Roger B. Smith(1925-2007)
- Additional Crew
Rodger B. Smith was born in Columbus, Ohio on July 12, 1925. He earned
a bachelor degree in business administration at the University of
Michigan in 1947, and his MBA at the University of Michigan's Ross
School of Business in 1953. He served in the United States Navy from
1944 to 1946.
Smith began his career at GM (General Motors) in 1949 as an accounting
clerk, and had become the company's treasurer by 1970, and vice
president the following year. In 1974, Smith was elected executive vice
president in charge of the financial, public relations, and government
relations staffs. He ascended to chairman of GM in 1981.
When Smith took over GM, it was reeling from its first annual loss
since the early 1920s. Its reputation had been tarnished by civil and
personal injury lawsuits, persistent quality problems with its
manufactured vehicles, bad labor relations, public protests over the
installation of Chevrolet engines in Oldsmobiles, and by a poorly
designed diesel engine. GM was also losing its market share to foreign
automakers for the first time.
Deciding that GM needed to completely change its structure and culture
in order to remain competitive into the future, Smith instituted
several initiatives that included forming strategic joint ventures with
Japanese and South Korean automakers, launching the Saturn division,
investing heavily in technological automation and robotics, and
attempting to rid the company of its risk-averse bureaucracy. However,
Smith's far-reaching goals proved too ambitious and overwhelming to be
implemented effectively in the face of the company's resilient
corporate culture and bureaucracy. Despite Smith's vision for a new and
better GM corporation, he was unable to successfully integrate GM's
major acquisitions, several of which also failed to tackle the root
causes of GM's fundamental problems.
Smith began the reorganization of GM that would define his chairmanship
with the 1981 creation of the worldwide Truck and Bus Group,
consolidating the design, manufacture, sales and service of all trucks,
buses and vans under one umbrella. The year 1982 saw the creation of
the Truck and Bus Manufacturing Division, which combined all truck
manufacturing and assembly operations from their former divisions, but
still a separate bureaucracy from that of the Truck and Bus Group.
In 1982, Smith negotiated contract concessions with the United Auto
Workers and cut planned raises for white-collar workers. After
unveiling a more generous bonus program for top executives that
provoked an angry response from the union, Smith was forced to
back-pedal. Relations with the UAW, management, and stockholders
remained strained. Profits improved in 1983 and Smith began unveiling
his vision for reorganization, diversification, and
"re-industrialization." As as result, many of the auto-making factories
in the USA began to close down starting with the Los Angeles South Gate
assembly plant that same year.
Smith took on the massive GM bureaucracy with disastrous results. A sea
change in how GM would market and build cars in the future, the 1984
reorganization was intended to streamline the process and create
greater efficiencies; the reverse actually occurred. Combining the
nameplate divisions, Fisher Body, and GM Assembly into two groups,
C-P-C (Chevrolet, Pontiac, Canada) to build small cars and B-O-C
(Buick, Oldsmobile, Cadillac) to build large cars, the effort was
subsequently criticized for creating chaos within the company.
Longstanding informal relationships that greased the wheels of GM were
severed, seemingly overnight, leading to confusion and slipping new
product programs. The reorganization virtually stopped GM in its tracks
for 18 months, and never really worked as intended, with the CPC
division building Cadillacs and BOC building Pontiacs. The
reorganization added costs and created more layers of bureaucracy when
the new groups added management, marketing and engineering staff,
duplicating existing staff at both the corporate and division levels.
Almost ten years elapsed before the 1984 reorganization was unwound and
all car groups were combined into one division.
Smith's major new car program prior to the 1984 reorganization, GM10
(also known as W-body), has been called "The biggest catastrophe in
American industrial history." Beginning in 1982, and costing $7
billion, the plan was to replace all mid-size cars produced by
Chevrolet, Pontiac, Oldsmobile, and Buick. The plan was huge in scope,
calling for seven plants that would each assemble 250,000 of the cars,
or 21% of the total U.S. car market. It was badly executed from the
start, but the 1984 reorganization wrought havoc on the program and it
never recovered. By 1989, the year before the last of the GM10s were
launched, GM was losing $2,000 on every one of the cars it produced.
