General Motors' Bumpy Road

Success, however, may bring self-satisfaction. The spirit of venture is lost in the inertia of the mind against change.

--Alfred P. Sloan Jr.

My Years with General Motors

In front of General Motors' fortress-like headquarters building in Detroit last week, antiwar picketers waved banners reading G.M. GETS RICH, G.I.s DIE. Why did they pick on G.M.? Last year it received only 3% of its $24.45 billion revenues from defense contracts, largely for M16 rifles. But, as the prime symbol of corporate success in modern America, G.M. is a conspicuous target. This year it is under rising pressure not only from citizens objecting to the Viet Nam War and pollution of the environment, but also from the Government and competing automakers.

In a tough year for them all, G.M. has lost more sales than its competitors. The corporation's share of the U.S. auto market in each of the past three years has been 52% or more; so far this year it has been barely 50%. G.M.'s car sales in 1970 have fallen 17.4%, Ford's 5.7%, Chrysler's 7%. Meanwhile, American Motors' sales have climbed 5.7%. Last month Chrysler and American Motors showed gains in sales compared with March of 1969; but G.M. dropped 16.6%. Last week the corporation announced a halt in production of full-size Oldsmobiles at two of the five plants making them, "for the remainder of the model year."

At home and abroad, G.M. is being more strongly challenged by Ford than at any other time since 1954. Ford leads in the growing overseas market, and is increasing its foreign sales 2 1/2 times as fast as G.M. In the U.S. market during the first half of the model year, G.M.'s Chevrolet lost its lead in both cars and trucks to Ford for the first time in 35 years; in early April, Chevy regained the lead. Pontiac has also lost its traditional No. 3 spot--to Chrysler's Plymouth. G.M.'s first-quarter earnings were down to $1.25 per share v. $1.62 in last year's first quarter. Its profit ratio has fallen fairly steadily, from 17% of assets in 1965 to 11.5% last year.

A growing question in Detroit is whether G.M. may have made one of its rare misjudgments of the market. The corporation historically has concentrated on big cars, encouraging customers to trade up. Chairman James Roche agrees with Henry Ford II that the market is moving downward to smaller and lower-priced cars, but he disagrees on how far the trend is likely to go. G.M. concentrated much of its sales effort this year on the so-called intermediate cars, Chevelle, Tempest and Skylark; sales of intermediates have not increased. The expanding market is for compacts, an area where Ford's Maverick has a clear lead. In March, Plymouth's Valiant was second in compact sales, and Chevy's Nova was third.

Lynx v. GMini. G.M. may recoup in this market when it introduces a new small car this summer. The car, so far called the XP-887, was late in getting an official name. G.M. President Edward Cole wanted to call it the "Lynx," while Chevrolet's general manager, John Z. DeLorean, held out for "GMini." As of last week the final choice had not yet been made known.

Along with other automakers, G.M. is also running into tougher problems with its labor force, including a distinct possibility of a U.A.W. strike against the company this fall. Chairman Roche complained in a February speech that absenteeism has doubled in the past decade to 5%, and work stoppages cost 13.3 million man-hours last year.

Changing an Image. More than its competitors, G.M. is beset by another difficulty--burnishing its image. Critics tend to find it a distant, impersonal corporation, where the glass doors leading to the executive suites are locked. "I think the biggest problem facing us as a corporation is communications," Chairman Roche told TIME Detroit Bureau Chief Peter Vanderwicken in an interview last week. The debate over lead-free gasoline to reduce pollution (TIME, Feb. 23) is a case in point. Within the industry, G.M.'s Ed Cole is commonly credited with being first to urge the oil companies last winter to remove lead from gas. Then Henry Ford II made the same point publicly, in an open letter to the presidents of the oil companies. Ford won headlines for doing something about pollution, and G M appeared to lag behind.

Last week G.M. tried to explain its efforts on the pollution front, only to be faulted. It ran an ad in more than 100 U.S. newspapers claiming that "G.M.'s 1970 model cars, as equipped for California use, achieve reductions of more than 80% on hydrocarbons and reductions of more than 65% on carbon monoxide emissions compared with 1960 cars without such controls." When questioned about that by newsmen, John T. Middleton, commissioner of the National Air Pollution Control Administration, said: "General Motors' record for compliance with the Government's emission standards for carbon monoxide is poorer than that for other U.S. auto manufacturers." Middleton would like to post federal inspectors in U.S. auto plants to ensure that cars are as pollution-free as they should be.

All these troubles have been exacerbated by G.M.'s rather stiff response to Ralph Nader. In the latest joust, a group of lawyers backed by Nader in the "Project for Corporate Responsibility" bought a dozen G.M. shares and suggested that a series of consumer-oriented resolutions be put to a vote at the annual meeting. G.M. brusquely refused. To G.M.'s chagrin, the Securities and Exchange Commission then ordered it to put two of the resolutions to a vote. One would add three public representatives to G.M.'s board; the other would create a committee, partially made up of outsiders, to oversee the company's efforts in safety and pollution control. Noting that the Nader lawyers had already won "an enormous psychological and publicity victory," the Detroit Free-Press editorialized: "The idea that a corporation needs some free-standing souls around to prod it in the public interest is not as apocalyptic as it sounds."

The resolutions will almost certainly be defeated at the May 22 annual meeting. Nonetheless, the vote affords another platform and rallying point for G.M.'s critics. Three weeks ago, the trustees of the University of Pennsylvania, after a student ballot, decided to vote its shares in favor of the resolutions. Students at Harvard, M.I.T. and the University of Michigan are pressing for a similar decision. Last week, New York City employees voted overwhelmingly to support the resolution with the 30,000 shares in their pension fund. Whatever happens, G.M.'s need is obviously more urgent than ever to try harder to become a corporation that is regarded not only as big but also as beneficent.

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