Saturday, February 28, 2009

General Motors -- the Family Weighs In

Grandpa Gordon Harry pioneered the camshaft driven fuel pump when he was a young engineer with General Motors.

My post on GM corporate culture brought in feed back from my parents, my uncle, and my brother. Everyone heard (or lived) the stories in slightly different ways. From my dad, in Lockport, New York, once home of GM's Harrison Radiator division:
Based on my limited observations of the Harrison operations here in Lockport I think that there were three (actually four, including the union) sub cultures interacting within the company - which I suspect was pretty typical of all US auto companies.

There was top management which operated in it's ivory tower isolated from the 'dirty work' of the manufacturing operation.

Manufacturing was led by tough, bull headed guys (no women in that culture!) who worked on the assumption that the union workers were dumb, weren't to be trusted and had to be 'kept in line.' Pure old 'Theory X' management style - I think, you do!

This assumption created and reinforced the Union labor philosophy that management couldn't be trusted and you only did what you were told to do and had to do. You avoided all work you could get away with.

The manufacturing and union culture somehow, over time, created a high level of mistrust and tension was always high - especially when contract negotiation time was approaching. In effect the two parties create a win-lose interaction that turned into a lose-lose situation. The focus was always on trying to get something from the other party. Cooperation and collaboration were the last thing on their minds - they were more like enemies fighting in the same theater of battle day after day.

And then there was the design group - like Gord and Alfred. They were a very different culture - technically focused and, to a large extent, they remained aloof from the rest of the operation as much as they could. Of course, they interacted with the other three groups because what they designed had to be manufactured but when friction occurred, I imagine that they stepped back and 'let them sort it out.'

Concerning Gord, did you know that he had 28 patents? I don't know what the others were - probably more mundane, technical items that were integrated into 'stuff' that made cars better. I do recall him talking about work he did on early catalytic converters before he retired. Perhaps you Uncle Bryan knows more about all this.

I was always impressed with the fact that Alfred spent his whole career on spark plugs - plain old spark plugs! But then I thought about how spark plugs had to change as combustion engines change from low to high compression, from relatively cool running engines to ones that ran at very high temperatures. And he also worked on jet engines - unheard of during his first couple of decades of work. And, I recall, he worked on the ignition systems that detonated the early atomic bombs. Quite a wide range of applications!
From my brother, the small business consultant here in Michigan:
I recall Grandpa Gord discussing an early version of cruise control, although I'm not sure if that was one of the patents. The GM he described was bureaucratic and immense, yet there was room within the design sector for expansive "what if" kind of thinking, both with innovative part development and car aesthetics.

That was now 45 plus years ago. Who knows what happened with that GM design culture. Grandpa Gord thought the accountants were running the show in the 80's, basing new model "introductions" more on their ability to maintain older die-hard American customers (i.e. Buick) than adapting to changing customer demands (i.e. fuel efficiency).

Brook Yates' book from the early 1980's "The Decline and Fall of the American Automobile Industry" refers to the "The Grosse Pointe Myopians." discussing in detail the way American automotive upper management grew "arrogant, lost touch with its markets, and failed to respond to changing public needs and tastes, technology, and energy and environmental concerns".

Our economy today is obviously more knowledge based. Unfortunately (I think)the days of someone with a high school education, working at an auto plant, earning $50,000-60,000 are over. It's amazing to me how that this sense of entitlement still exists within the auto unions. Not what one would think of as "entrepreneurial".
From my uncle Bryan, Gord's son, long time resident of Hawaii, recently retired from the US Department of Interior:
As a kid I always regarded Dad as hugely creative, and given pretty much free license by GM to go wherever he thought. Cruise control type things were something dreamed up out of the air. The fuel pump kinds were, however, innovative solutions to vexing problems.

I don't think the tension between the 'accountants,' the 'engineers,' and the 'stylists' that Dad crabbed about was any 'root in the trail' for GM.

In my view, the Darwinian seed was planted in the labor relations' conflicts
during and shortly after World War II. Recall, wages were frozen during and
shortly after the war. But labor strife and the competition for labor was
intense. GM leadership coped by giving its employees huge other benefits--work rules and health care, and pensions--that skirted the wage freezes and were championed as the model for all industry. And they are still grandfathered in! Because of GM's success at that time, Dad was really more concerned that the company was so dominant that Gov't was likely to break it apart using antitrust laws. And too--recall that Dad really had an analog--not a digital--mind and outlook. Maybe GM did too.

So fast forward to now. I think GM cars are very good. Excellent in fact. But GM can't pay out the labor benefits--work rules and health care, and pensions--when their sales are not only way down, but at best they now are only 20% of the total today's market share rather than 70% like the yesterdays. Around here each Chevy carries about $1500 / car 'employee other benefits costs' in its price tag. A Honda carries maybe $50 to $100.

In my sense--I hope the accountants prevail. They are saying that unless GM sheds these other benefits--work rules and health care, and pensions--to be comparable with the Toyotas and Hondas, the old company seems doomed.

So, I'm hanging on to my Chevy-- unless Michigan labor relents, it'll soon be a 'collectors item' (and still running great).
Here in the rust belt, the cost of employee benefits, and retiree benefits, in old news, weighing down budgets in the public and private sectors. Still, I think that building something that people want to buy would do a lot for the US auto industry...

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