final gm project !!

8/3/2019 Final Gm Project !!

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Submitted By

Akanksha Saxena

Anjali Jalan

Vidhi Singh

Kanishka Jain

Urvi Mishra

Tanvi Taneja

Suchita Salwan

Mohammad Ullah

Raghav Gambhir


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TRANSFORMATION OF

THE AUTO INDUSTRY


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THE ROLE OF FORD & GM

Henry Ford was once a popular symbol of the transformation from an agriculturalto an industrial, mass production, mass consumption economy. Ford was the

creative force behind the growth to preeminence of the automobile industry, stillthe world's largest manufacturing activity. As Womack, Jones, and Roos (1990:11) explain: "Twice in this century [the auto industry] has changed our mostfundamental ideas about how we make things. And how we make things dictatesnot only how we work but what we buy, how we think, and the way we live."

The first transformation was from craft production to mass production. Thishelped to create the market as we know it, based on economies of scale andscope, and gave rise to giant organizations built upon functional specializationand minute divisions of labor. Economies of scale were produced by spreadingfixed expenses, especially investments in plant and equipment and the

organization of production lines, over larger volumes of output, thereby reducingunit costs. Economies of scope were produced by exploiting the division of labor-- sequentially combining specialized functional units, especially overheads suchas reporting, accounting, personnel, purchasing, or quality assurance, inmultifarious ways so that it was less costly to produce several products than asingle specialized one. It also engendered a variety of public policies, institutions,and governance mechanisms intended to mitigate the failures of the market, andto reform modern industrial arrangements and practices.

Ford's main contributions to mass production/consumption were in the realmofprocess engineering the hallmark of which was standardization -- standardized

components, standardized manufacturing processes, and a simple, easy tomanufacture (and repair) standard product. This was made possible by themoving, or continuous, assembly line, in which each assembler performed asingle, repetitive task. The assembler had only one task -- to put two nuts on twobolts or perhaps to attach one wheel to each car. He didn't order parts, procurehis tools, repair his equipment, inspect for quality, or even understand whatworkers on either side of him were doing. Special repairmen re-paired tools.Housekeepers periodically cleaned the work area. Special inspectors checkedquality, and defective work, once discovered, was rectified in a rework area afterthe end of the line. The role of the assembly worker had the lowest status in thefactory. In some plants, management actually told assembly workers that they

were needed only because automation could not replace them yet. Assembly linework is unpleasant in a mass production environment. It is physically demanding,requires high levels of concentration, and can be excruciatingly boring. As aconsequence, Ford experienced very high labor turnover, 380 percent in 1913.(Even today, double-digit absenteeism is common in mass-production assemblyplants, necessitating a buffer stock of utility workers, who fill in for the assemblersthat fail to show up at the start of each shift). According to Ford "men work foronly two reasons: one is for wages, and one is for fear of losing their jobs," Thus
http://www.willamette.edu/~fthompso/MgmtCon/Henry_Ford.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Organization_of_Work_I.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Industrial_Engineering.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Assembly_Line.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Automation.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Henry_Ford.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Organization_of_Work_I.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Industrial_Engineering.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Assembly_Line.htmlhttp://www.willamette.edu/~fthompso/MgmtCon/Automation.html


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in every developed country, labor unions emerged as the best-organized andoften the most powerful political force. Their preferences were reflected not onlyin labor laws, but in public policy generally. They were the architects and chiefsupporters of the postwar Keynesian welfare state, with its goals of fullemployment, social security, and income parity Ford was also one of the first to

realize the potential of the electric motor to reconfigure work flow. Machines thatwere previously arrayed about a central power source could now be placed onthe assembly line, thereby dramatically increasing output.

By the 1930s, Ford's standardized product and his direct planning and controlsystem had been rendered obsolete by innovations in marketing andorganization at General Motors. These innovations were implemented by AlfredP. Sloan, who is best known for the multi-product, or M-form, organizationalstructure, in which each major operating division serves a distinct productmarket. When Sloan took over GM in the early 1920s, it was little more than aloose confederation of car and car-parts companies. Sloan repositioned the car

companies to create a five-model product range from Chevrolet to Cadillac andestablished a radically decentralized administrative control structure.

GM's operating divisions -- the five automotive divisions, the divisions makingcomponents and those making refrigerators, air conditioning, locomotives, etc. --were managed entirely by the numbers from a small corporate headquarters,using the DuPont system of financial controls, devised by Donaldson Brown, laterGM's chief financial officer. Under this system, each division kept its own booksand its manager was evaluated in terms of a return-on-assets target.

Sloan, believed that it was inappropriate, as well as unnecessary, for top

managers at the corporate level to know much about the details of divisionoperations. If the numbers showed that performance was poor, it was time tochange the division manager. Division managers with consistently good numbersgot promoted, ultimately to headquarters. Short run coordination between GM'sfive automotive divisions and the divisions making components was achieved viabuyer-seller relationships. Longer run coordination was achieved via the firstmodern capital budgeting system used in the US, also devised by Brown.

Within each of its operating divisions, however, GM, was organized and operatedlike Ford -- or any other mass-production manufacturer. In this system,assemblers were as interchangeable as parts. The mass-production systemrested on the presumption that activities should be simplified to the nth degreeand controlled from above, engineering and administrative functions delegated tostaff specialists, and the exercise of judgment passed up the managerial ranks.

