Roger Smith: Former chief of General Motors
Monday 03 December 2007
Roger Bonham Smith, motor industry executive: born Columbus, Ohio 12 July 1925; joined General Motors Corp 1949, director 1974-92, chairman and chief executive officer 1981-90; married 1954 Barbara Rasch (two sons, two daughters); died Detroit, Michigan 29 November 2007.
Arguably Roger Smith changed General Motors more than any of its chairmen since the legendary Alfred Sloan. But his decade-long stewardship of what was then the world's largest manufacturing company will go down in history as part of a secular decline which continues to this day.
A few figures tell the sad story. When Smith became GM's chairman in 1981, the sprawling company accounted for 46 per cent of the US car market. By the time he stepped down nine years later that share had fallen to 35 per cent. Today it is barely 24 per cent.
The man himself perhaps made his greatest impact on the public consciousness as the unwitting fall guy in the title of Michael Moore's satirical 1989 documentary Roger & Me, dealing with the collapse of the director's home town of Flint, Michigan, after GM had closed its old plant there. The film entertainingly recounts Moore's unavailing efforts to obtain a meeting with Smith to challenge him over what had happened. But its underlying message of the fading fortunes of the US motor industry, and of the towns that had relied upon it, is as pungent now as ever.
Argument will long continue over Smith's role in the decline. To his credit, he realised when he took over that the bloated and complacent GM was uniquely vulnerable. The late 1970s oil price shock had reduced the appeal of the petrol-guzzling, uninspiringly designed cars which the company produced, just as far nimbler Japanese competitors were entering the US market in earnest and Ford and Chrysler, GM's domestic rivals, were getting their own houses in order. His response to the looming crisis, however, may only have made matters worse.
Roger Smith was a life-long General Motors man. His family moved from Ohio to Detroit when he was a child. After serving in the US Navy, he joined GM as an accountant in 1949 and steadily worked his way up the financial side of the company, from where it traditionally drew its top executives. By 1970 he was GM's treasurer and 10 years later was appointed chairman.
For his critics, he was a mere bean-counter, obsessed with the bottom line. "You don't pay dividends on market share," he would say, and when asked once how American consumers should react to low-cost Japanese imports, his response was that they should "buy a used Buick." But the sharp-tongued and often imperious boss was also an innovator, with an unswerving faith in technology. During his tenure, GM formed joint ventures with Japanese and Korean manufacturers, launched the Saturn range of small cars, spent over $50bn on new plants, automation and robotics, cutting vast numbers of jobs, both blue and white collar, in the process.
But almost everything seemed to backfire. Reasonably enough, Smith decided to reorganise GM's five divisions of Buick, Oldsmobile, Cadillac, Chevrolet and Pontiac, then operating as independent fiefdoms, into two huge and theoretically more integrated groups. Alas, the outside management consultants who drew up the plan did not grasp the fierce loyalities workers and managers had to their own brands.
Smith was neither the first or the last reformer of GM to be defeated by its ingrained culture and its snails-paced bureaucracy. In 1984 came his boldest bid to automate production, with the $2bn acquisition of Electronic Data Systems (EDS), then owned by the idiosyncratic Texan businessman Ross Perot (who would run for the White House in 1992). The clash of corporate cultures and egos was devastating. In 1986 Smith fired Perot, buying his silence with a $750m pay-off, but not before Perot famously quipped to Business Week how "at EDS if we see a snake, we kill it. At GM, they organise a committee on snakes."
Making things worse was Smith's lack of PR acumen. True, the Saturn venture did bring improvement in union-management relations, but not before the powerful United Automobile Workers union had led a series of strikes. He enraged the UAW for instance in 1982, when in the midst of delicate labour talks, news came of increased bonuses for top managers. And just before he retired, GM revealed changes in its management pensions scheme that would double Smith's retirement benefits.
But he remained convinced that history would judge him more kindly. "I don't expect them to build a big stone monument to me ," he said in 1995. "I'd like to think that if I did anything extraordinary, it was the work we did getting the corporation ready for the 21st century." Alas, the question in this new millennium is less whether GM can recapture lost glories than whether it can survive at all.
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