Speaker 1: Welcome to tech Stuff, a production from I Heart Radio.
Speaker 1: He there, and welcome to tech Stuff. I'm your host,
Speaker 1: Jonathan Strickland. I'm an executive producer with iHeart Radio and
Speaker 1: I love all things tech. And this is Part three,
Speaker 1: the part three and final parts so far of my
Speaker 1: series about General Motors. So if you're just tuning in,
Speaker 1: you might want to seek out the first two episodes
Speaker 1: in this series that published over the last two weeks.
Speaker 1: In those episodes, I explain how William C. Durant started
Speaker 1: General Motors by first buying Buick, then creating a holding
Speaker 1: company called General Motors, and then by buying up a
Speaker 1: whole bunch of other car companies like Oldsmobile and Cadillac,
Speaker 1: as well as other companies that specialized in making various
Speaker 1: parts that were used in cars. I also talked about
Speaker 1: how Durant's investors kicked him out of the company for
Speaker 1: accruing debt, and how Durant was able to buy his
Speaker 1: way back into the company, and then how he got
Speaker 1: kicked out of it again. Then I talked about Durant's successor,
Speaker 1: Alfred Sloan, who was skilled in reducing costs and increasing
Speaker 1: efficiency and maximizing profits, but was very much not interested
Speaker 1: in stuff like, you know, worker conditions and compensation. I
Speaker 1: also talked about gms controversial activities leading up to World
Speaker 1: War Two, and how the company appeared to play at
Speaker 1: least some part in helping Hitler's war machine get started
Speaker 1: in Germany before doing the same thing in the United States.
Speaker 1: So today we're going to pick up post World War Two.
Speaker 1: For the most part, we're gonna do some backtracking. I
Speaker 1: apologize for that. It's just it's a complicated story. Anyway.
Speaker 1: While Sloan definitely had some qualities that I personally find
Speaker 1: pretty distasteful, there was no denying that he was brilliant
Speaker 1: at managing a company. Sloan had organized General Motors not
Speaker 1: by function, so it wasn't like it was organized by
Speaker 1: sales and then marketing and then manufacturing across all the
Speaker 1: different brands. Instead, he organized it by division, and so
Speaker 1: each division would oversee a specific brand of cars. So
Speaker 1: the Buick line had its own sales department, its own
Speaker 1: marketing department, it's own manufacturing departments, so on, and Cadillac
Speaker 1: was the same in Pontiac and Oldsmobile, etcetera. So each
Speaker 1: division had its own general manager, who was responsible for
Speaker 1: keeping down costs and maximizing profits, and Sloan essentially created
Speaker 1: the model that many, if not most, modern big industrial
Speaker 1: corporations followed today. Much of the design he brought over
Speaker 1: from DuPont. He had kind of picked that up from
Speaker 1: DuPont's businesses, but he added his own elements to it
Speaker 1: as well. And as such, in business, there are a
Speaker 1: lot of people who study Sloan's you know, leadership strategy
Speaker 1: and organizational strategy. In fact, if you remove people from
Speaker 1: the equation, if you forget that people exist, then Sloan's
Speaker 1: models are really effective. It's kind of like looking at
Speaker 1: a logic puzzle where you need to reduce one component
Speaker 1: in this case that would be you know, loss or cost,
Speaker 1: and maximize another component that would be profit. But trouble
Speaker 1: starts to pop up when you happen to think of
Speaker 1: things like salaries as part of your costs and people
Speaker 1: as assets. That kind of thinking where you have removed
Speaker 1: yourself from thinking about the human condition. Uh, that doesn't
Speaker 1: always end well. It tends to lead to things like
Speaker 1: unionization and strikes as people say, hey, we aren't just
Speaker 1: numbers on a spreadsheet now. General motors certainly found this
Speaker 1: to be true. And while the company didn't employ the
Speaker 1: same violent tactics that say Ford did, the disputes with
Speaker 1: organized workers were pretty dramatic. But let's push forward, and
Speaker 1: that means having to go back a bit. See One
Speaker 1: of the really important people in General Motors history whom
Speaker 1: I have not mentioned yet is Harley Earl, a professional designer.
Speaker 1: He was born in eighteen ninety three in Hollywood, California.
Speaker 1: His father, Jacob W. Earl, was a coach builder in
Speaker 1: the nineteenth century, and he owned a business called fittingly
Speaker 1: enough Earl Coach Works. Oh And while Harley would call
Speaker 1: California home, Jacob was actually from somewhere else. He was
Speaker 1: from Cadillac, Michigan. Because when we talk about automotive efforts
Speaker 1: in the United States, it always comes back to Michigan,
Speaker 1: and Jacob's son, Harley, would be a huge influence on
Speaker 1: Cadillac's as well as Michigan and other parts of General
Speaker 1: Motors as well. So after the turn of the century,
Speaker 1: Jacob began to expand his business a little bit. While
Speaker 1: he had started out repairing and building horse drawn coaches,
Speaker 1: he branched out by working on early automobiles and it
Speaker 1: was clear to him that the car was going to
Speaker 1: replace the older forms of transportation. So with that in mind,
Speaker 1: Jacob founded Earle Automotive Works, a custom shop in Hollywood, California,
Speaker 1: where the main customers were producers and movie stars and studios.
Speaker 1: In fact, a lot of of the company's early customers
Speaker 1: were producers who needed specialty vehicles for the motion pictures,
Speaker 1: like horse drawn vehicles, like like like Roman chariots. So
Speaker 1: there's nothing like really getting into the early automotive industry
Speaker 1: and still having to put aside time to design, you know,
Speaker 1: a chariot or two. Harley Earl would work in his
Speaker 1: father's shop after school, where he got hands on experience
Speaker 1: learning about mechanical systems. But he was also a keen
Speaker 1: academic student and he attended Stanford University. Didn't complete it,
Speaker 1: but he went there and he had a major in engineering.
Speaker 1: He also would occasionally get into a bit of trouble
Speaker 1: by apparently borrowing cars as dad had been working on,
Speaker 1: and then racing those cars without his dad knowledge, and
Speaker 1: frequently winning. There's a story that goes that his dad
Speaker 1: found out about this after reading an article in a
Speaker 1: local newspaper that detailed Harley Earl's victorious run with a
Speaker 1: car that most certainly did not belong to Harley Earl.
Speaker 1: By eighteen, Earl's automotive companies business was really booming, and
Speaker 1: Harley Earl decided to drop out of college in order
Speaker 1: to work at the shop full time. He became known
Speaker 1: for working on and designing custom made car bodies that
Speaker 1: really stood out, particularly in a world where the model
Speaker 1: t Ford had created a sort of uniformity in the
Speaker 1: automotive industry. In nineteen nineteen, a man named Don Lee,
Speaker 1: the owner of the Don Lee Coach and Body Works company,
Speaker 1: acquired the Earl Automotive Company, but he kept Jacob and
Speaker 1: Son in charge of it. And now I suddenly want
Speaker 1: to sing Andrew Lloyd Weber lyrics for Jacob and Son.
