I read John Z. DeLorean’s autobiography about thirty years ago; I was alternately fascinated and horrified. One of our readers, “Reno”, wrote this up as part of a healthcare degree he’s been taking. If you’ve never heard of the fellow beyond his stainless-steel coupe, this is a good place to start!
A healthcare leadership paper about Al Sloan and Charles Kettering would be an interesting intersection of the US automotive industry and cancer care. Alfred Sloan donated $4,000,000 to what was then known as the New York Cancer Hospital, and Charles Kettering agreed to oversee the organization of the cancer research program. At that time Alfred Sloan was the chairman of General Motors and Charles Kettering was Vice President of research at General Motors. These men came from wealthy families and made their fortunes running General Motors and forming Delco (Dayton Engineering Laboratories Co.). Charles Kettering is credited for inventing the electric starting motor at Delco. General Motors acquired Delco through its acquisition of United Motors Corporation in 1918. This is an interesting story, these men were able to position themselves for success through their various family connections and alumni networks. An intriguing story would be the story of a leader that was on the fast track to the top. This leader is the son of immigrants with an unstable home life growing up, making it to the senior executive team of one of the world’s largest corporations and then stepping down to peruse his own interests due to his refusal to comply with the strict hierarchy of a ridged corporate culture. A leader that would fit that description would be John Z. DeLorean.
John Z. DeLorean was born in Detroit in 1925, his management career in the automotive field started while attending a coop program in the Chrysler Institute. Growing up in Detroit most people worked in some capacity in the automotive field in those days, DeLorean had many short stints at factories and machining shops while he was in school. He worked his way through college and graduate school. He received a Masters from the Chrysler Institute. His father was a brilliant machinist, but had minimal formal education and had a hard time getting his ideas out to others. John continued working at Chrysler after his masters/coop program ended, but quit in 1952. He decided to leave Chrysler due to the size of the organization. He felt it was too big. In the early 50s the ‘Big Three” were the leaders in the automotive world. There were many independent car companies still producing competitive cars, but General Motors, Ford and Chrysler were producing the most cars by volume. GM was in first place, followed by Ford in a close second, and Chrysler was a distant third. John felt that Chrysler was a too large for him to be successful. He was looking for a smaller manufacturer where he would know all the people working on the projects he was participating in. This is an important theme that would come back again later in his career.
The independent car manufactures that were still around in the early 1950’s were experiencing a phenomenon that occurs in a maturing industry. The larger industry leaders were undercutting the smaller players in price and volume. The advancements that were being introduced each year were requiring more and more research and development dollars to remain competitive, and the style cycles demanded that a heavy restyle was required each year to remain competitive. The independents such as Packard, Studebaker, Willys, Rambler, Nash, Hudson, Crosley, and Kaiser were starting to have a hard time keeping up with the innovation and refreshes necessary to remain competitive. By the end of the 50s all of the independents listed above would be gone or combined. The independents were notable in their innovation. Packard was the first manufacturer to offer power windows and air-conditioning as regular production options. These innovations could not prevent the onslaught of GM.
John left Chrysler in 1952 and took a position under Forest McFarland who was the head of Research and Development at Packard. DeLorean’s first assignments were on the central hydraulic systems and development of the Ultramatic Automatic Transmission. The Ultramatic was Packard’s first fully automatic transmission. Due to Packard’s small size the engineer was involved in designing, working with machinists, assembly, testing, and production. This enabled DeLorean to learn and experience the many phases of car design. While working with the blacksmiths at Packard, John learned a basic philosophy that he adopted for the rest of his career; maintain business relationships with a mutual, professional trust, and respect. Later in his career this would be mistaken as arrogance and aloofness. Within four years of joining Packard he was asked to head the Research and Development department. In 1954 Packard bought Studebaker and formed the Studebaker-Packard Corporation of South Bend Indiana. The last true Packard was built in 1956 at the Packard plant in Detroit. After that all production moved to South Bend and the Detroit production and offices closed. The 1957 and 1958 Packards were facelifted Studebakers. It was a sad end to a storied marque.
