(), also known as '''GM''', is an
American Automobile Maker with worldwide operations and brands including
Buick ,
Cadillac ,
Chevrolet ,
GMC ,
Holden ,
Hummer ,
Opel ,
Pontiac ,
Saturn ,
Saab and
Vauxhall .
Chevrolet and GMC divisions produce
Truck s, as well as passenger vehicles. Other brands include
AC Delco and
Allison Transmission . GM also has a 3% stake in
Suzuki in
Japan and a joint venture with
AvtoVAZ in
Russia . In December
2003 , it acquired
Delta in
South Africa , in which it had taken a 45 % stake in
1997 , and which is now a fully-owned subsidiary, General Motors South Africa. General Motors is also a majority shareholder (50.9%) in
GM Daewoo .
GM's headquarters are in the
Renaissance Center in
Detroit, Michigan . The company is the world's largest vehicle
Manufacturer and employs over 340,000 people. In
2001 , GM sold 8.5 million vehicles through all its branches; in
2002 , GM sold 15 % of all cars and trucks in the world. They also owned
Electronic Data Systems from
1984 to
1996 and, prior to selling it to
News Corporation ,
DirecTV . GM owned
Frigidaire from
1918 to
1979 .
General Motors (GM) was founded in
1908 in Flint, Michigan as a holding company for Buick, then controlled by
William C. Durant , and acquired
Oldsmobile later that year. The next year, Durant brought in
Cadillac ,
Elmore , and
Oakland . In 1909, General Motors acquired the Rapid Motor Vehicle Company of Pontiac, Michigan, the predecessor of GMC Truck. A Rapid became the first truck to conquer
Pikes Peak in 1909.
GM surpassed
Ford Motor Company in the 1920s thanks to the brilliant leadership of
Alfred Sloan . "The manufacture of correct assessments, not physical products, is what most gratified Alfred Sloan," says Farber (2002). While Ford kept inventing new ways to cut manufacturing costs, Sloan was inventing new ways of managing a complex worldwide organization, while paying special attention to consumer demands. Car buyers no longer wanted the cheapest and most basic model—they wanted style, power and prestige, which GM offered them. Thanks to consumer financing, easy monthly payments allowed far more people to buy GM cars—while Ford was moralistically opposed to credit. During the
1920s and
1930s , General Motors bought out the
Bus company
Yellow Coach , helped create
Greyhound Bus Lines , replaced intercity train transport with buses, and established subsidiary companies to buy out
Streetcar companies and replace the rail-based services with buses. GM formed
United Cities Motor Transit in 1932 (''see
General Motors Streetcar Conspiracy for additional details'').
General Motors bought the
Internal Combustion Engine d
Railcar builder
Electro-Motive Corporation and its engine supplier
Winton Engine in
1930 , renaming both as the
General Motors Electro-Motive Division . Over the next twenty years, diesel-powered locomotives and trains — the majority built by GM — largely replaced other forms of traction on American railroads. (During
World War II , these engines were also important in American
Submarines and
Destroyer Escorts .) Electro-Motive was sold in early 2005.
At one point GM was the largest corporation ever in the United States, in terms of its revenues as a percent of GDP. In
1953 Charles Erwin Wilson , then GM president, was named by
Eisenhower as
Secretary Of Defense . When he was asked during the hearings before the
Senate Armed Services Committee if as secretary of defense he could make a decision adverse to the interests of General Motors, Wilson answered affirmatively but added that he could not conceive of such a situation "because for years I thought what was good for the country was good for General Motors and vice versa". Later this statement was often garbled when quoted, suggesting that Wilson had said simply, "What's good for General Motors is good for the country." At the time, GM was the one of the largest employers in the world – only Soviet state industries employed more people.
On
December 31 ,
1955 , General Motors became the first American corporation to make over one
Billion Dollars in a year.
After GM's massive lay-offs hit
Flint, Michigan a
Strike began at the General Motors parts factory in Flint on
June 5 ,
1998 , which quickly spread to five other assembly plants and lasted seven weeks.
