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General Motors Corporation

General Motors Corporation

300 Renaissance Center
Detroit, Michigan 48265-3000
U.S.A.
Telephone: (313) 556-5000
Fax: (248) 696-7300
Web site: http://www.gm.com

Public Company
Incorporated: 1916
Employees: 326,000
Sales: $185.5 billion (2003)
Stock Exchanges: New York Toronto Frankfurt Euronext Paris London
Ticker Symbol: GM
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 336211 Motor Vehicle Body Manufacturing; 336350 Motor Vehicle Transmission and Power Train Parts Manufacturing; 336510 Railroad Rolling Stock Manufacturing; 421110 Automobile and Other Motor Vehicle Wholesalers; 441110 New Car Dealers; 522220 Sales Financing; 522291 Consumer Lending; 522292 Real Estate Credit; 524126 Direct Property and Casualty Insurance Carriers; 532112 Passenger Cars Leasing

General Motors Corporation (GM) is the world's largest full-line vehicle manufacturer and marketer. Its arsenal of brands includes Chevrolet, Pontiac, GMC, Buick, Cadillac, Saturn, Hummer, and Saab. Opel, Vauxhall, and Holden comprise GM's international nameplates. Through its system of global alliances, GM holds stakes in Isuzu Motors Ltd., Fuji Heavy Industries Ltd., Suzuki Motor Corporation, Fiat Auto, and GM Daewoo Auto & Technology. Other principal businesses include General Motors Acceptance Corporation and its subsidiaries, providers of financing and insurance to GM customers and dealers. In the early 2000s, struggling under the weight of escalating healthcare and pension costs, GM sought to shed some of its less profitable activities. Toward that end, among other moves, the company sold its stake in Hughes Electronics, phased out production of the Oldsmobile, and discontinued the Chevrolet Camero and Pontiac Firebird. Facing a tough economic climate, GM has nevertheless retained its position as the world's leading automaker.

19th-Century Origins

The beginning of General Motors Corporation can be traced back to 1892, when R.E. Olds collected all of his savings to convert his father's naval and industrial engine factory into the Olds Motor Vehicle Company to build horseless carriages. For several years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could produce five horsepower and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. At the turn of the century, Olds had sold more than 1,400 cars.

Also during this time, the Cadillac Automobile Company was established in Detroit, founded by Henry Leland, who built car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was replaced by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Oldsmobile also reached its projected target of manufacturing 4,000 cars in one year. A third player, engineer David Buick, founded his own factory in Detroit during this time as well.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The nephew of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred when many firms manufactured the same product. General Motors Corporation was thus formed, bringing together Oldsmobile and Buick in 1903, and joined by Cadillac and Oakland (renamed Pontiac) in 1909. Positive financial results were immediately seen from the merger, although the establishment of the company drew little attention.

Other early members of the GM family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. GM's other U.S. automotive division, Chevrolet, became part of the corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60 percent interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or "testing" laboratory also was established to serve as an additional protection against costly factory mistakes. GM's system of administration, research, and development became one of the largest and most complex in private industry.

About the same time that GM was establishing itself in Detroit, an engineering breakthrough was taking place in Dayton, Ohio: the electric self-starter, designed by Charles F. Kettering. GM introduced Kettering's invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Kettering's Dayton Engineering Laboratories were merged into GM during 1920 and the laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of GM, in charge of its research and engineering programs.

During World War I GM turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the U.S. automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90 percent of GM's truck production was for the war effort. Cadillac supplied army staff cars, V-8 engines for artillery tractors, and trench mortar shells, while Buick built Liberty airplane motors, tanks, trucks, ambulances, and automotive parts.

It was at this time that Alfred Sloan, Jr., who went on to guide GM as president and chairman until 1956, first became associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million. When Hyatt became part of GM, Sloan joined the corporate management, becoming president in 1923. Overseas expansion soon commenced, with the 1925 purchase of U.K. automaker Vauxhall Motors and the 1931 acquisition of Germany's Adam Opel.

The Depression and World War II Era

GM suffered greatly under the effects of the Great Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect, Sloan was credited with creating not only an organization that saved GM, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operational responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 GM accounted for 44 percent of the total U.S. automotive sales, compared with 12 percent in 1921. In preparation for America's entry into World War II, GM retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that GM had developed were applied with great effectiveness. From 1940 to 1945 the company produced defense material valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. GM's contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons, and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Postwar Expansion

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced GM to concentrate their research in this field; by 1950, all of the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

Company Perspectives:

General Motors' enjoys a long tradition of accountability, integrity, and transparency that has helped establish our reputation as a leader in corporate responsibility. We place a high value on communicating clear, consistent, and truthful information about our performance to our employees, suppliers, dealers, investors, and customers.

During the Korean war, part of the company's production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during World War II). The reallocation reached 19 percent and then leveled off at about 5 percent from 1956 onward. Between 1951 and 1955 the five divisions of GMBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from six to the more reliable 12 volts. Power-assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air conditioning systems. Also during this period GM completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. Americans, however, were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford Motor Company, Chrysler Corporation, and GM had lost some 15 percent in sales while imports were virtually doubling their market penetration. The longer Detroit's automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than 8 percent of U.S. car sales. Although GM promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the company's market share slipped to just 42 percent of 1959's new car sales.

The 1960s were difficult years in Detroit. The 1967 riot in the neighborhoods surrounding GM's facilities forced management to recognize the urban poverty that had for so long been in their midst, and they began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. GM prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13 percent return on investment, and GM's return increased from 16.5 percent to 25.8 percent.

Remaining Competitive in the 1970s80s

Like the rest of the industry, GM had ignored, in large part, the importance of air pollution control. However, new, costly federal regulations were mandated, and GM had to invest in developing devices to control pollution. By the early 1970s, this issue was temporarily overshadowed by the impact of the oil embargo. GM's luxury, gas-guzzling car sales were down by 35 percent in 1974, but the company's compacts and subcompacts rose steadily to attain a 40 percent market share. Ford, Chrysler, and GM had been caught unaware by a vast shift in consumer demand, and GM suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 to meet local, state, and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Under the leadership of President F. James McDonald and Chairman Roger Smith, GM reported earnings declines from 1985 to 1992. The only respite came from an accounting change in 1987, which effected an earnings increase. McDonald and Smith attempted to place these losses in perspective by arguing that they were necessary if GM was to develop a strong and secure position on the worldwide market. Since the start of the 1980s, GM had spent more than $60 billion redesigning most of its cars and modernizing the plants that produce them. The company also acquired two major corporations, Hughes Aircraft, in 1986, and Electronic Data Systems (EDS), in 1984. Though expensive, the EDS purchase provided GM with better, more centralized communications and backup systems, as well as a vital profit center. GM also purchased a 50 percent stake in Saab Automobile AB, a Swedish maker of premium cars, in 1990. That same year Saturn Corporation was created as a subsidiary to produce compact cars in a Japanese-influenced factory in Tennessee; Saturns became popular because of their quality and the no-haggle method employed to sell them.

GM's market share dropped steadily from 1982 to 1992. In 1987 Ford's profits exceeded GM's for the first time in 60 years. From 1990 to 1992, the corporation suffered successive and devastating annual losses totaling almost $30 billion. Problems were myriad. Manufacturing costs exceeded competitors' due to high labor costs, overcapacity, and complicated production procedures. GM faced competition from 25 companies, and its market share fell from almost 50 percent to about 35 percent.

Key Dates:

1892:
R.E. Olds founds the Olds Motor Vehicle Company.
1895:
The first Oldsmobile model is taken on its trial run.
1900:
David Buick founds a factory in Detroit.
1902:
Henry Leland produces the first Cadillac.
1903:
William Durant forms General Motors Corporation, bringing together Oldsmobile and Buick.
1909:
Cadillac and Oakland (renamed Pontiac) join GM.
1912:
GM introduces the electric self-starter in its Cadillacs.
1918:
Chevrolet becomes part of GM.
1923:
Alfred Sloan, Jr., is named president.
1925:
U.K. automaker Vauxhall Motors is acquired.
1931:
Germany's Adam Opel is acquired.
1940:
GM begins producing defense materials.
1950:
All U.S. models are available with an automatic gearbox.
1971:
GM acquires a 34 percent stake in Isuzu Motors.
1984:
GM acquires Electronic Data Systems.
1986:
Hughes Aircraft is acquired.
1990:
Company acquires a 50 percent stake in Swedish carmaker Saab Automobile AB; Saturn Corporation is created as a subsidiary.
1996:
EDS is spun off.
1999:
GM acquires a 20 percent stake in Fuji Heavy Industries, maker of Subaru cars.
2000:
GM gains a 20 percent stake in Fiat S.p.A.'s Fiat Auto S.p.A. unit and takes full control of Saab.
2002:
A majority interest in Daewoo Motor Companylater known as GM Daewoo Auto & Technologyis acquired.
2003:
The company sells its stake in Hughes Electronics to News Corporation.

The 1990s: Regaining Ground

In 1992 Jack Smith, Jr., advanced to GM's chief executive office. He had earned respect as the engineer of GM Europe's late 1980s turnaround, and he quickly applied those strategies to the parent, focusing on North American Operations (NAO). During 1993, Smith simplified the NAO, cut the corporate staff, pared product offerings, and began to divest GM's parts operations. He was also hailed for his negotiations with the United Auto Workers (UAW). In 1993 he pledged $3.9 billion in jobless benefits, which raised the blue-collar payroll costs about 16 percent over three years. At the same time the contract gave Smith the ability to cut 65,000 blue-collar jobs by 1996 in conjunction with the closure of nearly 24 plants. Salaried positions were not exempted from Smith's job-cutting plan; staffing at the corporate central office was slashed from 13,500 to 2,300 in 1992.

In the early 1990s GM began to recapture the automotive vanguard from Japanese carmakers, with entries in the van, truck, and utility vehicle markets and the launch of Saturn. GM also gained an advantage in the domestic market because the weak dollar caused the price of imported cars to increase much faster than domestics. Market conditions along with Smith's strategies effected a stunning reversal in 1993, when GM recorded net income of $2.47 billion on sales of $138.22 billion. Riding the booming economy, the company recorded record profits of $6.88 billion on record sales of $163.86 billion in 1995. Despite the improved financial performance, GM's share of the U.S. car market continued its steady decline, falling to slightly more than 31 percent by 1995. The company's North American operations continued to be criticized by observers for its inability to produce innovative models, the glacial speed of its new product development, and the inefficiencies inherent in running six separate car divisions and a GMC truck division.

