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General Motors Corp.

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(Redirected from General Motors)
Companies > Manufacturers

General Motors Corp. (GM) is a world-leading manufacturer of automobiles.[1] However, it also participated in the equipment manufacturing industry through its purchase of Euclid Road Machinery and its foundation of Terex.

Contents

[edit] History

[edit] Origins

At the turn of the 20th century, there were fewer than 8,000 automobiles in the United States.[2] By the 1920s auto sales had reached 4.5 million.[3]

General Motors was founded by William B. Durant on September 16, 1908. He was a “flamboyant” businessman who achieved previous success in the manufacturing of horse-drawn vehicles. However, he understood the future of transportation was not carriages, but automobiles.[4]

GM started as a holding company for Buick Motor Co., but within two years it had acquired Oldsmobile, Pontiac, and Cadillac.

However, despite success, GM’s bankers viewed Durant as a liability. He had already brought the company to the brink of success and financial distress. As a result, in 1910, he was removed from the company he founded.

Durant went on to form Chevrolet, which also experienced a quick rise to success, but was eventually acquired by GM in 1918. He was brought back to power in GM, but resigned two years later. He filed for personal bankruptcy in 1920.[5]

By this time, GM had acquired more than 30 companies. However, most were weak and suffering from debt caused by uncoordinated operations. GM forged a new concept to manage all of these subsidiaries under one “umbrella.”[6]

The new leader of General Motors was Alfred Sloan, an engineer and industrialist with skills in marketing. GM’s new strategy was to focus not on how it built cars, but how it sold them.

GM developed a product policy allowing it to aim each of its brands (Buick, Pontiac, Chevrolet, Oldsmobile, and Cadillac) at different customers. It also offered stylish colors, features, and comfort. These new vehicles had curves instead of sharp corners. People began to view cars as more than transportation, but as a status symbol.

Still, developments went beyond the exterior. GM introduced front wheel suspension, automatic transmission, power steering, power brakes, fuel-injected engines, unibody construction, and a one-piece steel roof.

In 1925 GM acquired Vauxhall Motors Ltd. of Great Britain. Four years later, it acquired Adam Opel AG of Germany.

Auto production was postponed in 1942 as GM turned its production to the World War II effort. It delivered more than US$12 billion worth of materials, including airplanes, trucks, and tanks.[7]

[edit] Post-World War II

In 1955 GM was the first company to make more than US$3 billion in a year.[8]

The 1960s and 1970s were met with environmental concerns, increased gas prices, and foreign competition. As a result, GM was forced to downsize all its vehicle product lines and develop lighter, more aerodynamic, fuel-efficient car designs. It invented engines that could run on low-lead or unleaded gasoline, but the most effective reduction of emissions was achieved with the catalytic converter.

By 1979 GM employment reached 618,365, making it the largest private employer in the United States.[9] Worldwide, its employees numbered 853,000.[10]

General Motors named a new chairman, Roger B. Smith, in 1980. The company registered loses of more than US$750 million due to a 26 percent drop in car and truck sales.[11] GM consolidated its truck, bus, and van operations a year later and earned US$333.4 million on US$62.7 billion in revenue.[12]

In 1986 GM planned to close 11 U.S. plants. Employment continued to grow, but earnings dropped to US$3.9 billion.[13] By 1988 earnings had regained momentum and risen to US$4.6 billion while employment dropped to 766,000.[14]

Smith retired in 1990 and was replaced by Robert Stempel.

Meanwhile, the company closed four manufacturing plants and profits fell to US$102 million.[15] A year later, GM experienced an industry record loss of US$4.45 billion.[16] These losses resulted in an announcement of the closure of 21 future plants and the elimination of 24,000 jobs.[17]

Stempel resigned in 1992 and was replaced by Jack Smith.

In 1999, GM acquired the rights to the Hummer brand from AM General. It also acquired a 42 percent share of Daewoo Motor in 2002, which later increased to a 51 percent share.[18]

General Motors experienced the largest annual loss in auto industry history in 2007. It lost US$38.7 billion.[19] Still, GM retained a 23.7 percent market share within the United States.[20]

[edit] GM and the Equipment Industry

General Motors entered the earthmoving equipment manufacturing industry in the early 1950s. It had already designed suitable engines for the equipment. In fact, its Detroit diesel engines were already being used by established manufacturers.

In 1953 GM acquired Euclid Road Machinery for $20 million, establishing a Euclid division within General Motors.[21] Euclid offered a well-respected line of scrapers and haul trucks, but did not produce any crawler equipment. So, GM quickly hired two engineers to begin designing its own crawler tractor.

The TC-12 crawler tractor was launched in 1955. It had twin engines and a frame design that was split longitudinally to allow each crawler track to oscillate over uneven terrain. The first production units were rated at 402 net horsepower, created by two GM 6-71 diesel engines. Each one of the engines drove one track with help from its own three-speed Allison Torqmatic transmission. The TC-12 tractors were equipped with two transmission levers for steering and speed and two foot pedals for brakes.