By 1949 General Motors had every vertical in the automotive market covered with their 6 brands. They had also released their first new postwar body shell and they were dominating the market. They had the market saturated following the maxim of Alfred Sloan “A car for every purse and purpose.” The market was covered from low priced to high by Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, and GMC truck. The strategy was that an individual could start out buying a Chevy, and move up to Pontiac then Oldsmobile etc. as their finances improved. Each division had their own unique flavor in those days. Chevrolet was the economy car, and Pontiac was not as plain, but not flashy or exciting. They were known for chrome strips on the hood and a glowing Indian Head as the hood ornament. The exciting brands were Oldsmobile and Buick. Cadillac was marketed as the “Standard of the World” the pinnacle of the GM hierarchy. Oldsmobile, Buick and Cadillac were the only GM brands to have an OHV (Over Head Valve) V8 in 1953, there was a lot of excitement with the senior brands at GM. Cadillac and Oldsmobile each introduced their own V8 in 1949 331 and 303 respectively. Buick introduced their OHV V8 (The Nailhead) in 1953 for the marque’s 50th anniversary.
The Oldsmobile V8 was such a big deal when it was introduced that the song Rocket “88” was released in 1951 by Jackie Brenston and his Delta Cats as a tribute to the Oldsmobile Rocket 88. The Delta Cats were also known as Ike Turner and his Kings of Rhythm Band, this was before Ike Married Tina. The Olds 88 had the light body shell of the Olds 76 and the powerful engine of the heavy Olds 98. This is a formula that would be used by John when the GTO was created in the 1960s. In the early 50s, Oldsmobile, Buick and Cadillac were very exciting brands with their own unique feel. Chevrolet, Pontiac and GMC were all using straight 6 motors and had very plain utilitarian styling. The team running Oldsmobile were plugged into the consumers of the day, they were producing a product so popular that a hit song was written about the thrill of driving an Oldsmobile 88. This car had a light body with a powerful engine it was a combination that consumers wanted. The Oldsmobile leadership generated a buzz with the product that resulted in increased sales.
In 1956 John was recruited by General Motors’ Pontiac division to head the Advanced Engineering Department by Simon “Bunkie” Knudsen. Bunkie came from an automotive family. His father, William Knudsen, was heavily involved in the forming of General Motors. DeLorean enjoyed working at Packard and appreciated the multifaceted aspects of his positon there, it gave him the flexibility that he did not have at Chrysler. Simon was looking to dramatically change Pontiac and he needed someone who was a maverick who was able to be flexible as needed to transform the division. John DeLorean was entering his sweet spot. Bunkie understood office politics, but shunned them. It could be argued that his father’s position at GM allowed him this freedom and another manager would not have that leeway.
During the late 50s DeLorean was learning how to navigate the corporate politics. It became evident that the engineering skills were less and less important, and survival and advancement required selling ideas and proposals to management. Bunkie was mentoring John and revitalizing a brand that was selling more and more cars every year. Bunkie walked through the plant floor and stopped and talked to the workers and took their advice and he implemented their ideas where necessary. This enabled the brand to be more nimble and faster to react to market changes and consumer demands. During this period each GM brand was very independent only sharing body shells, basic suspension hard points and suppliers. This yielded cars from GM that had a familiar feel, but distinct personality. Bunkie was promoted to head Chevy in 1961 and Pete Estes was selected to head Pontiac, and DeLorean continued his development learning from the leaders that were transforming Pontiac and moving up through management ranks. Pete and Bunkie had different management styles. Pete was outgoing and Bunkie was more reserved, but DeLorean learned and applied the best leadership aspects from both men. DeLorean was using a hands on management style, where he was adapting to the leadership demands of the executive suite on the Fourteenth Floor in the GM headquarters, while delivering the messages gleaned from the factory floor or the engineering lab.
When the 1959 Pontiacs were being configured for their release, DeLorean came up with a look called the “Wide Track” that was incorporated in the marketing for the 59 and 60 Pontiacs. The 1959 GM corporate car bodies were very wide with the wheels tucked in, but he pushed the wheels out to the edge of the wheel well when prototyping a rear independent suspension system. The look was amazing on the new bodies and was different than the rest of the GM divisions. Incorporating the features across the whole car line and marketing the line as such contributed to the youthful performance oriented brand that he was brought on to accomplish. When john was recruited to work at Pontiac he was pitched that the brand was considered an “old lady” car. The sales were low and on a downward trajectory for several years. Upper management was considering closing down Pontiac. DeLorean saw this as an incredible opportunity to grow himself and the brand. The fact that he was starting to see success with his ideas, and the sales of more cars were attributed to his work. The senior leadership on the fourteenth floor had to call DeLorean to task at times due to the fact that he ignored some of the corporate mandates when making some engineering changes to the designs. These changes resulted in increased sales and year over year improvements to market share for the division. The wide track and the scaling back of chrome embellishments on cars were a couple of things that were counter to the trend within GM, but the trajectory of the Pontiac sales were attributed to these unique features of Pontiacs. DeLorean had a connection to the market place, similar to the Oldsmobile team’s market connection 10 years earlier. There was a buzz around Pontiac.
