100 Years of GM – A Brief History of General Motors

A Brief History of General Motors

It was the largest auto manufacturer in the world and used to be the fifth largest company of any kind. What company is it? If you guessed General Motors Corporation, better known as GM, you’d be correct, but did you know that GM is comprised of twelve different brands, employs over 250,000 world-wide, and makes and sells cars and trucks in thirty-five different countries? That’s pretty impressive, even for a company with celebrating its centennial in 2008.

GM came into being on September 16, 1908, in Flint Michigan. It was originally a holding company for Buick which was under the control of William C. Durant, but it acquired Oldsmobile later that year. In 1909, Durant brought in five more car companies, including Cadillac and Oakland, the latter of which would eventually become Pontiac, and two commercial truck companies (Reliance Motor Truck and Rapid Motor Vehicle) which would be the predecessors of GMC Truck. These companies were already building impressive histories of their own. For example, it was a Rapid truck that first conquered Colorado’s famous Pike’s Peak.

In 1910, two more companies (Ranier and Welch) were added to the impressive list of GM brands but the company was in debt to the tune of roughly $1 million, and Mr. Durant lost control of the company to a bankers trust. He subsequently left the company and helped Gaston and Louis Chevrolet establish the Chevrolet Motor Company. A brilliant stock buy-back campaign enabled Durant to retake the reins of GM in 1916, this time with the backing of Pierre S. DuPont, but while Chevrolet became part of the GM family in 1917 (producing the first GM car the next year – the Chevrolet 490), Durant was eventually removed from management. For the next thirty years (from 1920 to 1950), DuPont companies held large (and often controlling) shares of GM.

With or without Durant at the helm, GM continued to grow. In 1918, the Ontario-based McLaughlin Motor Car Company, manufacturer of the McLaughlin-Buick car, was acquired, and renamed General Motors Canada, Ltd., though R. S. “Colonel Sam” McLaughlin was retained as its first president. In 1925 the English company Vauxhall Motors joined the fold, and four years after that GM bought an 80% stake in Germany’s Adam Opel AG. This was increased to a 100% stake in 1931 (the same year the Australian Holden company was acquired), and Opel remains the core company of GM Europe today.

During the same time period (the late 1920’s), GM, then under the leadership of Alfred Sloan, surpassed Ford Motor Company’s sales figures, largely by paying attention to new management techniques and to listening to customer demands and offering power, prestige, and style, instead of the cheapest model, and they also created a finance plan which help consumers in buying a new car with affordable monthly payments.

While other companies were desperately trying to stay afloat during the Great Depressions, GM continued to expand, adding the Yellow Coach bus company during the 1930’s, which led to the creation of Greyhound Bus lines, as well as the general replacement of intercity trains with buses, doing the same with streetcars. As if buses weren’t big enough, the thirties also saw GM’s first foray into the world of aircraft design, buying both Fokker Aircraft Corp of America and Berliner-Joyce Aircraft, and marrying them together to form General Aviation Manufacturing Corporation, eventually merging North American Aviation into the company as well, though NAA would be divested in 1948, ending the GM’s major interest in aircraft for good.

Also in the 1930’s, GM bought the Electro-Motive Corporation, builder of the internal combustion engine railcar, and the engine supplier Winston Engine as well, combining them into the General Motors Electro-Motive Division. For the next twenty years GM build the majority of America’s diesel powered locomotives, and also used the same engines for the war effort, in American destroyer escorts and submarine, finally selling off the unit in 2005.

While General Motors continued to succeed through the 1970’s, the 1980’s saw the company under the controversial leadership of Roger B. Smith, who was full of good intentions that never seemed to work out. For the first time since the 1920’s the company was losing money – mainly to foreign companies with better quality and production practices. Smith tried to incorporate the Japanese methods into GM’s corporate culture by forming joint ventures with Toyota (NUMMI) in California and with Suzuki (CAMI) in Canada, but corporate politics and bureaucracy prevented any success. He also launched the Saturn Corporation as a corporate experiment using Japanese methods in a strictly GM environment. While NUMMI, CAMI, and Saturn remained successful, neither effort was enough to turn the company around.

The 1990’s gave GM another leader, Jack Smith (no relation to Roger) who took over just as GM was rallying from almost filing bankruptcy. Like his predecessor, he recognized the need for drastic change, though his method was to dismantle the Sloan legacy, cutting costs, improving designs, and, in a move which took a whole decade to complete, engineering the demise of Oldsmobile. By the end of the decade GM had ridden itself of the old Oldsmobile complex in Lansing, and Buick City in Flint (both cities in Michigan), which in turn led to a reduction in the work force.

In 1998, GM’s Massive layoffs triggered a seven-week auto workers strike, which made the national news because of GM’s long history and position within the American economy. By the year 2000, however, the company’s stock had risen to more than $80/share, only to fall after a pension and benefit fund crises after the market dropped following the events of September 11, 2001. GM managed to fully fund its pension fund, but other benefits suffered, and the company began offering buyouts which were accepted by more than 35,000 hourly workers.

By 2006 GM’s stock was rising once again, though it began the year at $19 a share, and despite conjecture that the company was headed for bankruptcy court, and another strike by the UAW in 2007, the company is still afloat, though it did fall to 2nd place (behind Toyota) in the list of world’s largest automakers for a few months.

Today, GM remains a large automaker in the world, but many of its original brands are no longer being marketed. On June 8, 2009, GM was reorganized by bankruptcy protection under the provisions of Chapter 11, Title 11, United States Code. On July 10, 2009, with financing partially provided by the US Government, General Motors emerged from reorganization and was re-listed on major stock exchanges on November 18, 2010. Early in the 21st century, GM dropped the Pontiac name and sold its Saab production and name. Both Hummer and Saturn were also on the block. The current list includes Buick, Cadillac, Chevrolet, GMC, Holden (Australia, New Zealand), Opel (Europe, Middle East, Africa, Aisa, Chile), Vauxhall (UK), and Daewoo (South Korea and Vietnam). It lost its position as fifth-largest company on the planet, as ranked by the Fortune Global 500 list and has now dropped to 38th place (as of Feb. 2011). How do the other automotive manufacturers rate? Toyota (#5), Volkwagen (#16), Ford (#23), Daimler (#30), Honda (#51), Nissan (#63), Hyundai (#78), BMW (#83), Fiat (#85), Peugeot (#94).