General Motors was dying. That was the message in the newspapers and magazines as business writers honed their obituary skills. The smell of corporate demise left a cold fear in the hallways of GM buildings in Detroit and its suburbs. Downsized, battered, and adrift in a tattered economy, the world's largest corporation staggered under new blows. Wall Street had cut the giant's credit rating. Its stock price was plummeting. And its cars weren't selling.
If money were blood, the company would already be dead. It was hemorrhaging by the billions. Its top management was in disarray. A "car guy," an engineer who'd come up through the ranks, was in the chairman's seat for the first time in decades, and he'd been overcome by crisis. It was a crisis he'd inherited more than made, but it was his to resolve. He hadn't succeeded.
Now, in the autumn of 1992, chairman of the board Robert C. Stempel retreated behind the barricades and brooded. As the worst year in General Motors history groped toward winter, the man charged with producing miracles withdrew into executive paralysis. He couldn't bring himself to decide which plants to close or which new car programs to fund. He ignored interview requests from the media and let mail go unanswered. People close to him found him remote and distracted.
When he looked out the executive windows on the fourteenth floor of the General Motors headquarters on West Grand Boulevard in Detroit, Stempel could see a grim vision of the future. General Motors' headquarters, once a symbol, of the American dream, was surrounded by a slum. Stempel could see burned and gutted houses and apartments, or vacant lots where charred debris had been cleared away, or claptrap homes where some of Detroit's most dismal poor existed in dreary poverty. A sea of misery surrounded the island of the General Motors Building. It mirrored the condition of Stempel's company.
Inside his office, and inside his head, Bob Stempel felt surrounded. The national economy had escaped from recession and had been slowly improving for more than eighteen months. But General Motors was losing money, losing market share, losing respect, and losing its way. Nothing Bob Stempel did seemed to work. Too often he did nothing. The day after Stempel ascended to the throne in 1990, Saddam Hussein invaded Kuwait and in the uncertainty of wartime psychology, automobile sales dried up.
Then, faced with having to lay off thousands of assembly-line workers and close an unknown number of plants, Stempel agreed to pay laid-off union people 90 percent of their take-home pay for up to three years. Billions of dollars would be drained from the company's coffers to let folks stay home and be 100 percent nonproductive. When plants did need workers, Stempel couldn't transfer UAW members who lived more than fifty miles from the assembly line. The shackles Stempel accepted in dealing with the union almost killed GM. An editorial cartoon given wide national play even portrayed the chairman of the board as a crash dummy.
It was as bad or worse for others in GM's senior ranks. The foppish dandy pushed into the company presidency by Stempel, over the objections of some board members, had failed, too. Lloyd E. Reuss had fulfilled the dire forecasts about his management style and ability. He finally suffered a rude demotion by the board of directors in a spring 1992 rebellion. When Reuss fell as president, he took the chief financial officer with him, and triggered another of the bewildering reorganizations that cascaded over GM with every slip in market share, leaving the rank and file shaking their heads in bewilderment.
Now it was happening again. The events of spring 1992 were leading to an autumn coup.
At the General Motors Technical Center in Warren, Michigan, an industrial Detroit suburb a few miles northeast of GM's headquarters, the rumors of Stempel's impending demise flew freely. A new president, Jack Smith, had been in power for barely six months. There were signs that he knew what he was doing, but the confusion and frustration at the working level remained. Smith had given unprecedented power to a Strategy Board composed of about eighteen senior executives from GM's North American Operations (NAO), the biggest and most important piece of the international GM empire. NAO, the core automotive business -- the cars, the trucks, and the parts that go into them -- of the company, would reportedly lose more than $10 billion in 1992.
Everything bad that happened at the top flowed quickly down to the car programs, where General Motors met the real world. New-car programs were being hit with delay after delay. A new Chevrolet Camaro intended to be a 1992 model wouldn't reach dealers until late 1993. And a new Corvette, intended to be introduced as a '93, had been hammered with so many budget cuts and executive-ordered delays that it was barely alive as a 1997 model.
The story of Corvette mirrored the story of General Motors. A new Corvette was long overdue. The model on the road, introduced in 1983, was a moneymaker. But its $100 million or so in annual profit was puny by GM standards. Teams of artists and engineers had been working secretly on a new design since 1988. They lived a roller-coaster existence. The budget for doing the new Corvette, up to $250 million, had been granted, trimmed, partly restored, cut again, even wiped completely from the books. As GM sank into its sea of red ink, the ripple effect on Corvette was like a tidal wave. On a Monday morning in mid-October, 1992, the tidal wave made landfall.