The mid-to-late 1990s saw a number of important initiatives in GM's non-automaking operations. In 1994 the renamed Hughes Electronics unit introduced Direct TV, a satellite-based direct-to-home broadcast service. The 1995 sale of the company's National Car Rental business was followed by the spinoff of EDS the following year. One year later, Hughes Electronics was revamped through the sale of its defense electronics operations to Raytheon Company and the merging of its automotive electronics activities (Delco Electronics) into GM's auto parts subsidiary, Delphi Automotive Systems. Hughes began concentrating on digital entertainment, information, and communications services and made a key acquisition in 1999 when it paid $1.3 billion for the direct-to-home satellite business of Primestar. In early 2000 Hughes would make a further divestment of a then noncore unit, selling its satellite manufacturing operations to the Boeing Company for about $3.75 billion. Delphi, meanwhile, would be completely separated from GM through a May 1999 spinoff to shareholders.

GM remained profitable through the end of the decade, but its U.S. market share dipped below 30 percent by 1999; at times GM's share was less than that of the combined share of all Asian automakers, an unprecedented development. While continuing to attempt to reverse the now three-decades-long fall, GM began looking for future growth from Asia, where early 21st-century growth in car sales was expected to surpass both North America and Europe. Instead of attempting to directly sell its own models, GM began assembling a network of alliances with key Asian automakers for its push into that emerging continent, aiming to increase its market share across Asia from its late 1990s level of 4 to 10 percent by 2005. The company already had a 34 percent stake in Isuzu Motors Ltd., which it had bought in 1971, and a 3 percent stake in Suzuki Motor Corporation, obtained in 1981. In 1998 GM increased its stake in Suzuki to 10 percent and agreed to build cars with the Japanese automaker. The following year GM increased its stake in Isuzu to 49 percent; acquired a 20 percent stake in Fuji Heavy Industries Ltd., maker of Subaru all-wheel-drive vehicles; and entered into an alliance with Honda Motor Co., Ltd. involving Honda producing low-emissions gasoline engines for GM and Isuzu producing diesel engines for Honda.

2000 and Beyond

In May 2000 GM, Fuji, and Suzuki agreed to develop compact cars for the European market. Another deal involving Europe was reached in early 2000, when GM agreed to acquire a 20 percent stake in the Fiat Auto S.p.A. unit of Fiat S.p.A., the number six automaker in the world, in exchange for Fiat taking a 5.1 percent stake in GM. Through this deal, GM aimed to grab a larger share of the market for the small vehicles popular in Europe and Latin America but shunned in the United States. In mid-2000 GM and Fiat jointly bid to acquire troubled South Korean carmaker Daewoo Motor Company but were outbid by Ford. Also in 2000, GM acquired the 50 percent of Saab Automobile that it did not already own.

Closer to home, GM began building a factory in Lansing, Michigan, its first new plant in 15 years. In another key early 2000 development, the company agreed to join with Daimler-Chrysler AG and Ford to create an Internet-based global business-to-business supplier exchange, Covisint LLC, that would be open to all suppliers and automakers. This would create the world's largest virtual marketplace. Although the Federal Trade Commission (FTC) quickly opened a preliminary antitrust inquiry into the plan, clearance was eventually gained and the Covisint venture went forward.

In June 2000 G. Richard Wagoner was promoted from president to CEO, with Smith remaining chairman. At the age of 47, Wagoner became the youngest CEO in GM history and faced the daunting task of running what was still considered by many observers to be an excessively bureaucratic and overly complex organization, which was extremely resistant to change and seemingly unable to anticipate most market trends.

The focus on strengthening its foothold in the Asian market continued into 2001. Ford suddenly announced that it was dropping its offer for Daewoo, leaving GM wide open to relaunch its bid. Negotiations began that year and were finalized in 2002. GM ended up acquiring a majority interest in Daewoo Motor, renaming it GM Daewoo Auto & Technology. At the same time, the company purchased an additional 10 percent of Suzuki, increasing its stake to 20 percent, and signed a deal with AvtoVAZ to build sports utility vehicles (SUVs) for the Russian market.

GM chalked up a solid performance during this period. While its competitors struggled with recalls, and quality and merger integration issues, the automaker appeared to have overcome the problems of its past. An April 2002 Fortune article noted that "some of what's driving GM is very basic: improvements in quality and productivity, the pruning of unprofitable vehicles, and frankly, weakness at its crosstown rivals Ford and Chrysler." GM's market share rose in 2001 and by early 2002 had reached 30.9 percent in the U.S. market. Chevrolet had also started to outsell Ford. This was due in part to the successful zero percent financing plans it introduced after the terrorist attacks in September 2001. The financing plan was advertised under the "Keep America Rolling" slogan. Sales of GM cars increased by 31 percent one month after its launch.

The company did face one major hurdle howeverits $76 billion pension fund. Deals struck with the UAW in past years left GM forced to pay out costly health and retirement benefits. The company was the largest purchaser of health care in the United States, spending nearly $5 billion on healthcare alone in 2003. Word spread quickly that GM's pension fund was underfunded by nearly $18 billion at the start of 2003. The company was able to generate cash for the fund by selling off its Hughes Electronics stake to News Corporation in 2003 for approximately $3.1 billion. It also jettisoned its armored vehicles business in a $1.1 billion deal. The sale of its noncore assets, global debt offerings, and income from its automotive operations allowed to the company to fully fund its U.S. salaried and hourly employee pension plans by the end of 2003. Its automotive earnings, however, felt the crunch. Overall, the company's net income for 2003 reached $3.8 billion. The majority of earnings stemmed from its GMAC and Asian operations.

Smith retired in May 2003, leaving Wagoner at the helm. GM's management team continued to focus on controlling costs while phasing out car linesincluding Oldsmobile, the Camero, and the Firebirdand launching such new products as the Cadillac CTS, the Hummer H2, and the Opel Vectra in Europe. GM faced a challenging road ahead. Rising healthcare costs, intense competition, and having to shore up its North American auto sales were just some of its obstacles. GM was, however, in the top position in its industry and was no stranger to adversity.

Principal Subsidiaries

General Motors Acceptance Corporation; General Motors Investment Management Corporation; GMAC Commercial Finance LLC; Saturn Corporation; Holden, Ltd. (Australia); General Motors do Brasil Ltda. (Brazil); General Motors of Canada, Ltd.; Adam Opel AG (Germany); General Motors de Mexico, S.A. de C.V.; Saab Automobile AB (Sweden); Saab Cars Holding Corporation; Vauxhall Motors Limited (United Kingdom).

Principal Operating Units

GM Automotive; Financing and Insurance Operations.

Principal Competitors

AmeriCredit Corporation; Bayerische Motoren Werke AG; Credit Acceptance Corporation; DaimlerChrysler AG; Ford Motor Company; Ford Motor Credit Company; General Electric Capital Corporation; General Electric Company; Honda Motor Co., Ltd.; Hyundai Motor Company; Mazda Motor Corporation; Mitsubishi Motors Corporation; Nissan Motor Co., Ltd.; PSA Peugeot Citron S.A.; Renault S.A.; Suzuki Motor Corporation; Toyota Motor Corporation; Volkswagen AG.

Further Reading

Bary, Andrew, "How to Fix GM," Barron's, July 5, 1999, pp. 1819.

Cray, Ed, Chrome Colossus: General Motors and Its Time, New York: McGraw-Hill, 1980.

Dassbach, Carl H.A., Global Enterprises and the World Economy: Ford, General Motors, and IBM; the Emergence of the Transnational Enterprise, New York: Garland, 1989.

De Lorean, John Z., On a Clear Day You Can See General Motors, London: Sidgwick and Jackson, 1980.

Geyelin, Milo, "Lasting Impact: How an Internal Memo Written 26 Years Ago Is Costing GM Dearly," Wall Street Journal, September 29, 1999, pp. A1+.

Hamper, Ben, Rivethead: Tales from the Assembly Line, New York: Warner Books, 1992.

Jacobs, Timothy, A History of General Motors, New York: Smithmark, 1992.

Keller, Maryann, Collision: GM, Toyota, Volkswagen, and the Race to Own the 21st Century, New York: Currency Doubleday, 1993.

, Rude Awakening: General Motors in the 1980s, New York: Morrow, 1989.

, Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors, New York: HarperCollins, 1990.

Kerwin, Kathleen, "For GM, Once Again, Little Ventured, Little Gained," Business Week, March 27, 2000, pp. 4243.

Kerwin, Kathleen, and Joann Muller, "Reviving GM," Business Week, February 1, 1999, pp. 114+.

Kuhn, Arthur J., GM Passes Ford, 19181938: Designing the General Motors Performance-Control System, University Park: Pennsylvania State University Press, 1986.

Madsen, Axel, The Deal Maker: How William C. Durant Made General Motors, New York: Wiley, 1999.

May, George S., R.E. Olds, Auto Industry Pioneer, Grand Rapids, Mich.: Eerdmans, 1977.

Meredith, Robyn, "Can GM Return to the Passing Lane?," New York Times, November 7, 1999, Sec. 3, p. 1.

Miller, Scott, "Open No Quick Fix for GM's 'Mr. Fix It'," Wall Street Journal, June 13, 2000, p. A22.

Osterland, Andrew, "Al and Me: Why General Motors Will Finally Get Serious About Downsizing," Financial World, December 16, 1996, pp. 3941.

Palmer, Jay, "Reviving GM," Barron's, June 22, 1998, pp. 3135.

Pollack, Andrew, "Paper Trail GM After It Loses Injury Suit," New York Times, July 12, 1999, p. A12.

Ramsey, Douglas K., The Corporate Warriors: Six Classic Cases in American Business, Boston: Houghton Mifflin, 1987.

"Rick Wagoner's Game Plan," Business Week, February 10, 2003, p. 52.

Rothschild, Emma, Paradise Lost: The Decline of the Auto-Industrial Age, New York: Random House, 1973.

Shirouzu, Norihiko, "GM Cracks Japan's Market with Its Wallet, Not Its Cars: Network of Alliances Aids Asia Expansion by Filling Gaps in Product Line," Wall Street Journal, January 26, 2000, p. A17.

Simison, Robert L., Fara Warner, and Gregory L. White, "Big Three Car Makers Plan Net Exchange," Wall Street Journal, February 28, 2000, pp. A3, A16.

Simison, Robert L., Gregory L. White, and Deborah Ball, "GM's Linkup with Fiat Opens Final Act of Consolidation Drama for Industry," Wall Street Journal, March 14, 2000, pp. A3, A8.

Sloan, Alfred, Jr., My Years with General Motors, New York: Doubleday, 1964.

Smith, Roger B., Building on 75 Years of Excellence: The General Motors Story, New York: Newcomen Society of the United States, 1984.

Taylor, Alex, III, "Finally GM is Looking Good," Fortune, April 1, 2002, p. 68.

, "GM's $11 Billion Turnaround," Fortune, October 17, 1994, pp. 5456+.

, "GM Gets Its Act Together," Fortune, April 5, 2004, p. 136.

, "GM: Some Gain, Much Pain," Fortune, May 29, 1995, pp. 7880, 84.

, "GM: Time to Get in Gear," Fortune, April 28, 1997, pp. 9496+.

, "GM: Why They Might Break Up America's Biggest Company," Fortune, April 29, 1996, pp. 7882, 84.

