10 Things You Didn't Know About General Motors

With General Motors losing $1 billion in cash every month (that's about $23,000 per minute), we figure that we better do this post pretty darned quickly. Behold Neatorama's 10 Things You Didn't Know about GM:

1. Founded by a Carriage Maker named Crapo

General Motors was founded in 1908 by William C. Durant. The C stands for "Crapo." It's pronounced "cray-poe." Billy Durant, as most people called him, was named after his grandfather Henry Howland Crapo, a Governor of Michigan. Durant founded GM with only $2,000 in capital.

Before making cars, Durant was a carriage maker. His company, Durant-Dort Carriage Co. in Flint, Michigan, was the largest carriage-maker in the United States, producing more than 100,000 horse-drawn carriages a year.

Within just a few years, Durant quickly built GM by buying Buick, Oldsmobile, Cadillac, and Oakland (now Pontiac). He then lost control of GM in just two years, then regained control six years later, only to lose it again (for good this time) four years afterwards.

In his olden days, Billy Durant poured his time, energy, and money into his latest venture: bowling alleys. He believed that bowling was the next big thing and that every family in America would spend their time at the bowling alleys. Needless to say, his last venture didn't grow as big as GM (source).

2. GM's Logo: Mark of Excellence

In 1966, GM introduced a decal on the door jambs of its vehicles, with the phrase "Mark of Excellence."

In the 1970s, GM started to produce shoddy cars. Its Chevy Impala cars (marketed as a "prestige car within the reach of the average American citizens") had leaky windows and the penchant for developing large a crack in the dashboard that owners derisively referred to as the "Mark of Excellence." Soon after, GM phased out the phrase though it took a while longer to improve the quality of their cars.

(Photo: Cartype: GM)

3. Who Owns GM?

GM is a publicly traded company, with about 610.5 million shares outstanding. Today, ~91% of GM stocks are held by institutions. The top 10 institutional holders, made up of banks and investment firms, own more than 50% of the company (source). They've gotta be hurtin' now as GM's stock has tumbled from $30 a year ago to just about $2.

4. GM Built War Machines for the Allied Forces ...

During World War II, GM led the largest commercial-to-military war production effort in American history. In 1942, the company converted all of factories to produce $12 billion worth of airplanes, trucks, tanks, guns, and shells for the US military. No other company delivered as much material to the Allied forces (source).

5. ... and the Nazi

The Opel Blitz - photo via ned.ronet.ru

When he rose to power, Adolf Hitler knew that he had to have an industrial partner to make military vehicles and weapons. And that partner wouldn't be Daimler or any other German automakers - the largest automobile manufacturer in German (actually, all of Europe) was General Motors.

In 1934, General Motors (through its German subsidiary Opel) started a lucrative partnership with the Third Reich that continued even after Nazi atrocities were revealed:

GM and Germany began a strategic business relationship. Opel became an essential element of the German rearmament and modernization Hitler required to subjugate Europe. To accomplish that, Germany needed to rise above the horse-drawn divisions it deployed in World War I. It needed to motorize, to blitz -- that is, to attack with lightning speed. Germany would later unleash a blitzkrieg, a lightning war. Opel built the 3-ton truck named Blitz to support the German military. The Blitz truck and its numerous specialized models became the mainstay of the Blitzkrieg.

In 1935, GM agreed to locate a new factory at Brandenburg, where it would be geographically less vulnerable to feared aerial bombardment by allied forces. In 1937, almost 17 percent of Opel's Blitz trucks were sold directly to the Nazi military.

That military sales figure was increased to 29 percent in 1938 -- totaling about 6,000 Blitz trucks that year alone. The Wehrmacht, the German military, soon became Opel's No. 1 customer by far. Other important customers included major industries associated with the Hitler war machine.

Why did GM do it? It was for the money (surprise!):

A few weeks later, in May 1941, a year-and-a-half after World War II broke out, with newspapers and newsreels constantly transmitting the grim news that millions had been displaced, murdered or enslaved by Nazi aggression and that London was decimated by the blitz bombing campaign, Sloan, then in his mid-60s, told his closest executives during a Detroit briefing: "I am sure we all realize that this struggle that is going on though the world is really nothing more or less than a conflict between two opposing technocracies manifesting itself to the capitalization of economic resources and products and all that sort of thing." (source)

6. GM Helped Build the First Car That Went Out of This World: The Lunar Rover

GM designed and built the mobility system for the Lunar Roving Vehicle, AKA the Lunar Rover or (my favorite) the Moon Buggy. The rover was first successfully used during the Apollo 15 mission.

Photo: NASA via Wikipedia

In a true GM moment, however, during the next mission, the rover's rear fender fell off! The astronauts had to make an emergency replacement fender out of maps, duct tape, and clamps. (Source)

7. Big in ... China!

GM's sales may have taken a nosedive in the United States, but it has become the top-selling foreign automaker in China. Chinese consumers snapped up more Buick cars in 2007 than any other automobiles by foreign car makers (source).

8. Birth of the United Auto Workers

Photo: Sheldon Dick, Strikers guarding window entrance to Fisher body plant #3, Flint, Michigan - via Libary of Congress

GM is inextricably linked with the birth of the United Auto Workers union. In December 1936, the fledgeling union staged a daring sit-down strike at GM's plant in Flint, Michigan.

