Lopez’s defection is surely one of the oddest job hops in corporate annals. But the story made headlines for another, more important reason. Lopez was a top spear carrier in a revolution just begun that is rudely shattering GM’s bureaucratic traditions. Many suppliers and some GM insiders were as anxious to see Lopez go as management was to keep him. The question now: will the revolution roll on without him?
Lopez arrived in Detroit not quite a year ago, fresh from a triumphant turnaround of GM’s European operations. He was charged with reordering GM’s relations with its suppliers, which are at least as critical, if not so notorious, as its relations with labor. Lopez immediately made waves, warning that even GM’s most loyal suppliers faced dismissal if they didn’t make radical cost cuts. U.S. suppliers soon understood why Lopez, in Europe, had collected the kind of nicknames common to ruthless shakeup artists, among them “The Grand Inquisitor” and “The Russelsheim Strangler” (the headquarters of GM’s Opel unit is in Russelsheim). But Lopez’s passion was also impressive; he sent teams of reformers into suppliers’ factories, distributed his own “warrior diet” (heavy on fruit) and demanded that his team wear their watches on the right wrist-as a discomfiting reminder-until victory was declared. “Once bitten by the guy,” says a GM manager, “you were really hooked.”
And the numbers looked good. GM estimates that Lopez cut costs by $4 billion, or almost 10 percent, just since last May. GM’s top management was wowed, as was Wall Street. Lopez developed a reputation as one of a “new breed of the transnational executive, who can swim in all waters,” says Henry Wendt, chairman of Smith-Kline Beecham. No surprise, then, that VW, with plunging profits, also wanted Lopez.
The surprise was Lopez’s own behavior. “He was having a … hard time emotionally” making the decision, says GM spokesman Bill O’Neill. Lopez has told reporters, “My family is my life.” Some insiders have said that his wife, Margarita, was unhappy in parochial and cliquish Detroit. But Lopez was also close to GM CEO Jack Smith. Smith’s eyes were red and his voice strained at the press conference where he lamented the loss of Lopez. Lopez couldn’t be reached for comment.
Despite the drama of Lopez’s departure, industry experts say it is no fatal blow. “There’s absolutely no reason why the Lopez revolution can’t continue without him,” says Ron Glanz, an analyst at Dean Witter. Glanz believes that GM should bring in someone from Europe who isn’t tainted by the old GM culture, but some observers say one of the leading candidates is Alan G. Perriton, a former Saturn executive and Lopez deputy.
Whoever picks up the baton, the change Lopez helped launch is unavoidable. According to Michael Czinege, senior vice president at Gemini Consulting, GM is doing what American industry must do to survive: move from negotiating with suppliers to “partnering” with them. Companies must cut their long list of suppliers (GM has 5,000 to 6,000) and then involve them intimately in cutting costs and designing and producing products. Ultimately, says Czinege, they must have a “shared vision,” and it must be mutually beneficial.
But GM is still in an earlier, more painful stage of the transition. Partly owing to Lopez’s aggressive personality and partly because of GM’s mounting losses, the focus was mostly on cost, and little on good relations. “He was breeding mistrust,” says Thomas O’Grady, an analyst with Integrated Automotive Resources, a Delaware firm. Adds one industry executive: “I know lots of major suppliers who’ve said they’ll never do anything … for GM again.” It may be a plus for GM that Lopez jumpstarted the revolution and is now leaving. “No one [inside] is weeping,” says one adviser to GM.
Meanwhile, GM has gotten bonus points for its openness about the Lopez affair. “For decades, GM has operated behind a brick wall,” says David Cole, a University of Michigan auto expert. “Now that’s turning to glass.” Some day, looking back, GM may see the last day of Lopez as the first of a new era.