A defining theme of Smith's tenure was his vision to modernize GM using
advanced technology. Some have suggested he was ahead of his time in
attempting to create a 21st-century organization in a company not ready
for the technology. "Lights out" factories were envisioned, where the
only employees were those supervising the robots and computers. This
was obviously viewed negatively by the unions, and further strained
relations. Over the decade of the 1980s, GM spent upwards of $90
billion attempting to remake itself, including a 1981 joint venture
with the Japanese robot manufacturer, Fujitsu-Fanuc. With the resulting
venture, GMF Robotics, GM became the largest manufacturer of robots in
the world. Unfortunately, the experience failed to meet with Smith's
vision, with the new robots famously painting each other instead of the
cars, or robots welding doors shut. Ultimately, some robotic systems
and automation installed in several plants were removed shortly after
their installation. The astonishing sums expended were widely viewed as
money wasted.
Responding to a 1986 report on 3-year capital expenditures projected at
almost $35 billion, VP of finance F. Alan Smith (no relation) opined
that the sum could be spent on purchasing both Toyota and Nissan
resulting in a bump in market share overnight and openly questioned
whether the proposed capital expenditures would pay the same dividends;
they did not. By the time Smith retired, GM had evolved from the lowest
cost producer in Detroit to its highest cost producer, due in part to
the drive to acquire advanced technology that never paid dividends in
efficiency.
In 1984, Smith oversaw General Motors' acquisition of Electronic Data
Systems from its founder Ross Perot for $2.55 billion, serving two
purposes. First was the opportunity to modernize and automate GM to
fulfill Smith's goals; second, it was an effort to broaden out of its
manufacturing base and into technology and services. As a result of the
EDS acquisition, Perot became GM's largest single shareholder, joined
its board of directors, and immediately became a source of friction to
Smith and a vocal and public critic of Smith and GM's management. In
1986 Smith and the board orchestrated a $743 million buyout of Perot's
GM stock at a substantial premium over the market value of the shares.
Perot accepted the buyout, but publicly denounced the expenditure as
outrageous at a time GM was closing plants and laying off workers. He
announced that he would put the money in escrow to give the automaker a
chance to reconsider, but never actually sequestered the funds.
The structure of the deal was unusual in that EDS would be owned by GM,
but Smith promised it would allow Perot autonomy to run the company. In
addition, the stock of EDS became a special 'Class E' GM stock, which
was separate from normal GM stock, an arrangement which almost got GM
kicked off the NYSE. Perot eventually agreed to the deal, because, as
Lee puts it, he was sold on the idea of saving millions of American
jobs by helping GM fight off Japanese competition.
The relationship between Smith, Perot, and the EDS executives ruptured
openly in September 1985, during a meeting in Dallas that brought the
EDS executive compensation issue to a head. Smith was reluctant to
accept the EDS plan, substituting a plan of his own. What ensued was
one of the most vitriolic corporate battles of the 1980s, with Perot
and Smith publicly exchanging barbs using the media, which delightedly
splashed the story over every business publication in the U.S. Perot
notoriously lashed out at Smith in a 1988 exclusive to Fortune
Magazine, saying: "My question is: Why haven't we unleashed their
potential? The answer is: the General Motors system. It's like a
blanket of fog that keeps these people from doing what they know needs
to be done. I come from an environment where, if you see a snake, you
kill it. At GM, if you see a snake, the first thing you do is go hire a
consultant on snakes. Then you get a committee on snakes, and then you
discuss it for a couple of years. The most likely course of action
is... nothing. You figure, the snake hasn't bitten anybody yet, so you
just let him crawl around on the factory floor. We need to build an
environment where the first guy who sees the snake kills it."
His tenure at GM ended one year after the release of the popular
underground documentary film Roger & Me (1989), where many displaced GM
workers called for Smith's retirement. Smith voluntarily resigned as
chairman of GM in 1990 and afterwords retired from business altogether.
He later toured the new Saturn facility in Tennessee, which he brought
to fruition, in 1991.
Smith's tenure is commonly viewed as a failure, as GM's share in the US
stock market fell from 46% to 35%, and it took on considerable debt
causing it to lapse close to bankruptcy in the early 1990s. As a
result, CNBC has called Smith one of the "Worst American CEOs of All
Time", stating: "Smith had the right idea, but lacked the intuition to
understand how his rip-up-the-carpet redo would affect the delicate web
of informal communication that GM relied upon."
