End of the Line The Rise and Coming Fall of the Global Corporation

Chapter One THE OLD WEST Running from Japan He had been called an "ax murderer," a "hitman," the "grand inquisitor." But the first public appearance in America by the man tapped to save General Motors, Jose Ignacio Lopez de Arriortua, revealed an executive who knew exactly what his audience wanted to hear, and who seemed a little goofy besides. "We are in a war," Lopez declared to an audience of GM executives and reporters in Saginaw, Michigan. The fight was "to save the auto industry and our lives," to keep "our sons and daughters" from becoming "second-class citizens" in the global economy. "We must act. We must win. We cannot afford to lose."(1) It was August 1992, and America's carmakers had for years longed for a savior in their battle against the Japanese. Lopez seemed the perfect man for the role. A native of Spain's gnarly northern Basque region, the fifty-one-year-old Lopez was dark, wiry, electric, and he came to the job with a reputation as a visionary who could turn vicious. In a twelve-year career with GM in Europe, he had earned such nicknames as "Lopez the Terrible," "Hurricane Lopez," and "The Spaniard Who Makes the Germans Tremble." And he had delivered, slashing the cost of the parts that went into General Motors' European cars. Best of all, he bragged that he had improved on Japan's vaunted and seemingly invulnerable manufacturing model, adding "scientific method" to Japanese "intuition." Yet Lopez also exuded a quirky charm. In Saginaw, he told reporters that his role model was Mother Teresa, whom he called a "great service provider." He explained that he and his staff had moved their watches from their left wrists to their right and that they planned to keep them there until GM reported "record profits." The point, he said, was to feel "something like pain."(2) Financial pain was exactly what General Motors had been feeling for years. In 1991, the company had lost some $7 billion in North America, and the erosion of GM's share of its home market was accelerating. The crisis had become so bad that GM had taken to acting out of character. The world's largest corporation, the company had long been famous and increasingly infamousfor the extreme deliberation with which top management made decisions. Yet in April, GM's board had staged an unprecedented coup, abruptly dumping CEO Robert Stempel after less than two years on the job. In his place the board named Jack Smith, the head of GM's European operations. And Smith came loaded with Lopez, who had been one of his key lieutenants in GM's European headquarters in Zurich.(3) Lopez took little time in making a name for himself in his newly created job as GM's purchasing czar, mainly by forcing suppliers to cut their prices drastically if they wanted to keep GM's business. Though he was virtually unknown in America when tapped for the job in April, by AugustBusinessWeekwas able to write that "not since Ralph Nader has one man so shaken Detroit." Autoworkers and suppliers quickly came to regard Lopez as more akin to the Grim Reaper, and the UAW quickly responded to Lopez's all-out assault on suppliers with a nine-day strike in Lordstown, Ohio, which ultimately forced the shutting of seven big plants. The owners and managers of the supply fi rms seemed no happier, though they dared not criticize Lopez openly. Yet for many Americans, after years of bad news about the failings of the countryLynn, Barry C. is the author of 'End of the Line The Rise and Coming Fall of the Global Corporation' with ISBN 9780767915878 and ISBN 0767915879.