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05.31.09

R.I.P., GM

As General Motors prepares to file for bankruptcy, Stephen Miller—obituary writer for The Wall Street Journal—on the colorful and tumultuous life of the once-dominant 101-year-old American company.

Like most 101-year-olds, General Motors was beleaguered by health problems for many years —in this case including legacy health-care costs that imposed crippling long-term obligations. But untrue to its legacy, GM failed in recent decades to innovate, whether out of arrogance or ineptitude, ceding to Toyota the title of world’s largest car company. And then came the gas-price spike, the economic crisis, a tumultuous Washington bailout, and now the largest bankruptcy filing ever.

It’s a stunning denouement for what was once an innovative industrial juggernaut, one whose fortunes became so closely identified with the economic health of the nation as a whole that one former GM president could plausibly, if inaccurately, be quoted as saying “What’s good for General Motors is good for the country.” (What Charles E. Wilson actually said at his confirmation hearing for secretary of Defense in 1953 was: “For years I thought that what was good for our country was good for General Motors, and vice versa.”)

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The car company with the no-nonsense name had a tumultuous birth. It was created in 1908 by a former horse-wagon manufacturer, William C. Durant, who had made Buick Motor Co. the most successful brand in the country. Durant’s groundbreaking insight was that a single company could manufacture cars of different brands aimed at different customers. He was a colorful figure, in and out of financial distress, less famous than his friend and rival Henry Ford perhaps because he left no lasting company with his name on it. Durant was a contemporary of Ford¹s and supported Ford¹s successful defense during an important 1909 infringement suit on the internal combustion engine.

GM's founder lost his shirt in the Depression and ended his days managing a bowling alley in Flint, Michigan.

Starting with Buick and a pile of capital from GM’s IPO, Durant acquired Oldsmobile in 1908, and soon rolled out Oakland (later renamed Pontiac) and Cadillac, two truck manufacturers, as well as parts manufacturer AC Delco, more than a dozen in all.

It was a heady time as the car industry strained toward maturity, highlighted by the Great Auto Race of 1908, which covered 22,000 miles from New York to Paris via Asia.

With the hastily assembled GM looking overextended, Durant was forced out of office in 1910 by his bankers. He went on to found Chevrolet, which he brought back into the GM fold in 1917, after having regained the GM presidency in 1916. He was forced out again in 1920, this time for good. (He later founded yet another car company—Durant Motors—then lost his shirt in the Depression, and ended his days managing a bowling alley in Flint, Michigan.)

It was the man who eventually replaced Durant, Alfred P. Sloan Jr., who brought to GM the precepts that would characterize it in coming decades, or as he put it, “a car for every purse and purpose.” In the words of Durant biographer Axel Madsen, Sloan "perfected a rigid system of command and control. The GM he built was a conglomerate that, independent of the whims of one man, could run itself."

A styling department was established and changes were made to each model annually, kicking off what would eventually become known as “planned obsolescence.” Under Sloan, the classic GM lineup was established, in roughly ascending order of luxury: Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac. Each was run as a semi-independent entity, preserving stylistic and technological independence. All this was in direct contrast to Henry Ford’s policy of giving the customer “any color that he wants so long as it is black.” Customers voted with their greenbacks on which policy they preferred: GM outsold Ford by the end of the 1920s, and would go on to dominate the market for automobiles for the next seven decades, becoming in the process the largest industrial company in the world.

GM prospered through the Depression, never failing to turn a profit. It became the largest industrial supplier of war material to the Allies during World War II, contributing tanks, machine guns, and diesel engines. Ironically, these were often deployed against war vehicles manufactured by GM’s German subsidiary, Opel AG, which the German government had requisitioned for wartime production starting in 1939.

GM helped lead the way in the revolution in consumer goods that flowered after the war, and it was in those years that its models began to assume iconic status, with models like the 1949 Buick Roadmaster, the 1957 Chevy, and the 1959 Cadillac El Dorado, which featured the largest tail fins on record. Technological innovation came as well, for instance powerful V8 overhead cam engines. By the 1960s, GM became known for its muscle cars, like the Camaro and Nova, as well as the innovative Corvair, a European-style small car that still inspires collectors despite (or perhaps because of) its image problems. At the other end of the spectrum was one of GM’s most thrilling rides, the Corvette, a two-seat screamer launched in 1953 that set track records as a very American kind of sports car.

If GM’s exuberant designs of the 1950s and 1960s were of a piece with American cultural history, its contributions in the 1970s were consistent with an era of diminished expectations including such beaters as the Vega, the Chevette and Chevelle, and, in the 1980s, the Citation. In 1981, a reorganization was undertaken by GM’s new chairman, Roger Smith, but it failed to solve emerging quality and design problems. Mr. Smith became a byword for arrogant incompetence thanks in part to a hostile press and Michael Moore’s 1989 documentary, Roger & Me. Still, it was under Mr. Smith that GM launched Saturn, its first new brand in half a century. Saturn represented a fresh start and an answer to the Japanese, but was soon left orphaned by an increasingly harried upper management. It was a pattern GM would repeat in other promising innovations, including the EV1 electric vehicle (original name, unfortunately for a car: the Impact).

In the 1990s, GM came late to the SUV party and stayed too long, and the company was caught without much to offer when gasoline prices spiked and consumers turned away from big cars and trucks. Still there were a few good years in there; sales topped 3 million vehicles for the first time in 1996. But the 9/11 attacks put the company’s unsustainable pension and medical obligations front and center.

By the time its leaders started flying (later, chastened, driving) to Capitol Hill, hats in hand, it seemed nearly every part of the giant corporation was in trouble. Niche brands such as Hummer and Saab had stopped performing. Oldsmobile was eliminated in 2004 and Pontiac was being phased out. Americans weren’t buying GM’s remaining flagship nameplates anymore, and the bailout billions weren’t righting a sinking ship. No one can say what sort of company will rise from the unprecedented bankruptcy, but it won’t be your father’s GM or your grandfather’s either.

Stephen Miller writes Remembrances, the obituaries feature in the Weekend Edition of The Wall Street Journal. He was previously obituaries editor for The New York Sun.