Correction Appended
By STEVEN PROKESCH
Published: November 7, 1986
In a sweeping move (click here) to cut costs and regain its competitive edge, the General Motors Corporation announced yesterday that it would close 11 plants in the United States that employ about 29,000 people, or more than 5 percent of its work force in this country.
Calling the shutdowns ''the first phase'' of a reorganization and modernization program, G.M. officials said at a news conference in Detroit that they were also studying the possible closing of other assembly, stamping, engine and component facilities. ''I wouldn't say this is the end of the plant closings,'' said F. James McDonald, the company's president.
Roger B. Smith, G.M.'s chairman, said the shutdowns were part of G.M.'s $10 billion program to replace obsolete facilities with modern, efficient plants. By making the company more competitive, he added, these moves would improve its ability to maintain market leadership and enhance the job security of its remaining work force....
Roger Smith was CEO of GM for 9 years and from the beginning of his leadership the company began to lose money; every year got worse. It isn't like these guys are in leadership as if an act of congress. Yet, no stockholder bothered to come forward to fire the guy. GM was going down the tubes under Smith's leadership and no one stopped him. Amazing. Little tin gods. Untouchable.
...But the closings were seen as a hard blow to Michigan's economy and extremely damaging to other states in the region....
He rid the company of many top managers and came up with an idea that PRODUCTION COSTS could be cut by homogenizing parts of the assembly of the cars. In other words, the exterior of the car would have a different style design. Even the interiors were custom to the style of the cars. But, the mechanical works of the cars were to be more and more similar, hence, less factories would be needed and he could get rid of much of the cost currently experienced by GM, namely the employees. Look, payrolls are a large part of production plants, so all one has to do is look at a company the size of GM and see answers to financial losses by ridding it of employees. It is an easy fix. IF, the company didn't rely on well skilled employees that had loyalty to the company and the cars.
The employees were great people. My father had a friend that worked in design for one of the Big Three. He loved cars. He loved every aspect of cars. Cars are personal when purchased, but, to build and have them perform on the road was a real thrill for many people. The car employees loved their work. Exciting. The American Road and their participation in it. Without working within the car industry not only hurt towns and the State of Michigan, but, the people, too. With the loss of their jobs they faced unemployment, but, there was also that huge loss of pride gone. To say there was depression among entire segments of Michigan populous was an understatement. Their culture was crushed and then GM seeks an understanding as to why the American people are loyal. It is cultural.
But, what occurred under Roger Smith was extremely tragic. Not just to the people losing their jobs, but, to the company itself. Smith spent something like 8 billion dollars. Not the 2013 billion, but, the 1990s billions. It was nuts. He never transitioned his ideas, he sledged hammered the company.
He was a dictator. He made people believe 'his vision' was the future and it needed time to mellow. Talk about ego, was there a room big enough? He retooled the entire company to make homogenized automobiles while the car market took off around him. It left him behind in a larger way than existed with GM before his leadership. He retooled the company without the experts that built it in the first place. He knew nothing about running a company that size and knew even less about car design and how they are built. He absolutely had no respect of the reputation of GM or the financial resources it had and once he had destroyed what was good in the company before his leadership he had no recourse but to continue to increase debt to make his vision work.
In his last years with GM he never achieved any of his visions and the company fell more and more into irretrievable debt.
When I look at Ford and realize the leadership of the company has been a decent of the first Ford car maker, it all makes sense to me. They lived cars, breathed cars and loved cars. The Ford Family has been a guiding light to that company and it shows.
It can't be phony. US industrialists have to know the industry they are in, the market, but, they have to know the product intimately. I am convinced of that when looking across the spectrum of time during the industrial revolution. The companies that did well were lead by their founders and continued the high quality that began it's reputation.
I am not saying successful companies only come from family based entrepreneurship, but, it does come from within the company by employees with many, many years of loyalty.
Today, there is a Wall Street that 'components' the market, extrapolates it with margins and assaults the money through complicated equations. There is really no loyalty to that 'system.' It takes on the philosophy of disloyalty. There is nothing permanent about Wall Street anymore. It is all about riding the bubble and making obscene money without conscience.
Economies of countries are about BUILDING permanence in Large Capital investments. Wall Street is paper. The two clash. They don't compliment each other anymore and the people of a nation is left in the breach.
If the USA is to be successful it has to rid itself of the Roger Smiths and seek loyalty to a product in companies that span the country. I wish GM never knew Roger Smith. One of the most successful investors in the USA has had many successes, but, his investments are NOT bubbles. Warren Buffet is one of the most successful investors in the world. The products his investments produce have been on the shelves of the USA for decades. They are cultural. They have loyalty.
The rewards of company leadership has to include a degree of loyalty to the product, but, also the people that work for that company. If there is a lesson about Detroit it is that no one cared about the people, the products the people made, the culture surrounding that product and the permanence of economic engine of that loyalty.
Roger Smith was a failure and until recent years GM has been the victim of his whims so long ago. When GM finally opened itself to the opinions of the people it found some success again. That is the lesson of Detroit. It all could have been avoided FOR THE RIGHT REASONS.