The GM TC-12 tractors weighed 40 tons and were capable of speeds of 6.9 miles (11 km) per hour going forward and 8.4 miles (14 km) per hour in reverse. This was faster than most crawler tractors of the time.[22] Upgrades to the TC-12 increased net horsepower to 413 in 1956 and 425 in 1958.

Five hundred TC-12 tractors were sold between 1958 and 1966.[23]

In 1959 the U.S. Department of Justice initiated an anti-trust suit against General Motors. It claimed that GM was too dominant in the earthmoving and off-road hauling industry and stifled competition within the market.[24] After fighting the suit for eight years, GM surrendered in 1968 and sold the majority of its Euclid division to White Motor Corp. However, General Motors retained its production of crawler tractors and front end loaders, but marketed them under a new name: Terex.

[edit] The Company Today

General Motors is the leading motor vehicle and parts manufacturer within the United States. It’s ranked second on the Global 500 list, behind Toyota Motors. GM’s 2007 revenues were $182 billion.[25]  On September 16, 2008 GM celebrated its 100th birthday.[26]

In 2008 General Motors became financially distressed following the global financial crisis. Due to the crash of Lehman Brothers, there was less credit available in the market, and GM was unable to secure loans needed for continuing operation.[27]  In June 2008 GM announced plans to cut costs by $10 billion and to borrow $5 billion. In September GM and Chrysler held talks about the possibility of combining both companies. In November GM warned that without assistance they would run out of money by the first half of 2009.[28] In December GM asked the U.S. Government for $18 billion, they were granted $9.4 billion.[29]

In February, 2009, GM cut 10,000 jobs and increased their total funding request from $18 billion to $30 billion. The same month, they announced a loss of $30.9 billion for the year 2008.[30]

In March, 2009, GM's Chief Executive, Rick Wagoner, was forced from his position by the U.S. Government. He was replaced by GM's COO, Fritz Henderson. GM was given 60 days to develop a new restructuring plan.[31]

In April, 2009, GM announced its final plan to re-organize without going bankrupt. The plan included cutting 21,000 more jobs. In May, GM announced they would be dropping 1,100 of their poorest performing dealerships. The same month, they reached an arrangement with the United Auto Workers to half the amount of debt owed; and borrowed an additional $4 billion from the U.S. Treasury.[32]

On June 1, 2009, GM filed for Chapter 11 bankruptcy protection.[33]  With $82.3 billion in assets, GM is the fourth largest American company to ever go bankrupt, and the largest industrial company to do so.[34]  As a result, GM was delisted from the New York Stock Exchange[35], the Dow Jones Industrial Average, and the S&P 500; all of whom have rules forbidding bankrupt companies from being listed.[36]  The plan for GM to emerge from bankruptcy involves the United States Government assuming 60 percent ownership, the Canadian Government getting 12.5 percent, the United Auto Workers recieving 17.5 percent, and unsecured bondholders claiming 10 percent. GM's old shareholders are expected to be wiped out.[37]

Through bankruptcy, GM is expected to become a leaner company.  They have already announced the sale of Hummer to the Sichuan Tengzhong Heavy Industrial Machinery Co., and have plans to sell the Saab, Pontiac, and Saturn brands.  They are expected to hold onto their four most profitable subsidiaries: Chevrolet, Buick, Cadillac, and GMC.[38]

[edit] Equipment List

[edit] References

  1. Global 500 list. CNNMoney.com, 2008-10-06.
  2. GM History. GM, 2008-10-02.
  3. Berg, William. The History of GM, Ezine Articles, 2008-10-02.
  4. Berg, William. The History of GM, Ezine Articles, 2008-10-02.
  5. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  6. Hamer, Tony and Michelle. General Motors – One Hundred Years of History. About.com, 2008-10-02.
  7. GM History. GM, 2008-10-02.
  8. Berg, William. The History of GM, Ezine Articles, 2008-10-02.
  9. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  10. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  11. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  12. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  13. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  14. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  15. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  16. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  17. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  18. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  19. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  20. A brief history of General Motors Cop. Forbes.com, September, 2008. (accessed: 2008-10-02)
  21. Bowman, Bill. Euclid and Terex History. GM wiki, 2008-10-06.
  22. Haddock, Keith. General Motors’ Crawler Tractor. ConstructionEquipment.com, May, 2007. (accessed: 2008-10-06)
  23. Haddock, Keith. General Motors’ Crawler Tractor. ConstructionEquipment.com, May, 2007. (accessed: 2008-10-06)
  24. Bowman, Bill. Euclid and Terex History. GM wiki, 2008-10-06.
  25. 2008 Fortune 500 list: General Motors. CNNMoney.com, 2008-10-06.
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  37. Humbled GM files for bankruptcy protection. MSNBC.com [October 15, 2009].
  38. GM sells Hummer brand. CBC.ca [October 15, 2009].