, "Is Jack Smith the Man to Fix GM?," Fortune, August 3, 1998, pp. 86+.

Weisberger, Bernard A., The Dream Maker: William C. Durant, Founder of General Motors, Boston: Little Brown, 1979.

Welch, David, "Has GM Outrun its Pension Problems?," Business Week, January 19, 2004, p. 70.

White, Gregory L., "As GM Courts the Net, Struggling Saturn Line Exposes Rusty Spots," Wall Street Journal, July 11, 2000, pp. A1, A10.

Zachary, Katherine, "Shopping Spree: GM Plunks Down Hard Cash to Add Strength in Asia," Ward's Auto World, February 29, 2000.

Zesiger, Sue, "GM's Big Decision: Status Quo," Fortune, February 21, 2000, pp. 10102, 104.

April Dougal Gasbarre

updates: David E. Salamie and

Christina M. Stansell

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Gasbarre, April; Salamie, David; Stansell, Christina. "General Motors Corporation." International Directory of Company Histories. 2005. Encyclopedia.com. 30 Jul. 2016 <http://www.encyclopedia.com>.

Gasbarre, April; Salamie, David; Stansell, Christina. "General Motors Corporation." International Directory of Company Histories. 2005. Encyclopedia.com. (July 30, 2016). http://www.encyclopedia.com/doc/1G2-3429100046.html

Gasbarre, April; Salamie, David; Stansell, Christina. "General Motors Corporation." International Directory of Company Histories. 2005. Retrieved July 30, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3429100046.html

General Motors Corporation

General Motors Corporation

300 Renaissance Center
Detroit, Michigan 48265-3000
U.S.A.
Telephone: (313) 556-5000
Fax: (313) 556-5108
Web site: http://www.gm.com

Public Company
Incorporated:
1916
Employees: 693,000
Sales: $176.56 billion (1999)
Stock Exchanges: New York Chicago Pacific Philadelphia Montreal Toronto Frankfurt Diisseldorf Brussels Paris London
Ticker Symbol: GM
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 336211 Motor Vehicle Body Manufacturing; 336350 Motor Vehicle Transmission and Power Train Parts Manufacturing; 336510 Railroad Rolling Stock Manufacturing; 421110 Automobile and Other Motor Vehicle Wholesalers; 441110 New Car Dealers; 522220 Sales Financing; 522291 Consumer Lending; 522292 Real Estate Credit; 524126 Direct Property and Casualty Insurance Carriers; 532112 Passenger Cars Leasing; 334220 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing; 334290 Other Communications Equipment Manufacturing; 513220 Cable and Other Program Distribution; 513340 Satellite Telecommunications

General Motors Corporation (GM) is the worlds largest full-line vehicle manufacturer and marketer. Its North American nameplates include Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, and Saturn. Opel, Vauxhall, Holden, Isuzu, Saab, Buick, Chevrolet, GMC, and Cadillac comprise General Motors international nameplates. Through its system of global alliances, GM holds a 49 percent stake in Isuzu Motors Limited, 20 percent each of Fuji Heavy Industries Ltd. and Fiat S.p.A.s Fiat Auto S.p.A. unit, and ten percent of Suzuki Motor Corporation. Other principal businesses include Hughes Electronics Corporation, a provider of digital entertainment, information, and communications services; and General Motors Acceptance Corporation and its subsidiaries, providers of financing and insurance to GM customers and dealers.

19th-Century Origins

The beginning of General Motors can be traced back to 1892, when R.E. Olds collected all of his savings to convert his fathers naval and industrial engine factory into the Olds Motor Vehicle Company to build horseless carriages. For a number of years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could produce five horsepower and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. Two years later, at the turn of the century, Olds had sold more than 1,400 cars.

That same year, an engineer named David Buick founded a factory under his own name in Detroit. A third factory for the Cadillac Automobile Company also was built in Detroit. This company was founded by Henry Leland, who was already building car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was re-placed by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Oldsmobile also reached its projected target of manufacturing 4,000 cars in one year.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The nephew of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred when many firms manufactured the same product. General Motors Corporation was thus formed, bringing together Olds-mobile and Buick in 1903, and joined in 1909 by Cadillac and Oakland (renamed Pontiac). Positive financial results were immediately seen from the union, although the establishment of the company drew little attention.

Other early members of the General Motors family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. General Motors other U.S. automotive division, Chevrolet, became part of the corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60 percent interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or testing laboratory also was established to serve as an additional protection against costly factory mistakes. General Motors system of administration, research, and development became one of the largest and most complex in private industry.

About the same time that General Motors was establishing itself in Detroit, an engineering breakthrough was taking place in Dayton, Ohio: the electric self-starter, designed by Charles F. Kettering. General Motors introduced Ketterings invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Ketterings Dayton Engineering Laboratories were merged into General Motors during 1920 and the laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of General Motors, in charge of its research and engineering programs.

During World War I General Motors turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the U.S. automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90 percent of General Motors truck production was for the war effort. Cadillac supplied army staff cars, V-8 engines for artillery tractors, and trench mortar shells, while Buick built Liberty airplane motors, tanks, trucks, ambulances, and automotive parts.

It was at this time that Alfred Sloan, Jr., who went on to guide General Motors as president and chairman until 1956, first be-came associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million. When Hyatt became part of General Motors, Sloan joined the corporate management, becoming president in 1923. Overseas expansion soon commenced, with the 1925 purchase of U.K. automaker Vauxhall Motors and the 1931 acquisition of Germanys Adam Opel.

Mid-Century: Surviving the Depression and Contributing to the War Effort

General Motors suffered greatly under the effects of the Great Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect, Sloan was credited with creating not only an organization that saved General Motors, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operational responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 General Motors accounted for 44 percent of the total U.S. automotive sales, compared with 12 percent in 1921. In preparation for Americas entry into World War II, General Motors retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that General Motors had developed were applied with great effectiveness. From 1940 to 1945 General Motors produced defense materiel valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. General Motors contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons, and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Postwar Expansion

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced General Motors to concentrate their research in this field; by 1950, all of the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

Company Perspectives

Vision: To be a world leader in transportation products and related services. We will earn our customers enthusiasm through continuous improvement driven by the integrity, teamwork, and innovation of GM people.

During the Korean war, part of the companys production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during World War II). The reallocation reached 19 percent and then leveled off at about five percent from 1956 onward. Between 1951 and 1955 the five divisions of General MotorsBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from six to the more reliable 12 volts. Power-assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air conditioning systems. Also during this period General Motors completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. Americans, however, were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford Motor Company, Chrysler Corporation, and General Motors had lost some 15 percent in sales while imports were virtually doubling their market penetration. The longer Detroits automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than eight percent of U.S. car sales. Although General Motors promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the companys market share slipped to just 42 percent of 1959s new car sales.

The 1960s were difficult years in Detroit. The 1967 riot in the ghettos surrounding General Motors facilities forced management to recognize the urban poverty that had for so long been in their midst and they began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. General Motors prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13 percent return on investment, and General Motors return increased from 16.5 percent to 25.8 percent.

Declining Fortunes from the 1970s Through the Early 1990s

Like the rest of the industry, General Motors had ignored, in large part, the importance of air pollution control, but new, costly federal regulations were mandated. By the early 1970s, however, the high cost of developing devices to control pollution was overshadowed by the impact of the oil embargo. General Motors luxury, gas-guzzling car sales were down by 35 percent in 1974, but the companys compacts and subcom-pacts rose steadily to attain a 40 percent market share. Ford, Chrysler, and General Motors had been caught unaware by a vast shift in consumer demand, and General Motors suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 to meet local, state^and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Key Dates

1892:
R.E. Olds founds the Olds Motor Vehicle Company.
1895:
The first Oldsmobile model is taken on its trial run.
1900:
David Buick founds a factory in Detroit.
1902:
Henry Leland produces the first Cadillac.
1903:
William Durant forms General Motors Corporation, bringing together Oldsmobile and Buick.
1909:
Cadillac and Oakland (renamed Pontiac) join GM.
1912:
GM introduces the electric self-starter in its Cadillacs.
1918:
Chevrolet becomes part of GM.
1923:
Alfred Sloan, Jr., is named president.
1925:
U.K. automaker Vauxhall Motors is acquired.
1931:
Germanys Adam Opel is acquired.
194045:
GM produces defense materiel valued at $12.3 billion.
1950:
All U.S. models are available with an automatic gearbox.
1971:
GM acquires a 34 percent stake in Isuzu Motors.
1981:
Company purchases a three percent stake in Suzuki Motor Corporation.
1984:
GM acquires Electronic Data Systems.
1986:
Hughes Aircraft is acquired.
1990:
Company acquires a 50 percent stake in Swedish carmaker Saab Automobile AB; Saturn Corporation is created as a subsidiary.
1994:
Hughes Electronics introduces Direct TV.
1996:
EDS is spun off.
1997:
Hughes sells its defense electronics operations to Raytheon and merges its Delco Electronics unit into GMs auto parts subsidiary, Delphi Automotive Systems.
1998:
Stake in Suzuki is increased to ten percent.
1999:
Stake in Isuzu is increased to 49 percent; GM acquires a 20 percent stake in Fuji Heavy Industries, maker of Subaru cars; Delphi is spun off to share-holders.
2000:
GM gains a 20 percent stake in Fiat S.p.A.s Fiat Auto S.p.A. unit and takes full control of Saab; Hughes sells satellite manufacturing unit to Boeing.

Under the leadership of President F. James McDonald and Chairman Roger Smith, General Motors reported earnings declines from 1985 to 1992. The only respite came from an accounting change in 1987, which effected an earnings in-crease. McDonald and Smith attempted to place these losses in perspective by arguing that they were necessary if General Motors was to develop a strong and secure position on the worldwide market. Since the start of the 1980s, General Motors had spent more than $60 billion redesigning most of its cars and modernizing the plants that produce them. The company also acquired two major corporations, Hughes Aircraft, in 1986, and Electronic Data Systems (EDS), in 1984. Though expensive, the EDS purchase provided General Motors with better, more centralized communications and backup systems, as well as a vital profit center. GM also purchased a 50 percent stake in Saab Automobile AB, a Sweden-based maker of premium cars, in 1990. That same year Saturn Corporation was created as a subsidiary to produce compact cars in a Japanese-influenced factory in Tennessee; Saturns became popular because of their quality and the no-haggle method employed to sell them.

General Motors market share dropped steadily from 1982 to 1992. In 1987 Fords profits exceeded GMs for the first time in 60 years. From 1990 to 1992, the corporation suffered successive and devastating annual losses totaling almost $30 billion. Problems were myriad. Manufacturing costs exceeded competitors due to high labor costs, overcapacity, and complicated production procedures. GM faced competition from 25 companies, and its market share fell from almost 50 percent to about 35 percent.

