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GM's drive to promote the Japanese-inspired team concept at its plants has often been greeted with suspicion, if not outright hostility, and many line workers cling resolutely to the Old World: a rigid, adversarial system characterized by strict seniority rules and a crippling multiplicity of job classifications. The result is a patchwork of different systems among GM plants, many of which are light-years behind the highly efficient Buick City factory in Flint, Mich., where the Buick LeSabre is produced. Overall, GM has made virtually no gains in productivity and remains the highest-cost automaker in the U.S. In fact, the company has been losing money on its North American carmaking plants for several years and has had to rely for profits on its successful European operations (auto brands: Opel, Vauxhall), its auto- financing subsidiary and other divisions.
Yet chairman Smith's radical cost cutting, which removed 137,000 workers from the payroll, and his $50 billion investment in retooling will eventually pay off for the company. More important, his huge reorganization of the company in the mid-1980s is finally creating some cooperation between GM's far-flung divisions. One major change has taken place in its Automotive Components Group, a $33 billion operation. Because the companies in the group (examples: Harrison Radiator, Packard Electric, Inland Fisher Guide) were captives, there was traditionally no incentive for them to offer competitive prices. GM now insists that its parts makers stand on their own, which has done wonders. The Delco Maraine division has cut 70% from the cost of manufacturing antilock brake systems.
The company's most dogged problem is its image among consumers. Admits president Reuss, with a candor uncharacteristic of GM's inner sanctum: "In the early and mid-1980s, we let a lot of people down. We disappointed customers with some of our products' quality, reliability and durability. And as we were going through the change from rear-wheel drive to front-wheel drive, we had too many cars that looked alike."
GM cars have improved vastly, but most car shoppers don't perceive it yet. While GM still lags behind most Japanese manufacturers in overall quality, its cars have 53% fewer defects than they had only five years ago, a fact the company is just beginning to tout in its advertisements. Some of GM's car lines actually beat the Japanese. Buick, for example, ranked fifth in the most recent J.D. Power survey of initial quality, placing the GM division ahead of Honda, Nissan, Acura and BMW, among others. The Buick LeSabre model placed ahead of the Acura Legend, Honda Accord and Nissan Maxima on the Power list of the most trouble-free models.
At the heart of the issue is consumer trust, which the Japanese have deservedly won and GM now has an opportunity to win back. Inspired by Saturn, GM may be able to turn the once derogatory epithet "domestic" into a true competitive advantage. "The Japanese have been worried about this for some time. It scares the liver out of them," says David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan.