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Pivot Points Marketing the Dream

A supersalesman creates GM Billy Durant: From critic to car czar "Get a horse!" the crowd taunted. The year was 1902. Two teenage girls, frightened and caked with dust, were taking their first ride in an automobile. Author William Pelfrey recalls the moment in Billy, Alfred, and General Motors. The car was a long-forgotten French brand: Panhard. [SUB] From the Corvair to the Cobalt: GM's lackluster small-car legacy Tim Morgan, a 51-year-old accountant in Houston, has an alter ego. He's a passionate fan of an unlikely object of love: the Chevrolet Vega. The Vega was General Motors' main small-car offering for much of the 1970s. Like many other GM small cars of the past half century, Vegas were star-crossed products. [SUB] GM's story is the American story For any company, 100 years is quite an accomplishment. For General Motors it is the accomplishment of the American dream. [SUB] The supporting cast Billy Durant founded General Motors, but his path was filled with important bit players whose names never became part of the auto lexicon. [SUB] Driving a Buick turned Durant into a believer The story of General Motors began in Flint, Mich., in the fall of 1904, when Flint carriage king Billy Durant shook off his disdain of automobiles and decided the Buick might have a future. [SUB] Lordstown: Man vs. machine -- and GM was the big loser In the mid-1960s, General Motors executives envisioned that their huge new assembly plant taking shape on farm fields in northeastern Ohio would make history. It did. But not in the way they had hoped. [SUB] A powerful force in a century of change Try to imagine a 20th century without General Motors. Not easy, is it? [SUB] David Buick: The forgotten man of a burgeoning empire Pulitzer Prize-winning historian Bruce Catton once observed that of all the automotive tales told in Detroit, "there is no tale as strange as the tale of David Buick." And yet, another prominent historian lamented that few aspects of U.S. auto history have been "so poorly recorded" as the early career of David Dunbar Buick. [SUB] GM fought safety, emissions rules, but then invented ways to comply When Dick Klimisch began working at General Motors in 1967, other GM engineers were trying to cut vehicle tailpipe pollution through mechanical engineering -- changing the way engines ran. They weren't having much success. [SUB] Charming Billy built an empire, then saw it slip away -- twice In the early 1880s, high school dropout Billy Durant traveled by train from Flint to Port Huron, Mich., to sell cigars. Sales of a few hundred would have made it a good trip. In a few days of selling, Durant won over most of Port Huron's cigar retailers. He staggered his boss when he returned with orders for 22,000 cigars. [SUB] Ed Cole's triumph: A great V-8 As the rare high-profile executive at General Motors, nationally famous after his face appeared on the cover of Time magazine in 1959, Ed Cole showed unsurpassed flair. How many divisional managers had ever been able to boast of publicity like that? His motto, "Kick the hell out of the status quo," soon would be widely known. [SUB] Durant's corporate jigsaw puzzle envisions a vehicle for every buyer How to assemble an auto empire: Be a builder, a buyer and a juggler Billy Durant was a builder and a buyer. He was an unparalleled entrepreneur, but he was not much of a businessman. He built Durant-Dort Carriage Co. into the world's largest producer of such conveyances. He was a millionaire before he was 40, and the fledgling automobile industry became his next world to conquer. [SUB] Gerstenberg led GM into downsizing Richard Gerstenberg's rise to CEO and chairman of General Motors in the early 1970s was a sign of the times for the company. The GM board put a high priority on naming someone who could focus on costs, prices and profits. Gerstenberg, a well-liked moneyman and a top-flight executive, was kind and considerate. [SUB] Publicity-savvy Ransom Olds used road trips to build a famous brand Ransom Eli Olds holds a special distinction among automotive pioneers: He has two vehicles and a rock band named after him. His most prominent namesake, obviously, was the Oldsmobile. But he later founded Reo Motor Car Co. in Lansing, Mich., using his initials to name the company and the car. [SUB] Pete Estes brought his 'attaboy' attitude to GM's presidency