Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.news From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Stempel resigns as GM chief Date: Tue, 27 Oct 92 13:27:07 EST Message-ID: \SE A \SS (WS) \HD Stempel resigns as GM chief \SH Failed to curtail automaker's losses \BY ASSOCIATED PRESS \DT DETROIT DETROIT (AP) - General Motors Corp. Chairman Robert Stempel quit yesterday, pressured to resign after a 2-year-old command that failed to stem record financial bleeding at the world's largest automaker. Mr. Stempel's departure makes his tenure the shortest of any of the 11 men who have chaired GM in the 84-year history of the company, once one of the most profitable and admired among American businesses. It was only the second time since its founding in 1908 that the automaker's top man was forced out. His job future had looked increasingly bleak in recent weeks, contributing to a sense of disarray and anxiety among many of GM's workers and managers. Published reports quoting unidentified GM board sources said he would be asked to resign because he was moving too slowly in cutting costs aimed at stopping devastating financial losses that have dogged the company for the past few years. "I could not in good conscience continue to watch the effects of rumors and speculation that have undermined and slowed the efforts of General Motors people to make this a stronger, more efficient, effective organization," Mr. Stempel, 59, said in a statement released by GM. John Smale, 65, former chairman of Procter & Gamble Co., is expected to be named interim chairman when the GM board meets Monday in New York. Mr. Smale said in a written statement yesterday that the board had accepted Mr. Stempel's resignation and asked him to continue as chairman until a successor is named. Mr. Stempel said he would comply. GM stock climbed 63 cents a share yesterday to close at $34.13 a share in trading on the New York Stock Exchange, where it was the most active issue, with 3.5 million shares changing hands. Wall Street analysts who follow GM weren't surprised Mr. Stempel resigned rather than wait to be fired. But none interviewed felt a new chairman would make much difference in the automaker's attempts to regain the competitive edge it once enjoyed. GM's core auto business in North America has been hammered during the recession, which began about the time Mr. Stempel succeeded Roger Smith as chairman in August 1990. Under GM's highly publicized plan to shrink, the company will close 21 plants and cut 74,000 jobs by 1995. Analysts said that strategy must remain on track regardless of what happens in the boardroom. That means avoiding multibillion-dollar design blunders that have hurt GM in recent years. They said it also means leaving President John F. Smith Jr. free to continue overseeing the downsizing. "For the good of the corporation and all those people that he hired is for Jack to finish the job he started," said Joseph Phillippi, an auto industry analyst with Lehman Brothers Inc. in New York. "Nobody at GM ever finished their job. They always got promoted up and away." Several analysts said Mr. Stempel was given too little time. "I sympathize with the lack of patience of the board of directors," said Mike Flynn, associate director of the Office for the Study of Automotive Transportation at the University of Michigan. "But I'm not sure they're right. A lot of GM's problems are traceable to the economy. I don't think Stempel's had a whole lot of time." "You can't turn a battleship around in a canal, at least not very quickly," said David Cole, director of the UM office. "It's going to be interesting to see if the board can prove more effective in addressing the problems of the lack of profits in North American auto operations," said David Garrity, an analyst with McDonald & Co. Securities in New York. "The main problem, first and foremost, is the apparent failure of GM's product program," he said, naming the much-ridiculed, poor-selling redesigned Chevrolet Caprice and the aging Oldsmobile lineup as examples. Independent presidential candidate Ross Perot, a former board member, said Mr. Stempel "stepped in when most of the damage was done." Mr. Perot criticized GM's unwillingness to change in the mid-1980s and left the board in 1987. "You can be at the right place at the right time or you can be at the wrong place at the wrong time," he said yesterday of Mr. Stempel. "Make no mistake, he is a world-class man. There's no question in my mind he has given it everything he has." Mr. Perot added: "The one thing that is not acceptable is for the board to try to run the company. I know the board. In terms of salvaging the company, you better get one of the tigers back in there that knows how to build cars to run the company. I just hope they pick the right tiger." Mr. Stempel, who announced GM's shrinkage plan in December, has seen his role diminished since an April 6 board meeting when directors ousted his handpicked president, Lloyd Reuss, and demoted Chief Financial Officer Robert O'Connell. Directors elevated to president and chief operating officer John F. Smith Jr., the man credited with turning around GM's money-losing operations in Europe. "The interesting thing now becomes who gets the job and what kind of titles are we looking at," said Lehman Brothers Inc. analyst Joseph Phillippi. "If Mr. Smale becomes the chairman and CEO, that still leaves Jack Smith a totally free hand to get done what he needs to get done." Mr. Smith and his North American Operations strategy board have moved decisively to salvage GM's balance sheet, renegotiating supplier contracts, sending efficiency teams into plants and forcing salaried employees to pay more for health benefits. But the domestic auto industry's tepid recovery and GM's largely aging and unexciting vehicles have eroded the company's market share - to 33.8 percent as of Sept. 30, down from 35.9 percent when Mr. Stempel took command. GM has only three new models across its five car marketing divisions for 1993. Only a few of the 15 new offerings for 1992 sold well. The company lost $7 billion in North America last year and could lose $3 billion to $4 billion this year. Those losses, plus a weakening economy in Europe, likely mean GM will lose money again this year. The losses and strained relations with the United Auto Workers union heading into next summer's national contract talks led to recent rumors that GM might seek Chapter 11 bankruptcy reorganization. The UAW, which represents about 270,000 GM hourly workers, said Mr. Stempel was a "victim," like tens of thousands of union members laid off in the past decade. This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM