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Smith, Jack - Overview, Personal Life, Career Details, Chronology: Jack Smith, Social and Economic Impact

business smith’s gm’s company

(1938-)
General Motors

Overview

Jack Smith became head of General Motors, the world’s largest automaker, in 1992. A believer in a bottom-up management style in which employees have input into production, Smith presided over a turnaround that saw the ailing corporation climb out of debt and back into profitability. However, some controversies remained over whether his reforms were sufficient to ensure the continued health of GM.

Personal Life

John F. Smith, Jr. was born April 6, 1938, in Worcester, Massachusetts. He earned his bachelor of business administration degree from the University of Massachusetts in 1960. In 1965, he was awarded a master of business administration (MBA) from Boston University. He joined GM in 1961 while still in graduate school. Smith is known to be a reserved and unassuming man who is uncomfortable giving interviews.

Smith’s interests include serving on a variety of civic and business boards. He is a member of the board of directors and executive committee of Detroit Renaissance, the Economic Club of Detroit, the American Automobile Manufacturers Association, and the Memorial Sloan-Kettering Cancer Center. In addition, he serves on the board of trustees of the United Way of Southeastern Michigan and the New American Revolution. Smith is president of the Beta Gamma Sigma’s Director’s Table.

Smith also sits on the Procter & Gamble board of directors. He is a member of the Business Roundtable’s Policy Committee, as well as chairman of the Government Regulation Task Force, the Business Council, the U.S.-Japan Business Council, and the American Society of Corporate Executives. He is a director of the Polish-American Enterprise fund. He is also a member of the Chancellor’s Executive Committee of the University of Massachusetts and on the Board of Trustees at Boston University. Smith has been awarded honorary doctoral degrees from both of those institutions, as well as from Providence College.

Career Details

Smith was working as a payroll auditor at a GM plant in Framingham, Massachusetts, when he first attracted the attention of his superiors. Assistant treasurer Roger Smith (later CEO of GM) offered Jack Smith a job in the company’s New York financial office. At first, Smith was reluctant to leave Framingham, which was close to his home-town of Worchester. However, Roger Smith talked him into it, and Smith departed for “the Big Apple” in 1966.

As Roger Smith moved up in the corporate hierarchy, so did Jack Smith. By 1974, Jack Smith had taken over the position of assistant treasurer. He was given increased responsibility over management at GM and by 1980 had risen to the post of corporate comptroller. Two years later, he was promoted to an even more important position—GM’s director of worldwide planning.

In this position, Smith negotiated his first major deal on GM’s behalf. He forged an alliance with Toyota Motor Corp., the Japanese auto giant. Together the two companies formed New United Motor Manufacturing (NUUMI), a joint venture to make cars based in GM’s Fremont, California, auto plant. For his success at sealing the NUUMI deal, GM once again promoted Smith to president and general manager of General Motors of Canada. Here, starting in 1984, he took responsibility for all of GM’s operations in Canada.

Having held full responsibility for operations in one country, Smith next moved on to conquer a continent, becoming head of operations for GM Europe in 1987. In under a year on the job, he helped turn one of GM’s perennial money losers into a profitable arm of the company. As his reward, in 1988 Smith was given dominion over all of the auto giant’s international operations. Smith’s success at handling this vast portfolio led to his being named vice chairman of the company in 1990. That summer, Roger Smith was replaced as chairman by Robert C. Stempel. A severe recession helped curtail GM’s growth, and by mid-1992 the company was staring at a $2.7 billion loss. By this time, Jack Smith had been promoted to president and chief operating officer (COO), but some on GM’s board continued to agitate for giving him total control of the company.

Those voices were heeded in November of 1992. Stempel was ousted as CEO and replaced by Smith. Almost immediately, the automaker’s fortunes began to turn around, no doubt in part due to an improving overall economy. For 1993, Smith’s first full year on the job, GM registered profits of $2.5 billion, the first time in four years that it had been able to show a profit. The upward trend continued in the ensuing years, as an economic boom spurred consumers to purchase GM cars and trucks at record rates.

While Smith’s tenure was marked by many improvements at GM, some observers accused him of not doing enough to make GM competitive. On many key measures such as employee productivity, profitability, and labor relations the leading U.S. automaker lagged behind a number of its domestic and foreign counterparts. The most visible of these problems were the recurring labor confrontations throughout the 1990s that often resulted in strikes—some of which crippled the entire company for weeks. The most damaging of these was a 1998 strike at two Flint, Michigan, plants; the labor stoppage cost GM over $2 billion in lost sales, making it one of the costliest strikes in history. Such failures led for some to call for Smith’s removal, as he, like his predecessor, came to be seen as an obstacle to GM’s progress in these areas.

Chronology: Jack Smith

1938: Born.

1960: Received B.A. in business administration from University of Massachusetts.

1961: Joined General Motors (GM).

1965: Received MBA from Boston University.

1974: Named GM assistant treasurer.

1980: Named comptroller of GM.

1982: Named GM director of worldwide planning.

1984: Elected vice president of GM.

1992: Elected chief executive officer and president of GM.

1996: Became GM chairman.

Social and Economic Impact

Jack Smith took over as GM CEO at a time of enormous crisis. Losses were at record levels, defective robot arms were going out of control and smashing windshields within view of the company’s world headquarters, and the management structure was in serious need of reform. Analysts were skeptical about Smith’s prospects for reversing this decline. To meet this challenge, Smith instituted a “bottom-up” management approach that was intended to re-orient the gargantuan corporation on a human scale. On the design level, this approach meant building cars and trucks that meet consumers’ needs and not the whims of auto executives and engineers. During Smith’s tenure, GM introduced over 35 new vehicles.

Under Smith, GM began to manage many of its assets more efficiently. The company embarked on the most ambitious manufacturing expansion in its history. Several new plants were added outside of the United States, where labor costs are cheaper. In the United States, job cuts were ordered in order to decrease production costs and improve efficiency. At the same time, GM closed or sold a slew of operations it did not need or could no longer afford, cutting costs and forcing it to focus on its core operations.

Even bolder steps were taken on the management level, as Smith restructured the automaker for the 21st century. He gutted GM’s central bureaucracy from 13,000 employees to 1,100 and reorganized operations into geographic sectors. The process of making decisions was streamlined, as “strategy boards” were convened to provide direction for each sector and the company as a whole. All of this was accomplished without the infighting that might have been expected to accompany such sweeping changes. Many GM executives were simply too battered by financial losses and very receptive to new ideas. But as drastic as these changes seemed, they were far short of what some analysts believed was necessary to place the automaker on solid footing.

Smith’s principal civic accomplishment was to move GM into a new global headquarters at the Renaissance Center in downtown Detroit. “The decision to make the Renaissance Center General Motors’ new home is symbolic of what we believe in as a corporation,” Smith told the newspaper Crain’s Detroit Business . “Detroit has been our home for the last 76 years. Keeping our headquarters in the city while our business interests stretch globally was important to General Motors.” For his efforts in this area, Crain’s Detroit Business named Smith its 1996 Newsmaker of the year.

Despite ongoing problems at GM, Jack Smith’s tenure as CEO is largely considered a success. Some have credited a soaring economy for the auto giant’s turnaround, but even the normally humble Smith isn’t afraid to take his share of the credit. “Every day, something is wrong somewhere,” he told the Detroit News . “It’s a large company. We had mountains to clear and roads to build to get this place running well. But it wasn’t the market that got us where we are today.”

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