History of General Motors

History of General MotorsThe Renaissance Center in Detroit, Michigan, is General Motors' world headquarters. General Motors Corporation, also known as GM or GMC, is the world's second largest car manufacturer based on annual sales. Founded in 1908, in Flint, Michigan, GM employs approximately 284,000 people around the world. With global headquarters at the Renaissance Center in Detroit, Michigan, USA, GM manufactures its cars and trucks in 33 countries. Their European headquarters is based in Zurich, Switzerland. In 2005, 9. 17 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall. Early history General Motors was founded on Wednesday, September 16, 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, Cartercar, Elmore, Ewing, and Oakland (later known as Pontiac). In 1909, General Motors also acquired the Reliance Motor Truck Company of Owosso, Michigan, and the Rapid Motor Vehicle Company of Pontiac, Michigan, the predecessors of GMC Truck. A Rapid became the first truck to conquer Pikes Peak in 1909. In 1910, Welch and Rainier were added to the ever-growing list of companies controlled by GM. Durant lost control of GM in 1910 to a bankers trust, due to the large amount of debt (around $1 million) taken on in its acquisitions. Durant left the firm and helped establish the Chevrolet Motor Company in 1911, with brothers Gaston and Louis Chevrolet. After a brilliant stock buy back campaign, he returned to head GM in 1916, with the backing of Pierre S. du Pont. Chevrolet entered the General Motors fold in 1917; its first GM car was 1918's Chevrolet 490. Du Pont removed Durant from management in 1920, and various Du Pont interests held large or controlling share holdings until about 1950. In 1918 GM purchased the McLaughlin Motor Car Company of Oshawa, Ontario, Canada, manufacturer of the McLaughlin-Buick automobile, and renamed it General Motors of Canada Ltd. , with R. S. â€Å"Colonel Sam† McLaughlin as its first president. In 1925, GM bought Vauxhall Motors of England, and then in 1929 went on to acquire an 80% stake in German automobile manufacturer Adam Opel AG. Two years later this was increased to 100% and the company remains the core of GM Europe to this day. In 1931, GM acquired Holden of Australia. GM surpassed Ford Motor Company in sales in the late 1920s thanks to the leadership of Alfred Sloan. While Ford continued to refine the manufacturing process to reduce cost, 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 via GMAC (founded 1919), easy monthly payments allowed far more people to buy GM cars, while Ford was moralistically opposed to credit. (Nevertheless, Ford did offer similar credit arrangements with the introduction of the Model A in the late 1920s but Ford Credit did not exist until 1959. ) 1933 – 1958 During the 1920s and 1930s, General Motors assumed control of the Yellow Coach bus company, and helped create Greyhound bus lines. They replaced intercity train transport with buses, and established subsidiary companies to buy out streetcar companies and replace the rail-based services as well with buses. GM formed United Cities Motor Transit in 1932 (see General Motors streetcar conspiracy for additional details). In 1930, GM also began its foray into aircraft design and manufacturing by buying Fokker Aircraft Corp of America (U. S. subsidiary of Fokker) and Berliner-Joyce Aircraft, merging them into General Aviation Manufacturing Corporation. Through a stock exchange GM took controlling interest in North American Aviation and merged it with its General Aviation division in 1933, but retaining the name North American Aviation. In 1948, GM divested NAA as a public company, never to have a major interest in the aircraft manufacturing industry again. General Motors bought the internal combustion engined 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 — the majority built by GM — argely 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. In 1935, the United Auto Workers labor union was formed, and in 1936 the UAW organized the Flint Sit-Down Strike, which initially idled two key plants in Flint, but later spread t o half-a-dozen other plants including Janesville, Wisconsin and Fort Wayne, Indiana. In Flint, police attempted to enter the plant to arrest strikers, leading to violence; in other cities the plants were shuttered peacefully. The strike was resolved February 11, 1937 when GM recognized the UAW as the exclusive bargaining representative for its workers. World War II General Motors produced vast quantities of armaments, vehicles, and aircraft during World War II for both Allied and Axis customers. By the spring of 1939, the German Government had assumed day-to-day control of American owned factories in Germany, but decided against nationalizing them. During the war, the U. S. auto companies continued to be concerned Nazi Germany would nationalize American-owned factories. [citation needed] GM's William P. Knudson served as head of U. S. wartime production for President Franklin Roosevelt, who called Detroit as the Arsenal of Democracy. The General Motors UK division, Vauxhall Motors, manufactured the Churchill tank series for the Allies. The Vauxhall Churchill tanks were instrumental in the UK campaigns in North Africa (ironically often being used to attack German logistics units using Opel trucks). Bedford Vehicles manufactured logistics vehicles for the UK military, all important in the UK's land campaigns. In addition, GM was the top manufacturer of U. S. Army 1? ton 4Ãâ€"4 vehicles. 