A new-style GM chairman is restyling the largest automaker
Chairmen of the board at General Motors tend to be bland organization types. Though they command a vast $60 billion industrial empire that controls more than 60% of the U.S. automobile market, none in recent decades has had the public impact of Henry Ford II or Lee lacocca. Three years ago, when Roger B. Smith, a 5-ft. 9-in., red-haired man with a squeaky voice, moved into the walnut-veneered chairman's office on the 14th floor of the General Motors building in Detroit, he was expected to blend into the woodwork. Smith had joined GM as an accounting clerk in 1949, spent his entire career with the company and was unknown outside the automobile industry.
Now 58, Smith would still be a pretty good choice for an American Express "Do you know me?" television commercial. Only last month, an NBC news broadcast referred to "General Motors Chairman Roger Miller." But inside GM, Smith is proving to be the most forceful chairman in a quarter-century. In the year before he took over, the company lost $762 million. Smith dramatically cut costs and raised cash by closing four plants and arranging for the future sale of the GM building in New York City for at least $500 million. He has kept costs low by consolidating and modernizing operations, laying off thousands of workers and winning wage concessions from hundreds of thousands of others. As a result of those measures and a better auto market, GM expects to show record profits of perhaps $3.8 billion for 1983, on sales of 4.1 million cars. Previous high for profits: $3.5 billion in 1978, the same year that GM set its record for car sales of 5.3 million.
Smith is surprising auto industry leaders even more by tinkering with the long-sacrosanct GM system. Says David Lewis, an aide in the president's office at GM from 1959 to 1966 and now a professor of business history at the University of Michigan: "He was all work and no play, but I underestimated the guy. He intends to make his mark on GM, and he will."
This week GM's 24-member board of directors will meet in New York City to vote on Smith's latest proposal: a reorganization that would consolidate the company's five car divisions (Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac) into two groups, one selling small cars and the other larger models.
Revamping the car lines could solve a major problem facing GM. When the company began building smaller models—the X-, J-and A-cars—in the late 1970s, it ordered its divisions to use the same basic models to save money. The most egregious instance was the J-car, which was forced into service for all five divisions. Recently a Cadillac engineer was asked to explain the principal difference between the Cadillac Cimarron and the Chevrolet Cavalier, two J-cars. His reply: "Oh, about $5,000."
Buyers were quick to catch on to the manufacturing sleight of hand. Chevrolet sales slumped partly because drivers could slide into the seat of a comparable Oldsmobile or Buick for only a few hundred dollars more. Quality also suffered, since individual divisions did not have to take responsibility for the corporate clones. The X-cars have suffered an embarrassing number of recalls and face a Justice Department lawsuit.