GM, to date, has been the world's leading auto manufacturer for 74 years consecutively. On
December 21 ,
2005 Toyota Motor Corp. announced that it would produce 9.06 million vehicles for 2006. Analysts estimate that GM will only produce around 8.825 million cars for 2006, giving up the title of the world's largest auto maker. However, CEO Rick Wagoner is confident that GM will remain #1. Regardless, GM's status as both an automotive and corporate juggernaut is in jeopardy. Its financial difficulties have dragged stock value down (see below); as of March 23, 2006, GM's
Market Capitalization is roughly $12.5 billion.
Hughes Electronics was formed in
1985 when
Hughes Aircraft was sold by the
Howard Hughes Medical Institute to General Motors for $5 billion. General Motors merged Hughes Aircraft with its
Delco Electronics unit to form GM Hughes Electronics (GMHE). The group then consisted of:
- Hughes Aircraft
- Delco Electronics
- Hughes Space and Communications
- Hughes Network Systems
- Hughes Training
In August
1992 GM Hughes Electronics purchased
General Dynamics ' Missile Systems business. In
1994 Hughes Electronics introduced
DirecTV , the world's first high-powered
Direct Broadcast Satellite service. In
1995 Hughes Electronic's
Hughes Space And Communications division became the largest supplier of commercial satellites. Also in 1995 the group purchased
Magnavox Electronic Systems from the
Carlyle Group . In
1996 Hughes Electronics and
PanAmSat agree to merge their fixed satellite services into a new publicly held company, also called PanAmSat with GM Hughes Electronics as majority shareholder.
In
1997 GM transferred Delco Electronics to its
Delphi Automotive Systems business. Late in the year the defense operations of Hughes Electronics (Hughes Aircraft and missile business) were merged with Raytheon.
Hughes Space and Communications remained independent until
2000 , when it was purchased by
Boeing and became
Boeing Satellite Systems .
In 2000, the remaining parts of Hughes Electronics: DirecTV, DirecTV Latin America, PanAmSat and Hughes Network Systems, were purchased by
NewsCorp and renamed The DirecTV Group. NewsCorp sold PanAmSat to
Kohlberg Kravis Roberts & Co. (KKR) in August 2004.
Current members of the ,
Erskine Bowles ,
John Bryan ,
Armando Codina ,
George Fisher ,
Karen Katen ,
Kent Kresa ,
Ellen Kullman ,
Philip Laskawy ,
Jerome York ,
Eckhard Pfeiffer , and
Rick Wagoner (chairman). York was elected to the board on
February 6 ,
2006 to represent
Kirk Kerkorian , as
E. Stanley O'Neal stepped down.
Rick Wagoner is also the
Chief Executive Officer of the company (since
June 1 ,
2000 ), succeeding
John F. Smith, Jr.
At the same time one should note that even small reductions in emissions which General Motors is achieving for conventional engines plays a role in making some progress on those health goals.
General Motors was named one of the 100 Best Companies for Working Mothers in
2004 by ''Working Mothers'' magazine.
Due to its highly compensated workforce GM has the highest health care and labor costs in the industry, and some analysts have criticized the company for this.
In March
2005 , the
Government Of Canada "gave
C$ 200 million to General Motors for its Ontario plants, and last fall it awarded C$100 million to
Ford Motor Co. to expand their Canadian auto production, provide jobs and contribute to the economy," according to
Jim Harris . With additional subsidies promised to non-North American auto companies like Toyota, Premier Dalton McGuinty said the money the province and Ottawa are pledging for the project is well-spent. His government has committed
C$ 400 million, including the latest Toyota package of
C$ 125 million, to the province's automobile sector, which helped finance $5 billion worth of industry projects.
GM corporate management has since 1955 allowed the gradual blurring of the distinctions between its own divisions. These divisions were once each targeted to specific market segments and, despite some shared components, each vehicle distinguished itself from comparable GM stablemates with unique styling and (to some extent) custom technology. The shared components and common corporate management created substantial
Economies Of Scale while the distinctions between the divisions created an orderly upgrade path, with an entry-level buyer starting out with a practical and economical Chevrolet and, (assuming progressive prosperity of the buyer), moving through offerings of the several divisions until the purchase of a Cadillac. The divisions were not
Competing with each other so much but rather they were passing along the same customer, who would thus always be buying a GM product, with the profits flowing to this single corporation.