The second transformation extends well beyond process engineering. It istransforming not only how we make things, but also how we live and what weconsume. It reflects the declining importance of both scale and scope and isdriven by reductions in communications, logistics, and information processing
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costs -- reductions stimulated if not caused by the introduction of computers andby our increasing ability to use them. Today, an organization that can afford acomputer workstation and software (about $20,000) can have first-classfunctional overhead systems.

Information technology has also given rise to new modes of internal organization,which emphasize multidisciplinary teams, whose members work together fromthe start of a job to its completion, in part because modern information systemsand expert systems make it efficient to push the exercise of judgment down intothe organization, to the teams that do an organization's work. As ShoshanaZuboff explains in The Age of the Smart Machine (1988), efficient operations inthe modern workplace call for a more equal distribution of knowledge, authority,and responsibility. This means "dismantling the very same managerial hierarchythat once brought greatness."

Flexible production dramatically reduced the demand for unskilled labor. Flexible

production requires numerate and literate workers, capable of a high degree ofself-direction. As a consequence, the number of unskilled industrial workers inthe developed world has been falling for nearly thirty years. Moreover, massproduction's decline has been accompanied by a decline in mass consumption.Instead of standardized products designed and manufactured for the lowestcommon denominator, final products reflect the full array of preferences andpocketbooks. This too has probably exacerbated the trend to further real incomeinequality.


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GENERAL MOTORS

THE EVOLUTION


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CREATION : 1897-1909

At the turn of the 20 th century there were fewer than 8000 automobiles inAmerica, many of them powered by steam or electricity, others had gasolineengines. An unexpected turnout at the first New York Auto Show in 1900,showed the magnitude of the publics fascination with the automobile. Over thenext few years, hundreds of fledging companies would try to meet the demandsof a growing market.

General Motors was founded by William Billy Durant on September 16, 1908.Durant had become a leading manufacturer of horse-drawn vehicles in Flint, MIbefore making his foray into the automobile industry. At his inception, GM heldonly the Buick Motor Company but in a matter of years would acquire more than20 companies including Oldsmobile, Cadillac, and Oakland, today known asPontiac.

In Germany, a company named Opel began manufacturing dependable sewingmachines. Opel became a brand recognized worldwide after adding bicycles totheir product arsenal. In 1899, Opel entered the growing automobile market withthe Opel-Patent-Motorwagen System Lutzmann and became a part of GM thirty

years later.

Time line

1897- Olds Motor Vehicle Company, under Ransom Olds produces their firstOldsmobile


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1899- In Germany, Adam Opel builds his first motorcar, the Opel-Patent-Motorwagen System Lutzmann.

1901- The Curved Dash Oldsmobile becomes the first American car to bemanufactured in quantity.

1902- Cadillac Automobile Company, named after the founder of Detroit, MI isorganized by Henry Leland.

1904- William Billy Durant of Durant Dort Carriage Company takes control ofthe Buick Motor Company.

1905- Cadillac produces the single cylinder Osceola, the first step closed-cardesign.

1906- Buick builds its first production four-cylinder car, a 1907 Model D

1907- The Oakland Motor Car Co. Is founded by Edward Murphy in Pontaic,MI.

1908- Under Billy Durant, General Motors is organized on September 16th,incorporating the Buick Motor Co. Oldsmobile becomes the second company to

join GM on November 12 th.

1909- GM purchases a half interest in Oakland Motor Car Co, today Pontaic, onJanuary 20th. GM acquires Cadillac for $5.5 million on July 29 th. AC Spark Plug

joins GM. GM purchases the Rapid Motor Vehicle Company, Known as GMC.


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ACCELERATION: 1910-1929

The General Motors Company officially became General Motors Corporation onOctober 13, 1916, when incorporation papers were filed in Delaware. By August

1, 1917, the new corporation had acquired all the stock of General Motors of NewJersey, which was formally dissolved two days later. It was during World War Ithat GM, for the first of four times in its history, would turn its facilities andexperience to the production of war materials. It did so again in World War II, theKorean conflict, and Vietnam. With no previous experience in manufacturingmilitary hardware, the young American automobile industry within 18 monthscompleted a turnaround from civilian to war production. The result was anoutpouring of weaponry credited with the winning of the war, changing the face ofEurope, and giving rise to the United States as a world power.

By 1916, Ford had achieved a comfortable market dominance. The Model T was

not sleek ,fast or powerful ,but it provided unprecedented personal mobility at aprice middleclass families could afford. Ford's single-minded pursuit of costreduction had worked, but in the 1920s he was to become a victim of his owndazzling success: while others had continued to advance the technology Fordhad blocked his engineers from making changes.

Meanwhile, GM's bankers had pushed Durant aside but not out of the game. In1911, Durant had founded a new company the Chevrolet Motor Company andset out to build "a car worthy of the name ,a car for power, speed, stability,appearance and price." However, Durant soon recognized the 1910s as an era ofutility and economy and he restyled the Chevrolet as an economy car. The Model

T was unassailable on price, but it could be challenged by offering the value-adding amenities that it lacked- a self-starter, electric lights, detachable wheelsetc. Under this strategy, Chevrolet became so successful that by June 1916Durant was able to accumulate enough GM shares to regained a controllinginterest in GM and retake the presidency. GM later absorbed Chevrolet. Onceback in control, Durant again tried to build his empire by making furtheracquisitions.

