GM History, 1990 - 1996

As GM moved into the Nineties, it was apparent that economic uncertainties, competitive pressures, intense global competition, stringent fuel economy standards, tougher emissions standards, and a pace of change more challenging than ever would affect all automobile manufacturers.

In 1990, EDS had record revenues and profits, GM Hughes Electronics had record revenues and GMAC posted its second best earnings ever. However, even with these and many other accomplishments, the Corporation recorded an overall loss for 1990. World events had a negative impact on the automotive markets. Conflict in the Middle East, the plunge in consumer confidence, and a U.S. recession all played major roles in increasing the pressure on virtually every aspect of GM’s business.

It became essential that GM improve performance, reduce costs and make GM known as a company that cares most for its customers. To combat these forces, GM changed its approach to design and manufacturing to eliminate waste and began seeking new ways to bring products to the market faster. Global competition became the name of the game.

In 1990, the Impact, an electric car prototype designed from the ground-up for efficiency and high performance was introduced. Saturn Corporation, also, introduced its all-new high-quality, high-value, fuel-efficient cars to the public to compete against the imports in the small car market. GM formed a single, powertrain focused organization, the GM Powertrain Division, made up of the GM Engine Division and Hydra-matic Division to improve customer satisfaction of powertrain systems. GM and Volga Auto Works (VAZ), the leading vehicle manufacturer in the Soviet Union signed agreements enabling GM to become the first American-based auto manufacturer to establish a working relationship with the Soviet auto industry. GM also announced it would build the "GM Pulsat Network" a dealer satellite communications network to strengthen sales and service effectiveness of GM dealers and better serve GM customers.

In 1991, the American automotive industry sustained losses unparalleled in its history. The challenges facing GM were particularly acute in the primary North American automotive market. GM accelerated fundamental changes in the way GM did business. Plants were idled throughout North American Operations, the salaried and hourly work force was reduced through attrition and retirements, executive compensation was reduced and many non-core assets were sold.

However, GM still introduced more new products in 1991 than any other automaker in the world had introduce in a 12-month period (nine cars, six trucks and five engines.) Customer satisfaction became an over-riding concern. The 24-hour Roadside Assistance program was carried by every division of GM, Bumper-to-Bumper Plus Warranty covered every part of every GM car or light truck for three years or 36,000 miles, without a deductible, and GMAC’s Smart Lease program was introduced to offer customers the option of leasing the GM vehicle of their choice with typically lower monthly payments.

The year of 1992 was known as the year of management changes at General Motors. GM launched a major reorganization to streamline its business practices and downsize its North American Operations (NAO). These changes were essential to GM’s vision of total customer satisfaction and the restoration of profitability. GM’s new structure led to more flexible decision-making processes, more efficient utilization of technical and capital resources, and increased management accountability for performance to produce high-value, high-quality products and services.

The five business sectors became NAO Automotive, International Automotive, Finance/Insurance, EDS, and GMHE -- each with its own Strategy Board to push decision making down in the organization. The Chevrolet-Pontiac-GM of Canada (C-P-C) and Buick-Oldsmobile-Cadillac (B-O-C) Groups were eliminated and individual nameplates were restored. The GM Technical Center consolidated five staffs into three becoming the NAO Technical Center. GM formed a centralized Vehicle Launch Center (VLC) with concentration on engineering and technical resources. Engineers from the car and truck divisions were joined by engineers from the Engineering Center and the Manufacturing Center to work as a team to strategically plan and execute new products. All component groups were consolidated into the GM Automotive Components Group Worldwide (ACGW) becoming the largest supplier in the industry. Its focus became global, those component businesses that did not have growth or profit potential were closed or sold.

Responding to the competitive realities of the marketplace, GM took the necessary actions of rightsizing the Corporation for long-term health. The objective for every portion of the restructuring was to minimize disruption, eliminate redundancies, focus on value-added activity, and improve the overall responsiveness of the organization while still providing an effective safety net for displaced employees. A variety of approaches were used to pare down the size of the work force. Significant reductions were made in both the salaried and hourly work forces. Salaried employees declined from 91,000 to 82,000 in 1992 with a goal of 71,000 by 1994. Hourly employees declined from 274,000 to 272,000 by 1992. Also, the Central office staff was reduced from about 13,500 to about 2,300 with many of the functions transferring to operating units.

In successful effort to regain lost market share, GM also launched the “GM Card” MasterCard allowing users to build up annual credits of 5 percent or more on each item charged toward the future purchase or lease of a new GM vehicle.

Difficulties faced in the past few years were in a sense the overdue wake-up call for General Motors. GM’s success had made it easy to ignore the significance of change and the signs of potential future problems, as the corporation’s legendary leader, Alfred Sloan, warned it could happen when he published his memoirs in 1963. The lesson is that for unrivaled leaders, success itself breeds the roots of complacency, myopia and ultimately, decline. That’s a generalized scenario, but leaders in all kinds of industries and businesses had the same harsh wake-up call in recent years.

