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Witz: What Really Killed Olds?


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Washington Post Staff Writer Warren Brown was waiting in the New York GM Building lobby on October 20, 1992, while GM’s Board was meeting upstairs. They were working on saving the company. He was hoping to collar someone who would tell him what was up.

Everyone knew GM was in serious trouble, so the building was crawling with reporters sniffing for news. Then-chairman Robert Stempel was struggling to turn the GM battleship around and steam it out of the giant sucking whirlpool his predecessor, Roger Smith, had steered it into. Under Smith’s financially driven leadership, GM products had devolved into shoddily-built ho-hum lookalikes, uncompetitive with cross-town competition from Dearborn, let alone the rising tide of quality imports. But the Board felt he wasn’t moving fast enough.

When the meeting was over, Brown got lucky. One (unnamed) veteran director walked him outside and told him, “Stempel must go.” And, he added, since Oldsmobile Division’s sales were sagging and it was bleeding red ink, it too must go. These were not Board decisions. They were considerations under discussion. But Brown says he (and senior staff writer Frank Swoboda) checked them with other GM sources before going with the story the following day.

“The outsiders who control the General Motors Corp. board of directors,” Brown wrote, “want Chairman Robert C. Stempel to step down within the next month board ... and management sources said yesterday.” Three paragraphs down, he dropped the bomb on Olds: “The board also is again considering the elimination of at least one of the company’s six automobile divisions, sources said. The current target is Oldsmobile ...”

The guillotine rises

This was not the first time the idea of axing Olds had come up. Then-PR Director Gus Buenz had fielded media questions on that subject before, but no one had taken it seriously. Pontiac was ailing and in the barrel in the late ’70s. A few years later, it was Buick. But when the Washington Post quoted anonymous “board and management sources” saying the guillotine might be poised over Oldsmobile’s neck, it was widely believed.

John Rock, the straight-talking general manager who had earlier turned around GM’s GMC Truck Division, had just been sent to Oldsmobile with a mandate to save it. “When Rock and I saw the story,” Buenz says, “we knew we had trouble [with] the press, employees, dealers, and customers, the press for the obvious reason of picking up the story and running it without checking with Olds or GM.” Rock held a videoconference the next day for dealers, employees, and media. “You’re looking at one pissed-off cowboy,” he fumed. “Someone is trying to shoot my horse.” Then he explained why it made no sense to eliminate Olds given its history (since 1887) and its new organization, product, and marketing plans.

None of that mattered to the worldwide media, which parroted the story as if it were already fact. Stempel was indeed soon replaced by Jack Smith, who pulled off the turnaround. But Oldsmobile twisted in the wind for 12 more years. Its sales plummeted to 398,000 in ’93, recovered to about 480,000 in ’94 and ’95, then began the death spiral leading to the painful December 2000 decision to finally fulfill Brown’s 1992 prophecy.

Why would he report such “news” of enormously important measures that GM’s Board was merely considering? Didn’t he know that a lot of ideas get discussed that never go anywhere? Didn’t he understand that GM couldn’t just “cancel” a division like it would a slow-selling model and disenfranchise 3000-plus dealers and millions of customers? Didn’t he stop to consider Oldsmobile’s critically important mission within GM’s product family — to fill the chasm between sporty, youthful, performance-oriented Pontiac and empty-nester/retiree premium sedan-oriented Buick while becoming GM’s Euro-flavor division and the step-up brand for Saturn owners outgrowing their compact coupes and sedans? Apparently not.

Am I suggesting that Warren Brown single-handedly killed Oldsmobile? Of course not. He had a lot of help from GM and Olds itself, whose ill-considered advertising and mediocre products of the time alienated traditional customers without attracting the new ones it wanted. But his story pushed it a long way toward the edge of the precipice.

He proudly considered that story a reporting coup. I considered it irresponsible at the time. And I do to this day.
Courtesy Automotive Industries Online, www.ai-online.com.

Gary Witzenburg, a former advanced technology engineering manager and part-time racing driver, is a widely published auto writer and Editor at Large of Automotive Industries.

 
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