Struggling General Motors Has Run Out of Scapegoats

Ross Perot knows what the problem is. But Roger Smith does not. When Smith, the boss of General Motors, can oust Perot, a billionaire entrepreneur and GM’s largest individual shareholder, from the company’s Board of Directors for being too openly critical of top management’s bureaucratic ways, then Roger Smith becomes Perot’s exhibit number one.
Perot, of course, did not get the heave without compensation. Smith bought him out for $700 million. But the hunkering down of Smith, after numerous statements recently about the need to shake up GM management with Perot’s help, reveals just how deeply entrenched are the hordes of pampered GM managers. Perot believes that Smith’s decision to close eleven GM factories is “immoral”; while the boss refuses to cut costs symbolized by the $140,000 Smith spends to heat the executives’ underground parking garage at company headquarters each year.

Giant General Motors, outpaced by both foreign and domestic auto companies, is in trouble. Its “gee whiz” futuristic science television ads don’t quite square with the technology lag afflicting its vehicles. While Ford advertises air bag options on Tempo and Topaz models, GM is advertising passive seat belts and rejecting the superior air bag technology. While Japanese and Korean car makers are advancing quality controls, GM is beset with quality failures. Even Smith’s first love -­turning factories into robotic arenas — is crumbling in the chronic breakdowns of the company’s most advanced automated plant built on the ruins of the Poletown community in Detroit.

The trouble with GM management is that it always blames everybody but management for its problems. In the late Seventies, GM blamed “over-regulation”. Funny, the Japanese and Germans, who had to meet the same leisurely paced and modest safety, pollution control and fuel efficiency standards, somehow got along with them. And under Reagan, regulation is on holiday.

Then came the scapegoating of the workers in the auto plants. They just were not as productive as the Japanese workers, GM would complain. Then the Japanese started opening plants in the U.S. where American workers did just as well if not better than their Japanese counterparts. John Nevin, chairman of Firestone, gets visibly upset when he hears such statements about unproductive workers; he says it is management’s failure.

Now GM is out of scapegoats. The laser beam is turning inward. It is focusing on top bosses who are nestled comfortably on the 14th floor of the GM building with private dining rooms and every comfort they can crave at the snap of their fingers. Yet, hark! A new and unexpected roasting is coming from conservative Republicans within the Reagan regime itself.

Richard G. Darman, Deputy Secretary of the Treasury, unleashed his blast in a speech before the Japan Society in New York on November 7th. He spoke of “corpocracy” — that is, “large-scale corporate America’s tendency to be like the government bureaucracy that corporate executives love to malign: bloated, risk-averse, inefficient, and unimaginative.” He then gave signs of “corpocracy” underinvesting in research and development, parochial corporate bureaucrats who take long lunch breaks on shrunken work days, climbing the corporate ladder by playing corporate politics and unable to sell to a global economy.

Two days earlier in Washington, Secretary of Commerce, Malcolm Baldrige, himself a former industrialist, really unloaded. He accused the steelmakers of not modernizing their plants years ago and the auto companies of placing style over quality. He charged other consumer product companies with letting American inventions be turned into marketable products first by foreign firms importing into the U.S., such as the transistor and the VCR.

“We were simply outmanaged,” said Baldrige. Most of all we lost our reputation for quality when we had been the world’s leader. There is no excuse for that and there is no one to blame but American management -­not labor, not the government, but management.” He listed the metal-working and machine tool industries as other examples of “poor management.”

So, Roger Smith, look inside your 14th floor at yourself, your colleagues and the tiers of management below it. You’ve plumb run out of scapegoats.