Retired GM Chairman Roger B. Smith Dies at Age 82

By Michelle Krebs November 30, 2007

By Michelle Krebs

Roger B. Smith, the General Motors chairman who led the world’s largest automaker in the 1980s Roger_smith_118 through a period of significant change, died in Detroit on Thursday after a brief illness. He was 82.

Smith served for only a decade as GM chairman, retiring on July 31, 1990, but, for better or worse, Smith changed the world’s largest manufacturing corporation more than any chairman since Alfred P. Sloan Jr., who chaired GM from 1937 to 1956 and had defined modern-day GM to that point.

And the change was tumultuous -– forced by external factors and brought about by Smith himself.

Roger Smith's name became a household one with the satirical so-called documentary about the fall of GM and the demise of Flint, Michigan, a GM town, in Michael Moore's first major film, Roger & Me.

Smith is credited -- or blamed -- with: dismantling the corporation and eliminating some of its sacred institutions, like Fisher Body; reconstructing the corporation in a new way; forming a joint manufacturing venture with now arch-rival Toyota to build small cars; introducing GM's first front-wheel-drive cars to compete with the rising Japanese makes; creating the Saturn division; and adding new entities with the purchase of Hughes Aircraft and H. Ross Perot's Electronic Data Systems.

Unassuming Beginnings

Born in Columbus, Ohio, Smith was educated in Michigan, receiving his business degrees from the University of Michigan after serving in the U.S. Navy.He began his GM career in 1949 as a general accounting clerk.

As was the typical path of GM chairmen, Smith rose through the financial ranks reaching the pinnacle on January 1, 1981 when he took over as chairman and CEO of the world’s largest automaker.

No one had a clue at the time that the unassuming Smith, known for his squeaky voice, curly red hair and pocked complexion, would lead the company into one of its most transformative -– and tumultuous -- periods in history.

But these were unprecedented troubled times for the American auto industry. Smith took the reins of the company on the heels of two major oil crises that caught domestic automakers flat-footed when it came to fuel-efficient cars –- and opened the door to Japanese imports that did.

In 1980, GM owned 46 percent of the U.S. vehicle market, but, by the time Smith took over a year later, the slide had started. And, unbeknownst to Smith at the time, it would continue to slide, dropping to 35.1 percent when Smith retired in summer 1990.

GM attempted to retaliate against the gas-sipping imports with the introduction of its first front-wheel-drive midsize cars, known as the J cars, that included the ill-fated Cadillac Cimarron, seen as nothing more than a gussied-up Chevy.

Reinvention Required

Smith saw a critical need for a complete overhaul of the automaker. His vision was to create the GM of the 21st century.

In his early days on the job, he was hailed as an innovator, a visionary genius in an industry that planned only for tomorrow. But his reputation as a genius was short-lived as the changes he made went awry.

Smith angered the UAW when on the eve of signing a concessionary contract with the union in 1982, GM revealed a sweetened bonus program for its top managers. Despite the union's outrage, GM didn't learn its lesson from the experience. On the eve of Smith's retirement, within months of contract talks with the union, GM announced improvements to its salaried pension plan that would double Smith's annual pension payout.

Restructuring GM

Smith hired pricey management consultants at McKenzie & Co. to figure out how to organize the company for the future. At that time, each of GM’s five divisions, in essence, were self-contained car companies, responsible for everything from vehicle development to manufacturing to sales and marketing.

The consultants found this inefficient. Upon their advice, Smith eliminated those operations and replaced them with two giant carmaking groups, Buick-Oldsmobile-Cadillac (BOC) and Chevrolet-Pontiac-Canada (CPC). The historic Fisher Body and General Motors Assembly Division disappeared completely.

While the previous structure may have been inefficient, the change proved incredibly disruptive. And what the outside consultants had failed to consider was the fierce allegiance employees had to their divisions –- their brands. People worked for Fisher Body or Chevrolet or Cadillac, not some amorphous group with meaningless initials. Employee morale was dismal.

Worse, the entire effort also proved expensive. Instead of streamlining operations, it bloated costs. To offset those higher costs, GM eliminated 40,000 salaried jobs -- about 25 percent of its workforce -- in 1986.

Saturn Launched

Still, GM was desperate for a small car to compete against the growing ranks of fuel-sipping Japanese models that were eating GM’s market share.

In a famous confrontation, John White, a bulldog of a reporter from the Boston Globe, asked Smith at a press conference what was GM’s best defense against a Japanese import. Hemming and hawing, Smith was finally backed into a corner by the insistent White to whom he responded, “A used Buick.”

Nonetheless, Smith recognized GM’s need. To learn how to make a small car, GM signed a joint-venture agreement with Toyota to set up a manufacturing facility in California to make small cars. GM assigned high-potential executives to do stints at New United Motor Manufacturing Inc., which continues today, churning out Pontiac Vibe and Toyota Matrix models.

At the same time, a GM skunk works was developing a new small car. Code-named the S car, it was supposed to be a Chevrolet. But Smith decided the car offered GM to completely reexamine and reinvent the car business, from coming up with a concept from a car to the way it is manufactured to union-management relations and to sales and marketing.

This “clean sheet of paper approach,” as Smith called it, led to the establishment of the Saturn Division, in which GM pumped $5 billion to its initial funding and authorized construction of a new assembly plant (while it was closing others) in Spring Hill, Tennessee, then virgin territory for automakers.

