Gm Moves International Base To Detroit

General Motors Corp., moving to take firmer control of its rapid overseas expansion, said Thursday it will move its top international operations staff from Zurich, Switzerland, back to GM headquarters in Detroit.

GM International Operations President Louis Hughes and about 30 senior executives and managers will move to GMs new offices in the Renaissance Center in September.

The worlds largest automaker said the move was aimed at streamlining the working efficiency of its top management by putting them all in the same building and reducing time spent on trans-Atlantic flights.

GM also said the move will allow Zurich-based GM Europe to concentrate more on development of new Opel and Vauxhall products while Hughes international staff coordinates global expansion in Asia, Latin America and Eastern Europe.

 

An acceleration of those (globalization) efforts now requires a closer interaction of key executives representing our corporations different business sectors, GM Chairman and Chief Executive Jack Smith said in a statement.

Having Lou (Hughes) and members of his team based in Detroit will enable us to work even more effectively with one another, Smith said.

But some industry officials viewed Thursdays announcement as a move by GM Chairman Jack Smith and the companys board of directors to better supervise Hughes, who has been a focal point for controversy in recent months as the internaional operations have gone from GMs biggest profit center to a drag on earnings.

Straining from cutthroat price competition in Europe and the largest overseas expansion in the automakers history, GMs international operating profits declined by a third in 1997 to $981 million. Operating profits for GM Europe dropped 60 percent to $313 million last year.

The rapid expansion, which includes five new full-scale assembly plants and the vehicles they will build, also caused widely publicized strains on GMs German-based product development operations.

Smith in February denied a report by the German newsmagazine Der Spiegel that Hughes would be demoted because of the troubles in Europe.

Hughes has been given a second chance in a way, said Eugene Jennings, a retired Michigan State University professor of management who closely watches the executive suites at Detroits Big Three automakers.

Theyre going to put Lou under a microscope in Detroit and in six months well know whether hes survived, Jennings said, emphasizing that Hughes must improve international profits.

Jennings added, however, that the move makes sense operationally and will help GM to avoid miscommunication among its various engineering, manufacturing and marketing groups that are jointly developing new vehicle platforms and strategies.

Cadillac Division General Manager John Smith, a former GM Europe product planner, said the move will reduce the number of bleary-eyed strategy meetings following eight-hour plane flights. Hughes will simply be able to walk upstairs to the chairmans office, he said.

Its going to be a lot easier with all of our global sessions, with everybody already living and working in the Detroit area, Smith, who is no relation to the GM chairman, said.

GMs International Operations were based in Detroit until 1992, when Hughes was put in charge of the unit, replacing Smith when he was named GM chief executive and later chairman.

With Smiths blessing, Hughes shifted the then-much-smaller unit to Zurich, where offices could be open during part of the business days in both Asia and North America.

Zurich will remain the European regional headquarters for GMIO, which includes German carmaker Adam Opel AG. GM maintains other regional bases in Detroit, Miami, Cairo, Singapore and Beijing.

Hughes is a member of the powerful GM Presidents Council and has been viewed by industry officials as za potential successor to Smith.