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Remembering GM’s Roger B. Smith

From Wards Auto| December 12 , 2007

Roger Bonham Smith was not a CEO out of central casting.

Standing at medium height and with blond-reddish hair, a ruddy complexion and a rather high-pitched voice, he hardly fit the stereotype of a boardroom tycoon.

But that’s precisely what he was as chairman of General Motors Corp. from 1981-’90. He died at age 82 on Nov.30, and to the end remained silent about his 42-year GM career.

“I’m taking it to the grave,” he replied when repeatedly asked to tell of his time at GM.

Bright, warm with friends but tough on colleagues, Smith also was one of GM’s most controversial leaders. Few among his subordinates spoke reverently about him, and many privately branded him a tyrant.

Yet in heading what was then the world’s largest corporation based on annual revenues, he weathered some tumultuous times and took a series of bold steps into uncharted territory that those with less fortitude may never have taken – for better or worse.

Four of those moves stand out: Launching Saturn as an entirely new company to compete against Japanese models; acquiring Electronic Data Systems (EDS) from fiery Ross Perot; purchasing Hughes Aircraft Co.; and tying in with Toyota Motor Corp. to build GM and Toyota cars at a GM plant in Fremont, CA.

But he also made questionable decisions that still haunt GM today. One was the 1984 reorganization designed to streamline the company but, with GM’s ingrained bureaucracy, had almost the opposite effect. Organization and operations charts were tossed aside and new ones redrawn, resulting in near chaos down the ranks.

Some GM old-timers say the “reorg,” as they called it, set back GM’s core product development programs just when it needed to be paying much more attention to burgeoning competition.

Although Smith loved cars, he was not a “car guy” in the traditional sense. His career was almost entirely on the financial side, and an underling who didn’t deliver a strong business case for his project would find it to be a no-go.

Given his reputation as a “bean-counter,” it’s surprising that an engineer was named as his successor. Bob Stempel was no ordinary engineer, however. He was a “car guy” with a string of technical accomplishments as he rose to executive vice president. But he was never cut out to be the financial leader of a corporation that for decades drew its CEOs from the financial side. As GM’s woes mounted not long after Smith retired, Stempel was forced out, and GM reverted to tradition by naming Jack Smith, a Roger Smith protégé, to CEO and, eventually, chairman.

Few who didn’t really know Roger Smith would be surprised to learn he had a keen sense of humor and a common touch. He once described a reporter he especially disliked as having a brain that “wouldn’t fit the top of a common pin.”

And he liked to pique attention by slyly reminding reporters that he had a “lulu” he was about to disclose.

One of those lulus was Saturn. Top GM insiders of that era in the late 1980s still argue that Saturn was a $2-billion waste – that Chevrolet first, but perhaps the other divisions as well, could have used that cash to develop stronger competitive models.

Others, however, saw Saturn as symbolizing GM’s commitment to changing the way it addressed the market and customers.

Saturn reportedly seldom made money in its early years and only now – 20 years after it was conceived – does it appear to be routed toward success. What if, asked some close to GM at the time, the auto maker had pumped cash into Oldsmobile instead, rather than later killing it off?

Smith reportedly paid $5 billion each for EDS and Hughes, although he once confided the number was closer to $4 billion apiece. Both since have been spun off at a multiple much higher than GM had paid, which should go down as a plus in assessing Smith’s time at the top.

Smith got Perot in the bargain, as he joined GM’s board of directors. But their relationship was not without its ups and downs, breaking at one point into open warfare. Perot, alone among the board directors, voted against the Hughes acquisition and repeatedly attacked GM for failing to take his advice on numerous issues. Still, in EDS Smith infused GM with information technology it did not have, and from his viewpoint picking up EDS strengthened the auto maker.

Ford Motor Co. reportedly offered to buy Hughes, but Smith once chortled he had gotten the best of his cross-town rival. Both were especially interested in Hughes’ technical acumen, particularly electronics.

The Toyota deal resulted in the launch of New United Motors Mfg. Inc., aimed at assembling cars for both companies, with Toyota in charge.

Besides getting a source for compact cars developed by Toyota, Smith’s motive also was to learn first hand about the Japanese auto maker’s esteemed lean production system, then transfer this knowledge to GM’s own operations. In that he had limited success, running into some initial resistance back home. Although today’s GM manufacturing system and strategy probably can trace some of its lineage back to NUMMI, which remains a 50-50 JV.

A book may yet be written about Smith’s tenure at GM. Sadly, it won’t be a first-hand account.

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