Roger Smith was CEO of GM for 9 years and from the beginning of his leadership the company began to lose money; every year got worse. It isn't like these guys are in leadership as if an act of congress. Yet, no stockholder bothered to come forward to fire the guy. GM was going down the tubes under Smith's leadership and no one stopped him. Amazing. Little tin gods. Untouchable.
...But the closings were seen as a hard blow to Michigan's economy and extremely damaging to other states in the region....
...But U.A.W. officials noted that many of the most senior employees at the facilities had already transferred to other plants, reducing the chances that the remaining workers, with less seniority, would be offered jobs elsewhere.
Harvey E. Heinbach, an analyst at Merrill Lynch & Company, estimated that the plants to be closed accounted for 10 percent of G.M.'s annual North American production capacity of nine million vehicles....
You, know the USA demands 'Fitness Tests' for large banks; it isn't a bad idea for companies this large that the USA economy and citizens rely on.
Smith came into leadership at GM at the time Japanese cars were taking a larger percentage of the market in the USA. Smith had no skills and never understood the intricacies of making cars. He was a hatchet man. Nothing else. He rid the company of many top managers and came up with an idea that PRODUCTION COSTS could be cut by homogenizing parts of the assembly of the cars. In other words, the exterior of the car would have a different style design. Even the interiors were custom to the style of the cars. But, the mechanical works of the cars were to be more and more similar, hence, less factories would be needed and he could get rid of much of the cost currently experienced by GM, namely the employees. Look, payrolls are a large part of production plants, so all one has to do is look at a company the size of GM and see answers to financial losses by ridding it of employees. It is an easy fix. IF, the company didn't rely on well skilled employees that had loyalty to the company and the cars.
The employees were great people. My father had a friend that worked in design for one of the Big Three. He loved cars. He loved every aspect of cars. Cars are personal when purchased, but, to build and have them perform on the road was a real thrill for many people. The car employees loved their work. Exciting. The American Road and their participation in it. Without working within the car industry not only hurt towns and the State of Michigan, but, the people, too. With the loss of their jobs they faced unemployment, but, there was also that huge loss of pride gone. To say there was depression among entire segments of Michigan populous was an understatement. Their culture was crushed and then GM seeks an understanding as to why the American people are loyal. It is cultural.
But, what occurred under Roger Smith was extremely tragic. Not just to the people losing their jobs, but, to the company itself. Smith spent something like 8 billion dollars. Not the 2013 billion, but, the 1990s billions. It was nuts. He never transitioned his ideas, he sledged hammered the company.
He was a dictator. He made people believe 'his vision' was the future and it needed time to mellow. Talk about ego, was there a room big enough? He retooled the entire company to make homogenized automobiles while the car market took off around him. It left him behind in a larger way than existed with GM before his leadership. He retooled the company without the experts that built it in the first place. He knew nothing about running a company that size and knew even less about car design and how they are built. He absolutely had no respect of the reputation of GM or the financial resources it had and once he had destroyed what was good in the company before his leadership he had no recourse but to continue to increase debt to make his vision work.
In his last years with GM he never achieved any of his visions and the company fell more and more into irretrievable debt.
When I look at Ford and realize the leadership of the company has been a decent of the first Ford car maker, it all makes sense to me. They lived cars, breathed cars and loved cars. The Ford Family has been a guiding light to that company and it shows.
It can't be phony. US industrialists have to know the industry they are in, the market, but, they have to know the product intimately. I am convinced of that when looking across the spectrum of time during the industrial revolution. The companies that did well were lead by their founders and continued the high quality that began it's reputation.
I am not saying successful companies only come from family based entrepreneurship, but, it does come from within the company by employees with many, many years of loyalty.
Today, there is a Wall Street that 'components' the market, extrapolates it with margins and assaults the money through complicated equations. There is really no loyalty to that 'system.' It takes on the philosophy of disloyalty. There is nothing permanent about Wall Street anymore. It is all about riding the bubble and making obscene money without conscience.
Economies of countries are about BUILDING permanence in Large Capital investments. Wall Street is paper. The two clash. They don't compliment each other anymore and the people of a nation is left in the breach.
If the USA is to be successful it has to rid itself of the Roger Smiths and seek loyalty to a product in companies that span the country. I wish GM never knew Roger Smith. One of the most successful investors in the USA has had many successes, but, his investments are NOT bubbles. Warren Buffet is one of the most successful investors in the world. The products his investments produce have been on the shelves of the USA for decades. They are cultural. They have loyalty.
The rewards of company leadership has to include a degree of loyalty to the product, but, also the people that work for that company. If there is a lesson about Detroit it is that no one cared about the people, the products the people made, the culture surrounding that product and the permanence of economic engine of that loyalty.
Roger Smith was a failure and until recent years GM has been the victim of his whims so long ago. When GM finally opened itself to the opinions of the people it found some success again. That is the lesson of Detroit. It all could have been avoided FOR THE RIGHT REASONS.