1] Nevertheless, while General Motors has claimed its German (Opel) operations were outside its control during World War II, this assertion appears to be contradicted by available evidence. General Motors was not just a car company that happened to have factories in Germany; GM management from the top down had extensive connections with the Nazi Party, both on a business and personal level. [2] Americ an GM Vice President (later Colonel) Graeme K. Howard was a committed Nazi, and expressed such views in his book, America and a New World Order. Adolf Hitler awarded GM boss James D. Mooney the Order of Merit of the Golden Eagle for his services to Nazi Germany. General Motors’ internal documents show a clear strategy to profit from their German military contracts even after Germany declared war against America. Defending the German investment strategy as â€Å"highly profitable†, Alfred P. Sloan told shareholders in 1939 GM’s continued industrial production for the Nazi government was merely sound business practice. In a letter to a concerned shareholder, Sloan said that the manner in which the Nazi government ran Germany â€Å"should not be considered the business of the management of General Motors†¦ We must conduct ourselves as a German organization. . . We have no right to shut down the plant. â€Å"[3] After 20 years of researching General Motors, Bradford Snell stated, â€Å"General Motors was far more important to the Nazi war machine than Switzerland †¦ Switzerland was just a repository of looted funds. GM-Opel was an integral part of the German war effort. The Nazis could have invaded Poland and Russia without Switzerland. They could not have done so without GM. †[3] Post-war growth At one point GM had become the largest corporation registered 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 â€Å"because for years I thought what was good for the country was good for General Motors and vice versa†. Later this statement was often misquoted, suggesting that Wilson had said simply, â€Å"What's good for General Motors is good for the country. At the time, GM was one of the largest employers in the world – only Soviet state industries employed more people. In 1955, General Motors became the first American corporation to pay taxes of over $1 billion. [4] 1958 – 1983 While GM maintained its world leadership in revenue and market share throughout the 1960s to 1980s, it was product controversy that pl agued the company in this period. It seemed that, in every decade, a major mass-production product line was launched with defects of one type or another showing up early in their life cycle. And, in each case, improvements were eventually made to mitigate the problems, but the resulting improved product ended up failing in the marketplace as its negative reputation overshadowed its ultimate excellence. The first of these fiascos was the Chevrolet Corvair in the 1960s. Introduced in 1959 as a 1960 model, it was initially very popular. But before long its quirky handling earned it a reputation for being unsafe, inspiring consumer advocate Ralph Nader to lambaste it in his book, Unsafe at any Speed, published in 1965. Ironically, by the same (1965) model year, suspension revisions and other improvements had already transformed the car into a perfectly acceptable vehicle, but its reputation had been sufficiently sullied in the public's perception that its sales sagged for the next few years, and it was discontinued after the 1969 model year. During this period, it was also somewhat overwhelmed by the success of the Ford Mustang. The 1970s was the decade of the Vega. Launched as a 1971 model, it also began life as a very popular car in the marketplace. But within a few years, quality problems, exacerbated by labor unrest at its main production source in Lordstown, Ohio, gave the car a bad name. By 1977 its decline resulted in termination of the model name, while its siblings along with a Monza version and a move of production to Ste-Therese, Quebec, resulted in a thoroughly desirable vehicle and extended its life to the 1980 model year. In the 1980 model year, a full line of automobiles on the X-body platform, anchored by the Chevrolet Citation, was launched. Again, these cars were all quite popular in their respective segments for the first couple of years, but brake problems, and other defects, ended up giving them, known to the public as â€Å"X-Cars,† such a bad reputation that the 1985 model year was their last. The J-body cars, namely the Chevrolet Cavalier and Pontiac Sunfire, took their place, starting with the 1982 model year. Quality was better, but still not exemplary, although good enough to survive through three generations to the 2005 model year. They were produced in a much-improved Lordstown Assembly plant, as are their replacements, the Chevrolet Cobalt nd Pontiac Pursuit/G5. 