Enamored With High Tech

Smith was also bedazzled by high tech; he saw GM’s future as a 21st century as being saved by technology.

During his chairmanship, GM acquired equity stakes in a host of small high-tech companies from Massachusetts to California, it bought Lotus for its engineering expertise and it invested heavily into high-tech equipment in its plants. 

GM also purchased Electronic Data Systems for $2.5 billion in 1984. The Texas-based computer company had been founded by one-time presidential candidate H. Ross Perot.

Perot was on board to help create the 21st Century GM that Smith envisioned, but the Smith-Perot honeymoon proved short-lived and the acrimony went public. Perot grew impatient with the slow pace of change at GM, leading to his famous quote in Business Week that “at EDS if we see a snake, we kill it. At GM, they organize a committee on snakes…” Two years later, GM bought out Perot’s remaining interest in EDS for $750 million.

Even after the EDS purchase, Smith kept tantalizing the media, saying something bigger than EDS was in the works. He referred to it as “a lulu.” Finally, GM announced the purchase of Hughes Aircraft for $5.2 billion.

And Then There Were the Cars

While Smith was enamored with re-organizations and high tech and obsessed with the bottom line, it appeared he cared little about market share and product. That led many to question whether GM knew what business it was in: was it a company that made cars or something else? They asked.

Still, during Smith’s tenure, GM introduced a host of new models, some clunkers and some hits, and killed off others.

GM introduced the 1984 Corvette, the first major styling change in 15 years. The Pontiac Fiero made its debut as a 1984 model –- though it was killed in 1988, likely by Smith who was no fan of the two-seater from the start. GM introduced its overhead cam engine with the Quad 4 in 1987; the same year Buick produced the limited-edition GNX model.

Near decade end, GM unveiled a family of midsize vehicles, code-named the GM10 program or W-cars that included the Buick Regal. It launched its small cars imported from its Japanese partners, including Suzuki, sold under the Geo banner at Chevy dealerships.

In 1990, GM introduced the Corvette ZR-1 as well as the first front-drive minivans. The oddly designed APVs became known as the Dustbuster for their shape. GM also announced the development of the Impact electric car, a precursor to the EV1. And GM bought a stake in Swedish automaker Saab.

Some of the good stuff that happened under Smith’s tenure –- like GM’s official reentry into motorsports and the birth of the Corvette ZR-1 -- seemed to happen despite Smith. In fact, Smith wanted to kill the ZR-1 when it ran into development problems but other executives, notably Lloyd Reuss, who became and then was fired as president, saved it.

Contribution Debated

On the occasion of Smith’s death this the week, the discussion of his true contribution to GM undoubtedly will be resurrected.

Many accuse Smith of wasting company resources, both human and monetary. They blame him for damaging the company, and, in fact, repercussions are still felt today, some say.

Upon his 1990 retirement, Albert Lee, former GM speechwriter and author of the book, Call Me Roger, an often ugly portrayal of the man at the top, said the decade under Smith was “a sad period for the corporation.” He accused him of “extreme waste of money on high tech” that could have been better spent on improving relations with employees.

In an interview with Smith at his retirement, he defended the massive amount of money GM spent during his chairmanship -- more than any chairman in the history of GM to that point. In 1986, GM hit a then record of nearly $12 billion in capital spending, an amount that hovered at the then still high level of about $7 billion a year every year thereafter. During the 1980s, GM spent $50 billion to build eight plants and renovate 19 others. Smith, in an interview, called those investments in GM’s future.

Also in the interview, Smith rankled at the accusation by critics who accused him of being a bean counter only interested in the bottom line and not market share. “You don’t pay dividends on market share,” he said.

Still, some credit Smith with recognizing GM absolutely had to change and making it happen. Even Perot, who became his arch rival, praised his vision, passion and dedication. At his retirement, Perot said of Smith, he had “a very clear vision of what he wanted General Motors to be and he worked night and day to try to accomplish that.”

“Roger Smith led GM during a period of tremendous innovation in the industry,” GM Chairman and CEO Rick Wagoner said in a statement Friday. “He was a leader who knew that we have to accept change, understand change, and learn to make it work for us. Roger was truly a pioneer in the fast-moving global industry that we now take for granted.”

Private Funeral Services

Smith is survived by Barbara, his wife of 53 years; four children: Roger B. Smith Jr., Jennifer A. Ponski, Victoria B. Sawula, and Drew J. Smith; and six grandchildren.

Services will be private. The family asks that contributions, in lieu of flowers, be made to the Roger B. Smith Memorial Fund to Benefit the Fight Against Cancer at William Beaumont Hospital, c/o of the Beaumont Fund, P.O. Box 5802, Troy, MI 48007-9620.

Michelle Krebs was the General Motors reporter for industry trade journal Automotive News during the Roger Smith era. She wrote a profile of Smith upon his retirement as GM chairman, entitled "Roger's Reign: The Once and Future King," that appeared on the cover of AutoWeek magazine.

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LEAVE A COMMENT

Georgy says: 4:41 AM, 12.05.07

Was Roger Smith really afraid of Michael Moore and did he refuse to comment on the issues?

Was "Roger and Me" a Michael Moore Illusion?

See historic Roger Smith letter at the bottom of
http://michaelwestfall.tripod.com/id17.html
… Judge for yourself.

http://www.newmediajournal.us/guest/m_westfall/04142007.htm

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