In any restructuring, some grief is inevitable. But the tumult surrounding GM is particularly intense. And that’s not only because of GM’s size, say friends and enemies. Even as GM courts the help it badly needs from employees and suppliers, it persists in dictating its desires. If GM can’t create more of a partnership with constituents, it may jeopardize even its successes. The strike in Michigan threatened to halt production of the company’s second best-selling car, the Pontiac Grand Am. And the strike in Ohio worsened a shortage of the popular Saturn. GM is now running ads pleading with buyers to wait for their cars.
GM’s woes aren’t new. Its share of the car market fell steadily from 48 percent in 1978 to 31 percent for the month of August, and it posted huge losses for the past two years. But a turning point came in April, when directors pushed aside slow-moving top managers to elevate John (Jack) Smith and his lieutenant, Lopez, who were largely responsible for GM’s profitable European operations. GM officials wouldn’t go on the record for this story, but insiders say the mandate is to turn a profit within 18 months. Plants may be closed and jobs lost even faster than expected. Suppliers have been ordered to shape up, cut costs and compete for contracts they once thought secure.
While this may be radical for GM, other companies pulled off such changes in the 1980s, most notably Ford and Chrysler. But those companies, despite their own crises, seemed to recognize that people would be more willing to make changes if they had a part in prescribing them. Executives at Motorola, in fact, say Ford taught them how teaming up with suppliers at the design stage of a product saved time and money. Ford also cultivated loyal employees, featuring them in ads and paring payrolls carefully to minimize layoffs. “GM could do exactly what Ford did,” says Donald Trauscht, CEO of Borg-Warner, which sells transmission systems to both. “But it would take them, say, 10 years.” Instead, GM has little time left to do it right. Picture a 19th-century wagon train that should have started west at the first sign of spring. Instead, it’s August, snow will soon fly and the pioneers are still packing, shoeing horses and bickering with the trail boss.
At GM, that boss is Lopez, a man of unstoppable drive and enthusiasm. He refers to his health-food diet as “warrior” food, and he launched his U.S. career with a no-notes, three-hour speech. But Lopez’s penchant for the hard line has earned him nicknames like the “Grand Inquisitor.” While some GM suppliers are losing out simply because of their own sagging productivity, others feel misused. Says one supplier who gets no complaints from Chrysler on the same product he sells to GM: “We do our jobs. Why do we have to suffer because GM didn’t do its job?” Other suppliers tell of GM sending mixed signals and abruptly canceling longstanding contracts. Although the company denies these reports, they leave suppliers wary.
When it comes to workers, Lopez hasn’t created hostility so much as inherited it. The UAW still burns over GM’s behavior in 1982, when it threw a breakfast with the union to celebrate a new contract, full of concessions, only to announce sweetened bonuses for managers just hours later. Last month’s strike in Michigan began, says a UAW spokesman, when GM changed a work schedule without getting members’ approval. Union leaders, determined to have some say over their shrinking domain, are signaling to management that they, too, can play rough. And both sides are posturing for contract talks next year.
GM executives argue that they are sharing the pain and point to moves that have hit white-collar workers, such as the elimination of bonuses and new charges on health insurance. Lopez answers his critics by warning that the industry is in a “battle” to preserve its pre-eminence. “The union is in this struggle with us,” he insists. “They are our brothers.” Another GM executive stresses the rewards everyone will reap from GM’s renewed strength. If people think GM is “arrogant,” he adds, they simply don’t understand the demands of competition.