1983 – 2008 Under the controversial leadership of Roger B. Smith throughout the 1980s, a multitude of well-intentioned initiatives seemed to go awry at every turn. GM was losing money for the first time since the early 1920s as the legacy of poor management of the previous decade was taking its inevitable toll. Poor product quality, lab our unrest and lawsuits over unsafe vehicle designs were affecting sales volumes, which meant that GM was losing market share at an alarming rate, mostly to foreign automakers. Recognizing the superiority of the Japanese quality and production procedures and practices, Smith set out to infuse their methods into the GM culture. He formed joint ventures with two Japanese companies (NUMMI in California with Toyota, and CAMI with Suzuki in Canada). Each of these agreements provided opportunities for GM managers to work alongside Japanese managers, thus learning their approaches, and taking this knowledge back to GM. Unfortunately the GM bureaucracy that opposed change influenced from outside was too strong and â€Å"inbred,† so the efforts of these managers as they returned to GM were essentially ineffective. Apparently anticipating this reaction, Smith also launched the Saturn Corporation, in which these managers could institute the Japanese system in a fresh non-GM environment. While all three of these facilities were, and still are, moderately successful, the net result for GM was failure to accomplish Smith's ambitious goals. GM's profits remained inconsistent and its share of the U. S. market continued to fall. Ironically it was another Smith, not related to Roger, who took the reins of GM in the early 1990s, and succeeded where Roger had failed. Like Roger, his tenure began when GM was in dire straits, having just endured a very close brush with bankruptcy. Its losses were much deeper than they had been a decade earlier and â€Å"Jack† Smith was burdened with the task of overseeing a radical restructuring of General Motors. Sharing Roger's understanding of the need for serious change, Jack undertook many major revisions, of which the most visible to the public in general was the demise of the Oldsmobile division, an effort that took in total a full decade. Reorganizing the management structure to dismantle the legacy of Alfred P. Sloan, instituting deep cost-cutting and introducing significantly improved vehicles were the key approaches. These moves were met with much less resistance within GM than had Roger's similar initiatives as GM management ranks were stinging from their recent near-bankruptcy experience and were much more willing to accept the prospect of radical change. By the late 1990s, many archaic remnants of GM's history were falling away, such as the Oldsmobile complex in Lansing, Michigan and Buick City in Flint. This also meant a large reduction in the work force. 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. Because of the significant role GM plays in the United States, the strikes and temporary idling of many plants noticeably showed in national economic observations. In the late 1990s, GM had regained market share; its stock had soared to over $80 a share by 2000. However, in 2001, the stock market drop following the September 11, 2001 attacks, combined with historic pension underfunding, caused a severe pension and benefit fund crisis at GM and many other American companies and the value of their pension funds plummeted. A weak U. S. dollar and private health care (as opposed to nationalized health care in other countries) costs also put GM at a disadvantage to its Japanese, Korean, and European counterparts In successive moves, GM responded to the crisis by fully funding its pension fund; however, its Other Post Employment Benefits Fund (OPEB) became a serious issue resulting in downgrades to its bond rating in 2005. The company expressed its disagreement with these bond rating downgrades. In 2006, GM responded by offering buyouts to hourly workers to reduce future liability; over 35,000 workers responded to the offer, well exceeding the company's goal. GM has gained higher rates of return on its benefit funds as a part of the solution. Stock value has begun to rebound – as of October 30, 2006 GM's market capitalization was about $19. 19 billion. GM stock began the year 2006 at $19 a share, near its lowest level since 1982, as many on Wall Street figured the ailing automaker was bound for bankruptcy court. But GM remained afloat and the company's stock in the Dow Jones industrial average posted the biggest percentage gain in 2006. [5] In early 2007, GM fell to be the world's second largest auto company, behind Japan's Toyota, but regained the lead during the summer. Also, in June 2007, GM sold its military and commercial subsidiary, Allison Transmission, for $5. 6 billion. Having sold off the majority, it will, however, keep its heavy-duty transmissions for its trucks marketed as the Allison 1000 series. During negotiations for the renewal of its industry labor contracts in 2007, the United Auto Workers (UAW) union selected General Motors as the â€Å"lead company† or â€Å"strike target† for pattern bargaining. Late in September, sensing an impending impasse in the talks, the union called a strike, the first nation-wide walkout since 1970 (individual plants had experienced local labor disruptions in the interim). Within two days, however, a tentative agreement was achieved and the strike ended.