Picture this:

You have stalling financial markets. Car sales are falling through the floor, as is revenue. You’re pressed into rationalising your multi-brand structure and combining resources amongst different brands, well the brands you’ve still got, at least. You’re thinking of shuttering at least one. You’re investing in electric vehicles. You have troubles with the UAW. Your share price has plummeted.

GM in 2008? Maybe.

GM in 1932? Yes.

This is the story from one of GM’s own publications, which was put together to celebrate their 100 years anniversary. EduSaab’s extracted it and sent it on to me and it makes for a fascinating comparison.

If only they’d stuck to a few of their plans back then, like shuttering Cadillac and pursuing diesel. If only they would do one of those in Europe now and the other in the US.

Here’s hoping that the 2008 General Motors can emerge as successfully as the 1932 GM did.

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Even during the Depression, GM managed to make money

Despite layoffs, plant closings and a lower stock price, GM gained market share



The Great Depression caused other automakers to go under, banks to fail and one of every four American workers to lose his or her job. Yet General Motors stayed in the black.

The stock market crash of Oct. 24, 1929, heralded an economic slump that would cripple the United States and other industrialized nations for much of the next decade. But throughout the Depression, historian William Pelfrey noted, GM maintained a profit margin of at least 10 percent in every year except 1932.

Under President Alfred Sloan, GM “was able to underprice the competition and increase market share in the core automotive business during those dark years, laying the foundation for even more astounding future growth,” Pelfrey wrote in his book Billy, Alfred, and General Motors.

Still, GM was not immune to the effects of the Depression:

– GM closed some plants and laid off workers at the rest of its factories, Pelfrey wrote. At the same time, he said, the “most efficient and critical ones scheduled overtime and increased assembly line speed rather than bring people back or add new jobs and costs.”

– Between one-fourth and one-third of all U.S. auto dealers went broke during the Depression, Timothy Jacobs estimates in his book, A History of General Motors.

– On Sept. 1, 1929, GM stock traded at $73 a share on the New York Stock Exchange. On the same date in 1932, the stock closed at just under $16.

– GM’s U.S. unit sales dropped from nearly 1.5 million in 1929 to fewer than 522,000 in 1932, according to company data.

– In 1929, GM reported net sales of $1.5 billion, according to Automotive Daily News, the predecessor of Automotive News. In 1932, GM sales plunged to $432.3 million.

– The company’s net income plummeted from $248.3 million in 1929 to $164,979 in 1932, the newspaper reported. And GM lost $4.5 million on automobile sales in 1932, Jacobs wrote, as talk arose “of closing out Cadillac.”

In the black — but black-and-blue

The Great Depression took a financial toll on GM. Here is the record on GM’s net sales and income during the early years of the Depression as reported on Nov. 29, 1933, by Automotive Daily News, predecessor of Automotive News.

 
1929
Net sales – $1,504,404,472
Net income – $248,282,268

1930
Net sales – $983,375,137
Net income – $151,098,992

1931
Net sales – $808,840,723
Net income – $96,877,107

1932
Net sales – $432,311,868
Net income – $164,979



Cutting back

In his book My Years with General Motors, Sloan said that during the Depression, GM “made an orderly, step-by-step retreat in all matters, including wage and salary reductions.”
GM increased the number of interchangeable parts among its divisions, Sloan wrote, moving to “three basic standard types” of car bodies. The company consolidated Chevrolet’s manufacturing with Pontiac’s and Buick’s with Oldsmobile’s. GM also consolidated Buick, Oldsmobile and Pontiac sales operations, Sloan added.

“In effect, from a management point of view, General Motors for a year and a half was reduced from five to three car divisions,” Sloan said.

As GM coped with turmoil in its core automotive business, the company became an “investment trust,” historian Jacobs wrote. The company poured much of its $400 million in reserve funds into such industries as radio, aircraft, airlines and diesel engines, he said. In a 1930 statement to shareholders that accompanied their dividend checks, Sloan said GM had joined a radio venture with RCA and held interests in Bendix Aviation Corp. and Fokker Aircraft Corp., Automotive Daily News reported.

GM also bought Electro-Motive Co., which built electric-powered rail cars. The company would become part of GM’s Electro-Motive Division, which developed diesel engines for rail cars.

In 1933, auto sales plunged as Gov. Frank Murphy of Michigan and then newly inaugurated President Franklin D. Roosevelt ordered banks to close temporarily to prevent a run on deposits. Michigan’s 10-day “bank holiday” in February “crippled sales materially,” Automotive Daily News reported. In 1933, GM sold 753,039 new vehicles in the United States.

At the federal government’s request, GM helped form a bank in March 1933, the National Bank of Detroit. Sloan said GM intervened to help bring order to Detroit’s troubled banking industry. In addition, GM’s action would send a positive signal to Americans who depended on the auto industry for their financial “well-being and who look to the motor industry for leadership in a crisis” Sloan was quoted as saying in Automotive Daily News.

After several subsequent bank consolidations, the former National Bank of Detroit now is part of JPMorgan Chase & Co.

Labor tension

As the Depression eased somewhat in the mid-1930s, GM’s sales rose. But so did conflicts with its workers. In 1936, GM sold nearly 1.7 million new cars and trucks in the United States. The automaker also was hit by several sit-down strikes by workers who demanded more money and job security.

Thomas Sugrue, a sociologist and historian at the University of Pennsylvania, says many of those workers’ jobs were dangerous and lacking in benefits. “Some of the most famous incidents in the history of union organizing in the Great Depression happened at GM factories” in Flint, Mich., Sugrue says.

In late December 1936 and early January 1937, workers took over and locked themselves inside GM’s Fisher Body No. 1 and No. 2 plants. Violence erupted between workers and plant guards, Jacobs and Pelfrey wrote. “Strikers hurled steel door hinges, stove bolts and other auto parts, plus a stream of water from a high-pressure hose, at police who arrived on the scene,” Jacobs wrote. The National Guard was called in.

The strike ended Feb. 11, 1937, when GM recognized the UAW as the official bargaining agent for auto workers.

When a milder recession hit the United States in the late 1930s, GM’s new-vehicle sales here fell to 893,328 in 1938.

But sales started to rise again before America entered World War II in December 1941. GM sold a record 2,024,193 vehicles in 1941 before it converted its factories to military work.

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