Earlier inventions such as electric light bulb, the telephone, and the radio markedthe new era of possibilities. In particular, the automobile sent the imaginationracing and expanded the horizon upon which people could dream. As demandfor automobiles grew to unexpected heights in 1920s, General Motors set thepace of production, design, and marketing innovation for others to follow.

By 1920, in the midst of a nationwide economic crisis, GM was on the verge offinancial collapse. The crisis marked the turning point in General Motors history.New men were asked to assume leadership of the corporation. A new concept ofmanagement was forged and a new concept of product emerged. Coordinatedpolicy control replaced the undirected efforts of the previous years.


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As its principal architect, Mr. Sloan was credited with creating not only anorganization which saved General Motors, but a new management concept thatwas adopted by countless other businesses. Fundamentally, the conceptinvolves coordination of the enterprise under top management, direction of policy

through top-level committees and delegation of operating responsibilitythroughout the organization.

Adding Chevrolet, Vauchall and Opel, diversifies the selection and added to thereach of GM. With the philosophy and strategy of a car for every purse andpurpose and a series of landmark innovations that changed the automobileitself, GMs vehicles went beyond transportation, becoming statements andaspirations in their own right. During these years GM also opened more than adozen new plants outside the United States.

The milestone 1927 Cadillac Lasalle, with curves rather than sharp corners and a

long, low stance, made people see cars as far more than just a mode oftransport. Designed by Harley Earl, the Lasalle was a world apart from the highand boxy Ford Model T, marking the beginning of the automotive design , Earlwould head GMs studio until his retirement in 1959.

CADILLAC IN THE 1920s

Time line

1910- Cadillac is the first American manufacture to offer closed bodies asstandard.

1911- Bill Durant starts another car company called Chevrolet named after theformer Buick racecar driver Louis Chevrolet. GM Export Co is established tohandle the sale of products outside of North America.


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1918- GM buys remaining operating assets of Chervolet Motor Co. In May, GMof Canada, Ltd. Is formed through a merger.

1919- GM acquires 60% interest in Fisher Body Co. Construction of the GMbuilding in Detroit begins. GM Acceptance Corp. Is established to finance cars

and trucks.

1923- GM opens its first European assembly plant in Copenhagen, Denmark.GM Research Corp. Introduces Ethyl gasoline.

1924- The GM proving grounds open in Milford, MI

1925- GM acquires Vauxhall Motors Ltd. In the U.K. GM establishes operationsin Argentina, France and Germany. General Motors do Brazil is established inSao Paulo.

1928- GM is established in India.

1929- GM acquires controlling interest in Adam Opel AG of Germany. GM Chinais established with its headquarters in Shanghai.


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EMOTION: 1930-1959

Hard times in America and political changes in Europe throughout the 30sbrought new uncertainty, but GMs commitment to innovation continued

unabated. By 1941, GM accounted for 44 percent of total U.S. sales, comparedwith 12 percent in 1921.

Before Americas entry into the war against the Axis nations, GM turned outweapons along with automobiles. After Japan struck at Pearl Harbor in 1941, theindustrial skills that GM developed were applied with great effectiveness. Civilianautomobile production was halted early in 1942 and the Corporations plants werecompletely turned over to the war effort.

GMs contributions during World War II dwarfed its efforts during World War I,offering a dramatic example of the vital importance of a nation at war being able

to call upon well-managed and experienced industrial resources. From 1940 to1945, GM delivered defense material valued at $12.3 billion.

The success of GMs tremendous wartime role lay in its peacetime managerialphilosophy. Decentralized, highly flexible local responsibility made possible thealmost overnight conversion from civilian production to building and supplying awar machine -- a timetable of days and months never believed possible by theenemy. GMs contribution spanned virtually every conceivable product from thetiniest ball bearing to massive tanks, naval ships, fighting planes, bombers, guns,cannons, and projectiles. GM alone turned out 13,000 airplanes and one-fourthof all U.S. aircraft engines.

The mid-1930s were a time of revolution in America. While workers wereengaging in sit-down strikes at General Motors in the winter of 1936-37, thecompany tried to block food shipments into the plant, turned off the heat, called inpolice and tried to use court injunctions to remove striking workers from plantpremises. After a bitter 44 days, GM finally acceded to the UAWs demand tonegotiate a contract for its workers. In the 50 years since the UAW negotiated itsfirst contract with GM, the relationship between the two parties evolved from onethat was strictly adversarial to one that is more reasoned and geared towardsproblem solving. This change occurred on both sides and worked to theadvantage of the union, its members, and the corporation. Tracing the growth ofthe UAW, a dramatic change can be seen in the relationship between GM andthe UAW since the UAW first gained the right to represent hourly workers at GM.What began as a revolution in Flint, Michigan had evolved into a workingrelationship in the late 1980s that ultimately benefited all involved. When theUAW and GM signed that first one-page contract in 1937, the issue was simple:recognition of the then fledging UAW as the bargaining agent for GM employees.GM was, by the standards of the day, a huge corporation with assets of$1.5billion and 69 plants in 35 cities. By 1937, the UAWs total membership was


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3,75,000, up from 35,000 just two years ago. The early years were important inthat the UAW won significant protection for the workers, and just two years afterwinning the right to represent GM workers, the union established seniority rightsand laid groundwork for an apprentice program. Times were good, and the unionpressed hard to ensure that the GM workers shared in the success of the

company. This was first achieved with the establishment, in 1940, of 40 hours ofannual paid vacation for employees with at least one year on the job. Theamount of annual paid vacation was doubled in 1942 for employees with fiveyears of seniority. That same year, the contract provided a 4 percent-per-hourraise for workers.

