General Motors Corporation

I

Introduction

General Motors Corporation (GM), one of the world’s largest manufacturers of automobiles and trucks. GM sells about 20 percent of all cars and trucks in the United States and about 15 percent of all cars and trucks in the world. Based in Detroit, Michigan, GM is the largest corporation in the United States based on overall sales.

GM markets vehicles under the brands of Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, Saab, and Saturn. GM owns German automaker Adam Opel and British automaker Vauxhall Motors. In addition, GM has a 100 percent equity stake in Saab Automobile AB of Sweden and owns the bulk of the automotive assets of the Daewoo Motor Company in South Korea. It also has a strategic alliance with Fiat in Italy and a joint venture with the Shanghai Automotive Industry Corporation in China. GM also builds locomotives for railroads.

II

Early History

GM’s founder, William C. Durant, grew up in Flint, Michigan. In the late 1880s Durant and a business partner established a company to manufacture horse-drawn carriages with spring suspension. The company soon became the leading manufacturer of horse-drawn carriages in the United States, making Durant a millionaire. In 1904 Durant bought the financially ailing Buick Motor Car Company, which had been founded in 1903 by Scottish-born David Dunbar Buick. Although Durant lacked mechanical skills, he excelled in business administration and quickly turned the Buick company into the largest manufacturer of automobiles in the United States.

Durant believed that any car manufacturer producing only one model line was vulnerable to bankruptcy if sales faltered for even a single year. A large company that produced a variety of models, he reasoned, would be better protected from market forces. In 1908 Durant formed the General Motors Company in Flint and approached leading automakers with his idea for consolidation. Within two years, GM had acquired more than two dozen companies that manufactured automobiles or car parts. Buick and Olds Motor Vehicle Company, maker of the popular Oldsmobile, joined GM in late 1908. The first U.S. passenger car manufacturer, Olds had been founded in 1897 by Ransom Eli Olds of Lansing, Michigan. Two other major car manufacturers merged with GM in 1909: Oakland Motor Car (later renamed Pontiac) of Pontiac, Michigan, and the Cadillac Automobile Company, founded by Henry Leland in 1902 and named after the French explorer who founded Detroit, Antoine de la Mothe Cadillac.

---

---

III

Changes in Management

Durant’s many purchases overextended GM financially. In 1910 bankers took control of the company and forced Durant out of GM. A year later, Durant established Chevrolet Motor Company in partnership with Swiss-born racecar driver Louis Chevrolet. The new company grew rapidly by producing inexpensive cars to compete with the popular Model T of the Ford Motor Company. Durant used the profits to buy GM stock, and by 1916 he had regained control of GM. That year the company reincorporated as General Motors Corporation. Also in 1916, GM acquired an important parts manufacturer, Dayton Engineering Laboratories Company (Delco), whose founder, Charles F. Kettering, had invented the electrical ignition system for automobile engines. In 1918 Chevrolet formally became part of GM.

In 1920, with GM again facing financial problems, Durant was ousted a second time. Pierre S. du Pont, chairman of GM and president of chemical manufacturer E. I. du Pont de Nemours and Company, assumed GM’s presidency and reorganized the company. In 1923 Alfred P. Sloan, Jr., succeeded du Pont as president. Sloan, who remained president until 1937 and continued as chief executive officer until 1946, implemented a decentralized management structure and built GM into a global industrial empire. In 1927 GM vehicles outsold Ford vehicles for the first time.

IV

Labor Problems

Unrest among GM workers grew in the 1930s as the company sped up its assembly lines and ignored workers’ safety concerns. In December 1936 and January 1937 workers at GM plants in Flint halted assembly lines with sit-down strikes, in which the workers dropped their tools but remained inside the plants. GM responded by shutting off heat to the plants. When Flint police tried to force the strikers out with tear gas, the governor of Michigan deployed the National Guard to maintain order. Soon the sit-down strikes spread to GM plants in other cities, crippling the company’s production. In February 1937 GM granted worker demands and agreed to recognize the United Automobile Workers of America (UAW) as the collective bargaining agent for its employees.

	More from Encarta
	•  Important Notice: MSN Encarta to be discontinued. Learn more. •  Presidential Myths Quiz •  Coffee break: Recharge your brain