department staff at GM stores seldom drive GM products… for the simple reason that they know better.

  • avatar
    gslippy

    What’s changed in the last decade?

    1. GM’s market share is down to about 19%.
    2. Oldsmobile is a distant memory, and Saturn and Pontiac are dead.
    3. The Koreans are kicking butt on quality.
    4. Ed Whitacre is not a car guy.
    5. Cadillac has dramatically improved products.
    6. The Volt’s development costs are in the billions (?), and the resulting “economy” car will sticker at $41,000.

    • 0 avatar
      geeber

      Regarding the Volt, maybe GM’s management is hoping that the old Lee Iacocca saying still holds true:

      “People want economy and will pay any price to get it.”

    • 0 avatar
      mtypex

      gslippy: your list is nearly identical to mine

      I get a kick out of the Honda V6 engines in the Saturn VUE.
      Honda is pretty much well known as a four-cylinder sporty/torqueless engine specialist, and GM had many years of selling V6 engines (which were the bread and butter of product for decades after the V8 started to decline in the sales mix). Honda makes decent V6 engines, not as good as Nissan’s maybe in terms of power, but for GM to buy V6 engines from Honda… just wow, I think you could have said then, as well as today!

    • 0 avatar
      Robert.Walter

      There’s an even better quote from Lido:

      “The guy with the lowest manufacturing cost makes the rules.”

  • avatar
    CamaroKid

    What happens when it goes to 13.5 million and you have 25% share?

    How prophetic was that?

  • avatar
    Boff

    Has anyone ever written a complete, unexpurgated history of GM’s fall from grace? I read JZD’s “On A Clear Day You Can See General Motors” as a kid in the 80′s…that was a long time ago, though…

  • avatar
    PG

    Fantastic article. Mr. Flint will be missed.

    He tears into GM in every possible way, and his thoroughness is to be admired. But reading this now, in 2010, I’m reminded of how far GM has come. Their product lineup has vastly improved – just look at Cadillac. It’s not Catera anymore, it’s CTS-V. Even Buick is starting to come out with some decent models again.

    Sure, GM has a long way to go, but I don’t think they’re nearly as dysfunctional as they were a decade ago. And we as Americans should be glad – we paid for it, after all.

    • 0 avatar
      mikey

      PG +1

    • 0 avatar
      gslippy

      “…how far GM has come”. That’s a fantasy; you should testify before Congress for the next bailout.

      If this is true, why does GM’s market share continue to drop? This is the kind of comment Bob Lutz would make, then complain about the perception gap between his ‘reality’ and the consumer’s thinking. Cadillac, yes, but the rest… not so much.

      “…how far Hyundai has come”. Now that’s reality.

      And if you think GM is not nearly as dysfunctional as a decade ago, that’s damning with faint praise. It’s like saying the Titanic nearly missed the iceberg as it turned to port. Maybe all the dysfunction disappeared with Oldsmobile, Pontiac, Saturn, Saab, and Hummer? GM’s products have improved, but so have their competition’s.

    • 0 avatar
      rnc

      Before I found TTAC I had read Flint’s “backseat driver” for years (this is the first time I’ve ever read this speech). What is funny is if you read those articles and nothing else over the last 3 years you would beleive that Ford was the dying company with no chance and that GM was going to be fine as long as lutz was there. (Example: “GM will dominate the domestic small cars b/c they have daewoo, while ford only has Ford Europe and Mazda”???).

  • avatar
    MarcKyle64

    The day when GM finally does turn turtle will be a sad one for me. But…if I were another automaker and someone looking for work from GM sent me a resume’ – I’d file it in the circular cabinet next to my feet.

    Where are the talented graduates from automotive engineering schools going these days? Hyundai? Ford?

    • 0 avatar
      Lumbergh21

      You’ld be wrong to do it. One big problem with GM is there is no career path for design and production engineers to move into top management and another related problem is mid-level management on up don’t listen to the design and production engineers. BAsed on my limited knowledge of GM engineering, it’s not the engineers it’s the non-engineers manging the engineers that are screwing up the quality of GM products.

  • avatar
    ihatetrees

    Wow. That was a great, prophetic piece.
    The Honda V6 in the Vue may have made some weird financial sense during the SUV boom. But think of brand killing message it conveyed to the informed consumer: “GM can’t build a decent V6″. Did Powertrain management have no shame?

    Regarding Saturn in general, I think Flint missed the subtle management/labor conspiracy to strangle the brand. Saturn was a threat to both a disfunctional management and union culture.

