Sixty to Zero

Sixty to Zero: An Inside Look at the Collapse of General Motors--and the Detroit Auto Industry

Alex Taylor
Foreword by Mike Jackson
Copyright Date: 2010
Published by: Yale University Press
Pages: 256
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  • Book Info
    Sixty to Zero
    Book Description:

    The collapse of General Motors captured headlines in early 2009, but as Alex Taylor III writes in this in-depth dissection of the automaker's undoing, GM's was a meltdown forty years in the making. Drawing on more than thirty years of experience and insight as an automotive industry reporter, as well as personal relationships with many of the leading players, Taylor reveals the many missteps of GM and its competitors: a refusal to follow market cues and consumer trends; a lack of follow-through on major initiatives; and a history of hesitance, inaction, and failure to learn from mistakes. In the process, he provides lasting lessons for every executive who confronts the challenges of a changing marketplace and global competition. Yet Taylor resists condemning GM's leadership from the privileged view of hindsight. Instead, his account enables the reader to see GM's decline through the eyes of an insider, with the understanding that corporate decision-making at a company as large as General Motors isn't as simple as it may seem. Taylor's book serves as a marvelous case study of one of the United States' premier companies, of which every American quite literally now holds a share.

    eISBN: 978-0-300-15888-5
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Foreword
    (pp. ix-xiv)
    Mike Jackson

    Few brands ever become so successful that they transcend the products and services they stand for and actually come to represent the countries and cultures from which they emerge. Coca-Cola is one—during the Second World War, GIs brought Coke with them to some of the remotest corners of the earth, and in the course of a few years, that hourglass-shaped bottle became a proxy for American power worldwide. McDonald’s is another, introducing American middle-class sensibilities regarding food, convenience, and service to countries on six continents.

    General Motors is a third. During the postwar boom, as domestic manufacturing reached its...

  4. Acknowledgments
    (pp. xv-xvi)
  5. Introduction
    (pp. 1-12)

    Because of its size and history, its products, and its advertising, General Motors, along with brands like Chevrolet and Cadillac, is a name instantly recognizable to people everywhere. Before their eyes, and mine, this great company—hailed as a monument to superior corporate management, technological achievement, and product excellence—spiraled downward for forty years before it crumbled into bankruptcy in 2009 and had to be rescued by the federal government. For years, GM was the largest automaker in the world and utterly dominated the American market. Now it is struggling to justify the investment of fifty billion dollars in taxpayer...

  6. CHAPTER 1 GM at the Peak
    (pp. 13-22)

    On November 1, 1954,Timemagazine published a cover story that was so energizing and admiring that it made you want to stand up and salute its subject. Entitled “The Battle of Detroit,” it described the work done by GM president and CEO Harlow Curtice to get new cars ready for the 1955 model year. In those years,Timewas usually friendly to big business, especially those who were big advertisers. The November story was a prelude toTimenaming Curtice Man of the Year for 1955, and it couldn’t have painted him in more heroic terms if he were...

  7. CHAPTER 2 Growing Up in the Car-Crazy Fifties
    (pp. 23-32)

    Coming of age in the Connecticut suburbs, I was only dimly aware of the colossus that GM had become. Fairfield County wasn’t Detroit or Flint. No one in town worked in an auto factory or at a supplier, and even GM’s advertising agencies were hundreds of miles away.

    Cars, on the other hand, were a big deal. Everybody in the neighborhood knew when a new car showed up in somebody’s driveway. This wasn’t Los Angeles, so you weren’t what you drove, but cars did define how you felt about yourself and how you wanted others to feel about you. GM,...

  8. CHAPTER 3 Cracks in GM’s Edifice
    (pp. 33-52)

    GM has an embarrassment of riches,”Timedeclared in March 1962. “With Frederic Donner, a tack-sharp onetime accountant, as chairman, G.M. now commands 55.7% of the U.S.-made auto market. That is a company record, the highest in the industry since Henry Ford’s model Ts got 60% in 1921, and more than enough to prompt some nervous glances from G.M. officials toward the U.S. Justice Department. . . . Chevy alone has captured 33% of the market.”

    In fact, by the 1960s, GM had stopped growing by several key measures. Its U.S. market share peaked in 1962 and started falling after...

  9. CHAPTER 4 Insecure Colossus: The Roger Smith Era
    (pp. 53-70)

    Perhaps it was the influence of growing up in the 1950s withTimemagazine in the house, or reading articles and books about Henry Luce and his influence, or living in Fairfield County with its overpopulation of publishing and advertising executives. Whatever the reason, I always felt that working at the Time & Life Building in New York City would be a career pinnacle, representing glamour, sophistication, and journalistic achievement.

