The Man Who Would Be Gm's SaviorKathleen Kerwin
From the moment 32 years ago when he first walked through the doors at General Motors Corp., it was obvious to Jack Smith that the world's largest corporation had begun to outgrow itself. In Framingham, Mass., at least, the house that Alfred Sloan built had stopped making sense.
The cavernous Framingham plant was shared by two of GM's proudest divisions--Chevrolet and Fisher Body. And to the quiet new guy in payroll, the mutual animosity between them was incomprehensible. "They had a line down the middle of the floor," Smith recalls in amazement. "And there were times when the plant managers of both sides didn't speak to one another." As chairman in the 1930s, Sloan had created a massive, faceless bureaucracy to manage a raft of separate fiefdoms. "During his time, it was a phenomenal system," Smith says. "But General Motors needed to change."
NO SPELLBINDER. Unfortunately, the change hasn't come fast enough. And one look at GM's new CEO as he mans the microphone raises questions about his ability to speed things up. While highfliers like General Electric's Jack Welch and Tenneco's Mike Walsh rivet an audience with spontaneous banter, Smith's stumbling speeches sometimes make you want to finish his sentences for him. He isn't flashy. "He's just a smart, tough operator," says GM director Edmund T. Pratt Jr.
Whether Smith can inspire GM's torpid bureaucracy remains to be seen. But his even-keeled, straightforward personality has served him well so far. Smith turned GM Europe into a world-class operator. He led the way on the first full-blown joint venture between a U.S. and a Japanese car company. Always a fast-tracker at GM, he rarely comes across as one. Managers like to work for him--and that yields results.
Part of Smith's charm is that he has never drifted far from his upbringing in a working-class, ethnic neighborhood in Worcester, Mass. The second of four children, he grew up on one floor of a three-story house. "He was always a boy of very few words," says Donald Moran, a close schoolyard buddy. "But he was one congenial Irish kid."
Friends say Jack takes after his father, John Smith, a quiet, patient man who ran the city's Health Dept. John and his two brothers were the first generation to move off the dairy farm started by Jack's Irish emigr great-grandfather. They also ran Smithfield Famous Ice Cream, a manufacturer with eight ice cream parlors. Jack's mother, Eleanor, was a Sullivan, a family well represented on the police force and in Worcester politics. Charles F. "Jeff" Sullivan, Jack's uncle, was mayor of the city during the late 1940s and later became the state's lieutenant governor.
Devoutly Catholic, the Smith clan put a big premium on education. Jack's older sister, Mary, spent a decade in a convent and went on to earn a doctorate in Sanskrit. She taught at Vassar and the University of North Carolina. She now teaches at Tufts University. Younger sister Sally (now Sally Mahoney) became an English teacher. She recently earned a master's degree in social work.
COUNTER OFFER. But Smithfield's occupied the kids as they were growing up. After school and on weekends, they pitched in making ice cream and running the stores. Sally recalls that working the counter "wasn't Jack's thing." As now, he preferred to work behind the scenes, mixing ice cream and lugging the big tubs. Holidays were the busiest. On Christmas Eve, recalls brother Michael T. Smith (now vice-chairman of GM's Hughes Aircraft Co. division), the family would work until 1 a.m. preparing ice cream orders that they began delivering at 8 a.m. the next morning.
Upon graduating with a degree in production management from the University of Massachusetts in 1960, Smith hired on at GM in Framingham as a payroll auditor. Shortly after, he married his high school sweetheart, Marie Holloway. Before long, he was commuting nights to Boston University for an MBA. And by 1966, he transferred to the GM treasurer's office in New York, a key stop on the auto maker's fast track for promising young executives.
Smith was transferred to Detroit in 1976--first as assistant comptroller, then as comptroller. His first operations job came in 1982, when he was named director of worldwide product planning.
In the new job, Smith was put in charge of negotiating an ambitious venture with Japan's Toyota Motor Corp. to operate a joint factory near San Jose, Calif. Inaugurated in 1984 as New United Motor Manufacturing Inc. (NUMMI), the project was an eye-opener for Smith. He was bowled over during a couple of visits to Toyota City and became convinced that Toyota's production methods were GM's ticket to the future. His bosses in Detroit didn't all share his enthusiasm. But Smith saw NUMMI as a chance to learn from Toyota.