Speaker 1: But anyway, Harley Earl became the chief designer for this
Speaker 1: branch of Lee's company, and Lee was the leading distributor
Speaker 1: of General Motors Cadillac line on the West Coast. So
Speaker 1: by the mid nineteen twenties, Harley Earl was quite the
Speaker 1: figure in Hollywood. He had made friends with various celebrities
Speaker 1: and studio heads through his work on custom car bodies,
Speaker 1: and he was kind of living the celebrity lifestyle. One
Speaker 1: thing Harley Earl adopted early on that would set him
Speaker 1: apart from other designers is that he would design a
Speaker 1: car body and then he would sculpt his design in
Speaker 1: three dimensions using clay. Now, at this time in car
Speaker 1: design that just wasn't standard operating procedure, but Earl proved that,
Speaker 1: you know, realizing designs and three dimensions really helped him
Speaker 1: create evocative body designs, and no doubt it helped him
Speaker 1: close numerous deals as well when clients got a chance
Speaker 1: to see the model and then imagine themselves tooling down
Speaker 1: Sunset Boulevard and a full sized version. Earl's approach would
Speaker 1: be the one that would see widespread adoption throughout the
Speaker 1: car industry. Moving forward. In nive Larry Fisher, the head
Speaker 1: of the Cadillac division at General Motors, tapped Harley Earl
Speaker 1: to design the companion make to the Cadillac. This one
Speaker 1: was called the Lassalle. So if you remember, GM had
Speaker 1: identified that there were price gaps between their different brands
Speaker 1: that they could target, but they didn't want to make
Speaker 1: certain brands more expensive or other brands less expensive because
Speaker 1: that could change the perception of the brand. So instead
Speaker 1: they introduced companion brands to fill in those gaps. Lisalle
Speaker 1: was the slightly less expensive version of Cadillac, not really version,
Speaker 1: I should say companion to Cadillac. They were distinct. So
Speaker 1: Earl agreed and he created four different Clay models. He
Speaker 1: had a touring car, a sedan, a roadster, and a coupe,
Speaker 1: and Alfred Sloan would approve all four of those models
Speaker 1: for production. In ninety seven, Earl joined General Motors as
Speaker 1: the head of a design division at that time called
Speaker 1: Art and Color. He was one of the earliest, perhaps
Speaker 1: first professional designers to work in the automotive industry. Now,
Speaker 1: I'm not going to go through all the different designs
Speaker 1: that Earl created, because again, that would be an exhaustive podcast.
Speaker 1: Also wouldn't be very effective because I don't know if
Speaker 1: you noticed, but this is an audio podcast, and you
Speaker 1: should really spend your time looking at some pictures of
Speaker 1: cars that Earl had a hand in designing. That would
Speaker 1: be far more effective. I should also point out that
Speaker 1: as his career went on, he spent less time hands
Speaker 1: on designing vehicles and more time overseeing teams of designers
Speaker 1: who were doing that. Although he still had the authority
Speaker 1: to approve or deny any style changes. It's important to
Speaker 1: know that it was these designs that Earl came up
Speaker 1: with that aligned with Alfred Sloan's vision of bringing new
Speaker 1: styles of cars to market year after year, thus creating
Speaker 1: almost a kind of planned obsolescence approach to the auto industry. Now,
Speaker 1: it wasn't that the cars would just poop out after
Speaker 1: a year of operation. They didn't. They were, for the
Speaker 1: most part, reliable machines if you maintain them properly. It
Speaker 1: was more that by creating a signature style that would
Speaker 1: change over time, GM also created an incentive to buy
Speaker 1: new cars, at least for the people who could afford
Speaker 1: to do that kind of thing. You know, cars have
Speaker 1: always been tied to status symbols, and having a car
Speaker 1: with a distinctive modern look as a real sort of
Speaker 1: social cachet to it. Earl ushered in a new era
Speaker 1: in industrial design, creating an approach to integrated design that
Speaker 1: used a single team to work on all aspects of
Speaker 1: a specific product, from the way it looks to how
Speaker 1: it operates and handles, to how it's marketed and priced.
Speaker 1: This unified method meant that everyone was on the same
Speaker 1: page when it came to the project. There was no
Speaker 1: worry about handing this off to a different team and
Speaker 1: then seeing all of your hard work get is handled
Speaker 1: by them. It was Earl who designed features that would
Speaker 1: later become iconic in the automotive world, such as the
Speaker 1: curled tail lights on Cadillacs in the late nineteen forties
Speaker 1: or the fins on Cadillacs not long after. Those were
Speaker 1: from Harley Earl. Earl was also an early pioneer in
Speaker 1: concept cars. So, for those unfamiliar with that term, a
Speaker 1: concept car is a showcase vehicle. It's not intended to
Speaker 1: go into production. It's not meant to be a vehicle
Speaker 1: that the common person could purchase at some point, so
Speaker 1: you should never expect to see a concept car in
Speaker 1: a line in a car dealership, parking lot or anything
Speaker 1: like that. Rather, these cars show off design elements and
Speaker 1: technologies that might find their way into later production vehicles.
Speaker 1: And often these concept cars wouldn't even be street legal
Speaker 1: as designed, so it's meant to show possibility, but not
Speaker 1: you know, a guarantee that this is what you're going
Speaker 1: to see in the dealerships the following year. It's a
Speaker 1: way to get ideas off the ground and get the
Speaker 1: automotive world excited about those ideas. So one of the
Speaker 1: earliest concept cars, in fact, uh it's often cited as
Speaker 1: the first concept car was the Buick Wide Job from
Speaker 1: nineteen thirty eight. It was one that Hurly Earl worked on.
