General Motors began on September 16, 1908 as a corporation started by William Crapo Durant. Buick was the basis of its foundation. From 1923 to 1946, GM flourished under the leadership of Alfred P. Sloan, Jr. By the 1950’s GM had five separate brands it was producing for the American public and maintained a 46% market share in the U.S. GM’s market share peeked in 1962 with 51% of the market and there began to be mutterings that GM should be broken up under antitrust laws. At this point GM began a slow downhill ride because some of its early strengths, like a rigid structure, became weaknesses as GM began to lose its feel for reading the American car market.
By the 1980’s GM began to have issues with cost-cutting and began, in my opinion, to make its biggest mistake. This was when GM stopped keeping its models and brands separate. For example, the Moraine assembly plant made the Chevy Blazer, the GMC Jimmy, and the Oldsmobile Bravada during the 1990’s. These three SUVs were all exactly the same vehicle except for certain features that were only available from their specific “brands.” GM also stopped innovating. The GM Blazer, although it became the TrailBlazer, did not change its design for several years. GM continued to make the same car, by this time in three sizes, until the plant closed in 2008.
Another issue that was detrimental to GM, and probably all the auto makers, was an agreement that was reached with the unions in 1990. This agreement was that, if GM laid off workers, it would be required to give the employees “subpay” to supplement unemployment payments. GM also began to use a marketing practice that was unsuccessful; one it had to employ because of its multiple models of vehicles. The practice was called “launch and leave.” GM spent millions to launch a “new” model, but with so many models being produced it could not continued to support the model with subsequent advertising.
In 1994, GM hired a new CEO, Rick Wagner. Mr. Wagner attempted to raise GM’s market share from its first low of 33%. But with GM spread so thin over so many different models and brands, even when GM found a new nitch, it could not give the new innovation time to mature. A good example of this was the EV1,the first electric car produced by an American automaker. It was introduced in 1996 but dropped in 1999 because of lack of interest by the American public. Another failing by GM and its leadership was its refusal to give up its “bread and butter,” big gas-guzzling SUV’s. In 2004, when gas prices began to creep upwards of $4, GM refused to focus on smaller, more gas efficient vehicles. Surprisingly, only five years before, GM had a fully operation electric vehicle in full production.
Who knows why GM made the decisions that it did, but it has had a devastating effect on the employees of the Moraine Truck and Bus Plant and the entire Dayton area.
I didn't know any history of the GM plant. Living in Miami it is kind of hard to know what is going on sometimes when it doesn't directly affect you all the time. Great history lesson.
ReplyDeleteWhen my brother went to college in the sixties, I read his management textbooks. That's when I first learned the word "paragon." GM was the paragon of of the industrial world. It was the best of the best, run by the brightest people, and it was the epitome of excellence in manufacturing, management, and marketing.
ReplyDeleteWhen I took some management courses in the nineties, GM was held up as an example of corporate failure, with the Japanese model being touted as the way to do business. Since then, it too has shown its blemishes.
GM certainly squandered a lot of capital and its failure has caused a lot of harm to a lot of people.
Have you seen the documentary, "Who Killed the Electric Car?" It's a very interesting exploration of that question, concerning GM's EV1.