Thursday, April 10, 2003

Fixing GM 'wasn't as tough as it looked'

By John Porretto
The Associated Press

DETROIT - Jack Smith accepts his designation as the man who saved General Motors Corp. the same way he accepted the job to run the company just over 10 years ago - reluctantly.

Smith, who ends his 42-year career with GM when he retires as chairman May 1, recalled his thoughts when the automaker's directors shook up senior management in 1992 and asked him to steer the company as its CEO.

"I wasn't looking for the job, that's for sure," Smith said.

"On the other hand, it was impossible not to do my best to try to help," said Smith, chairman since 1996. "As it turned out, it wasn't as tough as it looked."

Smith, who will be replaced as chairman by CEO Rick Wagoner, paints a picture of a company that for decades was too internally focused and reluctant to change. The result was a massive bureaucracy and a dire financial predicament.

GM, the world's largest automaker, lost a record $23 billion in 1992 after a loss of $4.5 billion the previous year. The company faced slumping sales, mounting debt and a weak U.S. economy.

And while Americans were beginning a love affair with trucks and sport utility vehicles, GM's lineup was geared to passenger cars.

His daunting task: restructure a company that was running much the way it did when it was organized by Alfred P. Sloan Jr. 70 years earlier.

Smith immediately began reeling in parts of the company that for years had operated as semi-independent businesses. GM consolidated 27 purchasing centers into one. Over time, seven engineering centers became one. The company's central office, which had 13,000 employees when Smith took over, today has 1,000.

GM's total employment has fallen from 756,000 in 1991 to 349,000, although not all the reductions have meant layoffs; some were part of subsidiary sales and restructurings. "My honest take is that everyone knew we were in trouble, and everyone knew we needed to change," he said.

Today, GM ranks highest among the domestic automakers in leading quality, productivity and manufacturing surveys. The company also was the industry leader with 28.3 percent of the U.S. market at the end of 2002.

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