Elliott Marantette Estes, the future president of General Motors, spent his first year after high school churning butter for $3.20 a day at the Constantine (Mich.) Co-Operative Creamery. When a cousin who worked for Pontiac sent a news clipping about the General Motors Institute, Estes decided the automotive business was for him. [SUB] Henry Leland, daddy of the Caddy, proved the importance of precision Henry Martyn Leland was the father of the mass-produced luxury car in the United States. And his son, Wilfred, might well be called the luxury car's favorite uncle. [SUB] CEO Murphy had his ups and downs A sign on Thomas Murphy's desk proclaimed "Bless this mess." It was misleading; Murphy was really an orderly man. [SUB] Durant almost landed Ford, but couldn't come up with $2 million Imagine if a corporation could go back in time and rub out the one little problem that would prove to be its biggest headache for the next 100 years. That is what must have vexed Billy Durant until the day he died. [SUB] Railroading the streetcars? The story has the ingredients for a good urban myth: conspiracy, greed, big-business hardball. The premise was that General Motors worked quietly with oil companies and tire makers to buy up and dismantle trolley lines and destroy public transportation in the United States. [SUB] Billy bought, bought -- and then bought more Being double-crossed can lead to good things. The case of Billy Durant provides an example. Billy got the short end of the stick from a supplier in the late 1880s when he was in the carriage business. He vowed it wouldn't happen again -- and it didn't. Not in the carriage business and not in the auto business. [SUB] Downsizing in the 1970s As oil prices soared, car designers scurried to shave pounds, inches With the gasoline crises of the 1970s still fresh in many minds, Buick designer Bill Porter labored over the proportions of a new Buick Riviera, scheduled for mid-1980s introduction in dramatically downsized form. He wasn't happy about how the design was taking shape. [SUB] Acquisitions lured car buyers -- but when sales fell, bankers swarmed In the months after he founded General Motors, Billy Durant became a one-man acquisition machine, snapping up auto manufacturers and suppliers. By 1910 he had acquired either full or majority control of almost two dozen automakers and parts suppliers. [SUB] Punching bag: After years as the champ, GM was pummeled by critics For General Motors, the good old days may have officially ended on Monday, June 4, 1979. That was the day the May sales numbers came out. Imports had logged their best month ever, and GM's market share dropped nearly 3 percentage points from May 1978, to 44.6 percent. It was the beginning of a long slide. [SUB] Cadillac introduces the self-starter If it was a first, it might very well have come from Cadillac If you had to pick a B.C.-A.D. technological moment for the auto industry, Cadillac's introduction of the self-starter in 1912 wouldn't be a bad choice. [SUB] GM diversifies, reorganizes — and falters badly Roger Smith's diversification strategy created Saturn -- and lots of problems Roger Smith was a pop-culture punching bag in the late 1980s, but he gets some vindication in the survival of the Saturn brand -- one of his pet projects as chairman and CEO of General Motors from 1981 until his retirement in 1990. Smith died in November 2007 at age 82. [SUB] C.S. Mott: A man for all seasons Charles Stewart (C.S.) Mott was a classic overachiever. During his 97 years, he was a soldier, a sailor, an engineer, a business owner, a General Motors executive and board member, a politician and a philanthropist. [SUB] Pressure from the Japanese led to long-overdue drive for quality In early 1982, General Motors President Jim McDonald had a chip on his shoulder when he walked into a meeting of top executives. McDonald was tired of finding oil stains on his driveway after driving home a new GM car. To McDonald, leaking fluids meant that GM's engineering specs were bad or its assembly was sloppy. [SUB] To get back in the race for GM, Durant found a racer Billy Durant lost control of General Motors to East Coast bankers in October 1910, but he knew what he had to do to reclaim it. As Durant wrote later in notes for an unfinished autobiography, "If I ever expected to regain control of General Motors, which I certainly intended to do, I should have another company of my own." [SUB] Can't