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Cost-cutting GM official leaving, probably for VW


DETROIT -- The hard-charging Spaniard who turned General Motors Corp. on its ear by demanding lower prices from suppliers and forcing changes in manufacturing operations said yesterday that he was leaving the company.

It had been rumored for weeks that Jose Ignacio Lopez de Arriortua would leave GM. Although he did not say yesterday where he was going, he is expected to accept a top executive post Tuesday with Volkswagen AG, one of GM's toughest competitors in Europe.

In the nine months Mr. Lopez has been vice president for worldwide purchasing at GM's Detroit headquarters, where he came after serving in Europe, he earned a reputation as one of the most colorful and unconventional GM executives ever.

Armed with a doctorate in industrial engineering, the man who went by the nickname Inaki attacked entrenched constituencies inside and outside GM with an eye toward slashing costs.

He was not bashful about suggesting operational changes at suppliers' factories to reduce waste, and he openly criticized cozy transactions between GM and its suppliers, sometimes negotiated during golf games and at banquets.

Many suppliers and GM parts makers said the concessions Mr. Lopez demanded were so large that they would be driven out of business. But he resisted suppliers' suggestions that they could go no further.

"Please don't use any more excuses, like our prices are already low and our profits cannot be cut further," he lectured suppliers at a banquet in Detroit Saturday night in their honor. "We must change our attitude from the excuse generation to creativity in action."

GM announced Mr. Lopez's departure late yesterday afternoon, after the close of trading on the New York Stock Exchange. Its stock lost $1.375 a share, closing at $38.75.

As recently as Saturday evening, at the black-tie gala for suppliers at which Mr. Lopez was host, the automaker's chief executive, John F. Smith Jr., said he wasn't sure Mr. Lopez was leaving.

Last month, in an effort to dissuade Mr. Lopez from leaving GM, Mr. Smith promoted him to vice president and group executive in charge of worldwide purchasing.

Since taking over as chief executive in November, Mr. Smith has staked his credibility with investors and the GM board on cutting TC costs. The savings Mr. Smith hoped to achieve were based heavily on Mr. Lopez's ability to forge new, lower-price agreements with thousands of suppliers that sell automotive parts and materials to GM.

Before Mr. Smith and Mr. Lopez came to headquarters, they had worked together in Europe to make GM's operations there profitable after years of losses.

But GM's North American operations lost about $12 billion from 1990 to 1992, leading to the resignation last year of Robert C. Stempel as chairman and chief executive.

Mr. Smith said GM would announce Mr. Lopez's successor shortly. Alan Perriton, a deputy to Mr. Lopez, is a logical candidate for the job, but whoever gets the job will face large obstacles in trying to wrench cost savings from suppliers and internal GM parts manufacturers.

At usually strait-laced GM, Mr. Lopez cut an unusual figure, which may have helped him sell his philosophy of business and manufacturing. He thought most people were too heavy, and he often passed out copies of his own "warrior diet," heavy on fruit and light on fatty foods.

A passionate native of the Basque region of Spain, he cast GM's competition against Japanese automakers as no less than "a third industrial revolution, to preserve our way of life in the West."

In somewhat broken English -- it was his fourth or fifth language -- he suggested that executives wear their wristwatches on their right wrists to cause nagging discomfort until GM returned to profitability. And he greeted colleagues and journalists with a bear hug more often than with a handshake.

In recent weeks, he had been telling GM colleagues that he dreamed of bringing another automotive assembly complex to his homeland. GM operates an Opel assembly plant in Zaragoza; VW owns a Spanish automaker, SEAT.

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