An Outsider Reemerges Front and Center at GM

Harry Pearce strode up to a makeshift stage at the Cadillac factory in this gritty burg in the midst of Detroit. Dapper in a gray suit, he clearly was from a different world than the factory workers who had gathered at dawn to see him.

But though most of the union members and salaried workers in the plant had never seen him and knew little about him, they rose as one and gave a rousing standing ovation to the man who may one day be their company’s chairman.

Harry Pearce is back.

Today Pearce, 58, is vice chairman of General Motors Corp., the No. 2 executive at the world’s largest corporation. But Chairman John F. Smith has been scaling back his responsibilities since handing over the chief executive title to the young and energetic G. Richard Wagoner. So as much as any single person short of Wagoner, Pearce will steer the auto maker into the next decade.

He’s beaten acute leukemia that he had only a 50% chance of surviving, and that, combined with his unwavering loyalty to the auto maker and his reaching out to employees also stricken with cancer, has made him something of a folk hero to GM’s rank and file.

Pearce was declared cured in September after a stem-cell transplant from one of his brothers and two years in remission, and now exudes health. Yes, his hair is whiter and a bit wispier than a couple of years ago, but he is fit and has kept his piercing gaze and rock-solid handshake.

He’s back at work full time, tackling his broad portfolio, which includes developing new forms of alternative-propulsion vehicles, managing government relations, building the GM Defense business with the U.S. military and deciding what’s next for GM’s high-potential media subsidiary, Hughes Electronics Corp. It’s enough to bring him squarely front and center at GM.

But it’s not all about boosting GM’s business or making cleaner engines. On this day, Pearce is at the Hamtramck factory, which turns out Sevilles and DeVilles, to urge the workers to participate in a bone-marrow registry so that cancer victims stand a better chance of finding a marrow match and beating the odds of the disease.

“It changes your attitude toward life in general,” Pearce said. “When you’re facing your own mortality that directly, it causes you to reassess in a very broad way what’s important in life.”

He’s on the board of a handful of cancer organizations and is chairman of the National Marrow Foundation. But he says he wants to boost not only R&D; spending but also the realization among cancer victims that they must believe they can be winners.

“If you come to the conclusion or even tentative conclusion that you’re not going to make it, I personally believe that it can become a self-fulfilling prophecy,” he said in an interview on the 38th floor of General Motors’ downtown headquarters, one level below his spacious office decorated with the grandfather clocks and other timepieces he collects.

“A positive attitude with respect to one’s ability to achieve a cure and conquer the disease is part of the cure.”

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In some ways, Pearce is a GM outsider. He’s not a career automotive man like most other executives. He’s not a “car guy” who grew up with motor oil in his veins. But as company insiders and outside observers agree, he knows GM, and the industry, as well as anyone in Detroit.

A lawyer by training, Pearce is renowned for his keen intellect and steel-trap mind, becoming an authority on topics through voracious reading and astute questioning until he is an expert.

As he says, there’s no better way to learn about an industry than to litigate your way through it, as he did in defending GM in product-liability suits starting in 1970. He can talk about crash dynamics, hydrogen extraction in fuel cells and paint jobs with the best of them.

“He definitely commands quite a lot of respect in the analyst community, where he’s seen as a trustworthy character, someone you can rely on to execute sensibly,” said Saul Rubin, automotive analyst at UBS Warburg in New York.

Pearce works without scripts--a habit from years of court summations. He impressed journalists at the Detroit auto show in January when he made a complex presentation on a hybrid car powered by a diesel engine and an electric motor--without using notes or visual aids.

“His incisive intellect is well beyond his training as a lawyer,” said Greg Salchow, chief auto analyst at the investment bank Raymond James & Co. in Detroit. “Alternative fuel is something about which he could do a lot for GM, and even for society as a whole. I think without a doubt we’ll have fuel-cell vehicles, and his ability to communicate and work with regulators like the California Air Resources Board will serve him well.”

Given his work as auto company lawyer, consumer advocates are unlikely to put Pearce at the top of any heroes list.

“He’s a great defense attorney, but he doesn’t always have the safety of the public in mind,” said Joan Claybrook, president of Public Citizen and head of the National Highway Traffic Safety Administration in the Carter administration.

“He is very good at maneuvering and manipulating the Justice Department to avoid safety recalls. His method is to launch an attack and use the power and resources of the company to do so,” Claybrook said.

Nevertheless, Pearce remains a rarity among the sometimes swaggering, sometimes diffident, sometimes irresolute auto executives, and other traditional adversaries tend to pay their respects.

“I always found Harry to be a good listener, objective, looking for win-win solutions to situations,” said Richard Shoemaker, the United Auto Workers vice president in charge of hammering out labor deals with GM. “He was never encumbered by what I would refer to as the old GM culture of labor relations and lack of people skills.”