Roger B. Smith died in his sleep on November 29, 2007 after a short
illness at age 82. A specific cause of death has never been released.
a bachelor degree in business administration at the University of
Michigan in 1947, and his MBA at the University of Michigan's Ross
School of Business in 1953. He served in the United States Navy from
1944 to 1946.
Smith began his career at GM (General Motors) in 1949 as an accounting
clerk, and had become the company's treasurer by 1970, and vice
president the following year. In 1974, Smith was elected executive vice
president in charge of the financial, public relations, and government
relations staffs. He ascended to chairman of GM in 1981.
When Smith took over GM, it was reeling from its first annual loss
since the early 1920s. Its reputation had been tarnished by civil and
personal injury lawsuits, persistent quality problems with its
manufactured vehicles, bad labor relations, public protests over the
installation of Chevrolet engines in Oldsmobiles, and by a poorly
designed diesel engine. GM was also losing its market share to foreign
automakers for the first time.
Deciding that GM needed to completely change its structure and culture
in order to remain competitive into the future, Smith instituted
several initiatives that included forming strategic joint ventures with
Japanese and South Korean automakers, launching the Saturn division,
investing heavily in technological automation and robotics, and
attempting to rid the company of its risk-averse bureaucracy. However,
Smith's far-reaching goals proved too ambitious and overwhelming to be
implemented effectively in the face of the company's resilient
corporate culture and bureaucracy. Despite Smith's vision for a new and
better GM corporation, he was unable to successfully integrate GM's
major acquisitions, several of which also failed to tackle the root
causes of GM's fundamental problems.
Smith began the reorganization of GM that would define his chairmanship
with the 1981 creation of the worldwide Truck and Bus Group,
consolidating the design, manufacture, sales and service of all trucks,
buses and vans under one umbrella. The year 1982 saw the creation of
the Truck and Bus Manufacturing Division, which combined all truck
manufacturing and assembly operations from their former divisions, but
still a separate bureaucracy from that of the Truck and Bus Group.
In 1982, Smith negotiated contract concessions with the United Auto
Workers and cut planned raises for white-collar workers. After
unveiling a more generous bonus program for top executives that
provoked an angry response from the union, Smith was forced to
back-pedal. Relations with the UAW, management, and stockholders
remained strained. Profits improved in 1983 and Smith began unveiling
his vision for reorganization, diversification, and
"re-industrialization." As as result, many of the auto-making factories
in the USA began to close down starting with the Los Angeles South Gate
assembly plant that same year.
Smith took on the massive GM bureaucracy with disastrous results. A sea
change in how GM would market and build cars in the future, the 1984
reorganization was intended to streamline the process and create
greater efficiencies; the reverse actually occurred. Combining the
nameplate divisions, Fisher Body, and GM Assembly into two groups,
C-P-C (Chevrolet, Pontiac, Canada) to build small cars and B-O-C
(Buick, Oldsmobile, Cadillac) to build large cars, the effort was
subsequently criticized for creating chaos within the company.
Longstanding informal relationships that greased the wheels of GM were
severed, seemingly overnight, leading to confusion and slipping new
product programs. The reorganization virtually stopped GM in its tracks
for 18 months, and never really worked as intended, with the CPC
division building Cadillacs and BOC building Pontiacs. The
reorganization added costs and created more layers of bureaucracy when
the new groups added management, marketing and engineering staff,
duplicating existing staff at both the corporate and division levels.
Almost ten years elapsed before the 1984 reorganization was unwound and
all car groups were combined into one division.
Smith's major new car program prior to the 1984 reorganization, GM10
(also known as W-body), has been called "The biggest catastrophe in
American industrial history." Beginning in 1982, and costing $7
billion, the plan was to replace all mid-size cars produced by
Chevrolet, Pontiac, Oldsmobile, and Buick. The plan was huge in scope,
calling for seven plants that would each assemble 250,000 of the cars,
or 21% of the total U.S. car market. It was badly executed from the
start, but the 1984 reorganization wrought havoc on the program and it
never recovered. By 1989, the year before the last of the GM10s were
launched, GM was losing $2,000 on every one of the cars it produced.
