The next 100
After a century in business, GM looks to an uncertain futureBy AMANDA SMITH-TEUTSCH and JOHN GOODALL / Tribune Chronicle
Fact Box
Things you didn't know about GM ...
n In 1919, GM bought an unknown company that had built the world's first commercial refrigerator for $100,000 and re-named it Frigidaire. Eight years later, Frigidaire was a household name and was contributing more than $15 million to GM's annual net earnings. In 1929, GM's Frigidaire Division brought the world's first room air conditioner to market.
n GM Research demonstrated the revolutionary two-stroke diesel engine, which had been in development for five years, at the Chicago World's Fair in 1933. The president of Burlington Railroad saw the exhibit and immediately ordered one built for his railroad's new streamlined Pioneer Zephyr. The Zephyr's speed and efficiency spelled the end of the steam locomotive, and the GM two-stroke diesel was soon adopted not only by railroads but manufacturers of heavy trucks, boats, and off-road equipment around the world.
n During World War II, GM was the Allied Forces' biggest supplier, delivering more than $12 billion in goods ranging from airplanes to tanks, marine diesel engines, trucks, machine guns, bullets and artillery shells.
n GM scientists and engineers developed and built the world's first mechanical heart pump in 1952, making possible the world's first open heart surgery. It is on display at the Smithsonian Institution.
n In 1955, GM collaborated with Lockheed and IBM to develop the world's first computer operating system. Modern GM cars have 10 times the computing power of that system and more than the computer system used in Apollo moon rockets.
n GM developed and built the guidance and navigation systems for the Apollo 11 astronauts' mission to the moon in 1969. The company designed and manufactured the mobility system for the Lunar Roving Vehicle used by the Apollo 15 astronauts to navigate the moon's surface in 1971. The vehicle is now on display at the Smithsonian Institution's National Air and Space Museum.
n In the early 1970s, after experimenting with several different designs and materials, GM scientists and engineers at the Milford Proving Ground developed the first metal highway median safety barrier: the same basic design and concept are still used on highways across the U.S. today.
n In 1974, GM's earth-moving equipment division, Terex, built the world's largest truck, called the Terex Titan. Used in mining operations, it was powered by a 3,300-horsepower locomotive engine supplied by GM's Electro-Motive Division. It measured 66 feet in length and 22.6 feet in height and could haul a load of more than 360 tons.
Source: General Motors
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» Find the General Motors centennial Web site at www.GMNext.com.General Motors' century mark comes at a trying time for the American auto industry. High oil prices, losses on the stock market and increases in the unemployment line have translated to shifting purchasing habits by American consumers. Instead of the large, gasoline-chugging pickup trucks, once the profit engines of companies such as GM, people now are leaning toward smaller, more fuel-efficient models.
That's good news for GM-Lordstown, which has made a name for itself in recent years by building efficient reliable small cars.
"We are the flagship small car plant," said Tom Mock, spokesman for GM Lordstown.
Over the past decade, productivity at the local plant has improved 30 percent, he said. Methods in place for making suggestions mean that everyone, from management to engineers to line workers, have a way to suggest improvements and ways to do their jobs better, he said.
"The key components are problem solving, eliminating waste and finding ways to do things better, and finding more efficient ways to produce a quality car," he said.
General Motors will mark 100 years of its incorporation on Sept. 16, 1908.
An auto industry analyst, John Wolkonowicz of Global Insight, said General Motors as a whole, along with the entire auto industry, face difficult challenges for the future.
The rapid rise and the rapid fall of gasoline prices has thrown automakers into a state of confusion. As prices fell at the pump, August sales of large vehicles in the United States were strong, he noted.
''It showed that consumers don't really want small cars,'' Wolkonowicz said. ''They became very fashionable at $4 per gallon.''
He said America is an unusually fashion-driven country.
General Motors will need to respond to that quirk by making sure it has an adequate range of products available to meet what will be the current whims of the consumer, he said. The company will have to produce vehicles that consumers can get excited about, he said.
Wolkonowicz said GM has a good track record for that in recent years. He cited the Malibu as an example.
Contrary to popular opinion, GM has addressed issues of quality versus Asian products, he said. The company's power train is the equal of any in the world, Wolkonowicz said.
Long-term, the trend will be toward smaller and more fuel-efficient vehicles. That is being driven by government standards, Wokonowicz said.
''The key is finding a way to make more money on smaller vehicles than has been done in the past,'' he said.
''Fuel economy is not free,'' the analyst said. ''Power train technology to achieve it is going to be expensive.''
GM recently said it hopes to cut $10 billion in costs over the next 18 months. Frederick "Fritz" Henderson, GM's president and chief operating officer, has ruled out closing or selling any of GM's eight brands besides Hummer, which GM has put up for sale. But he hasn't ruled out getting rid of some of its slow-selling models.
Ford Motor Co. and Chrysler LLC have made simplifying their model lineups a central part of their turnaround plans. Ford has sold its Jaguar, Land Rover and Aston Martin lines. Chrysler dropped four slow sellers last year and has said it plans to eliminate a third or more of its remaining models.
GM has trimmed some models, too. It folded its entire Oldsmobile division several years ago. And in the last few years, it has reduced the number of nameplates offered by its Buick, Pontiac and GMC brands from 30 to 16.
