William J. Holstein

The Washington Post’s Warren Brown praises “Why GM Matters.”
Warren Brown is the top automotive correspondent for the Washington Post and is regarded as one of the deans of the national automotive press corps. Here's what he said in his column yesterday:

By Warren Brown
April 19, 2009

The perception gap has been a killer for General Motors. It's the gap between what the public thinks is real and what actually is real. It is a chasm that varies in width and depth, depending on the issue. But it's one into which GM has fallen repeatedly, damaging itself unnecessarily.

Business writer William J. Holstein has figured this out in his latest book, "Why GM Matters: Inside the Race to Transform an American Icon."

It's a good, quick read (254 pages) for anyone who wants to get up to speed on the history of GM and the unhappy circumstance in which the century-old American automobile manufacturer now finds itself -- teetering on the edge of bankruptcy, momentarily surviving on a grudging infusion of taxpayer loans.

I highly recommend it to House Speaker Nancy Pelosi and White House Chief of Staff Rahm Emanuel, two otherwise intelligent Democrats who are given to fits of appalling ignorance in their public commentary on GM.

I specifically refer to the often-stated Pelosi-Emanuel contention that GM makes no cars that consumers want, a statistically provable fallacy, even now when the company is in a desperate fight for survival. I also refer to their joint error in suggesting that GM for the past 30 years has done little or nothing to improve vehicle fuel-efficiency or quality, or that it has been managed by a succession of bumbling leaders -- one of which, G. Richard Wagoner Jr., recently was shown the door by a White House turned de facto GM director.

Holstein does an excellent job of vetting that nonsense, which he presents as errors of conventional wisdom.

What strikes me -- painfully, because I lived through and reported on many of them -- are the number of times in which GM was doing, or trying to do the right thing, and made a total mess of matters in communicating its intentions to the general public.

In fairness, some of those perceptual errors were the fault of a regicidal media bent on wounding and bringing to the ground a corporate giant. The classic case here is then-GM president's Charles E. Wilson's testimony before the Senate Armed Services Committee.

Wilson was being considered for secretary of defense. He was asked if, as defense secretary, he could make a decision unfavorable to GM. Wilson, ever the patriot, responded that neither he nor GM would ever consider doing anything to hurt the national interests "because for years I thought that what was good for the country was good for General Motors and vice versa."

But, in the media, that declaration of national loyalty was turned into a statement of arrogant corporate royalty: "What's good for General Motors is good for the country."

Move up to 1989. Detroit's 1970s misperception that Japanese cars were a passing fad had yielded to the reality that foreign automobiles, from Japan and almost everywhere else, were in the U.S. market to stay. The death of that misperception led to the demise of another held by the United Auto Workers, which was that American consumers preferred to "look for the union label."

The collective result was that GM's once-dominant share -- as much as 60 percent of the U.S. market in the 1960s -- began dropping precipitously. That decline was accompanied by a need to trim assembly line employment and close plants.

Roger B. Smith, GM's chairman and chief executive at the time, knew this. He began moving decisively to do something about it -- pushing for improvements in GM products and shutting down plants.

For his efforts, Smith was portrayed in the brutally satirical Michael Moore film, "Roger & Me," as a callous corporate leader who preferred robots over American workers, whose jobs, where humans were still needed, he was shipping overseas.

The truth, as most auto industry analysts knew at the time, was that GM was moving too slowly to close unneeded plants and close dealerships in a shrinking market.

That seeming procrastination continued under Roger Smith's successor, Robert C. Stempel, who was forced out of his job in 1992 for moving too slowly. Afterwards came John G. Smale and John F. "Jack" Smith Jr., chief executives who tried to accelerate the pace of change at GM, and who in many ways succeeded, but whose successes in streamlining things such as the company's product design, development and procurement operations largely went unheralded.

And then came Wagoner, who made measurable progress in manufacturing efficiencies and product quality, who spent billions revamping GM's product lines, but who was almost as slow as Stempel in shutting plants, reworking GM's product marketing divisions, and culling the company's dealership ranks.

Wagoner thought time was on his side. It wasn't. The global economy collapsed and crushed auto sales in the process. His company needed bailouts, and he was out of a job.

Perception and reality -- it's dangerous to misalign the two and too easy to fall between them. GM has done enough of that. But the company now has the products and the attitude to write another, happier chapter in an economic recovery -- whenever that happens. Here's hoping Obama's people understand that.