Before 1955:
- GMC Truck - produced strictly utilitarian commercial vehicles over a wide range of capacities
- Chevrolet - an entry-level brand offering high utility at low price, with some light trucks and panel vans
- Pontiac - a brand that sold solid, extremely quiet vehicles (these used a side valve straight eight), attractive to a modest and reserved lower middle class
- Oldsmobile - a leading technical innovator with the first production Automatic Transmission , this eventually became GM's first "performance" division, introducing the industry's first short-stroke, high-compression overhead-valve V8 (the "Oldsmobile Rocket") in 1949
- Buick - a more expensive and luxurious brand for the upper middle class (often called the "doctor's car") with four models - the small body/engine ''Special'' and ''Super'' and the larger ''Century'' and ''Roadmaster'', each emphasizing a soft ride, upscale interior, and in the late 1940's an available "shiftless" automatic transmission and hydraulic power windows
- Cadillac - the self styled "''standard of luxury''", with large production competition only from rival Packard
The postwar industry became enamored with the concept of "planned obsolescence", implemented by both technical and styling innovations, with a three year product cycle typical within the industry. In this cycle, a new basic body shell is introduced and then modified for the next two years by minor styling changes. GM,
Ford , and
Chrysler competed vigorously in this new environment.
By 1957, with a "horsepower race" active in the U.S. industry, Pontiac became somewhat performance-minded, rivaled by some specific Buick models (the Century for example), completing the evolution in the early and mid 1960's with the Bonneville and the GTO, with Oldsmobiles mostly later becoming soft, comfortable, and practical vehicles. High performance vehicles were available from all of the divisions, peaking in 1970 and ending with the imposition of anti-
Smog technologies that severely impacted performance, drivability, and efficiency across the industry in the early 1970's.
By the late 1960s, most of GM's vehicles were built upon a few common ''platforms'' and in the 1970s, began to use nearly identical body panel stampings, differing only in internal and external trim items. This was seen especially in the compact passenger vehicles offered by the divisions.
Beginning in the 1980's, GM frequently "rebadged" one division's successful vehicle into several models across the divisions, all positioned close to one another in the market place. Thus, a new GM model's main competition might be another model spawned off the same platform. This led to so-called market "
Cannibalization ", where GM's respective divisions spent time stealing sales from one another, while other more co-ordinated efforts (notably from the Japanese manufacturers) were allowed to increase their market penetration. For instance, the company's GMT360 mid-sized light truck platform has, since its inception in 2002, spawned the basic
Chevrolet Trailblazer , an extended version of the Trailblazer, the
Oldsmobile Bravada , the
GMC Envoy , the Envoy XL (an extended Envoy with a reconfigurable tailgate) and later, the
Isuzu Ascender ,
Buick Rainier , and
Saab 9-7X . Though each model had a more or less unique mission, without custom engine choices or radically different suspension settings and trim choices, the cars can hardly be told apart.
Critics have suggested that this progressive blurring of well-defined brands has been a large contributor the late 20
th and early 21
st century market failures of GM.
During the 1980's and later GM divisions had market issues concerning quality - not that the vehicles produced were especially bad but rather that they did not compare well to foreign competition in matters of fit and finish, durability of sheet metal, paint (which was not at all durable for several years after a formulation change), and plastic components.
In 2004, GM redirected resources from the development of new sedans to an accelerated refurbishment of their light trucks and
SUV s for introduction as 2007 models in early 2006. Shortly after this decision, fuel prices increased by over 50 % and this in turn affected both the trade-in value of used vehicles and the perceived desirability of new offerings in these market segments. The current marketing plan is currently to extensively tout these revised vehicles as offering the best fuel economies ''in their class'' (of vehicle), although such advantages are expected to be minor until the introduction of new hybrid light trucks in 2007, with projected 25% mileage improvements. In contrast, Ford, GM's primary domestic competitor, has emphasized building more and better passenger cars with attractive styling, features, and quality, with profitability flowing from lower production costs through reduction of excess plant capacity and firm consumer demand, which enables avoidance of marketing incentives (such as ''low'' or ''zero interest'', ''cash back'', or ''free'' or ''low cost'' added accessory, appearance, and other
Packages ). When the new models were released in early 2006, they were well recieved, with strong sales. A following increase in fuel prices in the Spring of 2006 continues to trouble both GM and Ford owing to product mixes inapporpriate for such an environment.
Beginning in the summer of 2005, and continuing for months afteward, GM promoted sales through an employee discount to all buyers. Marketed as the lowest possible price, GM cleared an inventory buildup of 2005 models to make way for its 2006 lineup. While the promotion was a temporary shot in the arm for sales, it did not help the company's bottom line.
As is the case with the two other U. S. automobile manufacturers, international exchange rates tend to favor Japanese and Korean competitors, although the extent of this advantage is often overstated by the companies to excuse poor performance. The expected future entry of
China into the U. S. automotive market is likely to be advantaged by unrealistic currency exchange ratios that have become a structural problem owing to the Chinese government's extensive purchase of U. S. government debt in the form of bonds. European manufactures are somewhat disadvantaged by over-regulation. Irrespective of these various manufacturing conditions, various foreign manufacturers have demonstrated an ability to compete in the U.S. market with vehicles assembled in various U.S. states and using a substantial portion of domestic content. Such plants are advantaged over GM and Ford through the employment of a younger, nonunion, and more generally healthy workforce.
General Motors has extensive "legacy" costs in pensions and health care costs from retirees and their families. Most of these obligations were taken at a time when GM had a much larger share of the domestic and worldwide market and could afford to be more generous. GM has also committed itself (through union agreements) to pay ongoing wages to non-working employees displaced by automation (the so-called ''Jobs Bank''). These costs, combined with marketing and quality problems, have severely impacted GM's ability to carry these obligations. As of March 2006, GM management is increasingly engaged in a high wire act to restore the company to financial health.
In April 2005, General Motors posted a US$1.1-billion loss, for the first quarter of that year. Its debt was also downgraded to
Junk Bond status. GM announced plans to cut 25,000 jobs in the United States, and included plans to shut down one of the two
Oshawa Car Assembly plants in
Oshawa, Ontario by 2008.
By November 2005, within the first nine months of the year, GM had posted a near $4 billion loss. On
November 21 ,
2005 , GM had announced a revised plan of increased cuts. These cuts went from 25,000 to 30,000 employees, or 9% of its labor force. GM also increased the number of plant closings. Originally, the company planned eight plant closings; the new plan calls for the closing of twelve facilities.
In December, 2005,
Standard And Poor's further downgraded GM bonds to "B", with the observation that it is "now dubious" whether the new line of SUVs and trucks would return GM's North American auto business to profitability
1.
In February 2006, GM decided to slash its annual dividend to $1.00 per share. GM had resisted the move for some time. However, the reduction will save GM about $565 million in cash each year.
In March 2006, GM divested 92.36 million shares (reducing their stake from 20% to 3%) of Japanese manufacturer
Suzuki , in order to raise $2.3 billion. GM originally invested in Suzuki in the early 1980s.
March also saw GM restating its prior-period earnings due to restructuring costs and the Delphi bankruptcy. Earnings from 2005 were reduced by $2 billion, pushing the loss for that year to $10.6 billion.
On
March 22 , GM agreed to buyout more than 125,000 GM/Delphi hourly workers for upto $140,000. If enough workers sign up for buyouts or early retirement, GM's operating costs would drop significantly
2. On
March 23 , a private equity consortium including
KKR ,
Goldman Sachs Capital , and
Five Mile Capital purchased $8.8 billion, or 78% of
GMAC , GM's commercial mortgage arm.
The new entity, in which GMAC will own a 21% stake, will be known as Capmark Financial Group
3.