Mid-1990s and Beyond: Profits Despite U.S. Market Share Erosion

In 1992 Jack Smith, Jr. advanced to General Motors chief executive office. He had earned respect as the engineer of GM Europes late 1980s turnaround, and he quickly applied those strategies to the parent, focusing on North American Operations (NAO). During 1993, Smith simplified the NAO, cut the corporate staff, pared product offerings, and began to divest GMs parts operations. He was hailed for his negotiations with the United Auto Workers. In 1993 he pledged $3.9 billion in jobless benefits, which raised the blue-collar payroll costs about 16 percent over three years. But at the same time the contract gave Smith the ability to cut 65,000 blue-collar jobs by 1996 in conjunction with the closure of nearly 24 plants. Salaried positions were not exempted from Smiths job-cutting scalpel: staffing at the corporate central office was slashed from 13,500 to 2,300 in 1992.

In the early 1990s GM began to recapture the automotive vanguard from Japanese carmakers, with entries in the van, truck, and utility vehicle markets and the launch of Saturn. GM also gained an advantage in the domestic market because the weak dollar caused the price of imported cars to increase much faster than domestics. Market conditions along with Smiths strategies effected a stunning reversal in 1993, when GM re-corded net income of $2.47 billion on sales of $138.22 billion. Riding the booming economy, the company recorded record profits of $6.88 billion on record sales of $163.86 billion in 1995. Despite the improved financial performance, General Motors share of the U.S. car market continued its steady decline, falling to slightly more than 31 percent by 1995. The companys North American operations continued to be criticized by observers for its inability to produce innovative models, the glacial speed of its new product development, and the inefficiencies inherent in running six separate car divisions and a GMC truck division.

The mid-to-late 1990s saw a number of important initiatives in GMs non-automaking operations. In 1994 the renamed Hughes Electronics unit introduced Direct TV, a satellite-based direct-to-home broadcast service. The 1995 sale of the companys National Car Rental business was followed by the spinoff of EDS the following year. One year later, Hughes Electronics was revamped through the sale of its defense electronics operations to Raytheon Company and the merging of its auto-motive electronics activities (Delco Electronics) into GMs auto parts subsidiary, Delphi Automotive Systems. Hughes began concentrating on digital entertainment, information, and communications services and made a key acquisition in 1999 when it paid $1.3 billion for the direct-to-home satellite business of Primestar. In early 2000 Hughes made a further divestment of a now noncore unit when it sold its satellite manufacturing operations to the Boeing Company for about $3.75 billion. Delphi, meanwhile, was completely separated from GM through a May 1999 spinoff to shareholders.

General Motors remained profitable through the end of the decade, but its U.S. market share dipped below 30 percent by 1999at times GMs share was less than that of the combined share of all Asian automakers, an unprecedented development. While continuing to attempt to reverse the now three-decades-long fall, GM began looking for future growth from Asia, where early 21st-century growth in car sales was expected to surpass both North America and Europe. Instead of attempting to directly sell its own models, GM began assembling a network of alliances with key Asian automakers for its push into that emerging continent, aiming to increase its market share across Asia from its late 1990s level of four percent to ten percent by 2005. The company already had a 34 percent stake in Isuzu Motors Limited, which it had bought in 1971, and a three percent stake in Suzuki Motor Corporation, obtained in 1981. In 1998 GM increased its stake in Suzuki to ten percent and agreed to build cars with the Japanese automaker. The following year General Motors increased its stake in Isuzu to 49 percent; acquired a 20 percent stake in Fuji Heavy Industries Ltd., maker of Subaru all-wheel-drive vehicles; and entered into an alliance with Honda Motor Co., Ltd. involving Honda producing lowemissions gasoline engines for GM and Isuzu producing diesel engines for Honda. In May 2000 GM, Fuji, and Suzuki agreed to develop compact cars for the European market. Another deal involving Europe was reached in early 2000, when GM agreed to acquire a 20 percent stake in the Fiat Auto S.p.A. unit of Fiat S.p.A., the number six automaker in the world, in exchange for Fiat taking a 5.1 percent stake in GM. Through this deal, General Motors aimed to grab a larger share of the market for the small vehicles that are popular in Europe and Latin America but shunned in the United States. In mid-2000 GM and Fiat jointly bid to acquire troubled South Korean carmaker Daewoo Motor Co., but were outbid by Ford. Also in 2000, General Motors acquired the 50 percent of Saab Automobile that it did not already own.

In another key early 2000 development, General Motors agreed to join with DaimlerChrysler AG and Ford to create an Internet-based global business-to-business supplier exchange, Covisint, that would be open to all suppliers and automakers. This would potentially create the worlds largest virtual market-place, although the Federal Trade Commission quickly opened a preliminary antitrust inquiry into the plan. The company also began building a factory in Lansing, Michigan, its first new plant in 15 years. In June 2000 G. Richard Wagoner was promoted from president to CEO, with Smith remaining chairman. At the age of 47, Wagoner became the youngest CEO in GM history and faced the daunting task of running what was still considered by many observers to be an excessively bureaucratic and overly complex organization, which was extremely resistant to change and seemingly unable to anticipate most market trends.

Principal Subsidiaries

General Motors Acceptance Corporation; General Motors Investment Management Corporation; Hughes Electronics Corporation; Saturn Corporation; Holden, Ltd. (Australia); General Motors do Brasil Ltda. (Brazil); General Motors of Canada, Ltd.; Adam Opel Aktiengesellschaft (Germany); General Motors de Mexico, S.A. de C.V.; Saab Automobile AB (Sweden); Vauxhall Motors Limited (U.K.).

Principal Divisions

Allison Transmission Division; Buick Motor Division; Cadillac Motor Car Division; Chevrolet Motor Division; Electro-Motive Division; Oldsmobile Division; Pontiac-GMC Division; Pontiac-GMC Truck Division.

Principal Operating Units

e-GM Group; GM Asia Pacific; GM Europe; GM Latin America, Africa and Mid-East; GM Locomotive Group; GM North America; GM Powertrain Group; GM Truck Group.

Principal Competitors

AmeriCredit Corp.; Bayerische Motoren Werke AG; Credit Acceptance Corporation; DaimlerChrysler AG; Ford Motor Company; Ford Motor Credit Company; General Electric Capital Corporation; General Electric Company; Honda Motor Co., Ltd.; Hyundai Motor Company; Mazda Motor Corporation; Mitsubishi Motors Corporation; Nissan Motor Co., Ltd.; PSA Peugeot Citroen S.A.; Renault S.A.; Suzuki Motor Corporation; Toyota Motor Corporation; Volkswagen AG.

Further Reading

Bary, Andrew, How to Fix GM, Barrens, July 5, 1999, pp. 1819.

Cray, Ed, Chrome Colossus: General Motors and Its Time, New York: McGraw-Hill, 1980.

Dassbach, Carl H.A., Global Enterprises and the World Economy: Ford, General Motors, and IBM, the Emergence of the Transnational Enterprise, New York: Garland, 1989.

De Lorean, John Z., On a Clear Day You Can See General Motors, London: Sidgwick and Jackson, 1980.

Geyelin, Milo, Lasting Impact: How an Internal Memo Written 26 Years Ago Is Costing GM Dearly, Wall Street Journal, September 29, 1999, pp. A1 +.

Hamper, Ben, Rivethead: Tales from the Assembly Line, New York: Warner Books, 1992.

Jacobs, Timothy, A History of General Motors, New York: Smithmark, 1992.

Keller, Maryann, Collision: GM, Toyota, Volkswagen, and the Race to Own the 21st Century, New York: Currency Doubleday, 1993.

______, Rude Awakening: General Motors in the 1980s, New York: Morrow, 1989.

______, Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors, New York: HarperCollins, 1990.

Kerwin, Kathleen, For GM, Once Again, Little Ventured, Little Gained, Business Week, March 27, 2000, pp. 4243.

Kerwin, Kathleen, and Joann Muller, Reviving GM, Business Week, February 1, 1999, pp. 114-K Kuhn, Arthur J., GM Passes Ford, 19181938: Designing the General Motors Performance-Control System, University Park: Pennsylvania State University Press, 1986.

Madsen, Axel, The Deal Maker: How William C. DurantMade General Motors, New York: Wiley, 1999.

May, George S., R.E. Olds, Auto Industry Pioneer, Grand Rapids, Mich.: Eerdmans, 1977.

Meredith, Robyn, Can GM Return to the Passing Lane?, New York Times, November 7, 1999, Sec. 3, p. 1.

Miller, Scott, Open No Quick Fix for GMs Mr. Fix It, Wall Street Journal, June 13, 2000, p. A22.

Osterland, Andrew, Al and Me: Why General Motors Will Finally Get Serious About Downsizing, Financial World, December 16,1996, pp. 3941.

Palmer, Jay, Reviving GM, Barrens, June 22, 1998, pp. 3135. Pollack, Andrew, Paper Trail GM After It Loses Injury Suit, New York Times, July 12, 1999, Sec. A, p. 12.

Ramsey, Douglas K., The Corporate Warriors: Six Classic Cases in American Business, Boston: Houghton Mifflin, 1987.

Rothschild, Emma, Paradise Lost: The Decline of the Auto-Industrial Age, New York: Random House, 1973.

Shirouzu, Norihiko, GM Cracks Japans Market with Its Wallet, Not Its Cars: Network of Alliances Aids Asia Expansion by Filling Gaps in Product Line, Wall Street Journal, January 26, 2000, p. A17.

Simison, Robert L., Fara Warner, and Gregory L. White, Big Three Car Makers Plan Net Exchange, Wall Street Journal, February 28, 2000, pp. A3, A16.

Simison, Robert L., Gregory L. White, and Deborah Ball, GMs Linkup with Fiat Opens Final Act of Consolidation Drama for Industry, Wall Street Journal, March 14, 2000, pp. A3, A8.

Sloan, Alfred, Jr., My Years with General Motors, New York: Doubleday, 1964.

Smith, Roger B., Building on 75 Years of Excellence: The General Motors Story, New York: Newcomen Society of the United States, 1984.

Taylor, Alex, III, GMs $11 Billion Turnaround, Fortune, October 17, 1994, pp. 5456 +.

______, GM: Some Gain, Much Pain, Fortune, May 29, 1995, pp. 7880, 84.

______, GM: Time to Get in Gear, Fortune, April 28, 1997, pp. 9496 +.

______, GM: Why They Might Break Up Americas Biggest Company, Fortune, April 29, 1996, pp. 7882, 84.

______, Is Jack Smith the Man to Fix GM?, Fortune, August 3, 1998, pp. 86 +.

Weisberger, Bernard A., The Dream Maker: William C. Durant, Founder of General Motors, Boston: Little Brown, 1979.

White, Gregory L., As GM Courts the Net, Struggling Saturn Line Exposes Rusty Spots, Wall Street Journal, July 11, 2000, pp. A1, A10.

Zachary, Kamerine, Shopping Spree: GM Plunks Down Hard Cash to Add Strength in Asia, Wards Auto World, February 29, 2000.