tell the Pontiacs from the Buicks? That's a problem There they were, lined up on the cover of Fortune magazine's Aug. 22, 1983, issue: General Motors' new mid-sized cars. The group of four -- the Chevrolet Celebrity, Pontiac 6000, Buick Century and Oldsmobile Cutlass Ciera -- made a striking statement. But it wasn't the message GM executives wanted their new A-body cars to send. [SUB] Gifted race car driver, inventor died penniless and forgotten Louis Chevrolet had a variety of talents: skilled race driver, inventor, gifted mechanic. But he was no whiz at business. He had opportunities to become a millionaire -- and played his cards wrong every time. [SUB] GM 2-seaters, past and present The Chevrolet Corvette, unveiled at the 1953 General Motors Motorama in New York, was a toothy-grilled, rocket-tailed concept meant to be America's answer to the growing number of European sports cars. Just six months later, GM was bolting together 300 production copies in Flint, Mich. [SUB] Where did the Chevy bow tie come from? From Durant's newspaper, most likely Billy Durant, founder of General Motors, was not only a superb salesman and promoter. He also apparently loved to develop names and logos for his products. For years, the story of the Chevrolet bow tie emblem was consistent: Durant had seen the design on wallpaper in Paris. But it wasn't true. [SUB] Roger Smith's grand plan: Unravel division system, create a unified GM On Jan. 10, 1984, General Motors issued what, at first glance, appeared to be little more than a run-of-the-mill press release. In reality, it was the equivalent of a sledgehammer. And with it, CEO Roger Smith began dismantling the organizational structure of the world's largest automaker. [SUB] Walter Chrysler rode the rails to GM, then started his own company Nearly a decade before he started his own car company, Walter P. Chrysler was the highest-paid employee in the U.S. automobile industry, making more than $600,000 a year at General Motors. Not bad for a guy who was sweeping floors in a Union Pacific Railroad machine shop for 4 cents an hour when he was 17. [SUB] A shopping spree in the '80s It seemed like a good idea at the time: Take General Motors' massive profits and invest in tangential industries to help GM develop world-beating cars more efficiently. It was 1978. GM had been hit hard by the gasoline crunch and stagflation, but it was on top of the U.S. car market. GM had just earned $3.5 billion on $63 billion in sales. [SUB] 'Body by Fisher': A family affair There were six brothers: from the eldest, Fred, Charlie, Bill, Larry, Ed and Al. There also was a baby brother, Howard, who wasn't in the auto business, and there were four sisters. Howard worked for the family company that managed the joint financial interests. They came from Norwalk, Ohio. [SUB] Learning the Toyota method firsthand NUMMI joint venture in California was a classroom for change In the early 1980s, General Motors quietly negotiated an unprecedented deal: GM, the world's largest automaker, would build cars jointly with fast-rising challenger Toyota. Both parties had something to gain from the talks, which created New United Motor Manufacturing Inc., known as NUMMI. Toyota wanted to learn to build cars in the United States. [SUB] A personal note The Fisher brothers were able to win and retain the lifelong loyalty of their employees. My father was one of them for 37 years. [SUB] Auto loans expand the market Financing pioneer put more people in new cars The creation of General Motors Acceptance Corp. in 1919 was nearly as revolutionary as the invention of the automobile itself. GMAC was the first finance company run by an automaker. Before GM established its captive, banks had lent consumers money for large purchases such as houses. [SUB] Buying a brand doesn't mean forever Hummer may be sold. Saab has lost its identity. Will both brands go the way of Lotus, the performance car maker General Motors sold in the 1990s? [SUB] Multimillion-dollar scam rocked GMAC Acquaintances of John McNamara called him a "great guy." The Long Island Buick-Pontiac-GMC dealer was known as a philanthropist. But in September 1992, McNamara admitted bilking General Motors Acceptance Corp. out of about $443 million in a Ponzi scheme. He borrowed about $6 billion from GMAC over 11 years. [SUB] Angst in the '80s: Long streak of miscues sends a giant reeling If one was searching for the limits of technology in 1986, the year had its share of omens. In January, the Challenger space shuttle blew up soon after launch. In April, an explosion ripped through the Chernobyl nuclear plant, spewing radiation across the Ukraine. And Roger Smith's vision of a technological colossus began to unravel. [SUB] GM creates an r&d powerhouse Where GM's bright ideas are born and nurtured The General Motors research and development organization grew from humble beginnings in a Dayton, Ohio, barn into one of the world's foremost scientific centers. [SUB] COMMENT: EDWARD LAPHAM Perot was a burr under Roger Smith's saddle Ross Perot didn't claim to have all the answers when he took a seat on the GM board in 1984. At first he said he just wanted to make sure the data services company he had sold to the automaker was operating at peak efficiency Edward Lapham is the executive editor of Automotive News. [SUB] 100 years of engineering leadership: A scorecard It's no surprise that many of the things we take for granted can be traced to their origin at GM. Here are some highlights from GM's first century as an engineering leader. [SUB] Over 100 years, you can't avoid some flops Consider the 2001 Pontiac Aztek. Or the 1982 Cadillac Cimarron. How about the 1991 Chevrolet Caprice? Don't forget the 1990 Chevrolet Lumina APV, General Motors' early stab at a front-drive minivan. What do those vehicles have in common? They quickly earned widespread derision from automotive critics and buyers alike. [SUB] Durant pushed out in 1920 Durant loses GM a 2nd time; Sloan and DuPont usher in the modern era At age 50, all Pierre DuPont really wanted to do was work in his garden. After the financial success of his family's E.I. du Pont de Nemours & Co. during World War I, he certainly could have. The business already had been turned over to his younger brothers. [SUB] The new breed that went global Nearly all of the bright young financial executives who wrested control of General Motors in 1992 had spent time in the company's elite training ground, the New York Treasurer's Office. But they got their operating experience -- and their nerve -- working abroad. It was an elite band of brothers that included Rick Wagoner. [SUB] Boss Ket: GM's wizard of the lab After Billy Durant assembled the wheels for what became General Motors and Alfred Sloan mapped a fruitful road ahead, Charles Kettering drove the enterprise forward. [SUB] Despite early trauma, Daewoo became the cornerstone of GM's drive into Asia In late April 2002, General Motors Chairman Jack Smith flew to Seoul to sign an agreement to buy key assets of bankrupt Daewoo Motor Corp. He expected the usual pomp and circumstance common to such ceremonies. Instead, he got chaos. [SUB] 'Big Bill' Knudsen turned Chevrolet from an also-ran into a powerhouse William S. Knudsen found two seemingly contradictory traits in Americans when he arrived from Denmark in 1900 at age 20. "They were very friendly, and they loved to fight with their fists," he said. "I was more or less forced to become a boxer. When I worked in the shipyards, fistfights were almost a matter of daily routine." [SUB] How Saturn became major player in GM galaxy With the mammoth Saturn project, General Motors set out in the 1980s to find a new way to manufacture cars in America. But Saturn's lasting legacy was a new way to sell cars. [SUB] Sloan restructures an unwieldy giant After the frenetic Durant era, Sloan brought order from chaos In 1920, Alfred Sloan wrote a long report about the best way to organize General Motors. He showed the report, titled "Organization Study," to GM President Pierre DuPont and CEO Billy Durant. DuPont was very impressed. Durant never reacted to it. Fast forward to 1923: Durant is out, and Sloan's Organization Study is in. [SUB] GM's Tennessee moonshot General Motors spared no expense when the opportunity arose to launch its first new U.S. vehicle brand in 50 years. The cost to bring Saturn to market in 1990: $3.5 billion. Originally, GM proposed $5 billion for the endeavor. But when the industry hit a sales bump in 1986, the corporation trimmed its initial investment to $3.5 billion. [SUB] Investment plan locked in top talent In May 1923, as Alfred Sloan became president of General Motors, the company finally was recovering from a series of upheavals that had challenged its very existence. [SUB] Bob Stempel: A first-rate engineer who rose to the top in tough times In January 