Like the company itself, Corvette was dying.
General Motors was all but out of control, managed by rumor, innuendo, press leak, and reflex. Nobody was fully in charge. Bob Stempel collapsed at a meeting in Washington and was hospitalized. Two months later he underwent open-heart surgery.
The press had a field day -- weeks of field days -- as tasty bits of inside information that could only have come from the board of directors were leaked to reporters at the Washington Post and then blazed from headlines and anchor desks across the country. The board members' treachery was known. Stempel's personal advisers warned him that directors J. Willard Marriott and Anne McLaughlin, both of them rich and with little feel for the automotive business, were feeding the Post. Stempel did nothing to stop them.
At lower levels in the company, people tried to cope. Corvette program manager Russ McLean -- the man charged with producing the current Corvette and with developing its replacement -- gathered a dozen of his key people in his office shortly after 8 A.M. on Monday, October 19.
"I want everybody to take a deep breath," McLean told them. "The Strategy Board met all weekend. There'll be an announcement about another reorganization in the next day or two.
"But the impact for us...well, all programs after '96 have been put on hold or canceled. Since we were a 1997, all I can say is for you to clear your calendars, stop everything, and go into a holding pattern. Right now, things are pretty confused...."
Automotive News, the most influential publication in the industry, called the General Motors shake-up one of the one hundred most significant events in the history of the automobile. To Corvette, it ranked in the top ten.
A midlevel Corvette manager, Pete Liccardello, replayed McLean's words again and again, looking for salvation. As a key engineering and administrative manager for the 1997 Corvette, he knew that they were on the brink of disaster. If the Corvette team couldn't deliver a new car for 1997, it was almost certain that General Motors and Chevrolet would have no Corvettes at all. The current car, dubbed C4 because it was the fourth-generation Corvette, was first sketched out in design studios in 1979, engineered in the early eighties, and produced continuously since late 1983. But it was an old-looking car for the nineties. Its future was limited. Though it turned a profit for GM and was still popular among Corvette lovers, it wouldn't meet the federal government's increasingly strict safety standards about broadside crashes effective with 1997 models.
The choice for General Motors was either to deliver an all-new fifth-generation Corvette, a C5 engineered from the ground up, or to spend millions of dollars to change the old Corvette. With the new car already overdue, the coming side-impact standards signed the death warrant for C4. The last of the fourth generation would be produced in the spring of 1990. There were two possible scenarios for the day after the assembly line stopped: Either the Corvette plant in Bowling Green, Kentucky, would shut down and the legend would die, or the plant would switch over to a new-model Corvette and the legend would live.
Some of the basic engineering for C5 was done. Decisions made two and three years earlier, when the goal was simply to produce a world-class sports car that would beat the competition in performance and quality, made the Corvette team look prescient. Their design exceeded the new crash standards. But that might not matter. Liccardello thought that a total shutdown looked likely. Corvette could die. But he found some hope in Russ McLean's closing words an hour ago.
"Maybe we'll know more when Joe Spielman has time to sort things out," McLean said. "He came out of this pretty good. A lot bigger chunk of North American Operations is his...."
Spielman ran a massive engineering and manufacturing organization that was juggled and jimmied in 1992 until it finally took shape as the Midsize Car Division. When the dust settled enough in late October to see who'd won and who'd lost, more than 40 percent of GM's North American auto production, including Corvette, belonged to Joe Spielman.
So where do we fit? Liccardello wondered. Spielman is a Corvette fanatic. But we're a little piece of a big business.
For now, no one had a clue about the future of either Corvette or General Motors. A car that was an American legend could be facing an ignominious end. Liccardello called up a file on his computer and updated the four-year chronology he kept of C5's fits and starts. He posted the revised version outside his cubicle.
The new line read: "October 19, 1992 Chaos"
Copyright © 1996 by James Schefter
All Corvettes Are Red
For eight years, Schefter enjoyed unprecedented access to every part of GM, including areas off-limits to many company vice presidents. A true insider, he observed the new Corvette's odyssey from sketch to clay model to prototype to production vehicle. He accompanied test drivers across scorching deserts and snow-packed mountains. And he came to know the fiercely dedicated team of designers, engineers, and executives who fought and achieved their dream: a new Corvette that is better conceived, better built, and less expensive than its predecessors. The Corvette's odyssey to reclaim its glory is a thrilling testament to the endurance of American spirit.
- Gallery Books |
- 384 pages |
- ISBN 9780671685010 |
- January 1998