Speaker 1: The Wide Job was a two door convertible, had some
Speaker 1: pretty cool features like wrap around bumpers, and even had
Speaker 1: electric windows, which was pretty novel for the time, and
Speaker 1: many of the cars features would find their way into
Speaker 1: future production cars. As for the Wide Job itself, Earle
Speaker 1: would drive it around for many many years. Uh it
Speaker 1: belongs in the museum and now it's in one. It
Speaker 1: is not an exaggeration to say that the big reason
Speaker 1: GM was able to overtake and hold onto the number
Speaker 1: one car company in the United States was in large
Speaker 1: part thanks to Earl's design team. By nineteen forty, that
Speaker 1: team had grown large enough to warrant a new facility,
Speaker 1: But World War Two changed things dramatically. GM would initially
Speaker 1: resist the push to switch over to wartime production, but
Speaker 1: once it did, nearly all of the company's manufacturing capabilities
Speaker 1: were redirected to building vehicles, engines, and other material for
Speaker 1: the US war effort, at least in this country. To
Speaker 1: hear about how GM's subsidiary Opal played a part producing
Speaker 1: material for the Access Powers, you should listen to the
Speaker 1: previous General Motors episode. Harley Earl made waves in the
Speaker 1: business world in general, and the automotive industry in particular
Speaker 1: when he began hiring women designers starting in the early
Speaker 1: nineteen forties. Not at the time such a thing was
Speaker 1: unheard of, but Earl insisted on it. And you could
Speaker 1: also make at least some argument that a little bit
Speaker 1: of this might have been by necessity, because a lot
Speaker 1: of male engineers were drafted to support the United States
Speaker 1: in World War Two. But Earl's efforts to bring women
Speaker 1: onto teams didn't end with World War Two, and he
Speaker 1: even formed an all women team of designers to work
Speaker 1: on vehicles in the night teen fifties, which was so
Speaker 1: newsworthy that it's embarrassing because it just points out how
Speaker 1: much of a disparity there was between men and women
Speaker 1: in the workplace in the nineteen fifties. He maintained that
Speaker 1: including multiple points of view really helps the best ideas
Speaker 1: rise to the top, which is a philosophy I happen
Speaker 1: to share. It's one of the big reasons that I
Speaker 1: feel inclusion and diversity are great things to embrace, because
Speaker 1: not only does it help address inequities that have existed
Speaker 1: for far too long, but we all benefit when everyone
Speaker 1: gets a chance to contribute. Anyway, let's get back to
Speaker 1: General Motors, because now we're at the point where World
Speaker 1: War two has ended, so we're caught up now. In
Speaker 1: nineteen forty six, Alfred P. Sloan stepped down as CEO
Speaker 1: of General Motors. He was, however, still chairman of the
Speaker 1: board and he would remain so until nineteen fifty six,
Speaker 1: and even then he was elected honorary chairman, which was
Speaker 1: a position he held until he passed away a decade
Speaker 1: later at the age of ninety. In ninety seven, General
Speaker 1: Motors opened a new automobile factory in Van Nuys, California. Now,
Speaker 1: originally this plant would be in charge of manufacturing trucks
Speaker 1: under the Chevrolet brand, but later it would produce iconic
Speaker 1: cars like the Camaro, the ol Camino, the Firebird, the
Speaker 1: Monte Carlo, and more. The plant remained in operation for
Speaker 1: about forty years, but GM would shut it down in
Speaker 1: nineteen two. Now, I think we could mark nineteen fifty
Speaker 1: as sort of being the beginning of the Golden Age
Speaker 1: of automobiles, or at least the automobile industry. Cars represented
Speaker 1: the platform upon which most of the cutting edge technology sat.
Speaker 1: That's where you would see cool tech was in cars.
Speaker 1: That was like the number one spot. Detroit, Michigan was
Speaker 1: the technological center of the United States at this point
Speaker 1: in history, and it would remain so for a couple
Speaker 1: of decades until some eggheads out in California began to
Speaker 1: create what would become Silicon Valley. In nineteen fifty, Michigan
Speaker 1: had more millionaires in it than any other state in
Speaker 1: the United States, mostly thanks to the automotive industry. Cars
Speaker 1: were king. When we come back, we'll learn about what
Speaker 1: happened to GM over the following decades, with a few
Speaker 1: shoutouts to some specific makes and models. But first let's
Speaker 1: take a quick break. We're back and heading into the
Speaker 1: nineteen fifties. GM was one of the largest employers in
Speaker 1: the world at that time. It was certainly the biggest
Speaker 1: employer in the United States. It had more than five
Speaker 1: hundred seventy five thousand employees in nineteen fifty five. That
Speaker 1: meant it employed twice as many people as the next
Speaker 1: largest company in the US, which was US Steel. The
Speaker 1: next car company on the list that year would top
Speaker 1: out at number four, That was Chrysler, with a hundred
Speaker 1: sixty seven thousand or so employees. GM was dominating. In fact,
Speaker 1: in nineteen fifty five, the company reported that after taxes,
Speaker 1: it would take in a profit of more than one
Speaker 1: billion dollars, the first U S company to hit a
Speaker 1: billion dollar profit in a year. They would also become
Speaker 1: the first company to have to pay a billion dollars
Speaker 1: in taxes, which will be an interesting fact to reflect
Speaker 1: on when we get to the early two thousands and beyond.
Speaker 1: That's foreshadowing something else that loomed over GM in the
Speaker 1: nineteen fifties was an escalating legal battle. In nineteen forty nine,
Speaker 1: the federal government sued the E. I. DuPont, de Nemour
Speaker 1: and Company. Now you might remember way back in part
Speaker 1: one of this series that the DuPont family was largely
Speaker 1: responsible for helping GM founder William Durant return to GM,
Speaker 1: only to subsequently forced Durant out once it appeared that
Speaker 1: Durant was going to continue accruing debt well the DuPonts
Speaker 1: remained major investors in GM, and by nineteen forty nine
Speaker 1: they owned around twenty three percent of the company. The
Speaker 1: US government alleged that the DuPonts were using this ownership
Speaker 1: to leverage GM to purchase paint and fabric primarily from
Speaker 1: DuPont owned businesses, meaning that the DuPonts were making use
Speaker 1: of anti competitive practices. In fact, by nineteen forty seven,
Speaker 1: nearly seventy percent of all the paint GM purchased was
Speaker 1: from DuPont and nearly of all the fabric was from
Speaker 1: DuPont as well. The lawsuit in nineteen forty eight was
Speaker 1: a big publicized deal. Harry Truman's administration had filed the suit,
Speaker 1: and nineteen forty eight was an election year in the US,
Speaker 1: so Truman's platform included a strong stance against monopolies and trusts,
Speaker 1: and GM and DuPont were kind of in his sights. Now,
Speaker 1: The initial case failed to bring out any indictments, but
Speaker 1: then the US filed a civil case against DuPont in
Speaker 1: nineteen forty nine, and GM was a co defendant in
Speaker 1: that case. That case didn't actually go to trial until
Speaker 1: nineteen fifty two because Justice moves at a certain pace
Speaker 1: here in the US. The trial stretched on for more
Speaker 1: than a year. It ended in December nineteen fifty three,
Speaker 1: and it wasn't until the following year when Judge Walter
Speaker 1: Labi ruled in favor of the defendants in favor of
Speaker 1: DuPont and GM, but the US government appealed this ruling
Speaker 1: to the Supreme Court. By this time we're talking about
Speaker 1: the Eisenhower administration. That Truman administration has long gone by now,
Speaker 1: and over two days in nineteen fifty six, both sides
Speaker 1: got to argue their case in front of the Supreme Court,
Speaker 1: and in nineteen fifty seven the court ruled in favor
Speaker 1: of the US government, so they reversed the decision. At
Speaker 1: that stage, this case went back down to the district courts,
Speaker 1: which were now tasked with the duty of figuring out
Speaker 1: how were the DuPonts going to extricate themselves from their
Speaker 1: ownership of that of General Motors. This trial happened in
Speaker 1: nineteen fifty nine. Once again we have Judge Labay overseeing
Speaker 1: the case. This included arguments that selling off the large
Speaker 1: number of shares of General Motors could cause the value
Speaker 1: of the company's stocks to plummet, and because GM was
Speaker 1: such a huge employer in the United States, that in
Speaker 1: turn could lead to a general recession and layoffs and
Speaker 1: essentially doomsday. So Labi ruled that the DuPonts wouldn't have
Speaker 1: to get rid of their stake in GM if they
Speaker 1: passed the voting rights for their shares to DuPont shareholders
Speaker 1: and then maintain a greater distance from GMS activities. But
Speaker 1: that wasn't good enough for the US government, which by
Speaker 1: this time was going into another election year, and so
Speaker 1: the US government appealed this decision to the Supreme Court,
Speaker 1: which heard the case again or this new case connected
Speaker 1: to the previous one, and the court determined that, contrary
Speaker 1: to Laby's ruling, DuPont had to be forced to divest
Speaker 1: all GM stocks entirely. Congress, meanwhile, helped ease this a
Speaker 1: little bit by scaling back the tax burden on the
Speaker 1: sale of stocks, which otherwise could have cost the DuPonts
Speaker 1: about a billion dollars just in you know, selling those stocks.