CADILLAC IN THE 1930s

Timeline

1930- The Cadillac V-16 is the industrys first 16 cylinder engine.

1931- General Motors-Holdens Ltd. Is formed through merger of Holdens motorbody builders and GM Australia ltd.

1934- GMs 2 cycled diesel engine hauls the first American diesel powered train.

1935- Opels Olympia is the first mass-produced car all steel integrated bodyand frame construction. GM de Mexico is established.

1936- GM workers in Flint, MI begin a sit down strike the last week of December.

1937- The strike ends February 11 with GMs recognition of the United AutoWorkers Union. Pontiac introduces the first column mounted gearshift.


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1938- GM vehicle sales outside the U.S. and Canada exceed 350,000 vehicles/

1939- GMs Futurama exhibit is the star of the worlds fair.

1940- GM celebrates production of its 25-millionth U.S. made car. President of

the GM William Knudsen is appointed chairman of the Wartime Office ofProduction Management by the FDR.

1942- GM converts 100% of its production to allied war effort.

1948- Cadillac and Oldsmobile introduce the worlds first V8 engine. Holdensintroduces Australias first mass produced car.

1949- Cadillac introduces its first hardtop the Coupe De Ville.

1950- Chevrolet introduces the power glide transmission.

1951- Buicks Le Sabre and XP-300 concept cars show bold new advances infeatures and styling.

1952- Power steering is offered by Cadillac, Buick and Oldsmobile.

1953- Chevrolet Corvette, the first production sports car is introduced. Buick,Oldsmobile and Cadillac offer power breaks.

1954- The new Bel Air ushers in a new movement towards sleek styling. GMoffers the first 4-door pillar less hardtops.

1957- The Pontiac Bonneville with a fuel injected engine is introduced.

1958- GM marks its golden anniversary.

1959- Chevrolet introduces the Corvair and El Camino.


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REVOLUTION: 1960-1979

The 60s and 70s were a time of great change and new challenges.Environmental concerns, increased gas prices and foreign competition led to an

unprecedented downsizing of vehicles across all GM vehicle lines. It was thelargest reengineering program ever undertaken in the industry, ushering in anage of lighter, aerodynamic and fuel efficient vehicles. Then GM ChairmanThomas A. Murphy called it "the most comprehensive, ambitious, far-reaching,and costly program of its kind in the history of our industry." The first "downsized"cars were GMs 1977-model full-size autos -- about a foot shorter and 700pounds lighter than their predecessors. They proved an instant hit and werefollowed by redesigned 1978-model intermediates, 1979-model personal luxurycars, 1980-model front-wheel drive compacts, 1981-model front-wheel drivesubcompacts, 1982-model front wheel drive mid-size models, and the U.S.industrys first compact truck. 1985 saw the first front-wheel drive luxury cars roll

off the production line.

In 1971, GM pioneered the use of engines that could run on low-lead or unleadedgasoline. Two years later, GM was the first one to offer an airbag in a productioncar. In 1974, GM reduced the most important step in reducing emissions with thecatalytic converter. The technology, shared by GM, is used by the entireautomobile industry. GM played a lead role in developing the guidance andnavigation system for the first moon landing aboard Apollo11, and designed andmanufactured the Lunar Roving Vehicle(LVR) for Apollo 15. The LVR was thefirst vehicle driven on the moon and is currently on display at the SmithsonianNational Air and Space Museum in Washington D.C.

CHERVOLET IN THE 1970s

Timeline

1960- GM introduces a new lineup of small cars in the U.S.


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1962- GM produces its 75th millionth US made car. Opel introduces the small lowpriced Kadett

1964- Chevrolet introduces its mid-sized Malibu as the 1964 model.

1965- Oldsmobile introduces the front wheel drive tornado. GMs Futurama 2opens at the worlds fair, attracting over 29 million visitors.

1966- The legendary Pontiac Firebird and the Chevrolet Camaro are introduced.

1967- GM celebrates the production of its 100 millionth US made car on April21st.

1968- The 50 story GM building opens in New York.

1969- GM manufactures the navigation system for Apollo 11 moon landing.

1970- GM introduces the no lead or low lead tolerance engines on all 1971models in the US and Canada.

1971- GM manufactures and designs the mobility system for the Lunar RovingVehicle used in the Apollo 15 moon landing.

1972- In a joint venture, GM begins producing vehicles in Korea.

1973- The first GMC motor home is introduced.

1974- GM introduces the Catalytic Converter, soon adopted country wide.

1976- Down sized Oldsmobile, Cadillac, Pontiac, Buick models are introduced.

1979- GM introduces the new line of front wheel drive compact cars in the US.