When the 1960’s started, DeLorean was dialed into the automobile market place. He understood that the youth market was hot and the Baby Boomers were starting to get their licenses. There was an adage that said “you can sell an old man a young man’s car but you can’t sell a young man and old man’s car”. Pontiac was now involved in NASCAR and Drag Racing. This was great exposure for the brand, and the industry was buzzing about Pontiac. John was about to introduce a new car that would follow a formula Oldsmobile had followed in 1949. It was rewarded with a hit song and a legendary hotrod; Pontiac would do the same thing. When Ronnie and the Daytona’s sang about the 3 deuces, 4 speed, and the 389 engine in their hit from 1964 “Little GTO” they did not realize they were also singing about a corporate guidelines that was being violated. GM had a corporate policy about limits on the size of the engines that could be installed in intermediate sized cars. The 1964 Pontiac Tempest was based on GMs corporate A body chassis, which was an intermediate car. The Tempest had the 326 for its largest engine and the GTO used the Tempest’s A body chassis.
The thing that made the GTO special and exciting was the 389 engine and upgraded suspension and brakes. The 389 was the standard engine installed in the larger Bonneville and Grand Prix. No other GM intermediate car had an engine that large in 1964, but the 389 was part of the reason the GTO was an instant success. DeLorean and Pontiac leadership did not tell GM leadership about this car when it was under development. Leadership found out about this right before the cars public introduction and could not do anything about it. The car was kept from leadership due to the understanding that they would have not allowed production. John knew that this was a bad political decision, but he also knew that the concept of the GTO would be successful. In the first three years of the GTO production, they sold 31,000 in 1964, 60,000 in 1965, and 84,000 in 1966; the Pontiac production team figured they would sell 5,000 a year. The concept was so successful that GM let Buick, Chevrolet, and Oldsmobile follow with their own A Body based muscle cars the GS, Malibu SS 396, and 442 respectively in subsequent years. DeLorean and Pontiac created a whole niche market for factory muscle cars from GM. The other manufactures followed suit with cars like the Plymouth GTX, and Ford Fairlane GT 390. The corporate bosses were not pleased with DeLorean’s actions, but they were pleased with the profits from the new models. It is important to remember that in mid-1960s GM had approximately 50% of the domestic auto market, today they have 20%. DeLorean had an understanding of the car market and he had the support and flexibility within Pontiac to produce cars that people wanted to buy. When he started Pontiac was selling 233,000 cars a year in 1956. When he left Pontiac in 1969 Pontic sold just under 900,000 cars. DeLorean was a large part of this dramatic increase, with cars like the Grand Prix, Firebird, and the GTO. There was corporate pushback with the firebird and Grand Prix due to internal competition with the Rivera and Camaro, but DeLorean knew these would be hits.
DeLorean was on the management fast track at GM and he was promoted to the General Manager of the Chevrolet division. This was a huge promotion with more visibility. He lost much of the independence that he had at Pontiac. Pontiac had one assembly plant Chevy had 11. Chevy accounted for almost half of GMs total volume in 1969 and senior GM leadership wanted it to be run a particular way. John also ran into problems he experienced at Chrysler, namely the vastness of the organization and lack of interpersonal relationships. At Packard and Pontiac he was able to quickly establish connections and understand the inner workings. He thrived in these environments and Chevrolet would prove to be a challenge. He found success in implementing modern financial controls, increased use of computers for orders and inventory, and staff optimization. DeLorean described Chevrolet in February 1969 as a confused, over-managed, under-controlled division. He was very successful at Chevrolet he managed to turn the division around without as much turmoil as his work at Pontiac.
When John was given the top job at Chevy he had to deal with the Vega. The Vega was GMs bold new compact economy car to compete with the imported cars and to beat their cross town rival Ford to this segment of the market. The Vega project was known internally as XP-887. It was a corporate project with requirements dictated by senior leadership at General Motors. Pontiac and Chevrolet had been working on their own independent designs for cars in this space. The requirements for the Vega were not able to be met with either design from Pontiac or Chevrolet. DeLorean felt that the design from either division would have been a better car to produce. It would have been a more durable car than what was produced. The Vega was problematic from its initial development. The car did not come from within a division, and as a result it did not have the champions that were required to produce a high quality final product. Traditionally the corporate executives on the Fourteenth Floor would select a market to sell a car (policy) and then they would pick one of the divisions to produce and sell the car (operations). In the Vega’s case, it would have been the small car market and Chevrolet would have been the division to sell the car. The Vega project corporate management selected the market and developed the car themselves. They selected Chevrolet to sell the car. It was a corporate car not a divisional car. The people creating the car were several steps removed from the market. It produced a product that was ultimately not competitive in the marketplace, due to the immense problems the customers had with their Vega after purchase.
