News From the Auto Industry

But it’s been pathetically slow. The company that once claimed fully half of the American market–and whose CEO proclaimed in 1955, “What’s good for GM is good for America”–now clings to 28 percent of U.S. sales. GM has seen the Japanese and Koreans assault its once-dominant position in the market for small- and medium-sized cars, while the Germans in particular command the heights of luxury and performance. “GM is a giant that’s sick in bed,” one Toyota Motor executive aptly commented in 1985.

It was right about that time, however, that lightbulbs started going off inside GM’S collective head. Its executives suspected the Japanese had a secret kind of production technology that allowed them to make cars faster, better and cheaper. So GM entered a joint venture with Toyota in Fremont, Calif. It discovered there were no secret machines; the Japanese simply had a different–and better–manufacturing philosophy and style, which they had perfected thanks in part to quality experts such as W. Edwards Deming. At an almost glacial pace, GM began experimenting with these lean-manufacturing techniques in their facilities abroad.

To understand how the Japanese were winning, John I Smith Jr., then global product planning director, negotiated a 1984 joint venture with Toyota, called United New Motor Manufacturing Inc. (NUMMI), on the site of a shuttered GM plant in California.

As for Wagoner, who just turned 50, “he’s a competitor,” says Harbour. “He has no intention of finishing second.”