Speaker 1: So the DuPonts divested themselves of that stake gradually in
Speaker 1: various sales that concluded in nineteen sixty five, with the
Speaker 1: final two point three million shares they still owned in GM,
Speaker 1: so from start to finish, this whole process took more
Speaker 1: than fifteen years. Now in those fifteen years, a lot
Speaker 1: was also happening at General Motors. The company introduced the
Speaker 1: Corvette at the Motorama Auto Show in nineteen fifty three.
Speaker 1: This car had fiberglass body panels, which was new, had
Speaker 1: a six cylinder engine under the hood, which is not
Speaker 1: as powerful as a lot of people were hoping for.
Speaker 1: The original model was at two speed automatic transmission, and
Speaker 1: GMS Chevrolet made three hundred of the original Corvettes, all
Speaker 1: of them with white exteriors and red interiors. Out of
Speaker 1: those three hundred, GM was able to sell one three
Speaker 1: of them. The Corvette start wasn't exactly auspicious, but obviously
Speaker 1: the company didn't just abandon the idea. Unlike the experience
Speaker 1: of driving a later Corvette, it took a while for
Speaker 1: the actual brand to get up to speed, and to
Speaker 1: be fair, the old six cylinder Corvettes took about eleven
Speaker 1: seconds to accelerate to six emiles per hour around seven
Speaker 1: kilometers per hour. The following year, GM moved production to
Speaker 1: a manufacturing facility in Missouri with the capacity to produce
Speaker 1: ten thousand vehicles per year, but due to low demand,
Speaker 1: it only produced around three thousand, six hundred cars in
Speaker 1: nineteen fifty four. Then GM switched gears, so to speak,
Speaker 1: in nineteen fifty five five, and the new Corvettes would
Speaker 1: have V eight engines, which boosted the car's horsepower considerably
Speaker 1: and also the performance so it drove more like a
Speaker 1: true sports car. And the nineteen fifty six model would
Speaker 1: have a newly designed front end and sides that had
Speaker 1: scalped curves, and it gave the Corvette a really sleek
Speaker 1: and futuristic kind of appearance. And each subsequent year the
Speaker 1: car would get redesigns, and frequently those redesigns also included
Speaker 1: ways to boost the car's horsepower, which transformed the Corvette
Speaker 1: from a sub standard sports car to a decent sports
Speaker 1: car to one of the premier sports car lines in
Speaker 1: the United States in general, the nineteen fifties saw GM
Speaker 1: introduce a lot of daring and iconic designs thanks to
Speaker 1: Harley Earl's teams. Those tail fins we associate with the
Speaker 1: nineteen fifties come from there. In fact, my favorite car
Speaker 1: from GM ever came out during this time period. It's
Speaker 1: the nineteen fifty nine Cadillac Fleetwood Series SEV. This ing
Speaker 1: is an enormous monster of a vehicle. Huge, it's heavy,
Speaker 1: it's got the fins. But the reason why I love
Speaker 1: it is because it happens to be Doc Hopper's car.
Speaker 1: In the Muppet movie. Doc Hopper was the bad guy,
Speaker 1: and I always thought his Cadillac was just the most
Speaker 1: incredible looking car anyway. Harley Earl retired from General Motors
Speaker 1: in nineteen fifty eight when he reached the age of
Speaker 1: sixty five. It was a mandatory retirement, and his successor
Speaker 1: was William or Bill Mitchell. Mitchell had joined Harley's team
Speaker 1: of designers in the nineteen thirties. He had become a
Speaker 1: director level executive in the nineteen fifties and became a
Speaker 1: vice president in charge of all styling at GM in ninety.
Speaker 1: Under Mitchell's guidance, GM began to move a little away
Speaker 1: from the more flashy and ornamental aspects that had become
Speaker 1: part of various car designs under Earl's leadership. Not that
Speaker 1: all the cars produced during his tenure ended up being
Speaker 1: purely utilitarian. I don't want to give you that impression.
Speaker 1: There were some standout flashy cars, like the nineteen sixty
Speaker 1: three Corvette sting Ray, which is quite the profile if
Speaker 1: you ever look it up. The Corvette Stingray three one
Speaker 1: also has a split back windscreen, so the back windshield
Speaker 1: is is split. There's a divider, a metal divider in
Speaker 1: the center um, which looks really cool, but you know,
Speaker 1: it's probably not the most convenient feature if you want
Speaker 1: an unfettered rear view out of your rear view mirror.
Speaker 1: Later models would ditch that split windshield. It would go
Speaker 1: for a single piece wind shield instead. One of the
Speaker 1: things that GM vehicles were built upon was the fact
Speaker 1: that fuel in the fifties and sixties was cheap and plentiful.