Zesiger, Sue, GMs Big Decision: Status Quo, Fortune, February 21, 2000, pp. 10102, 104.

April Dougal Gasbarre

updated by David E. Salamie

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General Motors Corporation

General Motors Corporation

3044 West Grand Blvd.
Detroit, Michigan 48202
U.S.A.
(313) 556-5000

Public Company
Incorporated: 1916
Employees: 750,000
Sales: $138.22 billion
Stock Exchanges: New York
SICs: 3711 Motor Vehicles and Car Bodies; 3714 Motor Vehicle Parts and Accessories; 3812 Search and Navigation Equipment; 3761 Guided Missiles and Space Vehicles; 3663 Radio and TV Communications Equipment; 6141 Personal Credit Institutions; 3743 Railroad Equipment

General Motors Corporation is the worlds largest full-line vehicle manufacturer and marketer. Its American nameplates include Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, GMC Truck, and Saturn. Opel, Vauxhall, Saab, and Isuzu comprise General Motors international nameplates. The companys Automotive Components Group Worldwide brings vertical integration to General Motors manufacturing, and also supplies components and systems to every major automotive manufacturer. Other principal businesses include GM Hughes Electronics Corporation, a manufacturer of automotive electronics, commercial technologies, telecommunications, and space and defense electronics; Electronic Data Systems corporation, a global information technologies company; and General Motors Acceptance Corporation and its subsidiaries, providers of financing and insurance to GM customers and dealers.

The beginning of General Motors can be traced back to 1892, when R. E. Olds collected all his savings in order to convert his fathers naval and industrial engine factory into the Olds Motor Vehicle Company to build horseless carriages. For a number of years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could produce five horsepower and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. Two years later, at the turn of the century, Olds had sold over 1,400 cars.

That same year, an engineer named David Buick founded a factory under his own name in Detroit. A third factory for the Cadillac Automobile Company was also built in Detroit. This company was founded by Henry Leland, who was already building car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was replaced by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Oldsmobile also reached their projected target of manufacturing 4,000 cars in one year.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The son of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred as many concerns manufactured the same product. General Motors was thus formed, bringing together Oldsmobile and Buick in 1903, and joined in 1909 by Cadillac and Oakland (renamed Pontiac). Positive financial results were immediately seen from the union, although the establishment of the company drew little attention.

Other early members of the General Motors family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. General Motors other U.S. automotive division, Chevrolet, became part of the Corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60 percent interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or testing laboratory was also established to serve as an additional protection against costly factory mistakes. General Motors system of administration, research, and development became one of the largest and most complex in private industry.

About the same time that General Motors was establishing itself in Detroit, an engineering breakthrough was taking place in Dayton, Ohio: the electric self-starter, designed by Charles F. Kettering. General Motors introduced Ketterings invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Ketterings Dayton Engineering Laboratories were merged into General Motors during 1920 and the Laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of General Motors, in charge of its research and engineering programs.

During World War I General Motors turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the American automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90 percent of General Motors truck production was for the war effort. Cadillac supplied Army staff cars, V-8 engines for artillery tractors, and trench mortar shells, while Buick built Liberty airplane motors, tanks, trucks, ambulances, and automotive parts.

It was at this time that Alfred Sloan, Jr., who went on to guide General Motors as president and chairman until 1956, first became associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million. When Hyatt became part of General Motors, Sloan joined the corporate management.

General Motors suffered greatly under the effects of the Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect, Sloan was credited with creating not only an organization which saved General Motors, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operational responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 General Motors accounted for 44 percent of the total U.S. automotive sales, compared with 12 percent in 1921. In preparation for Americas entry into the Second World War, General Motors retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that General Motors had developed were applied with great effectiveness. From 1940 to 1945 General Motors produced defense material valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. General Motors contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons, and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced General Motors to concentrate their research in this field; by 1950, all the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

During the Korean war, part of the companys production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during the Second World War). The reallocation reached 19 percent and then leveled off at about five percent from 1956 onwards. Between 1951 and 1955 the five divisions which today form General MotorsBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from six to the more reliable 12 volts. Power assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air-conditioning systems. Also during this period General Motors completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. However, Americans were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford, Chrysler, and General Motors had lost some 15 percent in sales while imports were virtually doubling their market penetration. The longer Detroits automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than eight percent of U.S. car sales. Although General Motors promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the companys market share slipped to just 42 percent of 1959s new car sales.

The 1960s were difficult years in Detroit. Riots in the ghettos surrounding General Motors facilities forced management to recognize the urban poverty that had for so long been in their midst and they began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. General Motors prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13 percent return on investment, and General Motors return increased from 16.5 percent to 25.8 percent.

Like the rest of the industry, General Motors had largely ignored the importance of air pollution control, but new, costly federal regulations were mandated. However, by the early 1970s, the high cost of developing devices to control pollution was overshadowed by the impact of the oil embargo. General Motors luxury, gas guzzling car sales were down by 35 percent in 1974, but the companys compacts and subcompacts rose steadily to attain a 40 percent market share. Ford, Chrysler, and General Motors had been caught unaware by a vast shift in consumer demand, and General Motors suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 in order to meet local, state, and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Under the leadership of president F. James McDonald, and chairman Roger Smith, General Motors reported earnings declines from 1985 to 1992. The only respite came from an accounting change in 1987, which effected an earnings increase. McDonald and Smith attempted to place these losses in perspective by arguing that they are necessary if General Motors is to develop a strong and secure position on the worldwide market. Since the start of the 1980s, General Motors had spent over $60 billion redesigning most of its cars and modernizing the plants that produce them. The company also acquired two major corporations, Hughes Aircraft and Electronic Data Systems (EDS). Though expensive, the EDS purchase provided General Motors with better, more centralized communications and backup systems, as well as a vital profit center.

General Motors market share dropped steadily from 1982 to 1992. In 1987 Fords profits exceeded GMs for the first time in sixty years. From 1990 to 1992, the corporation suffered successive and devastating annual losses totaling almost $30 billion. Problems were myriad. Manufacturing costs exceeded competitors due to high labor costs, over capacity, and complicated production procedures. GM faced competition from 25 companies, and its market share fell from almost 50 percent to about 35 percent.

In 1992 Jack Smith, Jr. advanced to General Motors chief executive office. He had earned respect as the engineer of GM Europes late 1980s turnaround, and quickly applied those strategies to the parent, focusing on North American Operations (NAO). During 1993, Smith simplified the NAO, cut the corporate staff, pared product offerings, and began to divest GMs parts operations. He was hailed for his negotiations with the United Auto Workers. In 1993 he pledged $3.9 billion in jobless benefits, which raised the blue-collar payroll costs about 16 percent over three years. But at the same time the contract gave Smith the ability to cut 65,000 blue-collar jobs by 1996 in conjunction with the closure of nearly 24 plants. Salaried positions were not exempted from Smiths job-cutting scalpel: staffing at the corporate central office was slashed from 13,500 to 2,300 in 1992.

In the early 1990s GM began to recapture the automotive vanguard from Japanese carmakers, with entries in the van, truck, and utility vehicle markets and the launch of Saturn Corp. GM also gained an advantage in the domestic market because the weak dollar caused the price of imported cars to increase much faster than domestics. Market conditions along with Smiths strategies effected a stunning reversal in 1993, when GM recorded net income of $2.47 billion on sales of $138.22 billion. The CEO noted his corporations strategic advantages: a large customer base; a large and excellent car and truck dealer network; strong brands; a global presence in engineering, manufacturing, and marketing; a management team with broad international experience; and, most of all, a worldwide team of diverse, capable, and motivated employees.

Principal Subsidiaries:

Electronic Data Systems Corp.; GM Hughes Electronics Corp.; General Motors Acceptance Corporation; Saturn Corp. The company also has subsidiaries in the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, England, Finland, France, Greece, Ireland, Italy, Japan, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Portugal, South Africa, Sweden, Switzerland, Uruguay, Venezuela, Germany, and Zaire.

Further Reading:

Cray, Ed, Chrome Colossus: General Motors and Its Time, New York: McGraw Hill, 1980.

Dassbach, Carl H. A., Global Enterprises and the World Economy: Ford, General Motors, and IBM, the Emergence of the Transnational Enterprise, New York: Garland, 1989.

De Lorean, John Z., On a Clear Day You Can See General Motors, London: Sidgwick and Jackson, 1980.

Hamper, Ben, Rivethead: Tales From the Assembly Line, New York: Warner Books, 1992.

Jacobs, Timothy, A History of General Motors, New York: Smithmark, 1992.

Keller, Maryann, Rude Awakening: General Motors in the 1980s, New York: Morrow, 1989.

______, Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors, New York: HarperCollins, 1990.

Kuhn, Arthur J., GM Passes Ford, 1918-1938: Designing the General Motors Performance-Control System, University Park: Pennsylvania State University Press, 1986.

May, George S., R.E. Olds, Auto Industry Pioneer, Grand Rapids, MI: Eerdmans, 1977.

Ramsey, Douglas K., The Corporate Warriors: Six Classic Cases in American Business, Boston: Houghton Mifflin, 1987.

Rothschild, Emma, Paradise Lost: The Decline of the Auto-Industrial Age, New York: Random House, 1973.

Sloan, Alfred, Jr., My Years with General Motors, New York: Double-day, 1964.

Smith, Roger B., Building on 75 Years of Excellence: The General Motors Story, New York: Newcomen Society of the United States, 1984.

Weisberger, Bernard A., The Dream Maker: William C. Durant, Founder of General Motors, Boston: Little Brown, 1979.

April Dougal Gasbarre

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General Motors Corporation

General Motors
Corporation

300 Renaissance Center
Detroit, MI 48265-3000
(313)556-5000
http://www.gm.com

Over the course of nearly a century, General Motors (GM) has weathered more ups and downs and gone through more fundamental changes than most companies. GM has been the world's largest vehicle manufacturer since 1931, producing such brands as Buick, Cadillac, Chevrolet, GMC, Pontiac, Saab, Saturn, and Oldsmobile. From the 1950s into the 1970s, the automaker led the industry in building millions of low-cost cars, achieving nearly 60 percent of U.S. auto sales. Along the way, its Chevy Corvette convertible sports car became an American icon and a symbol of the laid-back West Coast lifestyle. Today, General Motors has about 30 percent of the auto market and faces new challenges, such as decreased productivity, rising costs of employees health benefits, and the demand for cleaner, safer, and more fuel-efficient vehicles.

From Carriages to Cars

General Motors traces its history back to the late 1800s, when William "Billy" Durant (1861-1947) was leading the horse-drawn carriage market in Flint, Michigan. A natural born salesman with his finger on the pulse of new markets, he realized the future was in the "horseless" carriage. In 1904, Durant took over Flint's failing Buick Motor Company. He quickly turned Buick around, and by 1907, was producing over four thousand cars per year. In 1908, with Durant at the helm, the company was the number-one automaker in the United States, outselling rivals Cadillac and Ford Motor Company (see entry).

