Roger Smith -- rebuilding GM from chassis up
Detroit — ''It was a gleaming '39 Ford,'' reflects Roger B. Smith. ''I can still see that car, and it was beautiful -- a little gray coupe. ''We took it down to the manual-training shop in high school and put a two-speed Columbia rear axle on it and the car ran like a deer. We had the thing apart every fourth week.''
Roger Smith no longer owns a Ford. Today, when he gets behind the wheel of an automobile at all, it probably has a General Motors badge on the hood. As GM's sixth chairman, the accountant-cum-top executive occupies one of the hottest seats, certainly one of the most powerful, in big industry today. Barely three years after he took over the reins of the world's largest automaker during a serious financial slump, the corporation has racked up a net profit in 1983 of $ 3.7 billion -- and stands to make more than $5 billion this year, according to industry estimates.
Sitting behind his desk in a two-room office on the 14th floor of the General Motors Building where -- walls and tables stacked with mementos of his stunning climb up Detroit's Mt. Everest -- the shirt-sleeved Smith speaks easily of where the corporation is and where he wants it to go.
A couple of years ago, he says, he took a hard, penetrating look at where the company was and sensed a need for more communication and faster footwork in the late 1980s and beyond. The result: a root-shaking reorganization plan that creates two ''super groups,'' one for big cars and the other for small. The individual car divisions -- Cadillac, Buick, Oldsmobile, Pontiac, and Chevrolet -- become, in effect, sales divisions that sell the cars but don't manufacture them.
To get the kind of management that can help redirect the huge enterprise, Smith initiated what he describes as the ''3-R system'' -- responsibility, risk, and reward. Every GM manager works toward a five-year goal.
''The whole GM compensation plan has been reworked to place the emphasis on the accomplishment of predetermined objectives,'' says Smith, his hands toying with a rubber band. ''If a manager delivers, he gets the reward,'' he adds. And if he doesn't? ''That's where the risk part comes in,'' Smith replies.
GM has more than 1,000 people right now involved in the reorganizational task force and subgroups to piece together the ''new GM.'' If it all works out as the chairman envisions, GM will become an even more dominant industrial figure -- not only in cars, he hints, but even in nontransportation fields where he sees an opportunity for GM to make a profit.
Smith's task is daunting. It requires, among other things, a redefinition of industrial America, including the role of the labor union. The decisions are monstrous, involving billions of dollars and the livelihood of hundreds of thousands of workers, both white collar and blue. Yet this somewhat impatient man, with a slightly high-pitched voice and a clear sense of what is doable and not doable, is widely credited with doing more to shake up the huge automaker than anyone else in recent years.
''I judge Roger Smith very favorably,'' declares Maryann Keller, a director of the money-management firm of Vilas-Fischer Associates of New York and former auto analyst with Paine Webber. Part of that favorable judgment comes, no doubt, from his reputation for hard work.
The nose-to-the-grindstone chairman puts in a 12-hour day, with homework. He is picked up at his Bloomfield Hills home at 6:30 in the morning, usually has breakfast on the job (rarely alone), and is on his way home by 7 at night -- that is, when he's not attending some function. ''I get a lot of my work done between 7:30 and 8:30 in the morning,'' he quips, adding: ''That's when the phone isn't ringing.'' Stories of his work habits abound, one of which describes Smith and Thomas A. Murphy, his predecessor, hurrying to work to see who would be the first to turn on the copy machine.
''Roger Smith was probably the 'real Japanese' as far as the managements in the United States are concerned,'' notes longtime market analyst Arvid Jouppi.
What's on his agenda? The massive restructuring of GM, contract talks that begin in July, the pricing of the '84-model cars, the rise in interest rates, the problem of government regulations, the relations with GM's far-flung partners all over the globe, the postelection economy, litigation by the truckload and imports by the shipload -- all demand continual monitoring by Smith and the coterie of executives at the huge industrial empire.
Smith's background in finance helped prepare him for the pace he now keeps. He was born in Columbus, Ohio, and spent two years in the US Navy in World War II. In 1949 he earned an MBA from the University of Michigan. When his attempt to go to work with Ford Motor Company failed to pan out, he got a job in the accounting department at GM in 1949. In March 1970, Smith was elected treasurer of GM -- a post that started him along the road to his present position as chairman and chief executive officer, which he took over on Jan. 1, 1981.
It was not a particularly auspicious time to take over an auto manufacturer. Car sales were in a rut. The federal government was still on the attack. The so-called X-cars and eight-cylinder diesels were losing face, and the prospects for any quick change were poor.
Some of those problems still beset the corporate behemoth. The compact X-cars , for instance, have been the subject of intense attack and multiple lawsuits ever since they hit the road in 1978. A class-action lawsuit was recently filed in federal district court in Washington, D.C., alleging faulty brakes in some 1. 1 million 1980-model X-cars. Should the case go against GM, the cost for recall and repair could run as high as $1 billion.
Yet despite such a negative start, GM is now on a swift roll. ''GM in every respect is a moneymaking machine, while the product offerings almost fit the mold established by the federal government,'' market analyst Jouppi says.
What kind of a man is Roger Smith? While he shows a deep humanity, both in his actions as well as behavior, the other things keep sticking out -- the intellectual side, for example. ''He tends to intellectualize,'' says Mr. Jouppi , ''rather than to act on an innate feeling. And he expects others to respond in like fashion.''
Can he relax when away from the job? ''I love to get out of doors and let the air blow in here and out here,'' pointing to his ears. Smith has a place in northern Michigan to which he goes as often as he can. When he goes fishing, he says, he ''usually throws everything back, anyway.''
Surveying the job ahead, the chairman notes that ''this is not a one-man organization. We are maybe less than halfway to where we need to be.'' The name of the game, he explains, is strategic planning and strategic management. GM, for example, has just finished a five-year plan on which the company's board of directors will vote. ''Strategic planning is worthless without strategic management to back it up and implement the strategic plans,'' he asserts.
Meanwhile, GM is trying to upgrade the area around its headquarters building, situated in an economically depressed area of the city. ''We're working hard to do something about it,'' Smith says. Then, looking out the window, he sighs. ''It's tough,'' he adds, pointing to the controversial new Hamtramck assembly plant a mile or so down the road from the GM Building.