Speaker 1: You could have these huge cars that guzzled gas because
Speaker 1: gas was easy to come by and it didn't cost
Speaker 1: very much. And so American car companies were churning out
Speaker 1: these big, inefficient cars through the fifties and sixties and
Speaker 1: into the seventies. And GM was not the only manufacturer
Speaker 1: to do this. It was pretty common across the industry
Speaker 1: in America. Well, that would all change due to a
Speaker 1: massive energy crisis. And to understand that crisis, we have
Speaker 1: to learn about a conflict in nineteen seventy three that
Speaker 1: had several names. It was called the Arab Israeli War
Speaker 1: of October nineteen seventy three. Sometimes it's called the yam
Speaker 1: Kapoor War, and sometimes it's called the Ramadan War. The
Speaker 1: primary nations involved were in Egypt and Syria on one
Speaker 1: side and Israel on the other. But of course the
Speaker 1: allies of these countries were kind of pulled in at
Speaker 1: least at a diplomatic level and a support level, and
Speaker 1: that ended up being pretty intense because those allies included
Speaker 1: the Soviet Union, which was allied with Egypt and Syria,
Speaker 1: and the United States, which was allied with Israel. At
Speaker 1: the heart of the matter was that the Arabic nations
Speaker 1: wanted to have land that Israel had claimed in a
Speaker 1: previous war. Released they wanted Israel to rule enguish those
Speaker 1: territories that it had occupied after a previous war from
Speaker 1: a few years earlier, and Israel declined to acquiesce to
Speaker 1: the request. Now, the war lasted most of that October
Speaker 1: while the United Nations was putting pressure on all parties
Speaker 1: to stop the hostilities. While the countries signed a ceasefire
Speaker 1: agreement in November of that year, tensions remained high. The
Speaker 1: U n sent in a peacekeeping force to kind of
Speaker 1: act as a buffer between Israel and Egypt, and ultimately,
Speaker 1: in nineteen seventy nine, Israel and Egypt came to an
Speaker 1: agreement that saw Israel withdraw from the Sinai Peninsula. Anyway,
Speaker 1: one of the many consequences of these hostilities is that
Speaker 1: the Arabic nations in the Organization of the Petroleum Exporting
Speaker 1: Countries or OPAQUE, decided to penalize countries like the United
Speaker 1: States and much of Western Europe. You know, these were
Speaker 1: parties that had aligned with Israel. The Arab countries voted
Speaker 1: to prohibit exports oil exports to those countries, which plunge
Speaker 1: that part of the world into an oil shortage. This
Speaker 1: coincided with a general market recession crisis and made it,
Speaker 1: let me check my notes here, um, a billion times
Speaker 1: worse for those countries. Now that's hyperbole, it's my hyperbole,
Speaker 1: but you get the point. All of a sudden, it
Speaker 1: became imperative for countries like the United States to change course.
Speaker 1: No longer could the country just burn through oil without reservation.
Speaker 1: Oil was hard to come by there were gas shortages
Speaker 1: across the United States. It was suddenly a very bad
Speaker 1: idea to be in the business of building fuel hungry automobiles.
Speaker 1: As such, companies like GM had to make a hard pivot.
Speaker 1: While OPEC would lift the oil embargo in nineteen four,
Speaker 1: the economic damage had already been done. The value of
Speaker 1: the US dollar was down, oil prices remained really high,
Speaker 1: So while the US could import oil, it was expensive.
Speaker 1: So gone were the days of plentiful and cheap oil
Speaker 1: of the fifties and sixties. This is also when you
Speaker 1: started seeing national security strategists point out that a heavy
Speaker 1: dependence on outside entities for fuel is a pretty enormous
Speaker 1: security flaw, always in hindsight right. A secondary oil crisis
Speaker 1: in nineteen seventy nine really reinforced this problem. This one
Speaker 1: was a crisis brought about due to a revolution in Iran.
Speaker 1: So what was going on with the car companies. Well,
Speaker 1: one thing that happened in nineteen seventy three at GM
Speaker 1: was that one of the company's executives was leaving, not
Speaker 1: specifically due to the crisis, although he would later say
Speaker 1: that he felt that GM had kind of sealed its
Speaker 1: own fate by not pursuing projects that would involve producing
Speaker 1: more small and midsized vehicles. He had headed up the
Speaker 1: Pontiac and then later the Chevrolet divisions in the late
Speaker 1: nineteen six He was also thought to be a potential
Speaker 1: contender for the CEO position in the future. But the
Speaker 1: funny thing about the future is that it's impossible to
Speaker 1: predict unless you happen to have been to the future already. That,
Speaker 1: by the way, is my coy way of saying. This
Speaker 1: particular GM executive was John Z. DeLorean, the same man
Speaker 1: who would be behind the d m C twelve a
Speaker 1: k a. The Dolorean used in the Back to the
Speaker 1: Future movies. Yep, he was a GM executive before he
Speaker 1: moved on. He was also part of the team that
Speaker 1: had made the g t O in the early sixties,
Speaker 1: which ushered in the era of the muscle car. And again,
Speaker 1: muscle cars not really viable in a world where you
Speaker 1: can't just feed them endless amounts of gasoline. So when
Speaker 1: de Lorean left, he said that one of the things
Speaker 1: that convinced him to go, And I should add there
Speaker 1: are some accounts that say he didn't actually have a
Speaker 1: choice in the matter, that he was forced to leave
Speaker 1: GM as opposed to he chose to leave, but that's
Speaker 1: a story on its own anyway. He said that one
Speaker 1: of the reasons he left was because he felt that
Speaker 1: GM had stopped innovating. He claimed that there had been
Speaker 1: no real significant technological innovation since power steering had been
Speaker 1: introduced in the late nineteen forties, and that the company
Speaker 1: was just focused on styling changes from year to year,
Speaker 1: and it was more about moving little pieces of metal
Speaker 1: around on a car in order to try and sell
Speaker 1: the same thing the following year, but just change up
Speaker 1: the appearance, and not about actual innovation. But GM's problems
Speaker 1: extended beyond the oil crisis and a flamboyant executive leaving
Speaker 1: the nest. The U s. Automotive industry was about to
Speaker 1: face some pretty big competition from overseas. I'll explain more
Speaker 1: after we take this quick break. In nineteen seventy four,
Speaker 1: The New York Times published an article that said, quote,
Speaker 1: probably no American company has offered so swift and stunning
Speaker 1: a blow from the energy crisis as the General Motors
Speaker 1: Corporation end quote. The article stated that GM had seen
Speaker 1: a thirty five percent decline in sales and had fallen
Speaker 1: from being the most profitable industrial company in the US. Instead,
Speaker 1: taking its place was the Exon Corporation, an oil company
Speaker 1: that's probably another company I should cover at some point
Speaker 1: in the future. So GM shut down most of its
Speaker 1: assembly plants, and partly this was a cost saving measure,
Speaker 1: but mostly it was because the company needed to do
Speaker 1: some serious retooling of its manufacturing lines in order to
Speaker 1: switch over to producing smaller, more fuel efficient vehicles. Since
Speaker 1: the nineteen fifties, the German auto company Volkswagen had found
Speaker 1: success exploring the Volkswagen Type one, better known as the
Speaker 1: Volkswagen Beetle or bug here in the US and Japanese
Speaker 1: companies began to join the club in the early nineteen seventies,
Speaker 1: but by nine seventy two, all foreign cars added up
Speaker 1: together made up only share of the US automotive market.
Speaker 1: The cars were mostly smaller, and many of them were
Speaker 1: less expensive than American cars, but they didn't get much
Speaker 1: attention in general until we had an oil crisis. People
Speaker 1: still needed to get around, but they didn't want frequent
Speaker 1: stops at gas stations siphoning away their cash. Imports from
Speaker 1: Germany and Japan began to see greater success in the
Speaker 1: US market, and they really established themselves, and now American
Speaker 1: companies suddenly had competitors that up to that point hadn't
Speaker 1: really been all that competitive. GM rushed to try and
Speaker 1: make small cars, but the results weren't always successful. This
Speaker 1: is around the time where people would start pointing out
Speaker 1: some production quality issues with GM vehicles in general in
Speaker 1: the various lines uh And I think we can attribute
Speaker 1: that to a lot of different factors, but a big one,
Speaker 1: I would say, is this incredibly rushed need to completely
Speaker 1: change the way you went about making cars in order
Speaker 1: to make cars that would would be in line with
Speaker 1: new fuel economy standards that the US government had set.