Spurred by his success, Durant set out to take control of the auto industry. He attempted to buy Ford Motor Company in 1907, but was unable to obtain a $9.5 million bank loan. Instead, he formed the General Motors Company, with headquarters in Detroit, Michigan, and began adding other new divisions. In 1908, Durant purchased Olds Motor Works, which had been formed in 1899 by Ransom E. Olds (1864-1950). In 1909, he acquired the Oakland Motor Car Company, which eventually became the Pontiac division in 1932. Rapid Motor Vehicle Company, the predecessor of the GMC truck, was purchased soon after. By 1910, Durant had gobbled up so many companies that GM was deeply in debt and on the verge of financial collapse. Several banks stepped in with loans to help out the struggling automaker on the condition that founder Durant be replaced as company head. After losing control of GM, Durant started the Chevrolet Motor Company in 1911.

General Motors at a
Glance

  • Employees: 362,000
  • CEO: G. Richard Wagoner Jr.
  • Subsidiaries: Adam Opel AG; Allison Transmission Division; Covisint, Inc.; Daewoo Motor Company Ltd.; General Motors Acceptance Corporation; GMAC Insurance; GM Locomotive Group; Hughes Electronic Company; Isuzu Motors Ltd.; New United Motor Manufacturing, Inc.; OnStar Corporation; Saab Automobile AB; Saturn Corporation; Vauxhall Motors Ltd.
  • Major Competitors: DaimlerChrysler AG; Ford Motor Company; Toyota Motor Corporation; Honda
  • Notable Products: Buick: Regal, Century, LeSabre; Cadillac: Seville, El Dorado, Escalade; Chevrolet: Blazer, Camaro, Corvette, Prizm, Silverado, Cavalier, Impala, Suburban, Tahoe; GMC: Sierra

The General Motors board of directors elected Pierre S. du Pont (1870-1954) its chairman in 1915, a position he retained for nearly fourteen years. Durant, however, remained on the board and embarked on a GM stock-buying spree. By 1916, he had purchased 54.5 percent of GM stock and with a controlling interest, took over as president of GM, ousting Charles W. Nash (1864-1948) who had served in that role since 1912. Power shifted again in 1918, when General Motors took over Chevrolet.

Timeline

1897:
Olds Motor Vehicle Company is started by Ransom E. Olds.
1903:
David B. Buick founds the Buick Motor Company.
1908:
General Motors Corporation is formed, incorporating Buick and Olds.
1909:
CM purchases Cadillac Automobile Company.
1918:
GM buys the Chevrolet Motor Company.
1923:
GM opens its first European assembly plant in Copenhagen, Denmark.
1932:
Pontiac division is established.
1936:
Workers at two Michigan assembly plants stage a sit-down strike.
1937:
Workers' strike is settled when GM recognizes the United Auto Workers (UAW) union.
1942:
All GM plants convert to producing military supplies until the end of World War II.
1953:
GM introduces the Chevy Corvette.
1956:
Chevrolet unveils the Corvair.
1965:
Ralph Nader publishes the book, Unsafe at Any Speed, critical of GM and its Corvair.
1969:
GM-made guidance and navigation systems are used in Apollo 11 Moon landing; Corvair is discontinued.
1985:
GM acquires Hughes Aircraft Company.
1986:
GM announces plans to close eleven U.S. plants.
1990:
The Saturn line of cars is introduced.
1991:
GM chairman Robert Stempel resigns amid financial crisis.
1999:
Assembly plant is opened in Shanghai, China.
2000:
GM announces it will discontinue its Oldsmobile line.
2002:
Company announces that eighty-seven new models will be introduced over the next four years.

Empire Thrives

General Motors expanded into Canada in 1918, merging the McLaughlin Motor Car Company Ltd. and Chevrolet Motor Company of Canada Ltd. into General Motors of Canada Ltd. It also made an attempt to get into aircraft manufacturing when it purchased the Dayton Wright Company in 1919. Ten years later, it sold the company to Fokker Aircraft Corporation. A more successful acquisition that year was of the Guardian Frigerator Company, which was renamed Frigidaire Corporation. It soon became the best-selling refrigerator in the country.

The 1920s and 1930s saw General Motors continue to expand by purchasing smaller companies and moving into foreign markets. It opened its first European assembly plant in Copenhagen, Denmark, in 1923. The first GM vehicle assembled outside the United States and Canada, a Chevrolet utility truck, rolled off the assembly line on January 7, 1924. Manufacturing plants were also opened in Buenos Aires, Argentina, in 1925, followed by plants in Australia and New Zealand in 1926. GM's acquisitions included Vauxhall Motors Ltd. of England, Fisher Body Company of Detroit, and Adam Opel AG of Germany.

In 1923, Alfred P. Sloan Jr. (1875-1966) became president of the ever-expanding GM. His priority was to make sure all the various divisions of the company were functioning efficiently. As part of this vision, Sloan structured General Motors so that its many parts worked together to produce maximum profits. At the same time, he wanted each of the divisions to retain its own unique identity. This was no easy task since GM produced a wide range of products, including Cadillac limousines, earthmoving equipment, buses, refrigerators, spark plugs, and roller bearings. For much of Sloan's long tenure, which lasted from 1923 until 1956, General Motors was the largest and most profitable manufacturing company in the world.

In 1936, amid the harsh economic climate of the Great Depression, employees at two GM plants in Flint staged sit-down strikes. Like many workers across the United States, they demanded higher wages, more benefits, and the right to be represented by a union. The strikes ended after about six weeks when GM recognized the United Auto Workers (UAW) union. Through the union, autoworkers could negotiate with their employees for improved working conditions, wages, work hours, and benefits.

On January 11, 1940, General Motors produced its twenty-five millionth vehicle but entered the decade under the dark cloud of World War II (1939-45). GM Japan ceased operation in 1941, the year the Japanese bombed Pearl Harbor. In 1942, GM converted all production at its assembly plants to the war effort, churning out $12.3 billion worth of goods, including airplanes, airplane engines and parts, trucks, tanks, guns, and ammunition shells. Vehicles included the 6x6 Army truck that carried troops and supplies and the DUKW, known as "the duck," which could carry fifty troops on land or water.

GM Tangles with Federal Government

With the war over, GM again turned to producing cars, bringing out several dozen new models in the 1950s and 1960s. An American legend was born in 1953 when GM introduced the Chevrolet Corvette, the first mass-produced sports car and the first with a plastic body. The company introduced new, smaller models during the 1960s, including the Buick Special, Oldsmobile F-85, Chevy II, and Pontiac Tempest.

The decade also found GM embroiled in several battles with the federal government. In 1961, the U.S. Department of Justice accused the company of using unfair practices to try and control all aspects of the diesel electric locomotive market. A federal judge dismissed the charge three years later. In 1962, the Justice Department filed charges against GM and three Chevrolet dealer trade associations. It accused GM of restricting Chevrolet sales in Southern California by refusing to sell to " discount houses," which are independent car dealers that buy vehicles in bulk and resell them to the public, usually at lower prices. A federal court ruled against GM in 1966, ordering it to stop restricting sales of Chevrolets to discount houses.

The company's image was further tarnished in 1965 with the release of Unsafe at Any Speed, a landmark book written by consumer advocate Ralph Nader (1934-). In his book, Nader was highly critical of GM and its Corvair model, which resulted in a publicized ongoing disagreement between the advocate and the automaker. In 1966, Nader accused GM of harassment, and the U.S. Senate committee investigated the situation. Company president James M. Roche acknowledged the harassment and apologized to Nader on behalf of GM. In 1969, GM's Chevrolet division announced it was discontinuing Corvair production.

Beetle Invasion Spurs Ill-fated Corvair

In the mid-1950s, the Volkswagen Beetle was a big hit in the United States and GM's Chevrolet division decided it needed a car to compete with it. Chevy designers were told to come up with a car that was small, got good gas mileage, was easy to manufacture, and had a European look. The result was the Corvair, which debuted in 1960, and was available as either a two-door coupe or a four-door sedan. In appearance, it was not at all like the Beetle. It had a boxy shape compared to the VW's half dome look. It also had more interior room. It did, however, incorporate many of the basic components of the Beetle, including an engine located in the rear of the vehicle.

By 1965, more than 1.2 million Corvairs had been sold when the car ran head-on into a wall of bad publicity. That year, the book Unsafe at Any Speed by consumer advocate Ralph Nader (1934-), was published. It claimed the Corvair would sometimes malfunction, causing the car to go out of control and roll over. GM denied there was a safety problem and in 1972, the National Highway Safety Administration investigated the situation and found that the Corvair was safe. The ruling, however, came too late. In 1965, Chevrolet produced 237,000 Corvairs; that number dropped to 103,000 in 1966. In 1969, the last year the car was built, only 6,000 Corvairs came down the assembly line. Over one million snazzy Corvairs were produced between 1960 and 1969; an estimated 300,000 Corvairs were still in use in 2002.

The 1970s brought a whole new set of problems. With the start of the environmental movement, public pressure was placed on the U.S. government to reduce air pollution. As a result, federal laws were created that required Detroit to build "cleaner" cars. In 1971, GM introduced engines that ran on unleaded or low-leaded gasoline, which burned cleaner than fully leaded gasoline. Prior to that time, all cars ran on leaded gas. In order to comply with the Federal Clean Air Act, GM began installing catalytic converters on all its cars sold in the United States and Canada, beginning with 1975 models. Catalytic converters help clean harmful exhaust fumes emitted by cars. It also began to build smaller cars that used fuel more efficiently, a trend that continued through the 1980s. That trend was reversed in the 1990s with the rise in popularity of bigger vehicles, particularly minivans and sport utility vehicles (SUVs).

Company Heads for Financial Collapse

By the start of 1980, the United States economy was in trouble. As a result, auto sales plummeted and carmakers suffered. GM posted an annual financial loss that year, its first since 1920. The loss came at a time when the company was spending billions of dollars to modernize aging assembly plants in the United States and abroad. Its finances were also weakened by a string of acquisitions made during the decade, including Hughes Aircraft Company, a defense electronics firm, and Electronic Data Systems, a data processing and telecommunications company. These factors led GM to close eleven plants worldwide, including several much publicized closings in Flint, Michigan, the city where the company began. All told, thirty thousand jobs were eliminated. The cost-cutting moves seemed to have paid off when in 1988, GM reported a $4.9 billion profit on record sales of $110.2 billion.

The sweeping and painful cuts were put in place by GM head Roger B. Smith (1925-), the longest-running CEO since Sloan. Smith was a colorful but controversial person who added an interesting chapter to the history of GM. Named CEO in 1981, he became known for his extraordinary vision and business savvy. He was also considered to be a blunt, quick-tempered loner. Smith expanded GM's overseas operations and improved the quality of GM cars. He served as CEO until he retired in 1990.