The move caught GM by surprise - after all, Alfred P. Sloan, the president of General Motors, considered his workers to be "among the most pampered in the industry." Indeed, "Generous" Motors' wages here high - about $1,500 per year - but work was hard and dangerous (many workers suffered injuries that could've been easily prevented by wearing gloves ... which weren't supplied by the company). The Great Depression also led to many lay offs, which caused the workers to worry about their job security.

About two weeks after thousands of striking workers occupied the factory, Flint police raided the plant, firing tear gas. The strikers inside fought back by opening the fire hoses and hurling two-pound hinges and other auto parts at them. Defeated, the police retreated and the strikers gleefully called the incident "The Battle of Bull's Run" (cops being the 'bulls' that ran away quickly from the plant).

Encouraged by this, the UAW targeted other GM plants with strikes. Forty four days after the start of the strike, GM agreed to grant sole bargaining right to the UAW.

9. GM's Car Troubles: Whose Fault Is It?

As GM and the rest of the Big Three automakers of Detroit draw closer and closer to bankruptcy, it's only natural to ask how did they let it get this bad.

Many people blame the union. On average, Detroit union auto workers earn about $75 per hour (salary and benefits). On top of that,, as well as the legacy costs of health care and pension costs of retired union workers). It all adds up to about an extra $2,000 to the car's cost. Strict work rules and job classifications led to thousands of redundant factory jobs (one study concluded that 8,200 assembly jobs wouldn't be needed if the Big Three automakers had the flexibility of Toyota's US factories).

Update 11/24/08: Here's an interesting article at The New Republic about the labor cost of General Motors: Link

How stubborn is the union? Here's a story that illustrates the point:

Not terribly long ago, says a Ford manager who must remain unnamed, Ford dispatched a team of welding experts to a factory to explore efficiency moves. The plant's union leaders, fearing layoffs might result, refused to meet with the team, and the effort came to naught. UAW leaders aren't bad people; far from it. But when everything is a negotiation, many things don't get done. (Just ask any parent.) (Source)

"Job bank" contracts with the union means that even if factories were closed, GM had to pay (almost full) wages and benefits of idling workers. Absenteeism runs rampant: every day, one in 10 auto workers don't show up for work, forcing the company to create a pool of extra stand-by workers. Efforts to combat absenteeism by verifying whether the absent workers actually went to the doctor were bitterly opposed by the union.

The management aren't blameless either. Poor quality control led to shoddy cars that made consumers mad. Detroit automakers also decided to put all their eggs in one basket: trucks and SUVs, only to see sales dried up as consumers avoided buying gas guzzlers because of the high gas prices.

That poisonous relationship with labor? It's a two way street. In 1987, GM Chairman Roger B. Smith remarked a "new spirit of cooperation" between management and labor. When journalist Paul Ingrassia toured a GM engine plant in New York, he was "stunned to see that there were two [men's room]: one for hourly workers, and a separate one for management." (Source)

Then, there are things that the management did that are just plain dumb. GM CEO Rick Wagoner got a 64% salary increase to $15.7 million in 2007, when GM was closing down plants and posted a record $39 billion loss. CEOs of the Big Three automakers went to Capitol Hill hats in hand to request a $25 billion loan package, only to be publicly ridiculed for flying in on private jets (they didn't even "jet-pooled" or downgraded to flying first class, remarked Re. Gary Ackerman). And when asked what they wanted the $25 billion for, they couldn't give a straight answer. (Source)

10. GM "Firsts"

Despite its current precarious financial troubles, GM had a long history of innovation and technological "firsts." To end on a (more) positive note, here are but a few of General Motors' achievements:

  • First V-8 Engine (1914, a 70 horsepower engine for the Cadillac)
  • First room air conditioner (remember to thank Frigidaire, then a GM subsidiary, who came up with the brilliant device in 1929)
  • First barrier impact and rollover tests (1934).
  • First concept car, the legendary Buick Y Job in 1938.
  • First fully automatic transmission (the Hydra-Matic in 1939).
  • First to put turn signals as standard-equipments on its cars (1939)
  • First mechanical heart pump (1952, built for Dr. Forest Dodrill by the GM Research Laboratory. The story is fascinating.)
  • First company to make $1 billion a year (in 1955)
  • First hydrogen fuel cell car (the 1966 Electrovan). After the project was scrapped because it was cost prohibitive, GM tried to give the Electrovan to the Smithsonian Institute. They refused the vehicle because they'd never heard of fuel cells before ...
  • First Anti-lock Brake System (ABS) in 1972.
  • First Electronic Fuel Injection (1979)

If you like this post, don't forget to check out: Evolution of Car Logos

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I would not spend one dime to make GH fat cats fatter. They may have gotten better at building cars but they are terrible at running their business. If I were terrible at running my businss I would go under. An executives pay should come out of profits, no profit, no pay.
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I worked for GM for five years back in the 70s. I saw a great deal of what is happening now beginning. I even tried to tell them but, they were not interested. Some might wonder if building vechicles for the enemy in World War II is coming back to haunt them. Carma Dude!
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Hi. A good man would prefer to be defeated than to defeat injustice by evil means.
I am from Namibia and now teach English, please tell me right I wrote the following sentence: "Review change of airline tickets with this airline, you will have to purchase new tickets."

Regards :( Pazia.
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Your "correction" of the average hourly rate for auto workers is still *very* misleading.

That 75 dollar number is derived by fuzzy math as follows

Current work wages + current worker benefits + all the costs of retired workers, divided *only* by the number of active workers = 75 dollars.

Retired workers outnumber active something in the order of 2 to 1 or 3 to 1.
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