GM’s Lopez Legacy : Firm’s Candor in Dealing With Departure Bears His Imprint
At 2:30 Monday afternoon, half an hour before the start of a news conference in Detroit to announce that General Motors Corp.’s controversial purchasing czar had decided to remain with the company, someone handed GM Chief Executive John F. Smith Jr. a note.
It seemed Jose Ignacio Lopez de Arriortua, the charismatic Spaniard who has been the focal point of a months-long battle between GM and European rival Volkswagen of Germany, had changed his mind again.
“Unfortunately, a short time ago, Mr. Lopez sent me a letter saying he was not going to accept the position and is leaving General Motors,” Smith told reporters at the company’s Detroit headquarters. “There was no further explanation.”
The surprise ending of an extraordinary public drama involving the man who had become the symbol of a new era of discipline and change at GM has left the world’s largest auto maker a little off balance.
To have pursued Lopez as aggressively as GM’s top management did after he first indicated in January that he was considering a move to Volkswagen ran decidedly counter to GM’s traditional corporate culture, where loyalty is expected at all costs. To have their efforts rebuffed at the last minute was an embarrassing blow.
But industry observers said the very openness with which GM conducted its negotiations with Lopez and the candor Smith showed at Monday’s news conference is evidence of the emergence of a new culture that Lopez had come to represent.
“In the old GM, it would have happened, it would have been over, there would have been a curt statement and that would have been it,” said David Cole, director of the Office for the Study of Automotive Transportation, whose father, Edward Cole, served as GM president in the early 1970s. “This is the beginning of a new personality coming out of GM. The company is shifting from being like a rock to a living object.”
And while it may take GM some time to recover from the departure of Lopez, who was credited with saving the company $1 billion in the 10 months since he moved from GM’s European operations to the auto maker’s North American business, some analysts said GM will be better off without him given his latest moves to gain more power in the corporation.
“Certainly it’s a blow,” said Maryann Keller, an auto analyst at Furman Selz in New York. “But if keeping him would have necessitated bending all of (GM’s) managerial positions, vaulting him into a position that he didn’t earn and destroying the morale within the organization, you have to ask which would be worse. They have been publicly humiliated by this very, very public betrayal, and frankly I think it was the best solution for GM in the end.”
A firm believer in teamwork, Smith has been trying hard to foster a sense of common purpose and sacrifice at GM, delegating much responsibility for the running of the company to his new management team and asking many of them to forgo raises and bonuses. Caving in to his purchasing chief’s hard-nosed negotiating tactics--Smith was prepared to make Lopez responsible for all of GM’s North American operations--might well have damaged the fragile balance he has managed to establish, Keller said.
Still, Lopez, one of the first executives Smith imported from GM’s European headquarters when he was named president last year, had played a vital part in Smith’s plan to revitalize the company, and he will be hard to replace.
Intense and charismatic, Lopez told his staff (whom he referred to as his “warriors”) that they were working to save American civilization. He distributed a booklet summing up his philosophy on life and food, which recommends a diet high in fruits and vegetables. He exhorted his colleagues to move their watches from their left to their right wrists--a reminder that it was time to change.
Many longtime GM suppliers--from whom Lopez demanded unheard-of double-digit price cuts--developed a love-hate relationship with the man they called “The Inquisitor,” a nickname coined by the European suppliers first subjected to his drastic cost-cutting tactics. But while he demanded that they lower their prices, Lopez also showed them how to increase their efficiency.
Smith clearly wanted Lopez to stay. Indeed, after Lopez initially resigned Wednesday, Smith and two other executives visited him at home Friday in an effort to persuade him to reconsider. On Saturday they spoke again, and Lopez agreed to stay on in a new position. GM confirmed the flip-flop Sunday, and Lopez’s second turnaround in two days Monday left GM staff feeling confused and upset, according to one GM manager.
While the reasons for Lopez’s final decision remain unclear, Smith said personal factors fueled Lopez’s desire to return to Europe. His family was reportedly unhappy in Detroit. And Volkswagen, which has offered to make Lopez head of its worldwide production and a member of the management board, reportedly lured him with the promise of fulfilling his dream to build an auto plant near his home in the Basque region of Spain.
In the end, Lopez remained an outsider in the close-knit world of Detroit. But industry observers said that was the inevitable consequence of the role he played at GM. “He brought in a shock treatment which was very much needed,” said Cole. “He became a symbol for what needed to change.”
But suppliers say they don’t expect GM to reverse course now that Lopez is gone.
“GM has to cut costs. We know that,” said Larry Enders, an executive at Standard Products in Dearborn. “They’re going to do it with him or without him.”
