Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.bonus,americast.usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Tue, Oct 27 1992 Date: Tue, 27 Oct 92 04:59:45 EST Message-ID: 10-27 0000 BONUS: Stempel called GM scapegoat USA TODAY Update Oct. 27, 1992 Source: USA TODAY:Gannett National Information Network General Motors' monumental competitive problems have claimed their biggest casualty: CEO Robert Stempel. Under fire for failing to stem GM's rising tide of red ink, Stempel resigned Monday, ending weeks of swirling speculation he would be forced to step aside by dissatisfied GM board members. WHAT HAS HAPPENED TO GM? Since Stempel took office Aug. 1, 1990, GM has earned a profit in just one of nine full quarters. In that time, the company's North American operations have lost more than $15 billion. Stempel tried to stop the bleeding with a plan to close 21 factories and eliminate 74,000 jobs by 1995. But GM's board members, fearful the company's fortunes were fading fast, reportedly pressured him into stepping down. HOW HAS DETROIT REACTED? Reaction in the Motor City ranged from relief to finger-pointing. Some say Stempel was a scapegoat and was blamed for problems he inherited from the free-spending era of his predecessor, Roger Smith. The United Auto Workers, often at odds with GM management, said Stempel's resignation resulted from failed U.S. economic policies - not poor management. "Make no mistake about it, like tens of thousands of hourly workers at General Motors and elsewhere, Mr. Stempel is a victim," the union said. WHAT WERE OTHER REACTIONS? "Bob Stempel stepped in when most of the damage was done," says Ross Perot, a presidential candidate and former GM board member. "There's no question in my mind he's given it everything he has." But other GM watchers say Stempel should have launched a merciless attack on GM's bloated bureaucracy as soon as he took the top job in August 1990. They argue that he wasted his first 18 months as CEO, hoping the U.S. economy would turn around and save GM the agony of a massive restructuring. WHEN DID DISSATISFACTION WITH STEMPEL BEGIN? Outside directors who don't work for GM signaled their dissatisfaction with Stempel in April when they threw out his management team and installed a group of executives headed by GM President Jack Smith. In the past two weeks, Stempel was hit with a flood of news stories in which unidentified board members called for him to step aside. Stempel was hospitalized briefly Oct. 13 for hypertension, and GM soon after disclosed it expects to post a third-quarter loss of $845 million. "I think (Stempel) just had enough and said, `I'm not going to take this any more, I quit,' " says Keith Crane, publisher of Automotive News. HOW DID STEMPEL SUM UP HIS DECISION? In a brief statement, Stempel said the days of media speculation about his future had "undermined and slowed" employees' efforts to make GM more efficient. Indeed, thousands of GM employees in the Motor City have been following the Stempel saga like an afternoon soap opera. Stempel echoed the thoughts of many experts who say GM may be too big for one person to fix. "The management team can only lead in this battle. The future success of GM really lies in the hands of the hundreds of thousands of employees," Stempel said. HOW DID STEMPEL MANAGE GM? The tall executive with a booming baritone is widely respected in Detroit as a thoughtful "car man" who still can look under a hood and diagnose engine troubles. Like former Ford CEO Donald Petersen, Stempel is a disciple of quality master W. Edwards Deming, who helped Japanese companies get on their feet after World War II. "Don (Petersen) and I had the same teacher," Stempel said in a 1991 interview. But experts say Stempel was saddled with three key problems during his brief tenure. HOW WAS ROGER SMITH'S LEGACY AN EFFECT ON STEMPEL? GM racked up some enormous profits under Smith, who ran GM from 1981 to 1990 and who is praised for starting the customer-focused Saturn small-car company. But during Smith's reign, GM embarked on a expensive spending spree. GM bought computer company EDS from Perot and later bought out Perot's GM interest for $750 million - after Perot complained about the way GM was run. GM also bought Hughes Aircraft, now facing its own financial woes, and scores of small computer and high-technology companies that had little to do with the car business. WHY HAS SMITH BEEN CRITICIZED? Critics say Roger Smith ignored GM's inefficient plants while investing millions of dollars in robots and unneeded technology. His moves did little to make GM's cars competitive with other products from Detroit and Japan. Stempel has never criticized Smith, and Smith refused to comment Monday. "It's not fair. I'm sorry," he said when reached at his home. HOW WAS GM LOYAL TO THE WRONG CROWD? GM watchers hoped the Stempel era would mean new blood at the top of GM, long run by managers who rose through connections as much as talent. Yet Stempel put longtime associate Lloyd Reuss in the president's job and kept him there over board objections until April. GM insiders say that longtime Stempel associates kept asking him to intervene when their projects were in danger. HOW WERE SHUTDOWNS AFFECTED? GM had planned to announce the shutdown of six assembly plants around July 4, completing the list of 21 factories that will shut by 1995. But the move would have required GM to decide which future cars and trucks it wanted to kill. Product planners lobbied Stempel to stall the plant closing announcements, which still have not been made. HOW WAS GM TOO CAUTIOUS? Although he and his family were stung years ago by the attempted kidnapping of his son, Stempel remained an outgoing, friendly figure in the auto industry until he became CEO. Then, Stempel turned taciturn. Unlike Smith, who bounded down from banquet tables to talk to reporters, Stempel avoided the media. WHAT HURT STEMPEL NEAR THE END? That reluctance may have hurt Stempel during the past few weeks, when he was sucker-punched by the rumor mill and the board declined to defend him. "Bob Stempel is a world-class man," says Perot. "And you know, you can be at the right place at the right time, or you can be at the wrong place at the wrong time." Bonus Editor: Kate Coughlin. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. 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