1958, a 6-foot-4-inch former college football center walked into Oldsmobile's Lansing, Mich., headquarters with engineering drawings under his arm. The young engineer looking for an opportunity was Bob Stempel, who would become one of the most influential engineers in General Motors history. [SUB] Rank had its privileges for GM brass The lives of top GM executives in the 1950s afforded perks and privileges available to only the few. [SUB] The boardroom revolt of 1992 Directors dump Stempel, Reuss, turn to Jack Smith A sense of turmoil to come nagged at many of GM's senior managers in the winter of 1991-92. "You could kind of smell the anxiety," Jim Perkins, then general manager of GM's bread-and-butter Chevrolet division, recalled in a recent interview. "In a corporation like GM, you get a sense of things like that, the unrest. [SUB] Annual model change was the result of affluence, technology, advertising Henry Ford revolutionized the auto industry with a simple idea: Make the Model T reliable and cheap and keep churning out the same product year after year. By the 1920s, though, that wasn't enough. Motorists in an increasingly affluent America craved novelty and innovation. [SUB] Under Jack Smith, things began to hum The seizure of power by GM's outside directors in 1992 and their ouster of a generation of top leaders appeared to be validated during the next several years by the company's improved performance. The link between the board coup and the improved results was the new president and CEO, Jack Smith. [SUB] Auto industry's first proving ground ended hit-or-miss testing methods Before General Motors built the automotive industry's first proving ground, vehicle testing was hardly scientific. It could even give way to a night on the town, as Alfred Sloan recalled in his memoir, My Years with General Motors. [SUB] Lopez revolutionizes GM purchasing Lopez moved from cost-cut hero to defector and alleged thief J. Ignacio Lopez may have helped save General Motors from bankruptcy in the early 1990s. But the former purchasing chief embarrassed his friend, GM CEO Jack Smith, and was the cause of bitter accusations and lawsuits in Germany and the United States. It was all about saving money -- first for GM and then for Volkswagen Group. [SUB] 'Around the world' proved Buick's worth Driving an automobile around the world was doable, if daunting, by the 1920s. When General Motors Export and Buick created an around-the-world expedition in 1925, they put a twist on the endeavor. Instead of challenging one team to drive a car the entire distance, the car was handed off from dealer to dealer. [SUB] Many GM alums went on to glory Many people built brilliant careers at General Motors, but many others used GM as a springboard to success elsewhere. Some of those who left, like J. Ignacio Lopez, found that life after GM was filled with problems. Others, like Walter Chrysler, went on to automotive glory. [SUB] GM looks beyond the United States GM began its overseas empire by buying established companies The roots of General Motors' overseas subsidiaries reach back into the pre-automotive age to saddles, sewing machines, bicycles, marine engines and even mythical creatures and knights-errant. GM didn't become a global powerhouse overnight; it accumulated its far-flung empire piecemeal. [SUB] Dealers resisted GM's strategy to shrink network, shuffle brands A certified letter in 1996 told Al Chapman how General Motors saw him fitting into its Project 2000 dealership consolidation plan. "They said I should sell my Buick and GMC franchises or acquire the Pontiac brand," Chapman recalls. He did neither. [SUB] Kettering University: GM's historic training ground for engineering talent Charles "Boss" Kettering no doubt would be delighted today to see nearly 2,200 students attending classes and working for major companies at the school he helped found 89 years ago in an industrial section of Flint, Mich. [SUB] GM wanted a retail network, but dealers' lobbying killed the plan In 1999, General Motors said it planned to buy dealerships and form its own retail operation, GM Retail Holdings. The proposal didn't get far. Dealers successfully lobbied state lawmakers for greater protection against perceived factory competition. [SUB] GM had early start in Japan but was hobbled by nationalism General Motors' history in Japan is nearly as long as the company's itself. The first Buicks and Cadillacs