A defining theme of Smith's tenure was his vision to modernize GM using
advanced technology. Some have suggested he was ahead of his time in
attempting to create a 21st-century organization in a company not ready
for the technology. "Lights out" factories were envisioned, where the
only employees were those supervising the robots and computers. This
was obviously viewed negatively by the unions, and further strained
relations. Over the decade of the 1980s, GM spent upwards of $90
billion attempting to remake itself, including a 1981 joint venture
with the Japanese robot manufacturer, Fujitsu-Fanuc. With the resulting
venture, GMF Robotics, GM became the largest manufacturer of robots in
the world. Unfortunately, the experience failed to meet with Smith's
vision, with the new robots famously painting each other instead of the
cars, or robots welding doors shut. Ultimately, some robotic systems
and automation installed in several plants were removed shortly after
their installation. The astonishing sums expended were widely viewed as
money wasted.
Responding to a 1986 report on 3-year capital expenditures projected at
almost $35 billion, VP of finance F. Alan Smith (no relation) opined
that the sum could be spent on purchasing both Toyota and Nissan
resulting in a bump in market share overnight and openly questioned
whether the proposed capital expenditures would pay the same dividends;
they did not. By the time Smith retired, GM had evolved from the lowest
cost producer in Detroit to its highest cost producer, due in part to
the drive to acquire advanced technology that never paid dividends in
efficiency.
In 1984, Smith oversaw General Motors' acquisition of Electronic Data
Systems from its founder Ross Perot for $2.55 billion, serving two
purposes. First was the opportunity to modernize and automate GM to
fulfill Smith's goals; second, it was an effort to broaden out of its
manufacturing base and into technology and services. As a result of the
EDS acquisition, Perot became GM's largest single shareholder, joined
its board of directors, and immediately became a source of friction to
Smith and a vocal and public critic of Smith and GM's management. In
1986 Smith and the board orchestrated a $743 million buyout of Perot's
GM stock at a substantial premium over the market value of the shares.
Perot accepted the buyout, but publicly denounced the expenditure as
outrageous at a time GM was closing plants and laying off workers. He
announced that he would put the money in escrow to give the automaker a
chance to reconsider, but never actually sequestered the funds.
The structure of the deal was unusual in that EDS would be owned by GM,
but Smith promised it would allow Perot autonomy to run the company. In
addition, the stock of EDS became a special 'Class E' GM stock, which
was separate from normal GM stock, an arrangement which almost got GM
kicked off the NYSE. Perot eventually agreed to the deal, because, as
Lee puts it, he was sold on the idea of saving millions of American
jobs by helping GM fight off Japanese competition.
The relationship between Smith, Perot, and the EDS executives ruptured
openly in September 1985, during a meeting in Dallas that brought the
EDS executive compensation issue to a head. Smith was reluctant to
accept the EDS plan, substituting a plan of his own. What ensued was
one of the most vitriolic corporate battles of the 1980s, with Perot
and Smith publicly exchanging barbs using the media, which delightedly
splashed the story over every business publication in the U.S. Perot
notoriously lashed out at Smith in a 1988 exclusive to Fortune
Magazine, saying: "My question is: Why haven't we unleashed their
potential? The answer is: the General Motors system. It's like a
blanket of fog that keeps these people from doing what they know needs
to be done. I come from an environment where, if you see a snake, you
kill it. At GM, if you see a snake, the first thing you do is go hire a
consultant on snakes. Then you get a committee on snakes, and then you
discuss it for a couple of years. The most likely course of action
is... nothing. You figure, the snake hasn't bitten anybody yet, so you
just let him crawl around on the factory floor. We need to build an
environment where the first guy who sees the snake kills it."
His tenure at GM ended one year after the release of the popular
underground documentary film Roger & Me (1989), where many displaced GM
workers called for Smith's retirement. Smith voluntarily resigned as
chairman of GM in 1990 and afterwords retired from business altogether.
He later toured the new Saturn facility in Tennessee, which he brought
to fruition, in 1991.
Smith's tenure is commonly viewed as a failure, as GM's share in the US
stock market fell from 46% to 35%, and it took on considerable debt
causing it to lapse close to bankruptcy in the early 1990s. As a
result, CNBC has called Smith one of the "Worst American CEOs of All
Time", stating: "Smith had the right idea, but lacked the intuition to
understand how his rip-up-the-carpet redo would affect the delicate web
of informal communication that GM relied upon."
Roger B. Smith died in his sleep on November 29, 2007 after a short
illness at age 82. A specific cause of death has never been released.