    I got there, but it wasn’t easy and required a long and circuitous journey. While in Grand Rapids, I had leveraged the accidental presidency of Gerald Ford into a job as...

  10. CHAPTER 5 Ford Speeds Up
    (pp. 71-80)

    With its air of prosperity, stability, and predictability, General Motors bore little resemblance to its more raffish crosstown rival, Ford. Controlled by the Ford family with its 40 percent share of the voting rights guaranteed by a special class of stock, the number two automaker was rife with palace intrigue. Executives jockeyed for favorable notice from whichever Ford was sitting as king. That of course made Ford much more fun for a journalist to cover. Sources with delicious secrets and fascinating gossip to pass on were far more abundant in Dearborn. The reason was simple: they had a lot more...

  11. CHAPTER 6 The Saturn Moonshot
    (pp. 81-92)

    Roger Smith called his big ideas “lulus,” and Saturn was a lollapalooza. Frustrated and impatient with trying to cure GM’s manufacturing, engineering, and marketing woes, Smith decided to start over again with a clean sheet of paper. So he created Saturn as a way to reinvent GM by doing everything differently. Smith tried to do it all at once. He tried to bypass GM’s balkanized manufacturing system by combining all of Saturn’s factory operations in one place. He tried to whitewash GM’s sorry union relations by giving workers a piece of the action in exchange for more cooperation. He tried...

  12. CHAPTER 7 Lee Iacocca, Blemishes and All
    (pp. 93-102)

    Looking on from offstage while GM struggled to reinvent itself was another automaker and its chief executive: Chrysler chairman and CEO Lee Iacocca. With his swagger, deft phrasemaking, and undisguised appreciation of the good life, Iacocca radiated more charisma on his own than a room full of GM suits. He was a magnet for editors because he usually said outrageous and unpredictable things—and because he sold magazines. Before Apple’s Steve Jobs becameFortune’s most reliable newsstand seller, Iacocca was one of its favorite cover subjects. Even after he left Chrysler, he became that rare retired executive who continued to...

  13. CHAPTER 8 Bob Stempel and the Crisis of ’92
    (pp. 103-118)

    Though Iacocca-like procrastination would have been unthinkable at buttoned-up GM, Roger Smith made his own mistakes when it came to succession. Whether consciously or not, he picked somebody as different from himself as possible. Smith ignored the leading candidate from the finance staff, another Smith named F. Alan, and set up a bakeoff between two vehicle engineers—“car guys,” in Detroit parlance. It may have been the right idea, but it came at the wrong time. A savage recession was about to scorch the economy, and the man at the top of the company was unable to cope. He plunged...

  14. CHAPTER 9 Jack Smith’s Unfinished Revolution
    (pp. 119-132)

    Smith took over GM at a good time. The recession was ending, and business was on the upswing. The prosperity of the 1990s would keep GM solidly profitable through the decade. Smith did his part, shrinking the company, consolidating functions, and trying to remove the air of mystery about how the company was managed with all its committees and staffs. Total employment, which stood at 757,000 when Smith took over, had fallen to 388,000 by the time he left in June 2000.

    The consolidation was badly needed, and Smith made it a theme of his tenure. He took over a...

  15. CHAPTER 10 Bob Eaton’s Big Score
    (pp. 133-144)

    Despite superficial similarities, Chrysler’s Bob Eaton was no Jack Smith. The two men both came out of GM’s international operation, where Eaton worked for Smith. Physically, they were similar, too, both on the pudgy side, though Eaton was a few inches shorter—I would guess around five feet, eight inches tall. But unlike Smith, who was revered by his coworkers and respected by journalists, Eaton had a peculiar personality that put some people off. He seemed to derive little pleasure or satisfaction from his job. His usual expression was one of vague stomach upset. I am normally polite and respectful...

  16. CHAPTER 11 GM on Cruise Control
    (pp. 145-158)

    TheSports Illustratedcover jinx hitFortunein 1994—and Jack Smith. Within days after our glowing story appeared in the October 17 issue, GM was rocked by two pieces of bad news. First, the company surprised Wall Street on October 20 by revealing that it earned just $552 million on sales of $34.5 billion in the third quarter—mainly because its core North American auto operations lost $328 million. In two disastrous days, GM stock skidded 12 percent, to a new twelve-month low near forty-one dollars a share. All of a sudden, Jack Smith didn’t look so smart.