DeLorean had to motivate the Chevrolet engineering staff to build the design they had to build. He was successful in gelling the teams on the project, and they produced the cars. DeLorean stepped up the quality processes in assembly to catch as many defects as possible and adjust the manufacturing processes to eliminate the defects before they could be built in to the Vega. Corporate funded the additional quality processes. In October 1971 GM Assembly Division (GMAD) took over the remaining Chevrolet assembly plants. This was an attempt to streamline the assembly facilities. One of the first things that was done was eliminating 700 jobs in quality at the Lordstown Ohio plant. The Vega’s were made exclusively at the Lordstown plant; the quality positions were put there specifically to address the shortcomings in the Vega during assembly. With the quality employees and processes removed, the owners of the new Vegas were discovering all the problems that were unable to be removed during the development. The assembly adjustments were put in place to correct these shortcomings, but GM took the assembly processes and plant away from Chevrolet. GMAD was now responsible for the Lordstown plant and all the other Chevrolet plants. GM made more money selling Caprices and Malibus then Vegas; as a result the Vega quality issues were not a high priority. The 1971 UAW strike at Lordstown resulted in a low output for the 1971 model year, and there were more UAW problems after GMAD took over operations of the Lordstown plant. The problems with the Vegas kept mounting with thousands of cars being recalled costing GM millions, and the sales did not meet expectations until the 1974 model year. By the end of the Vega run in 1977, the majority of the issues were addressed, but it was too late for the Vega. This development was frustrating to DeLorean.
In 1972 DeLorean was promoted to Group Executive of the Car and Truck Group. This is a position that had an office on the fourteenth floor at the GM headquarters. He was now a senior executive at General Motors. DeLorean wanted a position overseas where he saw the greater potential for growth in the European market, but he also saw another environment that was similar to Packard and Pontiac where he would have more autonomy. In his new position on the fourteenth floor he was now working with the executive team day after day. He was unable to go back into his division, Chevrolet or Pontiac, to take a reprieve from the struggles on the fourteenth floor he was in there every day. He was unable to achieve the small victories that keep people engaged. He was fighting to downsize cars, streamline ordering and inventories, and accelerate product development and innovations. The majority of the executives on the fourteenth floor were devoted to perpetuating the system rather than implement sound business results. It only took one year of this to wear DeLorean down on April 2, 1973 he resigned from General Motors. This paper shows that leadership is often reluctant to implement the concepts and ideas these leaders bring to the senior executive ranks. The successful companies embrace ideas from leaders like DeLorean, but it takes many components for leaders like DeLorean to succeed at the highest level. The majority of the senior leadership team must share the same goal and vision, this has proven elusive in many different car companies. The rise and fall of General Motors is a fascinating illustration of this resistance to change.
DeLorean believed that General Motors needed to adapt and innovate to retain its market share. He was unable to convince the rest of the fourteenth floor that this was necessary. History has proven DeLorean was correct in his intuition that General Motors was not on the right path with the processes in place to produce cars. General motors started losing market share in the later part of the 70s and the decline continued until GM declared bankruptcy on June 1, 2009 with its stock at .75 cents a share, GM was removed from the DOW. Its market share was 19.5% in 2009 at bankruptcy, in 1962 GM had 50.7% of the market. DeLorean was a visionary and he was not the only person who attempted to stop the inevitable. The corporate structure that had been built up at GM was so resistant to change and it wound up imploding. DeLorean was often at odds with the system, but was so successful in his day to day roles he was ultimately promoted out of his success zone. DeLorean quickly discovered once he arrived in a senior leadership position at General Motors that he was not able to implement the change that was necessary to ensure General Motors would retain its market share. He remained in that role for a year and resigned. There are many more chapters in John DeLorean’s story but this paper focused on his leadership while navigating the bureaucracy of General Motors. After he left General Motors he started his own car company DeLorean Motor Company (DMC). His car became a star car in the Back to the Future movie series. One of the many legacies of John DeLorean was that he had an understanding of the marketplace and culture and produced many products that are still relevant today.