1993 was a watershed year in GM’s drive to return to profitability and reassert industry leadership. Reflecting a major improvement in North American Operations (NAO) as well as strong earnings from International Automotive Operations, GMHE, EDS and GMAC, the corporation earned a total of $2.5 billion representing an $11.1 billion turnaround in NAO from 1991: a dramatic and gratifying turnaround after three straight years of staggering losses.

The most urgent challenge was to reverse the financial losses from the North American Operations. The objective for 1993 was for NAO to break even. The NAO team exceeded that objective, achieving a net income of $427 million in the fourth quarter of 1993. The new target was to make NAO profitable on a net income basis in 1994.

Intensified efforts in the areas of: customer focus, product quality, global sourcing and advance purchasing; lean manufacturing; commonization of processes, systems, and parts; and integration of global resources yielded results in 1993.

NAO achievements included U.S. deliveries of more than 4.7 million cars and trucks -- almost six percent over the 1992 calendar year and more than one million units ahead of GM’s closest competitor. 1993 was the best year for GMC Truck with sales surpassing the 400,000 mark for the first time. Saturn’s sales exceeded 225,000 units for the first time. Cadillac continued its leadership of the luxury market for the 45th year with 1993 calendar-year sales again exceeding 200,000 units. Automotive Components Groups (ACG) established manufacturing operations, customer service offices or joint ventures in China, Japan, Europe and Australia. And, GM and Toyota signed an unprecedented supply and sales agreement to sell GM cars as Toyotas in Japan. GM will build right-hand drive Chevrolet Cavaliers in the U.S. Toyota will purchase these models from GM and sell them in Japan.

At the same time, GM made significant progress in closing the quality gap with the best of the competition. The gap between GM and the best-in-class competition has been cut to less than 0.4 problems-per-car and less than 0.5 problems-per-truck.

In 1994, GM recorded all-time record net income of $4.9 billion, and all of GM's business sectors reported strong sales and earnings. Its success was spread across all its business sectors and geographical operations; North American Operations were profitable, and GM Europe was that region's most profitable volume auto manufacturer.

EDS and Hughes Electronics also reported record earnings in 1994 and strengthened their positions in fast-moving technologies of information management and telecommunications. Hughes' launch of DIRECTV was the most successful new product introduction in consumer electronics history.

Automotive Component Group Worldwide (ACGW) (now Delphi Automotive Systems), became a separate business sector of the Corporation in 1994. With sales of over $26 billion, and 190 operations and 17 technical centers in 31 countries, it is the world's largest automotive systems manufacturer. Growing rapidly, in the '90s, it has established manufacturing operations, customer service offices and joint ventures in China, Japan, Europe and Australia. It is now a supplier to virtually all the world's automobile manufacturers, as well as a strategic partner to GM's vehicle operations.

In 1994, evolutionary steps were taken to enhance NAO's ability to deliver segment-defining vehicles, implement lean, common operating and business systems, and continue progress in global intergration. The three NAO passenger car platforms and Saturn were combined under two groups. The new passenger car organizations became the Small Car Group made up of Saturn Corporation and the Lansing Automotive Division, and the Midsize and Luxury Car Group, composed of the Midsize Car Division and Cadillac Luxury Car Division.

In 1995, General Motors continued emphasis on quality leadership, common processes and systems, leveraging its global resources, achieving competitiveness in cost, and introducing targeted products for specific customer groups continued to pay off. GM reported record calendar-year results demonstrating the solid progress it made toward achieving its goal of consistent industry-leading financial results, even though the overall worldwide industry was slightly weaker in 1995 than during the previous year. Consolidated net income for the year was a record $6.9 billion compared with $4.9 billion in 1994. Sales and revenues for the 1995 calendar year totaled $168.8 billion -- a 9.0 percent increase from 1994, when revenues totaled $155.0 billion. General Motors dealers delivered a total of 8.3 million units, maintaining GM's position as the number-one vehicle producer worldwide for more than 60 consecutive years.

In 1996, General Motors began the year announcing that it would be the first automaker in modern times to market specifically designed electric vehicles to the public when its new EV1 passenger car is scheduled to go on sale later in the year. General Motors also announced plans to market an electric pick-up truck -- the Chevrolet S-10 -- nationwide in 1997 for use in commercial fleets.

As computer technology begin to revolutionize marketing and advertising, General Motors began an aggressive initiative to become No. 1 in marketing cars and trucks on the Internet. GM unveiled gm.com on the World Wide Web with a host of the latest Web technologies that provided an engaging overview and seamless route to divisional car and truck production line information as well as other services offered by GM subsidiaries. GM provided over 16,000 pages of information with 98,000-plus links to the world. Consumer response to the GM Web site was so popular and overwhelming when it went on-line that the first day GM had to increase its capacity by more than eight times its initial capability.

Looking to the future, GM is in transition from a base of multinational and regional operations to consolidated global strategies. Planning is underway to coordinate many of the North American and International vehicle platforms, the common structural systems which are the basis of its cars and trucks.

With common engineering and manufacturing systems and common components, GM will be able to offer a greater variety of vehicles tailored to needs and tastes of customers in the various worldwide markets and build them with lower costs.

As John F. Smith, Jr., GM chief executive officer and president stated, "GM is changing its ways and will continue changing."