On April 3, 2006, GM announced that it would sell 51% of
GMAC as a whole to a consortium led by
Cerberus Capital Management , raising $14 billion over 3 years. Investors also include
Citigroup 's private equity arm and
Aozora Bank of Japan. The group will pay GM $7.4 billion in cash at closing. GM will retain approximately $20 billion in automobile financing worth an estimated $4 billion over three years.
4
GM sold its 8% stake in
Isuzu on April 11, 2006, to raise an additional $300 million.
5
In May 2006, a federal judge will consider
Delphi 's request to cancel its union contracts. The
United Auto Workers and other unions have threatened to strike if that happens. In an effort to avoid a costly strike, GM has offered to pay for buyouts to up to 13,000 Delphi workers and allow 5,000 Delphi workers to flow back to GM.
Delphi has about 33,100 U.S. hourly workers, including 23,300 represented by the
UAW and 8,500 by the International Union of Electrical Workers-Communications Workers of America.
Bo Andersson , GM's vice president of global purchasing and supply, confirmed GM is stockpiling parts in case
Delphi workers strike.
GM stopped buying spark plugs from Delphi and transferred its business to
Denso ,
Beru ,
NGK and
Honeywell , which will make it easier for Delphi to close a spark plug facility in
Flint, Michigan .
GM stopped buying Air-induction from Delphi and transferred its business to
Siemens
Lawyers for GM said in court that the claim could exceed $4 billion if all eligible workers opt into the attrition program.
The plants scheduled to be closed include (''source: General Motors Corporation''):
For the first time ever, in
2004 the total number of cars produced by all makers in
Ontario exceeded those produced in
Michigan . GM officials cited profitability of their
Oshawa, Ontario , plant in refusing to distribute the job losses.
General Motors has long worked on alternative-technology vehicles, but has repeatedly failed to deliver them in a profitable way. The company was the first to use vehicles powered by
Kerosene , an area of interest throughout the industry in the late 1950's, but despite extensive thermal recycling (developed by Chrysler) the fuel consumption was too high and starting torque too low for everyday use. They were also an early licensee of
Wankel Engine technology, even developing the
Chevrolet Monza around the powerplant, but abandoned the alternative engine configuration in view of the
1973 Oil Crisis . In the
1970s and
1980s , GM pushed
Diesel engines and
Cylinder Deactivation technologies to disastrous results due to poor durability in the Oldsmobile diesels (this was a modified gasoline engine) and drivability issues in the Cadillac 4-6-8 variable cylinder engines.
In
1996 , GM introduced the
EV1 , the first modern mass-produced
Electric Car . Despite the positive publicity generated by this vehicle, the company never spread the technology beyond
California and
Arizona , and pulled the plug on the program in
2003 .
GM was also an early innovator in
Hybrid Vehicle development, building Diesel-electric trains since the
1930s and
Bus es since the
1990s (but without stored energy recovery), but did not introduce a true hybrid passenger car until
2004 . Their earlier
Hybrid Pickup Truck was such a mild application of the technology that many criticized it for being not a hybrid at all. The
2006 Saturn VUE Green Line will be the first hybrid passenger vehicle from GM, but it too is a mild design. GM has hinted at new hybrid technologies to be employed that will be optimized for higher speeds such as are encountered in
Freeway driving. As a great bulk of GM's fleet fuel consumption is by high fuel consuming light trucks and SUVs, a modest improvement in their mileage applied across this large fleet (say twelve to fifteen percent) would in fact conserve a significant amount of refined fuel.
Rather than effectively deliver hybrid and electric vehicles at the present time, GM has extensively touted its research and prototype development of hydrogen powered vehicles, to be produced at some unspecified future time and using a support infrastructure yet to be built. Since production and use of hydrogen from fossil fuels is at present about 1/6 as efficient as direct use of the fuel (e.g, compressed natural gas), this is a future dependent upon the availability of extremely low cost electricity - as might be produced at some indefinite future time by speculative power sources such as nuclear fusion.