Speaker 1: It was one of those things that really put the
Speaker 1: company on notice. Now, I want to be clear, this
Speaker 1: same thing was true for all American car manufacturers, not
Speaker 1: just GM. The U S Government had passed these laws
Speaker 1: to create new fuel economy standards, so everyone had to
Speaker 1: rush in order to try and meet them as best
Speaker 1: they could or else pay really big fines. But this
Speaker 1: meant that the real innovations that would emerge due to
Speaker 1: these new restrictions would be a few years down the road.
Speaker 1: As engineers tackled the problem and began to work up solutions.
Speaker 1: So in the meantime, companies were really just cutting corners
Speaker 1: anywhere they could to either meet these standards or they
Speaker 1: would have to pony up and pay fines. So GM's
Speaker 1: leadership was making some questionable decisions. For example, in order
Speaker 1: to create a smaller sedan marketed towards a prospective Cadillac buyer,
Speaker 1: which is you know again, Cadillac is the luxury end
Speaker 1: of the GM brands. GM introducing model called the Cimarron
Speaker 1: in the early nineteen eighties. That's c I M A
Speaker 1: R R O N. I always want to say cinnamon
Speaker 1: when I see it. But the Cimarron looked a lot
Speaker 1: like a Chevrolet Cavalier. Now, if you've been listening to
Speaker 1: all these episodes, you know that GM's brands, Chevrolet is
Speaker 1: the lower tier. That's kind of like the entry level.
Speaker 1: It's it's the the budget priced vehicles. That that was
Speaker 1: that brand, Chevrolet, and then Cadillac is on the opposite
Speaker 1: end of the spectrum, right, that's supposed to be the
Speaker 1: luxury brand. This led several journalists to compare the Cimarron
Speaker 1: to the Cavalier and say that there was effectively very
Speaker 1: little difference, at least externally, but doing the two besides
Speaker 1: a several thousand dollar stick at price jump for the Cadillac,
Speaker 1: Like they say, well, you could buy a Cavalier for
Speaker 1: several thousand dollars less and it looks the same as
Speaker 1: as the cimer On. That's what they were essentially saying.
Speaker 1: It didn't fare very well in reviews, and the sales
Speaker 1: were not great either. Cadillac would end the line of
Speaker 1: the cimar On in and it became one of those
Speaker 1: examples that people would cite when they wanted to talk
Speaker 1: about the missteps that General Motors made during this era.
Speaker 1: In N one, Roger B. Smith became the CEO of
Speaker 1: General Motors. Smith would lead GM for a decade, stepping
Speaker 1: down in n So how did he do well? Let
Speaker 1: me put it to you this way. When people make
Speaker 1: top ten lists of the worst CEOs of all time,
Speaker 1: Roger Smith frequently secures a spot on that list. While
Speaker 1: he was in charge, GM went from hold nearly half
Speaker 1: the automotive market in the US down to thirty five percent.
Speaker 1: So what the heck happened? Well, a lot of those
Speaker 1: decisions didn't necessarily look terrible at the time, and some
Speaker 1: of them might have actually been pretty good decisions, but
Speaker 1: they were executed poorly. One huge decision, however, was to
Speaker 1: reverse Alfred Sloan's organizational design of having each brand under
Speaker 1: GM operating autonomously. So you might remember Sloan set it
Speaker 1: up so Buick operated almost like it was an independent
Speaker 1: company compared to say Oldsmobile, compared to say Cadillac, and
Speaker 1: so on. Smith reorganized the company, bringing things back to
Speaker 1: a more centralized approach. You could argue kind of the
Speaker 1: way Durant had it going when things were messy and
Speaker 1: difficult to manage. Smith essentially declared that Chevrolet and Pontiac,
Speaker 1: as well as GM's Canadian arm, would end up focusing
Speaker 1: on building smaller cars, and that the u Wick, Oldsmobile,
Speaker 1: and Cadillac brands would focus on building larger cars. But
Speaker 1: Smiths approach to reorganizing disrupted processes that had decades of
Speaker 1: momentum behind them, and just like with a physical object
Speaker 1: in motion, if you disrupt something that has a lot
Speaker 1: of momentum, it frequently leads to a big, crashed mess.
Speaker 1: The reorganization was supposed to streamline processes, but it often
Speaker 1: had the opposite effect. Things got far more complicated, and
Speaker 1: more layers of managerial staff were thrown into the mix
Speaker 1: in order to sort things out. But I think a
Speaker 1: lot of us have had experience in corporate America where
Speaker 1: adding more managers is like the opposite of a solution.
Speaker 1: It just makes the problem even more complex. Uh So,
Speaker 1: the company became really bloated, at least on the managerial level,
Speaker 1: and the company began sharing more parts and designs between divisions.
Speaker 1: That led to very similar cars coming out marketed as
Speaker 1: different makes and models. So at a casual glance, you
Speaker 1: could have three or four different cars in front of you,
Speaker 1: and when you look at them, just you know, casually,
Speaker 1: they may all seem to be the same vehicle. And
Speaker 1: then you go around the back and you see that
Speaker 1: every single one of them has a different badge on them,
Speaker 1: a different brand. So one's a Buick, and one's a Cadillac,
Speaker 1: and one's an Oldsmobile, but they all kind of look
Speaker 1: the same. That was a problem that GM was running into,
Speaker 1: and it hurt the company's image. It was that whole
Speaker 1: Simmern and Cavalier problem from earlier writ large. Smith also
Speaker 1: wanted to modernize and automate assembly plants, which isn't necessarily
Speaker 1: a bad idea. That the goal was to create a
Speaker 1: really efficient process that would cut down on costs and
Speaker 1: it would eliminate the need for as many employees, which
Speaker 1: was something that the Auto Union wasn't too keen on
Speaker 1: for obvious reasons. The company would end up spending billions
Speaker 1: of dollars in an effort to modernize their areous assemblies,
Speaker 1: but the move was a little bit ahead of its time.