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GLOBALIZATION: 1980-1999

Although General Motors was always active internationally, the urgency ofoperating as a single global unit came with the shrinking of the world itself in the1980s and 1990s. With barriers to communication crumbling and new markets

opening, companies that didnt keep up were left behind. Accordingly, GeneralMotors re-invented itself as an integrated global team and intensified its focus oninnovation and growth.In 1982, GM marked its single largest production expansion outside of NorthAmerica with the opening of the new complex Zaragoza, Spain. This facilityimmediately began building the fuel efficient Opel Corsa. With joint ventures inChina and India plus the additions of Saab and HUMMER to the GM family, thecompany strengthened both the reach and variety of vehicles sold worldwide.GMs commitment to quality was very evident in 1987. GM executives and UAWleaders formed the Quality Network, a joint effort for strategic development ofhigh quality, customer valued products. Also, GM established the Targets for

Excellence program. This new supplier development/assessment program wasformed to ensure continuous improvement for its suppliers. Its aim was toevaluate and assist suppliers in five key areas: quality, costs, delivery,management and technology.

In October 1987, General Motors Corporation and the United AutomobileWorkers (UAW) signed a historic three-year labor agreement that underscored anew spirit of teamwork and human partnership between management and labor.The agreement, reached without a work stoppage or strike deadline, featuredunprecedented job security provisions and the establishment of joint studycommittees at GM plants around the country. The on-going focus of these local

joint committees is to review operational competitiveness and to find ways toimprove quality and efficiency and thereby attract new work.

In 1991, the American automotive industry sustained losses unparalleled in itshistory. The challenges facing GM were particularly acute in the primary NorthAmerican automotive market. Plants were idled throughout North AmericanOperations, the salaried and hourly work force was reduced through attrition andretirements, executive compensation was reduced and many non-core assetswere sold. The year of 1992 was known as the year of management changes atGeneral Motors. GM launched a major reorganization to streamline its businesspractices and downsize its North American Operations (NAO). These changeswere essential to GMs vision of total customer satisfaction and the restoration ofprofitability. GMs new structure led to more flexibledecision-making processes, more efficient utilization of technical and capitalresources, and increased management accountability for performance toproduce high-value, high-quality products and services.

1995 was a big year for GM. Annual vehicle sales outside North Americaexceeded three million units for the first time. Five million vehicles were sold in


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the United States that year and GM entered into its first joint venture agreementin China. Today, Buick is Chinas most popular automotive brand. By the end ofthe 90s, the foundation for global growth in the new millennium had been set.

Timeline

1980: GM announces plans to build five new plants in Europe: one in Austria andNorthern Ireland and three in Spain.

1982: GMs World of Motion Exhibit opens in Epcot Center at Walt Disney World.

1983: GM and Toyota Motor Corporation form a joint venture: the New UnitedMotor Manufacturing Inc. The 1984 Chevrolet Corvette is introduced with thecars first major styling change in 15 years. GM announces its Saturn Project- ano-year developmental program for a new family of U.S. produced cars usingstart to finish innovation.

1984: GM of North America is divided into two groups: Chevrolet, Pontiac, GM ofCanada and Buick, Cadillac, Oldsmobile. GM acquires Electronic Data SystemsCorporation (EDS), a data processing and Telecommunications Company.


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1985: GM acquires Hughes Aircraft Company, one of the leading defenseelectronics companies in the world.

1986: GM acquires Group Lotus, a performing car manufacturing company.

1987: The GM Sunraycer wins the 1950 miles inaugural world solar challengerace, finishing 2 and half days ahead of the runners up.

1988: Teamwork and Technology for Today and Tomorrow opens, showing 80years of automotive technology gathered under one roof.

1989: GM purchases 80% of Saab Automobile AB of Sweden.

1990: Gm debuts a new electric car, the Impact, in Los Angeles.The first Saturn car rolls of the line at Spring Hill, TN on the 30th of July.GM sponsors Sunrayce USA, North Americas largest competition for Solar

powered vehicles.

1992: GM celebrates production of one-millionth Corvette.

1993: Gm sells Group Lotus and Lotus Cars USA to Bugatti International SAH ofItaly.

1994: Hughes Electronics introduces DirecTV, the first direct broadcast satelliteTV distribution system in USA. GM becomes the first US automaker to offerdaytime running lamps in 1995 model year vehicles.

1995: GM and Shanghai Automotive Industry Corporation (SAIC) sign anagreement for a joint venture in Shanghai, China.

1996: With the introduction of EV1, GM becomes the first automaker in moderntimes to market a specifically designed electric car to the public.1996: EDS is split-off from GM. GM announces that OnStar will be introduced asan option on al 1997 model, front-wheel Cadillacs.

1999: Gms new joint venture in Shanghai begins production of Buick Regals forthe Chinese market. Delphi Automotive Systems becomes a separate,independent publicly held corporation on May 28th. Gm enters a memorandum ofunderstanding to acquire exclusive rights to the HUMMER automotive brand fromAM General Corporation. GM enters into an agreement with XM radio to bringsatellite radio into its vehicles. Adam Opel celebrate 100 years of automobileproduction.


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INNOVATION: 2000-2006

In 2003, GM partnered with Shell Hydrogen, a division of Shell Oil, to develop areal life demonstration of hydrogen fuel cells and fueling infrastructuretechnology in the Washington, D.C. area. The demonstration featured thenations first hydrogen pump at a Shell retail gas station support a GM fleet of

fuel cell vehicles.

GM had created innovative vehicles ranging from more fuel- efficient gasolineengines to biofuels and hybrids. The percept concept car, a diesel hybridvehicle achieves 80 mpg. Other milestones include the AUTOnomy. Hy- wireand Sequel fuel cell by wire concept vehicles and the Chevrolet Volt concept,with a flexible electricity drive system that allows the vehicle to run on electricityand either E85, biodiesel and gasolines fuelas with an engine or hydrogen witha fuel cell.

