Stempel Was Last Of GM Car Guy CEOs

Stempel Was Last Of GM Car Guy CEOs

By Dale Buss May 10, 2011

Robert Stempel died last weekend in Florida, leaving in Detroit a legacy as a colorful but star-crossed CEO who was denied the opportunity to fully apply his engineering credentials to fix the problem of General Motors' bland and outdated product line in the Nineties. At least Stempel lived to see the fledgling realization of his dream of marketplace acceptance of all-electric vehicles, a cause which occupied much of his post-GM career.

The long-time former GM executive died at the age of 77, nearly 20 years after failing to fulfill his leadership promise and unwittingly casting himself as part of the long-term ossification of company management that ultimately led to the automotive giant’s downfall, bankruptcy filing and federal-government bailout two years ago. An engineer by training and throughout his upward advancement, Stempel was the last true “car guy” to run General Motors, a sort of frustrated forerunner to Robert Lutz, the product guru who ended up reviving GM’s model lineup before his retirement as vice chairman last year.

Rising Star
Stempel had the uncanny bad luck of succeeding the late former GM CEO Roger Smith in 1990, after Smith had managed to hopelessly blur the company’s distinct brand identities – and just one day before the onset of the Iraq War helped plunge the U.S. economy into the last recession before a 15-year boom that began in the mid-Nineties. Before his final promotion, Stempel had put together a stellar career at GM. A native of Trenton, N.J., he earned a bachelor’s degree in mechanical engineering at Worchester Polytechnic Institute in 1955. Stempel joined GM as a detailer in the Oldsmobile chassis-design department in 1958. In 1962, he became Olds’ senior designer, then a transmission-design engineer in 1964; Stempel worked on the front-wheel-drive Toronado, which was named the 1966 Motor Trend Car of the Year.

Stempel was named Oldsmobile’s motor engineer in 1969 and earned an MBA from Michigan State University in 1970. In his next position, coordinating emission-control development, Stempel proved his mettle as what GM, in its post-mortem statement on his death, called “a visionary engineer.” His role, the company said, “included leading the development of the catalytic converter, one of the great environmental advancements in automotive history.”

Public Figure
But Stempel didn’t stop there – far from it. He went on to head Chevrolet engineering, to become general manager of Pontiac, to run Adam Opel in Germany, and then to return to Detroit in 1982 to become Chevrolet general manager. Soon, Stempel would run the Buick-Oldsmobile-Cadillac group, part of Smith’s reorganization of GM’s product-development infrastructure into a two-headed monster that was doomed to eventual failure. By then, Stempel was on the radar of the GM board as a potential successor to Smith. He served as head of the Truck & Bus Group, then GM’s Overseas Group, and joined the board in 1986. In 1987, GM named Stempel its chief operating officer. GM insiders and outsiders alike understood that, as Stempel rose through leadership amid a gaggle of finance chiefs, he was one of the few top executives at the company who actually could fix his own car.

Stempel also stood out as one of GM’s most candid rising executives,  cutting a figure as somewhat of a bon vivant along with his garrulous wife, Patricia Stempel. The couple enjoyed horses, and owned horse farms in Michigan and Florida. The Stempels actually first came to prominence in 1975 after their son, Timothy, was kidnapped near their home in Bloomfield Township,  Mich., then held in the trunk of a car for two days before he was released unharmed for a ransom of $150,000. The kidnappers were found, tried and convicted.

Running Behind
By the late Eighties, Smith had tried a number of major gambits to pull GM out of its long swoon and to fight back against Japanese competition that was chomping up American market share. Besides the reorganization, Smith attempted to cut costs by harmonizing GM’s various vehicle platforms into just a handful – which only resulted in a damaging blurring of brands and product lines. Smith also was beginning to lose interest in the Saturn small-car division that he had launched in mid-decade.

Stempel took over in 1990 after Smith’s retirement and enjoyed “one good day” in the job, as he later quipped to Reuters. The next day, Saddam Hussein invaded Kuwait, triggering the Gulf War and precipitating a major U.S recession that would sap car sales. Already behind in restructuring and downsizing because of Smith’s ill-fated organizational overhaul and because GM management had spent a decade in basic denial of the existential threat posed by the Japanese, Stempel believed he had to act fast to retrench more deeply and more quickly.

Designated Hitter
Under the gun, Stempel would close 12 plants, cut 74,000 GM employees, and preside over the compilation of a record $7 billion in losses in 1991. The final straw might have been Stempel’s agreement to a new United Auto Workers contract that guaranteed hourly workers a robust 95 percent of their wages if they were laid off – just as GM was in the midst of shedding more jobs than ever before. The financial minds at GM reasserted their customary control, with board members John Smale, former CEO of Procter & Gamble, and Jack Smith, a veteran GM financial executive, engineering Stempel’s departure. On November 1, 1992, as he also suffered from a heart condition, Stempel was deposed as GM’s CEO, and his compadre, Lloyd Reuss – father of Mark Reuss, who now is GM’s North American chief --  was fired as president.

A debate ensued and continued for years over whether Stempel had been treated unfairly. There was no denying his disappointing record during a shortened tenure. But, arguably, GM never would turn things around under a succession of later CEOs – despite rolling up extraordinary profits during a time of unprecedented U.S. economic prosperity – and the buck would stop only with its bankruptcy in 2009.

Second Career
In the meantime, Stempel moved on, determinedly if not cheerily at first. While CEO at GM, Stempel had managed to approve development of the EV1, which would become the first electric car introduced by a mainstream automaker. One of the main partners in development of EV1 was Energy Conversion Devices (ECD), whose nickel-metal-hydride batteries would power the second generation of EV1s, in the late Nineties, before GM deep-sixed the program.

Sure enough, in 1995, just as ECD was gearing up its involvement with the EV1, Stempel re-surfaced as chairman of the 35-year-old company founded and run by Stanford Ovshinsky. This legendary scientific mind always had trouble commercializing his brilliant discoveries and inventions. Ovshinsky had pioneered the development of a variety of devices ranging from flat-screen televisions to solar-energy systems as well as batteries to propel cars; he just needed someone with a background in commercialization to help ECD realize its vast financial potential.

Repeat Ending
Despite GM’s termination of the EV1 a few years into his tenure at ECD, Stempel and Ovshinsky became a notably successful odd couple, with Stempel putting in nearly as many hours as Ovshinsky in the company offices in an obscure industrial park in Troy, Mich. Stempel’s credentials helped ECD attain unprecedented commercial heights despite the failure of EV1, as he brought major brands including Intel, General Electric and ChevronTexaco into development deals. Stempel backed what arguably became Ovshinsky’s crowning financial achievement: construction of a huge photovoltaic-panel factory in Auburn Hills, Mich., that remains a leader in the burgeoning solar-shingles market.

But unfortunately, in a repeat of his commercial frustration of the previous four decades, Ovshinsky wasn’t able to stick around ECD to enjoy that time of reward. He and Stempel were shuffled out of the company by the board in 2007.  And like 15 years earlier from GM, Stempel cleaned out his desk and went home. Calling Stempel “a very popular chairman with employees,” the General Motors’ statement on Tuesday said that it “mourns the passing of Bob Stempel, who admirably led the company during very difficult times in the early 1990s.”

Dale Buss:  is a frequent contributor to AutoObserver.com.