    I recall the strike of ’98. GM was near victory. Plants were being shut across the country unexpectedly – and many workers missed their overtime and (privately) disagreed with union cement heads calling the strike. GM had a chance to go the Caterpillar route and give the UAW a solid (and necessary) beatdown. But they blew it, like so many things.

  • avatar
    Lumbergh21

    One last word, Ford seems to be turning things around since they got a new CEO who just so happens to be an outsider with an engineering background. Pure coincidence I’m sure.

  • avatar
    xargs

    A buddy of mine was an engineer at GM Powertrain, and he agreed that management was pretty clueless, and more unforgivable, cowardly. They spend a lot of money on projects that never saw production.

  • avatar

    That. Was. Awesome.

    Riveting read. I would have loved to have seen the jaws drop as he ripped into them 175 times in a row as he gave that speech. Rest in peace.

  • avatar
    Dave M.

    The fact that their plans regularly failed and produced further erosion of market share was the result of Consumer Reports, wacko environmentalists, The New York Times, etc.

    Or practical experience. Like millions of us.

  • avatar

    Frankly, the best thing that could have happened to GM was if it had been broken up and sold. Their size, their overlapping brands, and their crappy management all are insurmountable obstacles to reform. It would have been much better 10 years ago, now the Chinese would swoop in and pick up the pieces, which makes it politically untenable.

  • avatar
    Advance_92

    Back in 2000 no one but the crazies who were inflating the internet bubble were bullish on sales in China, I suppose. I’m also struck by the idea he emphasized the need to have an American way of doing things for GM; wasn’t this back when Nasser was trying (and once again failing, so I suppose the question answers itself) to make Ford more global?

  • avatar
    Robert.Walter

    Flint’s critique was more-or less right-on, but it came 12 years after Elmer Johnson spotted the same thing and issued his famous internal memo (before giving-up and quitting GM and going back to pracice law in Chicago. Note: He just died “recently” too.)

    http://www.thetruthaboutcars.com/download-88-elmer-johnson-gm-memo-here/

    • 0 avatar

      add in DeLorean, Perot, and your friendly Buickman.

      difference today is that there’s a new sheriff in the Ren Cen, his name is Reuss. criticisms are being replaced with confidences. when Akerson becomes Chair in Jan, Reuss assumes CEO. then Jerry can RIP watching how well GM does and smile.

  • avatar
    Zackman

    Wow! This speech is a prophecy come true. When the 1973 models came out, the pillarless hardtop pretty much died, and by extension, American excellence began to die as well. That pretty closely coincided with the end of U.S. involvement in Vietnam, the first oil shock in March, 1973 and the general end of the postwar-era.

    I was still in the air force at that time and when I went to check out the 1973 models in the fall of 1972, I was horrified at what was happening to the domestic car industry. Of course, domestic cars had become so bloated and were land barges in spite of various auto mags crabbing about that very thing for years previously. Extreme front and rear overhang made worse by ugly bumpers, huge engines choked by emission controls, etc, etc.

    What did not escape my notice were the Toyotas and Datsuns, with their small cars, more efficient engines that ran much better and were economical, in spite of the odd-smelling, cheap, tacky interiors – that left an impression that things were changing fast.

    Yes, I rant about the hardtop, but it was such a symbol of excellence that has not forgotten. Yes, modern cars run better, are much more efficient and have more creature comforts (too many?), but they, for the most part, lack a spirit and vitality that the postwar-era autos posessed. I drive a 2004 Impala that I love and has been an excellent, economical ride, but put it next to the 1964 Chevy I owned as represented by the photo, and there’s no comparison.

    Fisrt domestic consumer products indusrty to go: audio; next, clothing; followed by in no particular order, televisions, computers, appliances, tools. Autos next?

    Yes, his speech was eerily prophetic!

  • avatar

    Jerry Flint RIP. That lecture was perfect and extremely prophetic.

    I am glad GM is on the mend finally, it only took certain doom for it to happen. And while I don’t think they did everything they could, it seems they did enough.

    And don’t spout that ‘why aren’t they gaining market share?’ crap. Mending reputations takes time.

    The saint who steals has a longer road to redemption than the thief.

    There is also this thing called ‘the competition’. They also build products.

    I wouldn’t say I am a GM ‘fan’, I would just as soon buy a car from them as Hyundai or Ford, but I hope they turn themselves around fully. A company as old as that deserves it.


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