GM was suffering a nervous breakdown of sorts. Slowed by its massive corporate reorganization two years earlier, the company was unable to respond when Ford rolled out the Taurus sedan and Chrysler introduced its twin minivans.
"There was so much confusion at that time," said Don Runkle, who was chief engineer of Chevrolet then. "We spent 1984, 1985 and a good part of 1986 trying to decide who does what. In my view, we took our eyes off the product, big time."
GM's capital budget — money spent on plants, tooling and product development — was higher than ever, but the investment wasn't producing results. Since 1980, U.S. market share had declined from 44.5 percent to below 39 percent. Product quality was shaky and, perhaps most shocking, its state-of-the-art assembly plants couldn't match the productivity of Ford's less-automated factories.
In June, when GM's top 800 executives gathered at the company's Warren, Mich., Technical Center for their triennial conference, the mood was subdued. To save money, the company had decided not to hold the meeting at the swank Greenbrier resort in West Virginia.
In her 1989 book Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors, Maryann Keller described the events of that fateful conference.
In one presentation, Executive Vice President F. Alan Smith noted that GM's capital investment over the previous five years had totaled $45 billion. For that money, Smith reminded his audience, the company could have purchased Toyota and Honda.
Then GM President Jim McDonald lamented the automaker's lack of progress on quality. McDonald was an unpretentious man who felt most at home in the factory. Three decades earlier, he had started as a young worker in GM's foundries in Saginaw, Mich., then worked his way up the corporate ladder.
Ever since he had been named president in 1981, McDonald had preached the need for better quality. At one meeting of senior executives, he had handed out small pocket mirrors, then asked each manager to peer into the mirror to see who was responsible for the quality of GM cars.
At the triennial conference, McDonald lamented the company's heavy capital expenditures. "Improvements are important," he said. "But unless we interrupt the alarming rise in fixed costs, we could be improving ourselves right out of the ballpark."
According to Keller, McDonald added a startling coda: "We don't need more capital investments. We don't need any more mission statements."
Coming from a loyal GM lifer, that was a sobering admission of doubt.
For the record, McDonald now says he doesn't recall exactly what he said at that conference or whether Keller's account is accurate. He also told Automotive News that GM's huge capital expenditures in the 1980s were necessary.