It comes as no surprise that GM's domestic operations were to absorb little of what the Japanese had to offer. Instead of embracing Toyota's nimble management techniques, GM Chairman Roger B. Smith went on an automation binge, spending billions on robots that didn't work. Jack Smith, however, took much of what he learned to heart. It showed when he got the chance to run the European operation in 1986.
SHREWD MOVE. By that time, Smith's long hours and grueling travel schedule had taken their toll on his marriage. When he had moved to Detroit, Marie had kept a home on the East Coast, and their relationship had never really been the same. The promotion to Europe precipitated their divorce. When Jack's sister Sally took him to the airport for his big move, she remembers how dejected he looked. "He was seriously overweight," she recalls. "As he walked away, he was just all stooped over."
The first few months were lonely ones. The flagship Adam Opel division in Germany was slumping badly, and "when I got over there," Smith recalls, "I wasn't sure that I had really thought it through very well."
One of his key steps was to promote Jose Ignacio Lopez de Arriort a, then a feisty engineer with GM Espana. Lopez spearheaded the charge in purchasing, breaking GM's dependence on expensive German suppliers. Smith slashed central staff and sold unprofitable parts operations. Meantime, he crafted a unified team out of a bunch of squabbling executives from different countries and he depolarized divisions like Opel and Britain's Vauxhall Motors Ltd. When GM Europe moved its headquarters from Opel's base in Russelsheim to neutral territory in Zurich, Smith kept the new offices small to ensure that the staff couldn't grow beyond 200 employees.
He also worked hard to make Europe act more like Japan. Smith introduced "just-in-time" delivery of parts, cutting excess inventory. He closed the smaller of GM's two plants in Antwerp, Belgium, and added a third crew at the remaining factory. The move required delicate talks with Belgium's intractable unions but saved millions in overhead. Introducing 24-hour-a-day manufacturing in Zaragoza, Spain, he upped production by nearly a third with the same fixed costs.
The 2 1/2-year stint in Europe was a watershed for Smith as a manager. But some of the benefits were more personal. When he arrived in Zurich, Smith was assigned a new secretary, Lydia Sigrist. It only took a few days for romantic sparks to fly, but they agreed they couldn't date as long as she worked for him. "She left the company--immediately," Smith laughs. "So I figured she was very serious." As she recalls it: "One of us had to leave, and Jack had more seniority."
FAMILIAR FACES. Lydia took Jack on hikes in the mountains, encouraged him to lose 40 pounds, and spruced up his wardrobe. When Smith was transferred back to Detroit in 1988, he returned to Switzerland a few weeks later to get married. Since then, Lydia Smith has become his No.1 confidante, in business as well as personal matters. Sharing a firm belief in the sacredness of the family vacation, they spend time every summer at Cape Cod with Lydia's college-age daughter and Jack's two grown sons.
Smith's European experience is the foundation for what he's trying to do now in the U.S. He has brought many of his trusted lieutenants with him. Lopez created huge animosity among GM's suppliers and embarrassed his boss by defecting to Volkswagen. But he also saved $4 billion in annual purchasing costs. Several others, including new GM Europe President Louis Hughes, have leapt over GM's old guard to revitalize the executive suite.
Add in Executive Vice-President William Hoglund, who originally headed GM's wildly successful Saturn Corp. project, and General Counsel Harry J. Pearce, who skewered NBC for its shoddy "expose " of GM's pickup trucks, and Smith has a solid team. He's off to a good start. But he has a long way to go before he can say he has truly erased the old lines that divide GM from prosperity.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- The Two Words That Will Help Get an Airline Upgrade Over the Phone
- In One Tweet, Kylie Jenner Wiped Out $1.3 Billion of Snap's Market Value
- Apple Plans Upgrades to Popular AirPods Headphones
- U.S. Stocks Rise With Treasuries as Dollar Slips: Markets Wrap
- Los Angeles Cracks Down on Out-of-Control Hollywood Party Houses