Tuesday, August 09, 2005

Beacon No. 57: A GM Innovator Goes Home


In "GM Thrives in China with Small, Thrifty Vans," the Times' Keith Bradsher covers General Motors' success in selling cheap, fuel-efficient vehicles in the People's Republic.

China's small entrepreneurs love the Wuling Sunshine, a sub-$5,000 minivan that GM produces with a Chinese partner. It's short on horsepower by U.S. standards but gets 43 miles per gallon in the city, a critical factor in a still-poor country where the central government is slowly letting the price of gas rise to market levels.

GM and its partners have attained this commanding position through the efforts of an Ohioan, Phillip Murtaugh, who apparently saw early on that fuel efficiency and utilitarian design of the vehicle—rather than interior bells and whistles like eight cup holders and a CD changer—were the way to go in mainland China. It took Murtaugh nine years and a lot of deals to get GM China to number one:

Mr. Murtaugh played a central role in 1996 in setting up the company's main operation in China, a 50-50 joint venture with the Shanghai Automotive Industry Corporation, or S.A.I.C. Instead of following the usual G.M. career track of bouncing through assignments around the world every couple of years, he stayed on to run the operation for nearly a decade.


"Essentially, it is his baby," said Stephen Small, the joint venture's G.M.-appointed chief financial officer.

Mr. Murtaugh never learned to speak Chinese, but he was instrumental in setting up the Liuzhou joint venture, which is 34 percent owned by G.M., 50.1 percent by S.A.I.C. and the rest by the Liuzhou Wuling Automotive Company. His personal skills and ability to explain the latest ways to run a factory, often borrowed from Japanese automakers, made a deep impression with executives here, as did his regular visits.

After nine years of Murtaugh's efforts, GM now produces hundreds of thousands of vehicles annually in the PRC. It's impossible to overstate the importance of this market to General Motors, which is flailing in North America by trying to sell the gas guzzlers it has, rather than the energy-efficient vehicles it might want or wish to have at a later time. A leadership position—particularly against powerhouses like Volkswagen and regional competitors like Hyundai—can only increase GM's soft power along with its purely economic clout.

You'd think a guy with Murtaugh's record could write his own ticket in turnaround-hungry Detroit, where even DaimlerChrysler is now using Lee Iacocca in its ads—but instead Murtaugh walked from GM in March, is currently unemployed, and lives in tiny Cadiz, Kentucky.

Apparently, with China being one of GM's few profit centers, Detroit HQ decided to rein in Murtaugh (whom Bradsher calls a "maverick") by sending a few suits to ride herd on him from offices next door. Murtaugh either saw the writing on the wall and left of his own accord—or fought it quietly and lost.

Either way, his case will sound familiar to anyone who's read The Reckoning, one of David Halberstam's best but least-known books. While detailing the U.S. auto industry's rise and fall up through about 1985, Halberstam lionizes Yutaka Katayama, a young Nissan executive who almost single-handedly created the company's U.S. market and was beloved by Americans who had many reasons to dislike Japanese companies and their cars.

But with success came jealousy back in Japan. Nissan execs called Katayama home to Tokyo one day in 1977 and informed him that he had resigned several days earlier.

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