Rise of the Bookkeeper

By his own account, Richard Charles Gerstenberg got his first big break at General Motors by helping justify the company's price increases in hearings before the Office of Price Administration during World War 11. "I spent months in Washington working on the detailed end of the assignment," he says. "I really got a short course in the cost and pricing problems of General Motors in those days." Now that wage and price controls are back, G.M. faces some of the same problems, and its directors want Gerstenberg again to try to raise earnings in a Government-restricted, profit-squeezed economy. Only this time he will be the front-seat driver. To replace James M. Roche, who must retire this month when he reaches 65, the G.M. board last week selected the slight, self-assured Gerstenberg, 62, as chairman and chief executive of the world's largest corporation.

Main Rival. As vice chairman since April 1970, Gerstenberg has been a leading contender for the job. His main drawback was that his entire 39 year career at G.M. has been devoted to finance rather than to engineering or production, which many automen still regard as the drive shafts of the industry. But G.M. traditionally awards its chairmanship to the executive who seems best equipped to handle the problems immediately ahead. Gerstenberg's outstanding record of money management, and his articulateness in defending the auto industry against a growing number of critics, made him the choice. Thus "old Gerstenberg the bookkeeper," as he once described himself, beat out his main rival, President Edward N. Cole, also 62, a blunt, highly able engineer who will continue as G.M.'s chief operating officer.

The biggest surprise was the appointment as new vice chairman of Thomas Aquinas Murphy, 56, a vice president who also came up through the financial division. He leaped over ten more senior VPs to get Gerstenberg's old job. Picked out as a rising star, Murphy said, "I was stunned."

Work Ethic. Like many G.M. executives, Gerstenberg was a small-town boy who became a self-made man. He was raised in upstate New York and studied business at the University of Michigan ('31), working part time as a dishwasher to pay expenses. His father once told him to "get a big job with a big company and take things easy." Aided by a friend named H. Whitney Clapsaddle who was employed by G.M., Gerstenberg found a job in 1932 as a timekeeper at the company's Frigidaire division in Dayton. Ever since, he has followed the first two parts of his father's advice to a tee--and totally disregarded the third. A devout believer in G.M.'s spartan work ethic, he became assistant comptroller at 39 and cont'nued to rise.

Gerstenberg, who must retire within three years under the same rule that cleared the way for his election, will aim mainly during that period to improve G.M.'s net profits. During the first three quarters of 1971, they rose to $1.4 billion; or a margin of 6.7% on sales of $21 billion. That was well above the strike distorted margin of 3.2% last year, but still far below G.M.'s 10.3% in 1965. Gerstenberg holds most of the company's critics in no great esteem and once reprimanded a former G.M. executive who had made some slightly disparaging remarks about the company. "Once a G.M. man always a G.M. man," Gerstenberg snapped. Yet he has given serious thought to the issues raised by the corporation's critics. At a meeting of the National Wildlife Federation earlier this year, he declared: "Within this decade, we expect American skies will be essentially cleansed of automotive air pollution, and we intend to make comparable progress in the control of pollution from our plants." If he can help do that, Gerstenberg will end his term with a very good set of books indeed.

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