UPHEAVAL IN THE AUTO INDUSTRY : Turmoil Takes Toll on General Motors’ Daily Operations : Automobiles: With more cutbacks looming and management heads rolling, workers, dealers and suppliers are finding it difficult to concentrate on the task at hand.
The weeks of upheaval and uncertainty at the highest levels of General Motors Corp. are taking their toll on the daily operations of the world’s largest auto maker.
With Chairman Robert C. Stempel’s forced resignation Monday and at least 10 more senior heads expected to roll, the firm’s roughly half a million U.S. employees are finding it hard to concentrate. The water-cooler buzzing got so loud Tuesday at the headquarters of GM’s newly formed North American Automotive Operations in Warren, Mich., that one engineering manager called a meeting and told his employees to knock it off.
“I reminded them that we still have a job to do. This is all being decided at extremely high levels, and we can’t do anything about it,” said the manager, who asked not to be identified. “But you burn up so much energy worrying about it, you get nothing done.”
As the board huddles to choose GM’s new leaders, and managers try to catch wind of who the next casualties might be, salaried employees, union workers, suppliers and dealers complain that the drawn-out executive bloodletting is adding to the very problems it is intended to solve.
“There’s a cloud hanging over GM,” said an executive of a major parts supplier, who asked for anonymity. “What was slow is now slower. There are some things we’ve talked about with them where it’s hard to tell whether it’s a go program or it’s put on hold or it’s canceled. Because everyone’s too scared to make a decision. No one knows who’s going to be in charge from one day to the next.”
The UAW, which stands to lose upward of 60,000 jobs as a result of GM’s downsizing, is even more anxious to wring answers out of the auto maker’s management.
Ernie Emery, president of UAW Local 5960, says morale at GM’s assembly plant in Orion Township, just north of Detroit, has been at an all-time low since GM announced plans to close 21 plants and cut 74,000 jobs last December. And it sunk lower with the news of Stempel’s resignation.
“There is a feeling that (Stempel) has been a friend to the ones who build the cars,” Emery said. “Now, who knows what’s going to happen?”
The new management team will probably be headed by three men: Director John G. Smale, who led the movement to oust Stempel; President John F. Smith Jr., who orchestrated GM’s recovery in Europe, and William Hoglund, GM’s chief financial officer. Several executives who were loyal to Stempel are likely to be dismissed within a few days, analysts said.
Among the Stempel loyalists likely to be fired in the next round of executive purges are Executive Vice President Lloyd Reuss and Robert O’Connell, head of GM’s finance subsidiary. Both men were demoted in April. Executive Vice President F. Alan Smith, who lost his seat on the board last spring, is another likely candidate for the board’s ax, analysts said.
Most GM observers expect the new team to steer the company along the same cost-cutting track that the old team had mapped out--but at about twice the speed.
The bloated auto giant must close unneeded plants, eliminate layers of white-collar management, sell off much of its inefficient internal parts-making operations, negotiate a more flexible labor agreement with its union and streamline its engineering and product development, analysts and company executives said.
Smith and Smale, who have been meeting regularly since the board coup last spring elevated Smith to president and placed Smale in Stempel’s seat as chairman of the board’s executive committee, have already begun work on each of these fronts.
A dividend cut is also likely as new management seeks to conserve cash for developing cars and trucks. GM’s stock price fell $1.75 Tuesday to $32.375 amid concern of a dividend cut.
GM’s new regime is expected to move quickly to identify the remaining seven assembly plants it plans to close by mid-decade.
Smith is negotiating an early retirement buyout plan for GM’s blue-collar workers to hasten the job cutbacks. And he is expected to push hard for a more flexible labor agreement, modeled in part on the one in place at GM’s Saturn plant.
Meanwhile, the work force is left hanging. Even GM dealers are complaining.
John Campbell, who owns four GM franchises in Southern California, said it has been difficult to get answers on marketing decisions for his Buick and GMC truck dealerships.
“It does seem that it’s difficult to get definitive strategic answers and responses on things,” he said. “Everybody is asking questions. And everybody, everybody is wondering what is going on.”