  17. CHAPTER 12 Succession Battles at Ford
    (pp. 159-168)

    Red Poling succeeded Don Petersen as chairman and CEO and guided Ford through the recession of 1990–1991. As he got ready to retire in 1993, the board of directors revisited the issue of succession and, once again, passed over Allan Gilmour. I was later told that the Ford family could never accept a gay man as CEO, but the cerebral, witty Gilmour was also perceived to have other shortcomings. His quips made him seem less than authoritative, and his habit of answering a question with another question made him appear indecisive.

    In place of Gilmour, a graduate of Harvard...

  18. CHAPTER 13 Wagoner Takes Over
    (pp. 169-178)

    Ford had become a powerhouse, but GM was now a stronger company, too. Tall, broad-shouldered, and steeped in GM lore, Wagoner seemed to me to be a good choice for CEO when he ascended in 2000. And indeed he could claim credit for significant achievements during his time in office. He unified North American operations by abolishing independent fiefdoms, achieved a historic agreement with the United Auto Workers on health care benefits, and aggressively pursued expansion in China. He accomplished all this while winning the affection and loyalty of his subordinates. I never heard a GM’er say a bad word...

  19. CHAPTER 14 Nasser, Ford, and Mulally
    (pp. 179-190)

    Whatever problems GM was having weren’t coming at the hands of its domestic competition. Under Daimler’s ownership, Chrysler remained an erratic and essentially vulnerable player. Ford, meanwhile, after the relative stability of the Trotman era, was once again consumed by the palace intrigue that is as much a part of the company as its blue oval trademark.

    Ordinarily, the CEO of a company as large and prominent as Ford who was as young (fifty-one) as Jac Nasser and enjoyed his colorful backstory (the son of Lebanese immigrants, he was raised in Australia) would have enjoyed considerable media attention. For his...

  20. CHAPTER 15 The Legend of Lutz
    (pp. 191-200)

    The history of GM, Ford, Chrysler, and nearly every auto company revolves around the CEO. Running an auto company requires developing strategic goals, investing large amounts of capital, and being willing to place big bets, and only the CEO is in a position to make those decisions. Lesser executives surface from time to time—Ed Cole, father of the Corvair; John DeLorean, the inspiration behind the Pontiac GTO; brand marketing’s Ron Zarella—but their appearances are brief and the arc of their careers is short when compared to that of the CEO.

    Yet the name of one non-CEO appears again...

  21. CHAPTER 16 The Uneven Legacy of Lee
    (pp. 201-210)

    After he retired from Chrysler, Lee Iacocca couldn’t get out of Michigan fast enough. He immediately packed up and headed for California. Iacocca chafed at being away from the action, however, and over the next fifteen years, he got involved in a series of high-profile business deals, nearly all of which turned out badly. Still, he persisted; he couldn’t resist the opportunity to make a buck. As recently as 2009, he was in the news again at the age of eighty-four promoting “Iacocca edition” fortieth-anniversary Mustangs. There was nobody like Iacocca.

    Even in retirement, Iacocca remained a fascinating personality because...

  22. CHAPTER 17 GM’s Inevitable Collapse
    (pp. 211-224)

    In retrospect, 2005 should have been seen as the year when the GM warning flags came out. It was now becoming clear that whatever Wagoner did, the company was headed off a cliff. It was a year when the board of directors should have stepped in and demanded more action than Wagoner was taking. They did not. Ford and Chrysler were on the cusp of big changes, but at GM it was still “steady as she goes.”

    The first quarter of 2005 was like a slow-motion car wreck. Buyers stopped responding to GM’s offerings even as the company’s incentives neared...

  23. CHAPTER 18 The End of the Road
    (pp. 225-234)

    After my article appeared on January 8, 2008, suggesting that a real turnaround was at hand at GM, I got burned again. Just as in 1994, the publication of a story with a strong positive slant was followed by a string of negative events more calamitous than I could have imagined. GM was caught off guard by the run-up in oil prices as its truck sales cratered, destroying any hope of profits in North America. Despite hopeful pronouncements, Delphi, its former parts division and still financially dependent on GM, took another turn for the worse and sank deeper into bankruptcy....

  24. Epilogue
    (pp. 235-242)

    In the summer and early fall of 2009, I spent time with GM’s new CEO, Fritz Henderson. In addition to a pair of formal interviews, we did some driving together at GM’s proving ground in Milford, Michigan. We never got lost in the countryside as I had with Rick Wagoner years earlier, but I did sit in the passenger seat while Henderson took a Cadillac CTS through a handling course consisting of plastic cones lined up on a paved surface. Demonstrating my inability to learn from experience, I kept Henderson talking the whole time, which kept him from fully demonstrating...

  25. Index
    (pp. 243-254)