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Column: It's not always been pretty, but GM's still at top of the heap
Wednesday, April 14, 2004
By Rick Haglund

Over the past few decades, General Motors Corp. has shed hundreds of thousands of jobs and lost nearly half its share of the U.S. car-and-truck market.

Big-car GM was nearly knocked flat by Japanese automakers selling small, fuel-efficient vehicles during the gasoline shortages of the 1970s.

In the 1980s, then-Chairman Roger Smith's massive reorganization, which combined GM's five car divisions into two gigantic manufacturing groups, plunged the automaker into years of chaos and confusion.

The early 1990s brought serious financial and labor problems to GM. The company brushed up against bankruptcy early in the decade, forcing its board of directors to sweep out top management in a historic house cleaning.

Today GM's toughest competitor is Japan's Toyota Motor Corp., a company that didn't even start building automobiles until 1947. GM was founded in 1908.

But guess what? Despite those decades of turmoil, GM has managed to remain near the top of the corporate heap in the annual Fortune 500, which celebrated its 50th anniversary earlier this month. And the Detroit-based giant is still the world's largest automaker.

GM ranks third in sales behind Wal-Mart Stores Inc. and Exxon Mobil, respectively, in this year's ranking by Fortune of the largest U.S. corporations. When the first list was published in 1955, GM was ranked No. 1, a perch it occupied for decades.

What are we to conclude about GM's longevity as one of the nation's biggest corporations? Maybe it's that GM was so big and powerful in 1955, it could lose half of itself in the intervening decades and still stay among the nation's business heavyweights.

GM controlled 50.4 percent of the U.S. vehicle market in 1955, according to a story about the company in the April 5 Fortune 500 issue. (It's about 28 percent now.) GM posted sales in '55 of $9.8 billion, 42 percent higher than runner-up Standard Oil Co.

At the end of 1954, the total value of GM's outstanding stock was $58.8 billion in today's dollars, according to Fortune. GM's stock value -- its market capitalization -- today is $26 billion.

But during the past 50 years, Standard Oil and dozens of other Fortune 500 companies have either been merged or gone out of business.

Call me as crazy as former GM purchasing czar Inaki Lopez (who bolted for a job at Volkswagen the day he was to be named GM's North American president). But I think a case can be made that GM has stayed atop the Fortune 500 because it could adapt to changing business conditions and consumer preferences.

GM was long famous for its entrenched corporate bureaucracy, a maddening group of midlevel managers that Roger Smith called "the frozen middle."

But the company ultimately did what it had to do to remain a leading force in America's business.

The implementation of Smith's 1984 reorganization, for example, was a nightmare. But it set in motion a corporate streamlining that has been refined by successive GM leaders.

Today, the company's car and truck operations are part of a single organization that is saving the company billions of dollars a year and allowing it to develop models more quickly.

In the late 1980s, some industry analysts were questioning whether GM and its domestic competitors would survive much longer under intense Japanese competition. GM shrunk, of course, but market share has stabilized in recent years. And the quality of many of GM's vehicles rivals that of the best Japanese automakers.

Some of GM's corporate practices in recent years were much criticized, but have been widely copied. Suppliers howled in the early 1990s when Lopez demanded price cuts instead of customary increases. But annual price cuts by suppliers are now standard fare in the industry.

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