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Baltimore Sun

It's the same old story

I was particularly struck by a passage in David Halberstam's 1993 book The Fifties, in which he describes a major corporate shift at General Motors. Perhaps it will have some resonance for those of you who have worked at newspapers during the past 15 years.

For many GM people the critical moment came in 1958, when Frederic Donner became president. Donner's roots were in accounting but, unlike Harlow Curtice, who had also been an accountant, Donner was a man who gave off a sense of being interested only in numbers. …

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His ascent was a reflection of the changes in the company. At the daily meeting with heads of the divisions, Fred Donner kept talking about the stock, about what the stock analysts in New York said about it. For Bunkie Knudsen, then head of the Pontiac division, talk like this was downright sacrilegious. There had never been talk of the stock price at these meetings in the past. It was perfectly proper for the head of a company to talk about the need for profits, even the need to maximize profits, but to talk about driving the stock up and to talk about what Wall Street analysts thought about the company, he believed, was unthinkable. In the old days there had been a simple concept: The people in Detroit had to make good cars, and if they did, the people in New York would take care of the stock.

Donner's talk signaled something ominous to Knudsen: a profound change in the purpose of the corporation. It meant that profit, rather than the quality of the product, was now the objective of the corporation, and it meant, though few realized it at the time, that there would be an inevitable decline in the power of the engineering and manufacturing departments. It also signaled an even greater decline in the willingness of the corporation to experiment with new technology (each new development added costs to a car), and finally, it would lead to an unswerving drive to make the divisions as homogeneous as possible, so that the same pins and screws and nuts and bolts and body shells could be used in each division. For a profound metamorphosis was taking place in America's largest and biggest industrial companies: the rise of financial experts over product men. It was a sure sign that these companies, unconsciously at least, believed that they were de facto monopolies and faced no real competitive challenges anymore. Rather, their only real concern was to maximize the profits that now seemed to be permanently theirs and to drive the stock up.


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