On racial issues, GM traveled bumpy road from laggard to leader

Today, General Motors is a vigorous supporter of affirmative action. But it took a world war and a presidential order to prompt GM to integrate its work force in the early 1940s.

In 1940, GM employees were almost all white men, said professor Thomas Sugrue, a sociologist and historian at the University of Pennsylvania. Just 3 percent of auto workers at Detroit car companies were black, he said.

But two big events in 1941 changed that imbalance:

-- In June, President Franklin Roosevelt signed an executive order banning job bias at companies with government contracts, including GM. Sugrue said Roosevelt issued the order partially in response to a burgeoning civil rights movement in Northern states.

-- In December, the Japanese attack on Pearl Harbor caused America's entry into World War II. The departure of 16.1 million men for military service created a worker shortage at home.

As a result, GM and other automakers hired large numbers of workers from two groups they previously had shunned: African-Americans and women. By the time the war ended in 1945, Sugrue said, 15 percent of Detroit auto workers were black.

A job at an auto plant "provided a real rung on the economic ladder," Sugrue told Automotive News. "These were unionized jobs with decent pay, good benefits packages and a fair degree of security."

But even after black workers gained entry to auto plants, they were largely denied skilled-trades and white-collar jobs that paid better. By the early 1960s, groups such as the NAACP and the Congress of Racial Equality were picketing GM's headquarters in Detroit and its offices in New York, demanding action.

GM responded slowly, Sugrue said. "It wasn't as if all of a sudden the gates were opened and GM started hiring lots of black managers and engineers," he said.

But GM formed partnerships with other businesses to support job training programs. The company invested in community development programs that improved black neighborhoods.

GM also started to grant franchises to black retailers. In 1967, Albert Johnson became a GM dealer when he bought Ray Oldsmobile in Chicago. Rusty Restuccia, who has researched and written extensively about the history of minority dealerships, says Johnson was GM's first black dealer.

GM spokeswoman Susan Garontakos says the company did not keep records on dealers' ethnic identity before 1971.

For 14 years before he got his dealership, Johnson worked as a hospital administrator by day and a car salesman by night. Johnson says he bought new cars from Noting Oldsmobile in suburban St. Louis for $300 to $400 more than their wholesale price and resold them.

"I was selling to professional people I was involved with in my work," recalls Johnson, now 88.

At the same time, Johnson says, he was petitioning Detroit automakers unsuccessfully to become a dealer. Finally, he says, he appealed to Martin Luther King Jr., who took Johnson's case to President John Kennedy.

Four years after Kennedy's assassination in 1963, Johnson gained the Oldsmobile franchise.

"There was a great movement to award a franchise" to a minority entrepreneur, Johnson says. "I was in a good position."

In 1971, Johnson sold his Oldsmobile dealership and opened a Cadillac store in suburban Chicago. In 1994, he sold the Cadillac dealership and retired.

In 1972, GM started its minority dealer training program. Since then the company has spent millions of dollars to recruit, train and finance minority dealers. The GM Minority Dealers Association, a separate trade association, was formed in 1987. The group seeks "viable and profitable opportunities" for its members.

GM's drop in U.S. market share has hurt its minority dealers. As of April 30, 2008, the company had 340 minority-owned dealerships, down from 350 in January 2007. Minorities own about 5.0 percent of GM's 6,686 U.S. dealerships.

Black and Hispanic dealers assert that GM too often awards them failing stores that white dealers wanted to dump.

Martin Cumba, 54, who is Hispanic, owns Chevrolet dealerships in Temperance, Mich., and McMurray, Pa. Although some dealerships GM has assigned to minorities are "diamonds in the rough," Cumba says, many more are "coal."

Still, Cumba gives credit to GM's minority dealer development program. "It provides an opportunity for minorities who have initiative to be successful in owning their own business," he says.

In 2005, the National Association of Minority Automobile Dealers accused GM of unfairly terminating the franchises of underperforming minority dealers. The association said GM should not have expected the dealers to do well when the company was losing market share.

GM commissioned studies of its minority dealer program in 1998 and 2006. Last year GM named a board of senior executives to oversee the program.

Like minority dealers, minority suppliers have suffered from GM production cuts in North America in recent years.

Since the late 1960s, GM has bought $65 billion in parts from minority-owned suppliers under its supplier diversity program. Such companies tend to be small and have few contracts with import-brand automakers. They often lack the resources to follow GM into foreign markets.

GM also has diversified its white-collar ranks. As of Dec. 31, 2007, one in five of GM's salaried work force was an ethnic minority, the company says.

Jim Roche, CEO of GM from 1967 through 1971, was instrumental in promoting equal-opportunity employment within the automaker, according to a citation by the Automotive Hall of Fame.

In 1971, civil rights leader Leon Sullivan became the first black member of GM's board. Sullivan took a leading role in advancing the career of Roy Roberts, who became GM's highest-ranking black executive. Sullivan died in 2001.

Roberts retired in 2000 as GM's group vice president of North American vehicle sales, service and marketing. Before that, he was vice president of personnel administration development, heading GM's effort to trim its global work force.

Roberts says he met Sullivan while working at Lear Siegler Inc. Without telling Roberts, Sullivan recommended that GM recruit him. In 1977, Roberts joined GM as a manager in training.

Roberts says he remembers Sullivan visiting GM's corporate offices to review the company's diversity initiatives.

"I'll never forget," says Roberts, now 68. "I had just been appointed vice president. He was quietly so proud, and I could see it."

Professor Sugrue said GM seems eager to hire qualified and trained minority employees.

He pointed to a lawsuit in the mid-1990s that challenged the University of Michigan's use of race as a factor in admissions. GM filed a brief supporting the university — a far cry from its earlier practices, Sugrue said.

"It's unimaginable in 1950 that General Motors and many other major corporations would support affirmative action in the workplace," he said.

"They believed that companies should have the right to hire and fire at will — that there should not be government regulations that mandate nondiscrimination. They saw discrimination as managerial prerogative."