GENERAL MOTORS CORPORATION

Founded in 1908, General Motors Corporation (GM) is the largest industrial company in the United States. Known primarily as a manufacturer of American cars and trucks—including such standard nameplates as Buick, Chevrolet, Oldsmobile, Pontiac, GMC, and Saturn—GM also takes part in the manufacturing and marketing of Isuzu, Saab, and other foreign and domestic vehicles. In addition to its vast interests in the automobile industry, GM produces locomotive components, products and services for telecommunications and space, consumer electronics, and financial and insurance services.

The history of GM begins in 1892, when Ransom E. Olds raised enough capital to start a business building horseless carriages, working in a converted factory that belonged to his father. Within two years Olds' facility had become the first American factory in Detroit, Michigan, involved exclusively in the manufacturing of automobiles. It was not until 1901, however, that this business, the Olds Motor Vehicle Company, introduced its first model: the curved-dash Oldsmobile buggy. Meanwhile, other car manufacturers were cropping up in Detroit around the turn of the century; David Buick formed the Buick Motor Company in 1897, while Henry Leland founded the Cadillac Automobile Company in 1901.

A new market, the automobile industry was financially unstable, and before long these Detroit companies had no choice but to consolidate to stay afloat. Henry Ford (1863–1947) was winning American consumers' hearts with his Model T, and competition was beginning to intensify. The man responsible for bringing together the individual companies was William Durant (1861–1947), the son of a Michigan governor and a director at Buick. In 1908 Durant combined Oldsmobile and Buick, calling the new business General Motors; he introduced Cadillac and Oakland (later known as Pontiac) to the consortium in the following year. The mergers attracted little media attention at the time. Quick to turn a profit nonetheless, GM was off to a strong start.

Durant established a corporate base in Flint, Michigan, where he aimed to produce a variety of models based on those developed by the original companies. Within a few years, he put together a core staff of specialists to oversee and coordinate production throughout the company's various units and factories. Charles Kettering's 1911 breakthrough, an electric self-starter that would replace the arduous hand-crank mechanism, brought technological innovation to GM, which would later install the device in its Cadillacs. GM promptly invited Kettering to join its ranks, and he eventually took charge of the company's research and engineering programs. By 1920 GM had acquired more than 30 automotive businesses, including Chevrolet, which it procured in 1918.

When the United States entered World War I (1914–1918), GM stepped up to wartime levels of production. During the last two years of the war, 90 percent of GM's trucks went to the armed forces. Cadillac manufactured war materials like the V-8 engine and the mortar shell, while Buick built tanks, ambulances, and airplane motors. With the Ford Motor Company swelling to mammoth proportions, GM emerged from the 1910s as a potential competitor.

The Great Depression (1929–1939) hit the country in the late 1920s, threatening to ravage the automotive industry. GM responded to the crisis by recruiting the corporate management talents of Alfred Sloan Jr., who at his previous position at Hyatt Roller Bearing Company had transformed a $50,000 investment into a $3.5 million enterprise. Sloan helped to steer GM through the country's crisis, developing a strong management structure that other companies sought to replicate. Under the new system, GM's market share rose from 12 percent in 1921 to 44 percent in 1941.

With the United States entering World War II (1939–1945), GM again increased production. War materials from GM factories included 1,300 airplanes and one-fourth of all U.S. aircraft engines. In total, the company's contribution to the war effort was worth approximately $12 billion. After the war the automotive industry benefited from the rejuvenated national economy. But while many American families looked to buy a second car, market trends indicated a growing consumer preference for smaller European models. GM responded by developing more compact cars, but these did not gain the favor of American buyers. In 1959 the company's market share remained high, however, at 42 percent.

The 1960s brought turbulence in Detroit: Riots and other expressions of civil unrest compelled GM to recognize urban poverty and to revise its hiring practices to include minority workers. The expansionist policies of Presidents John F. Kennedy (1961–1963) and Lyndon B. Johnson (1963–1969) fostered such efforts toward diversity in businesses nationwide. Finding that change helped the company to grow and prosper, and GM developed new interests in home appliances, electronics, locomotives, insurance, banking, and financing at this time. But the 1970s brought costly changes to the company as it rose to meet national demands to control pollution and conserve resources. By 1977 GM had spent $4.5 billion meeting local, state, and federal requirements regarding pollution control.

Consumer demand for fuel-efficient cars led GM to spend billions more redesigning many of its once-popular models. Two significant purchases in the 1980s—the acquisitions of Hughes Aircraft and Electronic Data Systems—further depleted the company's financial resources. As a result of this period of heavy spending, GM reported a decrease in earnings between 1985 and 1992. And from 1990 to 1992 GM reported losses totaling $30 million.

The time was ripe for change at GM, and a new CEO, Jack Smith Jr., ushered in reformed policies. In 1993 Smith moved toward downsizing the company, paring down operations and slimming the corporate staff. Unveiling a plan to close 24 plants by 1996, Smith promised $3.9 billion in benefits to those made jobless and raised the salaries of blue-collar workers. Smith negotiated with the United Auto Workers as he made these changes, but the group remained disgruntled. A 54-day strike ensued in June 1998.

Meanwhile, GM rallied to retain its market share. When vans, trucks, and sports-utility vehicles came into vogue in the 1990s, GM followed the trend. Japanese manufacturers went after the same market, but a weakened dollar made imported cars more expensive than their domestic equivalents. GM benefited from the financial trend, pulling in hefty earnings from 1993 to 1995. Introducing the first electric car built for consumers in 1996, GM went on to announce more plans for change within the corporation and for innovation in the automotive field. As the slimmed-down company entered a new century, it showed no signs of giving up its role as an industry leader.

GENERAL MOTORS CORPORATION

FURTHER READING