Pearce earned an engineering degree at the U.S. Air Force Academy at Colorado Springs and wanted to be a pilot, but that career move was grounded when a medical exam found he was colorblind. He switched to law, and after earning his degree from Northwestern University in 1967, served as an Air Force staff judge advocate and later joined a law firm in his hometown of Bismarck, N.D., that was one of numerous firms GM retained around the country.

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Commuting from Bismarck, he handled scores of GM product-liability litigation cases. These included high-profile assignments involving the Chevrolet Corvair (assailed by Ralph Nader as “unsafe at any speed”) in the 1970s and GM’s X-cars in 1987. In the latter case, government regulators suspected defective brakes on compact cars such as the Chevy Citation and tried to order a recall of millions of the vehicles--only to be defeated by Pearce and company in court.

He attracted the attention of senior GM leaders and was asked to join the company as associate general counsel in 1985. He later served as general counsel and executive vice president before being named vice chairman in 1996.

But Pearce’s finest hour may have come in February 1993, when he made an extraordinary presentation to the Detroit press corps, methodically tearing apart a story by NBC’s “Dateline” that said GM pickup trucks’ side-mounted gas tanks burst into flames during collisions.

At a packed news conference, Pearce put on a spellbinding performance, laying out how GM, acting on a tip, deduced that NBC had rigged crash tests using model rocket engines taped near the gas tanks to deliberately ignite fires.

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His words during that presentation shed light on what makes him tick.

“I will not allow the good men and women of General Motors and the thousands of independent businesses who sell our products and whose livelihood depends on our reputation and the reputation of our products to suffer the consequences of NBC’s irresponsible conduct,” he said, his jaw set firmly. “GM has been irreparably damaged, and we are going to defend ourselves.”

“Dateline” issued an unprecedented on-air apology and retracted its story.

“Harry Pearce was teaching GM to respond carefully and with the dignity that would be expected of a large public company,” industry analyst Maryann Keller wrote in “Collision: GM, Toyota, Volkswagen and the Race to Own the 21st Century” (Doubleday, 1993). “This event demonstrated GM’s new awareness that public perception was based, not only on a company’s product quality, but also on the values and honesty of the company itself.”

One thing many are watching is what he will do with Hughes Electronics, the El Segundo-based GM subsidiary that owns the lucrative DirecTV satellite television service. Speculation is that GM will spin it off to maximize the potential value.

“We’ve consciously decided Hughes’ great strength and growth opportunity is as a service provider of entertainment, information and data,” Pearce said, noting that GM has shed Hughes’ defense business and satellite manufacturing. “We think we have positioned ourselves in a way so that we will be an absolute leader in those businesses.”

But he declines to comment on possible partners for Hughes, though a “spin and merge” scenario gaining currency--in which GM would spin off Hughes and merge it with Sky Global Networks, part of Rupert Murdoch’s News Corp. empire--is the kind of complex, value-unlocking deal Pearce relishes.

It’s not just questioning GM’s safety record that can get company man Pearce’s hackles up. In August, he assembled reporters at GM’s Truck Product Center in Pontiac, north of Detroit, to respond to what he saw as Ford Motor Co.’s attempt to steal the automotive environmental mantle.

Ford had announced to great fanfare that it would increase fuel economy in its sport-utility vehicles 25% by 2005. Pearce, as stone-faced as he was when he picked apart the “Dateline” report seven years earlier, intoned bluntly: “GM leads Ford today in truck fuel economy both on average and on a model-by-model basis, including SUVs. General Motors will still be the leader in five years, or 10 years, or for that matter 20 years. End of story.”

That understatement illustrates how intense yet low-key Pearce is, not exactly one to rally the troops a la Lee Iacocca.

“He’s very straight-arrow, conservative, deadpan,” said David Cole, who this week becomes head of the Center for Automotive Research in Ann Arbor, Mich., after many years of heading the University of Michigan’s automotive think tank. “But before he does anything, he does his homework.”

What’s got Pearce’s ire up most recently: new federal legislation sparked by the continuing recall of Bridgestone/Firestone Inc. tires that allows criminal charges to be filed against auto executives who are found to have withheld information related to safety issues.

“It’s a gross overreaction to a difficult situation. The moment you criminalize, or attempt to criminalize, any activity, you tend to shut down the flow of information,” Pearce said, visibly indignant at the idea. “If indeed there is a design defect in the product that we can identify and objectively define, then we fix it. Don’t criminalize it, fix it.”

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That focus on problem solving touched Debbie Sobol, a senior buyer in advance purchasing at GM’s Technical Center who also had leukemia and has undergone two stem-cell transplants.

Sobol, 37, says she was moved by “his reaching out, his genuineness in how he cared. Just by talking to me he gave me strength.” When he called her after she relapsed after her first transplant, “he gave me confidence and faith, seeing that this man could do it.”

And that’s more of a legacy, Pearce believes, than most lawyers could hope to leave.

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Terril Yue Jones is The Times’ Detroit bureau chief. He can be reached at t.jones@latimes.com.