arrived in 1915, just seven years after the automaker was founded. [SUB] Jack Smith: Leading, quietly, toward a global business plan Retired General Motors Chairman Jack Smith enjoys great personal respect and admiration within GM. "You hate to say somebody is your favorite, but Jack has probably been the favorite executive that I've dealt with at GM, as far as leadership style and ability to drive the organization," said Bill Lovejoy. [SUB] Durant forms a retail network Strong dealer organization, based on Buick model, kept metal moving You don't hit the century mark as a car company without a strong dealer network. And General Motors recognized early on the importance of the people who bring car and driver together. Billy Durant was a dealer guy. So was Alfred Sloan. Compare them with their contemporaries at Ford Motor Co. [SUB] When GM designed OnStar in '95, Huber was working without a map General Motors had no template to follow when it decided 13 years ago to create OnStar. In 1995, GM recognized that developing the world's first in-vehicle, hands-free voice and data communication system would be fraught with risks, challenges and skeptics. [SUB] The amazing tally Since Billy Durant assembled GM's retail network in 1908, the company's U.S. dealers have sold about 301 million cars and light trucks. At an estimated average transaction price over the past century of $10,000 (it's now about $30,000), those vehicles have put about $3.1 trillion in dealers' cash registers. [SUB] Harley Earl creates a design empire Styling, once an afterthought, became important sales tool When Harley Earl was a teenager, his family spent summers camping at Bailey's Ranch, in the mountains north of Los Angeles. When Earl was 16, the summer was particularly wet, and he fashioned a series of toy cars for himself and his younger brother from clay they found. "What Harley J. [SUB] Cultural clashes killed Asian alliances In 1994, General Motors' board of directors debated whether the company would be a global player in the auto industry. It was an odd question. After all, GM was the world's largest automaker. But the board concluded that GM's status was in jeopardy. [SUB] A shaky start: The 'pregnant' Buick To everyone's surprise, the first car designed by General Motors' new Art and Colour Section under Harley Earl was -- well, a disaster. Earl's team's initial effort came to be known as the "pregnant" 1929 Buick. The car had a bulge just below its belt line, and thus looked pregnant -- but it wasn't because of Earl's design. [SUB] Alternative powertrains? GM has been on the case for years Few vehicles have generated as much interest or publicity as the Chevrolet Volt, the extended-range electric car that General Motors promises to begin selling in late 2010. But the Volt is far from GM's first attempt at breaking the century-long grip of the internal combustion engine on the auto industry. [SUB] Earl knew exactly what he wanted For three decades, from 1927-59, Harley Earl was the most powerful voice in world of car design, shaping and influencing tens of millions of cars. He was a clever man and a consummate politician, and he had strong backing from Chairman Alfred Sloan. He retained absolute control of General Motors styling but sought input from every possible source. [SUB] UAW relations bottom out in 1998 A painful lesson: Flint strike showed labor-relations model had to change The 1998 UAW strike at General Motors' Flint stamping operations was a disaster for the company. The 56-day strike shut all of GM's North American assembly plants. It cost the automaker about 500,000 vehicles and $2.8 billion in net losses. [SUB] Even during the Depression, GM managed to make money The Great Depression caused other automakers to go under, banks to fail and one of every four American workers to lose his or her job. Yet General Motors stayed in the black. [SUB] >> More Stories from "How GM Changed the World" GM 100 Digital Edition COMMENTARY GM's story is the American story >> A powerful force in a century of change >> Perot was a burr under Roger Smith's saddle >> The Cadillac caper: Brand claimed Lincoln's sales crown in '98; but the figures were phony >> GM and Flint grew together >> The way out of the maze: Use overseas strengths >> Below the surface, always something >> The auto industry paid the price when GM's gumshoes trailed Nader >>

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