CEO Murphy had his ups and downs
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He was a lifetime GM-er who joined the company in 1938, right out of the University of Illinois. He was a bean counter, but a different kind of bean counter: He had a sense of humor. His off-the-cuff remarks were refreshing and humorous.
He became chairman and CEO of General Motors in 1974 and held the jobs until he retired in 1980. He was the first bean counter to have automotive experience before getting the top job. Albert Bradley, Frederic Donner and Richard Gerstenberg were accountants all their lives. Harlow Curtice counted a few beans, but he was best known as general manager of Buick.
Murphy was treasurer of GM and a 32-year finance staff veteran when Chairman Jim Roche summoned him in March 1970 and told him, "I want to tell you about our organizational changes." Murphy recalled, "I thought it was very nice of Jim to do that."
Roche started down the list, and suddenly he said, "Pete Estes will become group vice president for overseas, and you will replace him as group executive in charge of the car and truck divisions."
1973-74: A Middle East oil embargo had GM hustling to make its cars smaller.
1975: Double-digit price increase led to the term "sticker shock"; GM switched from annual price increases to a policy of raising prices several times during a model year.
1977: Owners were outraged when GM put Chevrolet engines in Oldsmobiles, Pontiacs and Buicks.
1978-79: Gasoline supplies again dwindled, causing lines at the gas pump and red ink for GM in 1980.
'Astounded'
Talking about it some years later, Murphy recalled, "I could never have been more astounded."
And with good reason. The guy who had never really worked in the auto business now had all the vehicle division general managers reporting to him.
Murphy was never a garden-variety vice president; he jumped from treasurer to group vice president. His next stop, in 1972, was vice chairman. It was another major leap; he was never an executive vice president.
His years as CEO were turbulent. Twice (1973-74 and 1978-79), oil supplies from the Middle East were disrupted, resulting in long lines and higher prices at filling stations. After the first scare, Murphy presided over the downsizing of GM's big cars.
GM lost money in 1980 — unheard of a generation earlier. The corporation also rolled to record profits under Murphy. That was more like it.
In 1977, GM ran short of V-8 engines for Pontiacs, Buicks and Oldsmobiles, so it installed Chevrolet V-8s in some of those cars. The fur hit the fan. Pontiac-Buick-Olds buyers who got Chevy engines screamed that their cars had been downgraded. About 50,000 accepted $200 and an extended warranty; another 12,500 received $400.
Sticker shock
As the 1975 model year began, GM raised new-car prices a stunning 10 percent, some of which was later rescinded. The rest of the industry followed meekly along, and the term "sticker shock" was born.
But Murphy and GM had an answer. The next year they raised prices nominally at the autumn introduction of new models. Then they raised prices again three months later. And they raised prices again six months later. They called it "interim pricing," and the Detroit 3 are still doing it.
Another part of the Murphy legacy: 60-60-60, which was spoken of in the GM executive ranks. The goal was for GM to win 60 percent of the domestic market with GM common stock selling for $60 a share by the time Murphy and Estes were 60 years old (1976).
The stock price was rather easy, and the ages came naturally. The market share was more difficult, although GM did achieve it for brief periods.
The government's antitrust people were on GM's case during the Murphy years, but it did not lessen his competitive zeal. He once told me, "I think it's a shame that we don't get every sale out there."
Murphy died Jan. 18, 2006, in Boynton Beach, Fla. He was 90.
You can reach John K. Teahen Jr. at autonews@crain.com.