Timeline

2000- GM inaugurates a new automotive assembly complex in Gravatai, Brazil,utilizing state-of-the-art modular assembly techniques and concepts. GeneralMotors announces plans to phase out the Oldsmobile brand line of vehicles.TheGM Precept advanced technology vehicle achieves the fuel efficiencyequivalent of 80 miles per gallon of gasoline in tests conducted in October.


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2001- GM enters the collision repair business with the introduction of the Goodwrench Auto Body Center program. GMs HydroGen1 fuel cell vehicle sets 11new endurance records in the tests at the Mesa, AZ proving grounds. ShanghaiGM, a joint venture between GM and Shanghai Automotive IndustryCorporation, launches the Buick Sail, the first modern family car built in China.

Cadillac unveils its all-new CTS, a radical departure from traditional Cadillacstyling. Following the September 11th attack, GM announces an unprecedentedKeep America Rolling retail- marketing program to boost the U.S. economy.

2002- Production begins at Adam Opels new facility at Russelsheim,Germany.GM introduces the AUTOnomy concept vehicle, the first vehicle everto combine fuel cell propulsion with by-wire technology. GM, Daewoo MotorCompany, and the Korea Development Bank sign final documents foracquisition by GM of the bulk of Daewoo Motors automotive assets. Buickcelebrates its one-hundredth anniversary.

2003- Cadillac unveils the Cadillac Sixteen concept car, featuring a 16-cylinder,1000- horsepower engine. GM announces that it will offer optionhybrid Power Trains on several of its most popular models including trucks,SUVs and mid size sedans in late 2003. GM announces its intention to split offits Hughes Electronics subsidiary and sell its economic interest in Hughes toNew Corp. GM and FedEx launch the first commercial test of fuel cell vehiclesin Japan, with the GM HydroGen3 fuel cell vehicle being used by FedEx inregular in Tokyo.

2004- GM announces plans to produce the Pontaic Solstice roadster at itsWilmington, DE, assembly plant. For a record sixth time, Chevrolet Corvette is

picked as the official pace car for the Indianpolis 500. A GM HydroGen3 fuelcell prototype vehicle sets out on a new endurance record for fuel cell vehicles,crossing 14 European countries, a total distance of 6,200 miles. The lastOldsmobile, a 2004 Alero, rolls off the assembly line in Lansing, MI, 107 yearsafter the first Oldsmobile was produced. GM delivers the worlds first full-sizehybrid pickup truck to the tenth Clean Cities Conference. OnStar by GMreaches the milestone of 3 million subscribers.

2005- The HUMMER H3 goes on sale, marking HUMMERs entry into the mid-size SUV market segment after the success of larger HUMMER H2. The all-new Chevrolet Aveo sedan makes its worldwide debut at Auto Shanghai,Chinas premier auto show. Pontaic announces a limited advance orderprogram for the Pontiac Solstice on the Apprentice and receives 1,000 orsersin 41 minutes.

2006- GM unveils the Saab Aero X sport- coupe concept car and six other newmodels at the other new models at the prestigious Geneva Motor Show. TheSaab Bio Power Hybrid Concept vehicle to combine bioethanol fuel andelectric power generation to deliver zero CO2 emissions, is unveiled. The


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Saturn Aura wins 2007 North American Car of the Year. Saturn Announcesthat its 2007 model year Saturn VUE Green Line hybrid SUV will have thelowest sticker price of any hybrid SUV.


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GENERAL MOTORS

THE DOWNFALL


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All empires contain the seeds of their own destruction. The ideas on which theywere founded cannot adapt to changing times. Their wealth creates bureaucracyand complacency. Meritocracy gives way to an introverted oligarchy that wastesits talents vying for position within the imperial court, rather than expanding the

empires borders. GM was the worlds most important company. Themanagement system pioneered by Alfred Sloan at GM in the 1920s became thebasis for the multidivisional modern corporation. Haunted by Henry Ford, Sloanbuilt a company that could run itself, independent of the whims of one man. Thisexplained GMs decentralized structure, with its autonomous operating divisions;its rigid system of command and control, where every detail had to be planned;and its vertical integration, in which GM undertook to make nearly all the partsthat went into its cars. In GMs sense of creating many different divisions thatcompete with each otherhas fallen out of fashion. With each division having itsown marketing and engineering, GM incurred unnecessary overheads. As theworld opened up to free trade, says Jack Smith, GMs chairman, Sloans

system was not competitive.

Nowhere were the doubts about GMs management greater than on Wall Street.GMs shares had under performed the stock market by around 70% in the pastdecade, continuing a dismal tradition (see chart).

GMs reorganizations tended to fall into two categoriescatastrophic and

ineffectual. The most catastrophic was the huge restructuring in 1984, which setoff an ill-fated $80 billion spending-spree on technology, and also split itsAmerican division into two groupsBOC (officially Buick-Oldsmobile-Cadillac,unofficially Big Overpriced Cars) and CPC (Chevrolet-Pontiac-Canada orCheap Plastic Cars). Most of the restructurings since then have beenincremental.
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2009: The collapse of General Motors into bankruptcy was only the latest chapterin a long story of mismanagement and decline


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Where did it all go wrong?