Speaker 1: The robots didn't work out so well. There are some
Speaker 1: famous stories about robots failing to perform up to expectation,
Speaker 1: and these ended up being very costly mistakes that didn't
Speaker 1: just impede progress, they hurt the company in general. Smith
Speaker 1: also saw GM acquire the company Electronic Data Systems from
Speaker 1: former presidential candidate Ross Perou. That was a deal that
Speaker 1: costs more than two and a half billion dollars. Pero
Speaker 1: also would become a major stakeholder in General Motors as
Speaker 1: part of this deal. In fact, he owned more shares
Speaker 1: than any other single shareholder in the company. Then, Pero,
Speaker 1: in his unique style, spent a good deal of time
Speaker 1: dragging Smith's name in the mud in the media, criticized
Speaker 1: various executive level decisions, which I mean it sounds like
Speaker 1: there was a lot of AMMO there to use. Pero
Speaker 1: and Smith would have many battles in the press and
Speaker 1: in board rooms. In nineteen Smith and the board of
Speaker 1: directors were able to buy out Perot's share of General Motors,
Speaker 1: but Pero would still comment on the progress or lack thereof,
Speaker 1: of the company for the next couple of years. Smith
Speaker 1: also oversaw another big acquisition, the Hughes Aircraft Company. That
Speaker 1: one cost five point two billion dollars, and these moves
Speaker 1: led people to say that he was paying far too
Speaker 1: much attention to diversifying GM's businesses, but not enough to
Speaker 1: the core automotive business, which was really in kind of
Speaker 1: a mess. Smith did see the formation of a new
Speaker 1: line of cars marketed as Saturn. That brand developed a
Speaker 1: kind of cult like following, which isn't a joke. Our
Speaker 1: first new car, my partner and I our first car
Speaker 1: was a Saturn, and the experience of buying it felt
Speaker 1: kind of like we were being indoctrinated. It didn't stick
Speaker 1: with us because it turns out we're too lazy to
Speaker 1: be good cult members, So we just drove the car
Speaker 1: until I want to say the alternator gave out and
Speaker 1: we got rid of it anyway. Smith's leadership led to
Speaker 1: Michael Moore releasing a documentary. It was his first film.
Speaker 1: This film focused on the impact of Smith's decisions on
Speaker 1: the automotive industry in general and on Flint, Michigan in particular.
Speaker 1: That film is called Roger and Me, and it includes
Speaker 1: scenes of GM workers calling for Smith's resignation, which would
Speaker 1: actually happen the following year. The year after Roger and
Speaker 1: Me came out, Smith voluntarily resigned as CEO. In the
Speaker 1: movie also focuses on how GM was shifting more work
Speaker 1: to Mexico, so more jobs were going to Mexican assembly
Speaker 1: plants where GM vehicles were being made. That way, the
Speaker 1: company didn't have to deal with unions. They didn't have
Speaker 1: unions in Mexico, whereas that's something that was kind of
Speaker 1: a thorn in the company's side here in America. This
Speaker 1: was not a good look for Generals. Smith left a CEO,
Speaker 1: but he stayed on with the Board of directors until nineteen.
Speaker 1: His successor, Robert Stemple, had been with GM since nineteen.
Speaker 1: He had begun as an engineer with Oldsmobile, but General
Speaker 1: Motors was in really bad shape, and it was exacerbated
Speaker 1: by the oil crisis of the seventies. Smith's leadership in
Speaker 1: the eighties, and then there was an economic recession in
Speaker 1: the early nineties. As a result, GM was losing money,
Speaker 1: so Smith led the board into voting Stemple out in
Speaker 1: nineteen I don't know if Stimple was actually doing a
Speaker 1: bad job or not. There's not a whole lot I've
Speaker 1: seen written about him. I'm sure there are books on
Speaker 1: the subject, but I didn't encounter them in my research.
Speaker 1: But it seems to me like there were a lot
Speaker 1: of external factors that were impacting General Motors, and it
Speaker 1: might not have mattered who was in leadership at that moment,
Speaker 1: it still would have been a really rough time for
Speaker 1: the company because of those external factors. But that's just
Speaker 1: me kind of armchair analyzing based on the research I
Speaker 1: came in contact with. It could be totally inaccurate, and
Speaker 1: I acknowledge that anyway. Roger Smith would actually step down
Speaker 1: from the board of directors in nineteen and at that point,
Speaker 1: the fourteen member board of directors only had two people
Speaker 1: on it who actually worked for General Motors. The new
Speaker 1: CEO of the company was John Jack Smith, Jr. And
Speaker 1: he would remain CEO for the rest of the nineties.
Speaker 1: In that time, General Motors began to recover from the
Speaker 1: various recessions and problems of the seventies, eighties, and early nineties.
Speaker 1: A dispute with unions would lead to another big strike
Speaker 1: in which had economic group percussions beyond the automotive industry itself.
Speaker 1: But the next really truly big crisis to hit GM
Speaker 1: came in the way of a developing economic recession and
Speaker 1: the terrorist attacks on September eleventh, two thousand one. At
Speaker 1: that point, the head of GM was Richard Wagoner Jr.
Speaker 1: He succeeded Jack Smith when Jack Smith stepped down in
Speaker 1: two thousand. Now remember when I said that Roger Smith,
Speaker 1: the guy from the eighties, often gets put down on
Speaker 1: a top ten worst CEO list. Well, Wagoner often gets
Speaker 1: on those lists as well. See it was while Wagoner
Speaker 1: was CEO that GM hit a truly low point. It
Speaker 1: lost nine percent of its market valuation under his leadership
Speaker 1: and in fact went bankrupt. It lost more than eighty
Speaker 1: two billion dollars, so the US government had to come
Speaker 1: in and bail it out, effectively nationalizing General Motors, which
Speaker 1: means that for a while GM was a state run
Speaker 1: business here in the United States. At the same time,
Speaker 1: Wagoner pushed GM to adopt higher standards of vehicle quality.
Speaker 1: He also pushed for improvements to operational processes. He did
Speaker 1: oversee some pretty massive layoffs and plant closures at the
Speaker 1: same time. Based on things I've read, it sounds like
Speaker 1: he really resisted making harder decisions, bigger cuts, which some
Speaker 1: analysts say he just didn't have what it takes to
Speaker 1: keep the business afloat. He didn't have the the guts
Speaker 1: to make those hard decisions. But I would also posit
Speaker 1: that these decisions were really super hard, particularly if you're
Speaker 1: actually thinking about the impact they have on people and communities.
Speaker 1: I mean, Flint, Michigan was hit incredibly hard during the eighties,
Speaker 1: and Smith's run as CEO contributed a great deal to that.
Speaker 1: So it must have been a pretty hefty responsibility to
Speaker 1: be in charge of this massive company that affects so
Speaker 1: many people's livelihoods, not just the people who worked directly
Speaker 1: for General Motors, but their families and the communities they
Speaker 1: live in. But whether Gonna deserves to be listed as
Speaker 1: one of the worst CEO s or not, The fact
Speaker 1: is that General Motors entered into a downward spiral. In
Speaker 1: two thousand four. GM chose to discontinue the Oldsmobile brand
Speaker 1: because oldsmobili kind of slid into unprofitability. I think a
Speaker 1: lot of people just established it as that's a car
Speaker 1: for old people. It's called Oldsmobile, forgetting that it was
Speaker 1: named after Ransom Old's the guy who founded the company.