General Motors is the top-selling foreign auto maker in
China , with 11.2% of the total market there. The
Buick brand is especially strong, led by the
Buick Excelle subcompact.
Cadillac initiated sales in China in 2004, starting with imports. GM pushed the
Chevrolet brand there in
2005 as well, transferring the formerly-Buick Sail to that marque. The company manufactures most of its China-market vehicles locally, through its
Shanghai GM joint venture. The
SAIC-GM-Wuling Automobile joint-venture is also successful selling trucks and vans under the
Wuling marque.
- Barabba, Vincent P. ''Surviving Transformation: Lessons from GM's Surprising Turnaround'' (2004)
- Berger; Michael L. ''The Automobile in American History and Culture: A Reference Guide'' Greenwood Press 2001, highly detailed annotated bibliography
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- Bonsall, Thomas E. ''Cadillac: The American Standard.'' Stony Run Press, 1993.
- Bonsall, Thomas E. ''Pontiac: The Complete History, 1926-1986''. 2nd ed. Bookman Dan, 1986.
- Boyd, Thomas A. ''Professional Amateur: The Biography of Charles Franklin Kettering''. E.P. Dutton, 1957.
- Boyd, Thomas A., ed. ''Prophet of Progress: The Speeches of Charles F. Kettering'' E.P. Dutton, 1961
- Busenkell, Richard L. ''Pontiac since 1945''. New York: Norton, 1989.
- Calder, Lendol. ''Financing the American Dream: A Cultural History of Consumer Credit'' Princeton UP (2001)
- Chandler, Alfred D., Jr., ed. ''Giant Enterprise: Ford, General Motors, and the Automobile Industry'' Harcourt, Brace, & World, 1964.
- Chandler, Alfred D., Jr. ''Strategy and Structure: Chapters in the History of Industrial Enterprise'' MIT Press, 1962.
- Cray, Ed. ''Chrome Colossus: General Motors and Its Times.'' McGraw-Hill, 1980.
- Farber, David. ''Sloan Rules: Alfred P. Sloan and the Triumph of General Motors'' U of Chicago Press 2002
- Gustin, Lawrence R. ''Billy Durant: Creator of General Motors'' William B. Eerdmans, 1973.
- Halberstam, David. ''The Reckoning'' (1986) detailed reporting on the crises of 1973-mid 1980s
- Kaplinsky, Raphael, and Kurt Hoffman. ''Driving Force: The Global Restructuring of Technology, Labor, and Investment in the Automobile and Components Industry'' Westview Press, 1988.
- Keller, Maryann. ''Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors'' William Morrow, 1989.
- Kuhn, Arthur J. ''GM Passes Ford, 1918-1938: Designing the General Motors Performance-Control System'' Pennsylvania State University Press, 1986.
- Leslie, Stuart W. ''Boss Kettering: Wizard of General Motors'' Columbia University Press, 1983.
- Lichtenstein, Nelson. ''e Most Dangerous Man in Detroit: Walter Reuther and the Fate of American Labor'' Basic Books, 1995.
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- Norton, Seth W. "Information processing in the theory of the firm: the rise of General Motors" ''International Journal of the Economics of Business'' Volume 11, #2 July 2004 pp 123-140, links GM's spectacular growth in 1920s to Sloan's synchronization of GM's sales to dealers with dealers' sales to final consumers.
- Rae, John B. ''The American Automobile: A Brief History''. University of Chicago Press, 1965.
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- Seltzer, Lawrence H. ''A Financial History of the American Automobile Industry''. Houghton Mifflin, 1928.
- Sloan, Alfred P., Jr. ''My Years with General Motors'' Doubleday, 1963. perhaps the single best book on GM
- Sloan, Alfred P., Jr., with Boyden Sparks. ''Adventures of a White-Collar Man'' 1941
- Weisberger, Bernard A. ''The Dream Maker: William C. Durant, Founder of General Motors'' McGraw-Hill, 1979
- Wright, J. Patrick. ''On a Clear Day You Can See General Motors: John Z. De Lorean's Look inside the Automotive Giant'' Avon Books, 1980.