In some ways, GMs problems can be traced to its origins a century ago.Between 1908 and 1920, its founder, Billy Durant, bought 39 companies

including Cadillac, Pontiac, Oldsmobile, Chevrolet and several parts-makers, butran them as separate entities. In 1923, after narrowly avoiding bankruptcy, AlfredSloan, a magnate, took over the running of GM. Sloan imposed tight financialcontrols and brought order to the chaotic model line-up. Yet even as GMexpanded abroad, establishing factories in 15 countries and buying Vauxhall inBritain and Opel in Germany, Sloan made little attempt to forge a unifiedcompany at home. The different divisions were run almost as independent fiefsthat fought among themselves and against any interference from the centre.

Still, GM was doing well enough after the second world Only in the 1970s, afterthe first oil shock, did faults start to become visible. The finned and chromed V8-

powered monsters beloved of Americans were replaced by dumpy, front-wheel-drive boxes designed to meet new rules (known as CAFE standards) limiting theaverage fuel economy of carmakers fleets and to compete with Japaneseimports. As well as being dull to look at, the new cars were less reliable thanequivalent Japanese models.

By the early 1980s it had begun to dawn on GM that the Japanese could not onlymake better cars but also do so far more efficiently. A joint venture with Toyota tomanufacture cars in California was an eye-opener. It convinced GMsmanagement that lean manufacturing was of the highest importance.Unfortunately, that meant still less attention being paid to the quality of the cars

GM was turning out. Most were indistinguishable, badge-engineered nonentities.

Mr. Wagoner had little choice but to generate cash to feed the beast. That meantkeeping production high and sustaining sales with costly dealer incentives, cheapcredit and heavily discounted fleet sales. That in turn hammered residual values


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and damaged GMs brands. It is easy to say with hindsight that Mr. Wagonershould have done more to prevent the slide. But had a more confrontationalmanager forced an earlier showdown with the union, downsized faster or tried tohack back a sprawling dealer network protected by state franchise laws, he mightmerely have hastened bankruptcy. It may be fairer to say that, dealt a rotten

hand, Mr. Wagoner tried to do many of the right things, but ran out of luck andtime.

The car-industry task-force appointed by Barack Obama to save GM quicklyconcluded that it could be viable without the pressure of bankruptcy to forcestakeholders to renounce most of their claims. But it also recognized that notmany people want to buy something as expensive and durable as a car from acompany that may not be around next year. The task-force was therefore forcingthrough quick rinse or pre-packaged bankruptcies to separate the good assetsfrom bad assets and liabilities speedily. The idea is to allow a new, cleansedcompany to emerge in at most a few months

Timeline

2007 - GM signs deal with the UAW, which includes shifting GM's retiree healthcare liabilities to an independent trust.

June 2008 - GM puts Hummer brand on review, ahead of a possible sale.


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July 2008 - GM announces plans to cut costs by $10 billion and raise $5 billionthrough borrowing and asset sales.

Sept 2008 - GM and Chrysler holds talks to combine companies. GM sets asidetalks in November to focus on preserving cash.

Nov 2008 - GM warns its liquidity will fall short of the minimum needed to run itsbusiness by the first half of 2009.

Dec 2, 2008 - GM seeks U.S. government aid of up to $18 billion.

Dec 19, 2008 - GM and Chrysler granted $17.4 billion in government loans.

Jan 21, 2009 - Toyota Motor Corp surpasses GM as the world's largestautomaker for the first time.

Feb 5, 2009 - GM announces plan to slash its global salaried workforce by about10,000, or 14 percent and cut the pay of most remaining white-collar U.S.workers.

Feb 17, 2009 - GM raises U.S. funding request to a total of $30 billion,announces plans to cut global workforce by 47,000 and close five U.S. plants by2012.

Feb 26, 2009 - GM posts 2008 loss of $30.9 billion.

March 5, 2009 - GM's auditors raise "substantial doubt" about its ability to survive

outside bankruptcy.

March 30, 2009 - GM Chief Executive Rick Wagoner ousted by U.S. government,replaced by Chief Operating Officer Fritz Henderson. Company also given 60days to develop new restructuring plan.

April 17, 2009 - GM says readying detailed plans for bankruptcy filing as it racesto complete a business plan under federal oversight.

April 22, 2009 - GM says unlikely to make a $1 billion debt payment due June 1.

April 27, 2009 - GM offers final plan to reorganize outside bankruptcy by slashingbond debt, cutting over 21,000 more U.S. jobs and emerging as a nationalizedautomaker. GM warns it would file for bankruptcy if an offer to exchange bondsfor company equity failed to cut $27 billion in debt by about 90 percent ofbondholders.


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May 5, 2009 - GM details plans to all but wipe out the holdings of remainingshareholders by issuing up to 60 billion new shares in a bid to pay off debt to theU.S. government, bondholders and the UAW.

May 7, 2009 - GM posts a first-quarter net loss of $6 billion and a cash burn of

$10.2 billion.

May 15, 2009 - GM announces plans to drop 1,100 of its smaller, less-profitabledealerships.

May 21, 2009 - GM announces a new cost-saving labor agreement with theUAW, under which UAW-aligned healthcare trust will receive half of the $20billion debt GM owes the fund in the form of stock and new debt, instead of cash.