The 1990s, like the 1980s, was a decade of turmoil for General Motors. As revenues once again dropped, GM chairman Robert Stempel (1933-) announced he would close twenty-one North American production plants and eliminate seventy-four thousand jobs over four years as a cost-cutting measure. But the cuts failed to impress GM's board of directors, which demanded and received Stempel's resignation, giving the job of CEO, and the daunting task of rebuilding the company, to John F. "Jack" Smith Jr. The bright spot of the decade for GM was the introduction of the Saturn line of autos, built in Tennessee. The Saturn was designed to compete against small import cars, which it did with great success. Part of the success was due to Saturn dealerships not employing high-pressure sales techniques and its excellent customer service.

On the Upswing

After twenty years of declining market share, General Motors started the twenty-first century with a shakeup of its top management. Its board of directors named G. Richard Wagoner Jr. as its CEO in 2000, replacing Smith, who remained as chairman of the board. Some industry analysts suggested GM would have been better off hiring a more dynamic leader from outside the company. According to Irene Gashurov writing for Fortune magazine in 2000, "Despite constant reorganization over the past decade, [GM] remains complex, bureaucratic, and highly politicized. The question is not so much, Can Rick Wagoner run GM? He can. The questions are these: Can Rick Wagoner make GM hum? Can he turn it once more into the heartbeat of America? Can any insider?"

Roger & Me

The closing of GM plants in Flint, Michigan, led to the 1989 controversial movie Roger & Me by Michael Moore (1964-), a novice filmmaker and son of a Flint GM worker. The film features Moore relentlessly pursuing Roger B. Smith (1925-), CEO and chairman of General Motors, to try and get him to visit Flint, which was devastated by the shutdown of the GM factories. Funny in parts and deeply moving in others, the movie tells the story of a working-class city in the Midwest that depended on the auto industry.

Two years later, those questions were at least initially answered. By 2001, after several decades of decline, GM controlled 30.9 percent of the U.S. auto market, up slightly over 2000. That same year, the company reported a profit of $1.5 billion on global sales of $177.3 billion. Some of the biggest news came in 2002 when, for the first time in eleven years, Chevrolet vehicles outsold Ford. Some industry analysts credited the upswing to improved vehicle quality, increased worker productivity, and getting rid of unprofitable vehicles. GM also unveiled plans for introducing more models than ever before, with eighty-seven new car models to roll out between 2002 and 2006. The success of GM will likely hinge on how popular these new models become.

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General Motors Corporation

General Motors Corporation

3044 West Grand Blvd.
Detroit, Michigan 48202
U.S.A.
(313) 556-5000

Public Company
Incorporated:
October 13, 1916
Employees: 748,000
Sales: $102.814 billion
Market Value: $24.952 billion
Stock Index: New York

The beginning of General Motors can be traced back to 1892 when R.E. Olds collected all his savings in order to convert his fathers naval and industrial engine factory into the Olds Motor Vehicle Company, where the new horseless carriages known as automobiles were to be built. For a number of years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could develop 5 hp and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which a relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. Two years later, at the turn of the century, Olds had sold over 1,400 cars.

That same year, an engineer named David Buick founded a factory under his own name in Detroit; and a third factory was also built in Detroit, the Cadillac Automobile Company. This company was founded by Henry Leland, who was already building car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was replaced by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Olds-mobile also reached their projected target of manufacturing 4,000 cars in one year.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The son of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred as many concerns manufactured the same product. General Motors was thus formed, bringing together Oldsmobile and Buick, and joined in 1909 by Cadillac and Oakland (renamed Pontiac). Positive financial results were immediately seen from the union, although the establishment of the company drew little attention.

Other early members of the General Motors family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. General Motors other U.S. automotive division, Chevrolet, became part of the Corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60% interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or testing laboratory was also established to serve as an additional protection against costly factory mistakes. General Motors system of administration, research, and development is one of the largest and most complex in private industry.

About the same time that General Motors was establishing itself in Detroit, an engineering breakthrough was takin place in Dayton, Ohiothe electric self-starter, designed by Charles F. Kettering. General Motors introduced Ketterings invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Ketterings Dayton Engineering Laboratories were merged into General Motors during 1920 and the Laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of General Motors, in charge of its research and engineering programs.

During World War I General Motors turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the American automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90% of General Motors truck production was for the war effort. Cadillac supplied Army staff cars along with V-8 engines for artillery tractors and trench mortar shells, and Buick built Liberty airplane motors, tanks, trucks, ambulances and automotive parts.

It was at this time that Alfred P. Sloan, Jr., who went on to guide General Motors as president and chairman until 1956, first became associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million.

When Hyatt became part of General Motors, Sloan joined the corporate management.

General Motors suffered greatly under the effects of the Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect Sloan was credited with creating not only an organization which saved General Motors, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operation responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 General Motors accounted for 44% of the total U.S. automotive sales, compared with 12% in 1921. In preparation for Americas entry into the Second World War, General Motors retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that General Motors had developed were applied with great effectiveness. From 1940 to 1945 General Motors produced defense material valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. General Motors contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced General Motors to concentrate their research in this field; by 1950, all the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

During the Korean war, part of the companys production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during the Second World War). The reallocation reached 19% and then leveled off at about 5% from 1956 onwards. Between 1951 and 1955 the five divisions which today form General MotorsBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from 6 to the more reliable 12 volts. Power assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air-conditioning systems. Also during this period General Motors completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. However, Americans were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford, Chrysler and General Motors had lost some 15% in sales while imports were virtually doubling their market penetration. The longer Detroits automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than 8% of U.S. car sales. Although General Motors promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the companys market share slipped to just 42% of 1959s new car sales.

The 1960s were difficult years in Detroit. Riots in the ghettos surrounding General Motors facilities forced management to recognize the urban poverty that had for so long been in their midst and began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. General Motors prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13% return on investment, and General Motors return increased from 16.5% to 25.8%.

Like the rest of the industry, General Motors had largely ignored the importance of air pollution control, but new, costly federal regulations were mandated. However, by the early 1970s, the high cost of developing devices to control pollution was overshadowed by the impact of the oil embargo. General Motors luxury, gas guzzling car sales were down by 35% in 1974, but the companys compacts and subcompacts rose steadily to attain a 40% market share. Ford, Chrysler and General Motors had been caught unaware by a vast shift in consumer demand, and General Motors suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 in order to meet local, state, and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Under the leadership of its current president, F. James McDonald, and current chairman, Roger Smith, General Motors has reported earnings losses since 1985. Managements strategy is to pursue strategic initiatives that reflect the kind of foresight that was missing in previous years. McDonald and Smith have attempted to place these losses in perspective by arguing that they are necessary if General Motors is to develop a strong and secure position on the worldwide market. Since the start of the 1980s, General Motors has been in the process of redesigning most of its cars and modernizing the plants that produce them. Between 1980 and 1986 this program cost over $60 billion. In addition, the company recently acquired two major corporations, Hughes Aircraft and Electronic Data Systems. The purpose of these expensive takeovers is to provide General Motors with the best technology in advanced computer services, micro electronics, and systems engineering. Despite these important moves, however, many industry analysts believe that the future of General Motors will depend even more on decisions that the U.S. government makes and has made with regard to the tax code, and trade and budget deficits.

Principal Subsidiaries

General Motors Electronic Data Systems Corp.; General Motors Commercial Corp.; General Motors Development Corp.; General Motors Export Corp.; General Motors Interamerica Corp.; General Motors Overseas Corp.; General Motors OI Leasing Corp.; General Motors Hughes Electronics Corp.; Delco Electronics Corp.; Hughes Aircraft Corp.; General Motors Trading Corp.; Saturn Corp. The company also has subsidiaries in the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, England, Finland, France, Greece, Ireland, Italy, Japan, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Portugal, South Africa, Sweden, Switzerland, Uruguay, Venezuela, West Germany, and Zaire.

Further Reading

My Years with General Motors by Alfred P. Sloan, Jr., New York, Doubleday, 1964; Paradise Lost: The Decline of the Auto-Industrial Age by Emma Rothschild, New York, Random House, 1973; R.E. Olds, Auto Industry Pioneer by George S. May, Grand Rapids, Michigan, Eerdmans, 1977; The Dream Maker: William C. Durant, Founder of General Motors by Bernard A. Weis-berger, Boston, Little Brown, 1979; Chrome Colossus: General Motors and Its Time by Ed Cray, New York, McGraw Hill, 1980; On a Clear Day You Can See General Motors by John Z. De Lorean, London, Sidgwick and Jackson, 1980; The Corporate Warriors: Six Classic Cases in American Business by Douglas K. Ramsey, Boston, Houghton Mifflin, 1987.

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General Motors Corporation

GENERAL MOTORS CORPORATION


Founded in 1908, General Motors Corporation (GM) is the largest industrial company in the United States. Known primarily as a manufacturer of American cars and trucksincluding such standard nameplates as Buick, Chevrolet, Oldsmobile, Pontiac, GMC, and SaturnGM also takes part in the manufacturing and marketing of Isuzu, Saab, and other foreign and domestic vehicles. In addition to its vast interests in the automobile industry, GM produces locomotive components, products and services for telecommunications and space, consumer electronics, and financial and insurance services.

The history of GM begins in 1892, when Ransom E. Olds raised enough capital to start a business building horseless carriages, working in a converted factory that belonged to his father. Within two years Olds' facility had become the first American factory in Detroit, Michigan, involved exclusively in the manufacturing of automobiles. It was not until 1901, however, that this business, the Olds Motor Vehicle Company, introduced its first model: the curved-dash Oldsmobile buggy. Meanwhile, other car manufacturers were cropping up in Detroit around the turn of the century; David Buick formed the Buick Motor Company in 1897, while Henry Leland founded the Cadillac Automobile Company in 1901.

A new market, the automobile industry was financially unstable, and before long these Detroit companies had no choice but to consolidate to stay afloat. Henry Ford (18631947) was winning American consumers' hearts with his Model T, and competition was beginning to intensify. The man responsible for bringing together the individual companies was William Durant (18611947), the son of a Michigan governor and a director at Buick. In 1908 Durant combined Oldsmobile and Buick, calling the new business General Motors; he introduced Cadillac and Oakland (later known as Pontiac) to the consortium in the following year. The mergers attracted little media attention at the time. Quick to turn a profit nonetheless, GM was off to a strong start.

Durant established a corporate base in Flint, Michigan, where he aimed to produce a variety of models based on those developed by the original companies. Within a few years, he put together a core staff of specialists to oversee and coordinate production throughout the company's various units and factories. Charles Kettering's 1911 breakthrough, an electric self-starter that would replace the arduous hand-crank mechanism, brought technological innovation to GM, which would later install the device in its Cadillacs. GM promptly invited Kettering to join its ranks, and he eventually took charge of the company's research and engineering programs. By 1920 GM had acquired more than 30 automotive businesses, including Chevrolet, which it procured in 1918.

