Sunday, November 23, 2014
Inquirer Daily News

Image and insularity

The roots of the General Motors downfall

Image and insularity

 


I've been thinking all week about General Motors, and marveling at its downfall. When the word went around, last weekend, that the Obama administration had basically ordered the downtrodden firm to radically restructure itself as a condition for receiving more bailout bucks, I kept flashing back to my own youth, back to a distant time when GM was an acronym worthy of awe.

I am standing in line with my family outside the GM exhibition hall at the 1964 World's Fair in Queens. It is hot, and the wait in line is approximately 90 minutes. It is unthinkable that anyone would give up and walk away. Nobody did. GM is promising, in its exhibit, to celebrate America's technological progress and to whisk us all into a bright American future - one made possible by the same kind of GM innovations that had filled our neighborhoods, and populated our TV commercials, with Chevys and Buicks and Pontiacs. Indeed, my family had arrived at the fair in an expansive Pontiac Catalina, which purred at high speed as it guzzled cheap gas.

So we wait, and of course our patience is rewarded. (Big corporations, in those days, did not fail us. Their products satisfied, and their workers stayed for life.) Inside the exhibit building, we are entertained by a series of lifelike dummies who chat, just like real people, about all the wonderful advances that had improved quality of life during the 20th century, the American century. Then we are tantalized by GM's visions of the future, which include phones that can directly dial the folks who live on our moon colonies. Upon leaving the exhibit, we kids receive metal GM lapel pins emblazoned with the words, "I Have Seen the Future."

But here's the thing, albeit in retrospect: General Motors didn't live up to its own image. The corporation portrayed itself as a font of technological innovation, but the truth is that, even by the time of the World's Fair, it was already burdened by the thick-headed insularity that would reduce it to the sorry state we see today: a once dominant colossus and epitome of private enterprise, reduced to begging for $30 billion in government handouts.

The usual habit, when lamenting the fall of GM, is to focus on the '70s, when oil shocks, Middle East turbulence, and growing foreign car-making competition failed to prod GM into scrapping its guzzlers and thinking fresh. But let's roll the clock back to the '50s, because that's when GM truly became blinded by its own corporate culture.

That's when GM was literally selling half the cars on the road. Motorists had money (the first postwar decade was consumer heaven), and gas was cheap. In fact, GM's big concern at the time was breaking the 50 percent barrier; it feared doing so, lest that achievement prompt the Justice Department to call for the company's breakup. But all this success breeded corporate complacency.

The mandate was to make bigger and bigger cars, to stress good marketing over innovative engineering, to goad consumers into buying bigger ever few years (a policy known as "dynamic obsolescence"). There had been one concerted effort, after the war, to make a small, inexpensive, efficiently engineered car (it was to be called the Cadet), but ultimately it was squelched, because GM didn't believe that the Cadet would bring in enough profit. Social consciousness, needless to say, was not part of the equation. GM's top designer, Harley Earl, famously articulated his priority: "Listen, I'd put smokestacks right in the middle of the sons of bitches if I thought I could sell more cars."

The result was that GM did not make the best use of its own engineers, back when those people could have developed the technological innovations necessary to trump the foreign competitors. GM simply never took the foreigners seriously; the late author David Halberstam once quoted a top GM official as complaining that the automaker was run by guys "who believe that the world is bordered on the East by Lake Huron, and on the West by Lake Michigan."

Flash forward five decades to the present day. Only people from that kind of insular corporate culture would ask for government money after flying to Washington in a private jet - clueless about how such behavior would look to the outside world. Even after sowing the seeds of its own destruction (losing $82 billion in the past four years; seeing its domestic market share drop to 18 percent), GM still doesn't seem to "get it." Or, as President Obama dryly noted last Monday, "Our auto industry is not moving fast enough to succeed."

It makes sense to me that the administration, as condition for providing more bailout money, has forced out the CEO who killed off GM's electric car program, and has given GM 60 days to march smartly into the future. There's no perfect solution at this point; perhaps a bailout with tight strings attached is the only feasible way to go. So says a reluctant public; in the latest Fox News survey, released this morning, 53 percent of Americans agree with the statement that a strings-attached bailout "is an unfortunate but necessary move to try to save the American way of doing business." If this approach can salvage GM and protect GM jobs, then maybe it's worth a try - if only for the nation's sake.

Charlie Wilson, a top GM executive during the '50s, is famous for supposedly saying that what was good for GM was good for the country. Actually, Wilson said the reverse: "We at General Motors have always felt that what was good for the country was good for General Motors as well." The country needs GM to retool, to lve up to the image that prompted so many thousands of us to wait in line at the World's Fair.

 

 

Dick Polman Inquirer National Political Columnist
About this blog

Dick Polman Inquirer National Political Columnist
Also on Philly.com
Stay Connected