May 22, 2009 - GM borrows another $4 billion from the U.S. Treasury andreaches deal with Canadian auto workers.

May 27, 2009 - GM's offer to exchange $27 billion in bond debt for a 10 percentstake in a reorganized company fails.

May 28, 2009 - GM and the U.S. Treasury make new equity exchange offerunder which bondholders would be offered 10 percent of a reorganized companyand given warrants to purchase another 15 percent.

June 1, 2009 - GM files for Chapter 11 bankruptcy protection at the U.S.Bankruptcy Court in the Southern District of New York.


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EMERGING FROMBANKRUPTCY

THE CHALLENGE AHEAD


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A new General Motors emerged from bankruptcy protection on Friday -- far morequickly than most industry watchers had expected -- as a leaner automakerpledging to win back American consumers and pay back taxpayers. A whirlwind40-day bankruptcy for GM concluded with the closing of a deal that sold key

operations to a new company majority-owned by the U.S. Treasury.

The development, which follows a similar fast-track reorganization of Chrysler,represented a victory for the Obama administration and its commitment to save

jobs in the wake of the crisis and prevent a liquidation of the largest U.S.automaker. At the same time, the U.S. government has taken on substantial newrisks as a 60 percent owner of the new GM with a $50 billion equity investmentand $10 billion in debt and perpetual preferred shares.

Analysts said the government intervention had given GM a new chance andsharply lower operating costs, but left management facing deep challenges given

the weak economy and GM's long-running slide in market share. "I wouldn't reallycall it a new GM, it is just a smaller GM. That would be more of an aptdescription. They still have a lot of hurdles to jump," said Mirko Mikelic, portfoliomanager at Fifth Third Bank. "Right now, they are in a survival mode." ChiefExecutive Fritz Henderson said the new company would shed layers ofmanagement, make decisions faster and shed the bureaucracy that critics saycontributed to the failure of the 100-year-old automaker. The company's white-collar workforce will be cut by more than 20 percent by eliminating 6,000 jobs.Executive ranks will be cut 35 percent.

NO MORE BUSINESS AS USUAL

"The bottom line is that business as usual -- and as we have had it until today --is over," Henderson told reporters at GM's Detroit headquarters. "Everyoneassociated with GM must be prepared to change -- and fast." The new GM willhave slashed its debt and healthcare obligations by $48 billion, dropped almost40 percent of the dealers from an unprofitable network and moved to sell laggardbrands such as Saab, Saturn and Hummer.

Analysts said that gives GM a chance to deliver on its commitment to launchmore fuel-efficient cars and to focus its resources on fewer brands, models anddealerships. "The challenge in the future is how to approach a marketplace that

has been burned by GM," said Pete Hastings, a fixed-income analyst at MorganKeegan.

While key assets and the Chevrolet, Cadillac, Buick and GMC brands were soldout of bankruptcy to form the new General Motors Company, other assets,including shuttered factories, remain in bankruptcy for a liquidation process. Thatold GM, which will become Motors Liquidation Co, is expected to stay in


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bankruptcy for years. Bondholders, who had been owed $27 billion, couldeventually receive a 10 percent stake in the new GM.

The U.S. Treasury will own 60.8 percent and 11.7 percent will be owned by thegovernments of Canada and Ontario. A retiree trust fund affiliated with the United

Auto Workers union will hold 17.5 percent. GM will start to pay back its debt tothe U.S. Treasury, which it owes by 2015, as soon as possible, Chief FinancialOfficer Ray Young told Reuters Television in an interview. The automaker plansan initial public offering as soon as 2010 and could use some of the proceedsfrom that stock sale to repay government debt, Young said.

NEW GM, NEW CULTURE?

Henderson, who took over as CEO when predecessor Rick Wagoner was oustedby the Obama administration at the end of March, said the company would berun by a single executive committee, cutting the number of top decision-makers

in half. He also said key decision-makers would meet weekly, a practice adoptedby Ford Motor Co CEO Alan Mulally that he has credited with speeding thatautomaker's turnaround. GM also eliminated the North American executive teamoverseeing operations in its troubled home market, which had caused theautomaker to lose more than $80 billion since 2005.

Nick Reilly, who has headed Asian operations, will take control of GM'sinternational operations based in Shanghai, a recognition of the growingimportance of China at a time when GM is selling its European unit, Opel. BobLutz, 77, GM's outspoken and high-profile former product chief, agreed to stay ina new position with responsibility for marketing, communications and a continued

role in vehicle design. Barclays Capital analyst Brian Johnson said Henderson'smaneuvers in part dismantled organizational forms that were a hallmark ofWagoner's tenure. "The organizational steps GM announced are, in the contextof the GM culture, relatively significant, even as they appear inscrutable tooutsiders," Johnson said.

________________________________________________________________


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REFERENCES

1. www.economist.com

2. www.reuters.com

3. www.gm.com

4. www.williamette.edu

5. Abernathy, William(1978) The Productivity Dilemma: Road back to

Innovation in the Automobile Industry.

6. Birth of the Kettering Doctrine : Fordism, Sloanism

7. Alfred Dupont (1977) The Visible Hand: The Managerial Revolution in

American Business.
http://www.economist.com/http://www.reuters.com/http://www.gm.com/http://www.williamette.edu/http://www.economist.com/http://www.reuters.com/http://www.gm.com/http://www.williamette.edu/

final gm project !!

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