When the United States entered World War I (19141918), GM stepped up to wartime levels of production. During the last two years of the war, 90 percent of GM's trucks went to the armed forces. Cadillac manufactured war materials like the V-8 engine and the mortar shell, while Buick built tanks, ambulances, and airplane motors. With the Ford Motor Company swelling to mammoth proportions, GM emerged from the 1910s as a potential competitor.

The Great Depression (19291939) hit the country in the late 1920s, threatening to ravage the automotive industry. GM responded to the crisis by recruiting the corporate management talents of Alfred Sloan Jr., who at his previous position at Hyatt Roller Bearing Company had transformed a $50,000 investment into a $3.5 million enterprise. Sloan helped to steer GM through the country's crisis, developing a strong management structure that other companies sought to replicate. Under the new system, GM's market share rose from 12 percent in 1921 to 44 percent in 1941.

With the United States entering World War II (19391945), GM again increased production. War materials from GM factories included 1,300 airplanes and one-fourth of all U.S. aircraft engines. In total, the company's contribution to the war effort was worth approximately $12 billion. After the war the automotive industry benefited from the rejuvenated national economy. But while many American families looked to buy a second car, market trends indicated a growing consumer preference for smaller European models. GM responded by developing more compact cars, but these did not gain the favor of American buyers. In 1959 the company's market share remained high, however, at 42 percent.

The 1960s brought turbulence in Detroit: Riots and other expressions of civil unrest compelled GM to recognize urban poverty and to revise its hiring practices to include minority workers. The expansionist policies of Presidents John F. Kennedy (19611963) and Lyndon B. Johnson (19631969) fostered such efforts toward diversity in businesses nationwide. Finding that change helped the company to grow and prosper, and GM developed new interests in home appliances, electronics, locomotives, insurance, banking, and financing at this time. But the 1970s brought costly changes to the company as it rose to meet national demands to control pollution and conserve resources. By 1977 GM had spent $4.5 billion meeting local, state, and federal requirements regarding pollution control.

Consumer demand for fuel-efficient cars led GM to spend billions more redesigning many of its once-popular models. Two significant purchases in the 1980sthe acquisitions of Hughes Aircraft and Electronic Data Systemsfurther depleted the company's financial resources. As a result of this period of heavy spending, GM reported a decrease in earnings between 1985 and 1992. And from 1990 to 1992 GM reported losses totaling $30 million.

The time was ripe for change at GM, and a new CEO, Jack Smith Jr., ushered in reformed policies. In 1993 Smith moved toward downsizing the company, paring down operations and slimming the corporate staff. Unveiling a plan to close 24 plants by 1996, Smith promised $3.9 billion in benefits to those made jobless and raised the salaries of blue-collar workers. Smith negotiated with the United Auto Workers as he made these changes, but the group remained disgruntled. A 54-day strike ensued in June 1998.

Meanwhile, GM rallied to retain its market share. When vans, trucks, and sports-utility vehicles came into vogue in the 1990s, GM followed the trend. Japanese manufacturers went after the same market, but a weakened dollar made imported cars more expensive than their domestic equivalents. GM benefited from the financial trend, pulling in hefty earnings from 1993 to 1995. Introducing the first electric car built for consumers in 1996, GM went on to announce more plans for change within the corporation and for innovation in the automotive field. As the slimmed-down company entered a new century, it showed no signs of giving up its role as an industry leader.

See also: Automobile Industry, Automobile (Origin of), William C. Durant, Alfred Sloan

FURTHER READING

Hamper, Ben. Rivethead: Tales from the Assembly Line. New York: Warner Books, 1992.

Howes, Daniel. "GM Now Running Leaner, Faster." Detroit News, November 2, 1997.

Keller, Maryann. Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors. New York: Harper Collins, 1990.

Sloan, Alfred, Jr. My Years with General Motors. New York: Doubleday, 1964.

Weisberger, Bernard A. The Dream Maker: William C. Durant, Founder of General Motors. Boston: Little, Brown, 1979.

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General Motors

General Motors

BIBLIOGRAPHY

In 2006 Detroit-headquartered auto giant General Motors (GM) was the worlds largest automaker and ranked number three on the Fortune 500 list of Americas largest corporations. The company has been a major player in U.S. labor history, and its vast worldwide expansion has had, and continues to have, many social consequences.

In 1897 Ransom E. Olds (1864-1950) formed the Olds Motor Vehicle Company and created several different automobile models powered by electricity and gasoline. After a fire in its factory, the company was forced to change its marketing and development strategy, which had previously focused on the wealthy, and instead moved to create a mass market for its vehicles, making them competitively priced with horses and buggies. This strategy was effective, and by 1904 the company had sold more than 12,500 vehicles.

Meanwhile, the owner of Buick was developing a complex network of suppliers to lower its costs, and incorporated with its holdings as General Motors. From 1908 to 1910 Oldsmobile, Cadillac, and several other smaller companies joined forces with the new company to create a larger, more powerful automaker. The incorporation included many more suppliers and an expansion to trucks and airplanes, and in the first half of the twentieth century, GM grew rapidly. The company also benefited from many defense contracts during World War I (1914-1918) and World War II (1939-1945).

GMs massive growth led to a need for large numbers of workers to assemble parts and automobiles. To improve their working conditions and increase their pay, workers throughout GM began to unionize in 1935 under the AFL-CIO. Later, a split in this organization led to the development of what would become one of the largest and most powerful unions in U.S. history: the United Auto Workers (UAW). The UAW was one of the first unions in the United States to include black workers.

Shortly after its formation, the UAW demanded contracts for GM autoworkers, but was denied negotiations with the automaker. On December 29, 1936, GM was informed that its largest stamping plant, in Flint, Michigan, was going to strike, and the company quickly made plans to move the machinery from the facility. In order to keep GM from removing the machinery, the workers staged a sit-down strike. Police attacked the strikers with tear gas, but workers remained at the plant for forty-four days until GM signed a document recognizing the UAW as the official representative of its workers for bargaining purposes. This was a significant event in U.S. labor history, as a large corporation conceded to the demands of a union.

The unionization of autoworkers at GM helped the American middle class grow rapidly in the 1950s. Despite their blue-collar jobs, workers had salaries and benefits that allowed them the luxuries of middle-class life. Many scholars believe this change in status allowed embourgeoisement to take place; that is, working-class laborers gained middle-class values and lifestyles because of their increased wages and class position, and their support for radical political movements declined (Abercrombie et al. 2000).

GM has been criticized for corporate practices that are ecologically unsound or that violate human rights. Throughout the 1990s, there was much concern about GMs use of factories in the developing world (especially Mexico) for cheap and less-restricted labor. According to a 1998 Human Rights Watch report, the directors of GMrun maquiladoras (foreign-owned plants that are operated by multinational corporations) in Mexico were repeatedly accused by their workers of unfair work termination and sex discrimination, especially pregnancy-related discrimination. Female employees complained that they were forced to undergo pregnancy tests before gaining employment, and some said they were even made to show their sanitary napkins to prove that they were not pregnant to retain employment. Other concerns have been raised over GMs relationship with the environment. For example, its Hummer brand has been repeatedly cited as one of the worse violators in the consumer truck market because of its high emissions and a fuel economy of less than ten miles per gallon. A 2006 documentary, Who Killed the Electric Car, attacks GM for the systematic dismantling of its electric-car program and for what the filmmakers imply was a conspiracy between GM and the oil industry.

SEE ALSO Automobile Industry; Corporations

BIBLIOGRAPHY

Abercrombie, Nicholas, Stephen Hill, and Bryan S. Turner, eds. 2000. The Penguin Dictionary of Sociology. 4th ed. New York: Penguin.

Bailey, L. Scott, ed. 1983. General Motors: The First 75 Years of Transportation Products. Princeton, NJ: Automobile Quarterly.

Jefferson, LaShawn, and Phoebe McKinney. 1998. A Job or Your Rights: Continued Sex Discrimination in Mexicos Maquiladora Sector. Human Rights Watch report 10 (1) December. http://www.hrw.org/reports98/women2/.

Paine, Chris, dir. 2006. Who Killed the Electric Car. Plinyminor and Electric Entertainment.

Remembering the Flint Sit-Down Strike, 19361937. HistoricalVoices.org presented by Michigan State University. http://www.historicalvoices.org/flint/.

Weisman, Jonathan. 2004. No Guzzle, No Glory: History Says Gas Spike Wont Smother SUV Love. The Washington Post, June 13: F01.

Elizabeth Alexander

David G. Embrick

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General Motors

GENERAL MOTORS

GENERAL MOTORS is a worldwide corporation that produces everything from microchips to locomotives. William Crapo Durant of Flint, Michigan and a small group of investors formed the General Motors Company (GM)16 September 1908 in Trenton, New Jersey. Durant, who already owned Buick Motor Company, bought small car and parts manufacturers and incorporated them into GM. Among Durant's first acquisitions were Oldsmobile, Cadillac, and Oakland (Pontiac). By 1920 GM had purchased more than 30 companies. After World War I GM experienced a decline so severe Durant resigned his post as president. In 1923 the Board of Directors elected Alfred P. Sloan, Jr. president (10 May 1923–3 May 1937)and Chairman of the Executive Committee (3 May 1937–2 April 1956). Sloan, whose Hyatt Roller Bearing Company joined GM in 1919, utilized creative management techniques that made GM the largest car and truck manufacturer in the world. Under Sloan's leadership, GM developed a number of firsts including independent front wheel suspension and the automatic transmission. While GM participated in all U. S. war efforts, its most dramatic contribution was during World War II. From 1942 through the end of the war, GM's plants stopped all non-military production. Producing ball bearings to bombers, GM was responsible for 13,000 planes and a fourth of the engines produced for all planes. In all, GM produced 12. 3 billion dollars worth of military materials. After the war GM experienced its share of the postwar boom, and by the sixties and seventies it was taking advantage of new technologies to make cars more efficient and safe even before government regulations went into effect. During the oil crisis of the 1970s GM experienced a decline in sales but responded by designing lighter and more economical autos. During the 1980s and 90s, GM continued to expand and opened plants in Germany, Brazil, Thailand, and Spain. In order to compete with an expanding import market GM developed Saturn located in Spring Hill, Tennessee, in 1990 and in 1996 it developed its own version of the electric car. GM has also been involved in various humanitarian projects such as a housing project with Habitat for Humanity for its employees in Mexico and the "Care and Share" program to collect food.

BIBLIOGRAPHY

Cray, Ed. Chrome Colossus: General Motors and its Times. New York: McGraw-Hill Book Co., 1980.

Madsen, Axel. Deal Maker: How William C. Durant Made General Motors. New York: John Wiley & Sons, 1999.

Smith, Roger B. Building on 75 Years of Excellence: The General Motors Story. New York: The Newcomen Society of the United States, 1984.

Lisa A.Ennis

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