Speaker 1: But that legacy car brand had to drive off into
Speaker 1: the sunset in two thousand four. The financial crisis of
Speaker 1: two thousand seven, the hits just keep on coming. It
Speaker 1: had a domino effect that also hit the automotive industry
Speaker 1: about a year later. Another energy crisis earlier on had
Speaker 1: shifted the market toward favoring fuel efficient cars, which hurt
Speaker 1: big American companies that had kind of gone really hard
Speaker 1: with big trucks and suv models which are known for,
Speaker 1: you know, not being fuel efficient. The financial recession also
Speaker 1: affected prices of raw materials that in turn took a
Speaker 1: big bite out of profit margins. Now you could try
Speaker 1: to deal with that by adjusting the asking price for
Speaker 1: vehicles and making them more expensive, but then you're in
Speaker 1: danger of pricing yourself out of the market, so it
Speaker 1: was really rough. The US government then steps in. Now
Speaker 1: it wasn't just to rescue a company, but also the
Speaker 1: people who depended upon that company as an employer. GM
Speaker 1: was not the only company to get bailed out by
Speaker 1: the US government. Chrysler was another one, and Ford got
Speaker 1: a line of credit. Although Ford had already gone through
Speaker 1: some major restructuring, it wasn't a better financial position to
Speaker 1: whether the crisis compared to General Motors or Chrysler. As
Speaker 1: part of this streamlining process to get things back under control,
Speaker 1: General Motors discontinued to other brands. One was Saturn, which
Speaker 1: had been around in some forms it's though it had
Speaker 1: never really been profitable despite all the cult stuff, And
Speaker 1: the other was Pontiac, the companion brand to the old
Speaker 1: Oakland line, which itself had long since been discontinued. Oh In,
Speaker 1: General Motors had been the company behind the Hummer brand
Speaker 1: of SUVs based off the military hum V that was
Speaker 1: first introduced in the two thousand nine. Changes led GM
Speaker 1: to pursue selling off the brand to another company, but
Speaker 1: ultimately all of those deals fell through, so General Motors
Speaker 1: instead mothbawled the brand in though last year the company
Speaker 1: began to show teasers of a truck and an SUV
Speaker 1: with the Hummer name attached to them. Uh not separately
Speaker 1: branded as Hummer. They are GMC branded vehicles, but they
Speaker 1: have Hummer in the name. While GM initially explored divesting
Speaker 1: itself of Opal back in two thousand nine, that actually
Speaker 1: wouldn't happen until, along with Vauxhall, the UK based car
Speaker 1: company that GM had also owned for decades, the Group
Speaker 1: p S, a company, acquired both of those in seventeen.
Speaker 1: The US government invested more than fifty billion dollars into
Speaker 1: GM in order to bail it out for this crisis
Speaker 1: in the U s. Treasury Department began to sell off
Speaker 1: the stake it had purchased in General Motors and eventually
Speaker 1: netted thirty nine point seven billion dollars as a results.
Speaker 1: So it spent fifty billion to acquire those shares and
Speaker 1: made thirty nine point seven billion selling them off, which
Speaker 1: is a net loss of eleven point three billion dollars.
Speaker 1: Along with the other bailouts, it would turn out that
Speaker 1: around ten and a half billion dollars would get passed
Speaker 1: on to taxpayers. That's what the average citizen was helping
Speaker 1: pay for with their taxes, their federal taxes. Uh. Was
Speaker 1: those bailouts of those big companies. That whole process actually
Speaker 1: stretched on for several years. The bailout didn't conclude until fourteen.
Speaker 1: GM emerged from bankruptcy as two separate companies. The old
Speaker 1: GM was the one that was saddled with all the debt.
Speaker 1: So this blows my mind that you can do this
Speaker 1: and and business. You can have two new companies or
Speaker 1: two companies come out of it. You know, one company enters,
Speaker 1: two companies leave. One of those two companies is the
Speaker 1: one that actually has all that massive debt that caused
Speaker 1: you to go into bankruptcy in the first place. The
Speaker 1: newer GM had all the assets, although it also did
Speaker 1: have seventeen billion dollars in debt itself. So yeah, there
Speaker 1: was a lot of debt going on here. But the
Speaker 1: new GM was able to get rid of most of
Speaker 1: that debt and it was able to move forward with
Speaker 1: just four brands at that point, Chevrolet, Cadillac, Buick, and
Speaker 1: the GMC truck and suv lines. One of the consequences
Speaker 1: of all that debt is the effect on general motors
Speaker 1: requirement to pay federal taxes, so it largely doesn't, at
Speaker 1: least again not on the federal and that's because the
Speaker 1: company can actually count the losses against all earnings, and
Speaker 1: so it frequently pays very little in federal tax even
Speaker 1: if the company has had a really profitable year, which
Speaker 1: might not seem fair, but it gives GM the chance
Speaker 1: to set a new foundation for its business without those
Speaker 1: extra costs in the form of taxes, and that tax
Speaker 1: relief doesn't last forever. I mean, we were talking about
Speaker 1: losses of eight two billion dollars that provided a lot
Speaker 1: of cushioning for GM too, you know, kind of get
Speaker 1: things moving again. So by two or three these those
Speaker 1: past losses will have essentially been accounted for and GM
Speaker 1: will effectively be working with a blank slate. So there's
Speaker 1: a lot more that we could say about General Motors. UH.
Speaker 1: For example, the company is, like many automotive companies, really
Speaker 1: focusing on hybrids and electric vehicles at this stage, which
Speaker 1: is really cool, really exciting stuff. It's also interesting to
Speaker 1: point out that previous GM executives have often said that
Speaker 1: one of the biggest mistakes they made was not making
Speaker 1: an earlier, you know, investment in electric vehicles. Some of
Speaker 1: them have said, well, yeah, I wish we had done it,
Speaker 1: not because I think it would have moved the bottom line,
Speaker 1: because it probably wouldn't, but it would have been a
Speaker 1: much better image issue, UM, which also matters. It's crazy
Speaker 1: to think that sometimes you do things just because it
Speaker 1: looks good for the optics. In other words, a phrase
Speaker 1: that I hate, but in our world it does make
Speaker 1: a difference. So like it or not, it's the world
Speaker 1: we live in. But that wraps up our series on
Speaker 1: general motors. UM. There's probably stuff that we could dive
Speaker 1: much deeper into, Like I didn't even talk about how
Speaker 1: power steering works. I just mentioned it, but we'll leave
Speaker 1: that for future episodes. If there are any specific things
Speaker 1: you would like me to really dive into, let me
Speaker 1: know I'll consider it. Or there's some other topic you
Speaker 1: would love for me to tackle in a future episode
Speaker 1: of tech Stuff, drop me a line on Twitter. The
Speaker 1: handle I use is text stuff hs W, and I'll
Speaker 1: talk to you again really soon. Tech Stuff is an
Speaker 1: I Heart Radio production. For more podcasts from I Heart Radio,
Speaker 1: visit the I Heart Radio app, Apple Podcasts, or wherever
Speaker 1: you listen to your favorite shows.