Auto industry allies hope to secure up to $50 billion in government loans this month that would pay to modernize plants and help struggling car makers build more fuel-efficient vehicles.
With Congress returning this coming week from its summer break, the industry plans an aggressive lobbying campaign for the low-interest loans. The situation is growing dire after months of tumbling sales, high gasoline prices and consumers' abandoning profitable trucks and sport utility vehicles.
Lawmakers authorized $25 billion in loans in last year's energy bill to help the companies build fuel-efficient vehicles such as hybrids and electric vehicles. With credit tight, automakers and suppliers now want lawmakers to come up with the money for the program - and expand the pool of money available to $50 billion over three years.
Industry leaders have argued that the loan guarantees are not a government bailout because it would hasten production of fuel-efficient vehicles and reduce dependence on imported oil.
The low-interest loans, at rates of about 4 percent to 5 percent, would pay for up to 30 percent of the cost of retooling plants to build hybrids, plug-in hybrids, electric cars and other alternatives.
Ford and General Motors Corp.'s credit ratings have fallen below investment grade, making it difficult for the companies to borrow money at affordable rates. Chrysler LLC, which has been heavily dependent upon truck sales, has been privately held since last year and faces similar problems getting access to capital.
"This industry could fall down, literally, or be absorbed if they don't get something in place very soon. I think it's that severe," Rep. Joe Knollenberg, R-Mich., said. "Something has to happen pretty quickly because they can't compete paying 15 to 20 percent (interest)."
The loans would be available to foreign automakers, but those companies are not expected to seek the money because they are in a better financial situation and priority would be given to companies with plants 20 years or older.
But at the local plant, it won't be a government bailout that keeps GM-Lordstown viable, according to local financial analyst Michael Creatore.
''Like the rest of GM, they need to focus on increasing efficiency and productivity, keeping costs down and continuing to build a safe, reliable car,'' Creatore said. ''If the plant can continue its efficiency, they should be able to secure many future cars for GM.''
While the American auto industry is going through one of its most difficult times, Creatore said GM should come out on the other side - although the makeup of the company may change.
"They're the biggest player, and it would be difficult for anyone to buy it. But the corporation may change through mergers or acquisitions, maybe with Ford, maybe with Chrysler."
Like the Lordstown plant, GM as a whole must focus on innovations and cost control.
"There will be adjustments to the way of doing business for all automakers," Creatore said. "In a globally slowing economy, all of them will feel the pinch."
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VoiceOfReason
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09-14-08 9:51 PM
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You miss the whole point TB, but that doesn't surprise me. However, your attitude is a great example of what I'm talking about.
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TBTBTB
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09-14-08 11:24 AM
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I find it hilarious that the article doesn't mention unions, yet the comments do. Some of you really need to get over it.
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VoiceOfReason
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09-14-08 10:52 AM
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Who needs jobs from GM? Right shrek?
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VoiceOfReason
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09-14-08 10:39 AM
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I must admit that I'm also stunned that when there are articles about GM, the conversations are almost non-existent. And this is a GM town. It's as though nobody cares, but everyone is all over the non-essential articles.
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VoiceOfReason
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09-14-08 10:35 AM
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Sorry about the duplicate post - that was a technology glitch.
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VoiceOfReason
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09-14-08 10:34 AM
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I hope that GM is able to engage the workforce and get unity between management and the unions. That appears to be happening as the unions become less powerful. The key to GM’s success lies not only in cost control, but the foresight to shift business from foreign suppliers back to the US. After all, the American worker is what built GM. However, that can only happen if the unions concede that they are part of what drove GM to their breaking point, and also drove jobs to foreign markets to the likes of Mexico and China. The American workforce will play a key role in the turnaround of GM. The employees will either be successful along with the company, or will fail along with the company. Attitude is everything in the new business world. It’s a global economy and America is competing against ever country and their workforce. Good luck GM and the employees. Your future depends on the success of the turnaround, as to some extent so does the rest of the US economy.
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VoiceOfReason
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09-14-08 10:33 AM
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I hope that GM is able to engage the workforce and get unity between management and the unions. That appears to be happening as the unions become less powerful. The key to GM’s success lies not only in cost control, but the foresight to shift business from foreign suppliers back to the US. After all, the American worker is what built GM. However, that can only happen if the unions concede that they are part of what drove GM to their breaking point, and also drove jobs to foreign markets to the likes of Mexico and China. The American workforce will play a key role in the turnaround of GM. The employees will either be successful along with the company, or will fail along with the company. Attitude is everything in the new business world. It’s a global economy and America is competing against ever country and their workforce. Good luck GM and the employees. Your future depends on the success of the turnaround, as to some extent so does the rest of the US economy.
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VoiceOfReason
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09-14-08 10:33 AM
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GM is certainly an impressive company; however, they didn't change with the times and the employees gained too much control via the unions. As a result, the company became lethargic and didn't keep pace with the world, since the rest of the world saw an opportunity to duplicate GM's business model, and do so at a lower cost, hence the success of Toyota, which is now larger than GM. GM seems to be making all the right moves but the question remains… is it too little too late? Only time will tell. Other companies that are examples are Wal-mart versus Kmart. Certainly in Kmart’s case, it was too little too late and time is proving that as the company continues to sink to the depths.
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