The General Motors bankruptcy has a special poignancy for me. By my reckoning, our landing General Motors as a client in 1970 was one of the two most defining moments in Burson-Marsteller’s 56-year history.* It was the catalyst for our extraordinary growth during the decade of the 70s -- from $5.2 million to $35.1 million – and even beyond. Its impact on making us a major “player” in the world of public relations consulting firms was enormous.
It’s hard for those of you who did not actually experience the General Motors presence during the half century starting in the 1930s to appreciate its enormity as a societal force. The world’s largest and most profitable corporation, it was the world’s largest private sector employer – at its peak 600 thousand. Counting dealers and major supplier employees engaged on GM business, the number approached two million. One of every 100 Americans depended on General Motors for a living.
General Motors chose Burson-Marsteller as public relations advisers after a Congressional hearing that excoriated management for hiring a private investigator to shadow consumer activist Ralph Nader. Nader’s hyper-critical book, “Unsafe at Any Speed,” hammered the Chevrolet Corsair, a new model heavily promoted by GM, as well as the industry’s attention to driver and passenger safety. Public outcry condemning the invasion of Nader’s privacy led to the formation of a board committee on public policy and social responsibility. One of its first acts was to order the CEO to engage independent public relations counsel.
As the leading firm specializing in business-to-business clients, we had GM’s Electro-Motive Division, the world’s largest manufacturer of locomotives, as a client We were GM’s only public relations firm, and I had worked with Tony DeLorenzo, their long-time corporate chief public relations officer. In late June (1970) Tony informed me of GM’s intention to hire a firm to advise senior management on corporate policy matters and that Burson-Marsteller would be one of three firms they would consider.
Our competition was Hill & Knowlton and Carl Byoir Associates, then the two largest and most highly regarded firms, each serving numerous major corporate clients. My principal associate, Buck Buchwald, and I assumed our being on the short list was more a factor of friendship than as a serious contender. The selection would be based on discussions with GM management about their perception by important stakeholders, i.e. no formal presentations.
Although GM was respected as the corporate world’s biggest and best, it was also generally regarded as arrogant, infallible, inflexible and a driver of hard bargains with dealers and suppliers. It was seen to be high-handed with media (after the Wall Street Journal published a drawing of a new model before its formal release, GM cancelled its advertising). Since we both felt we had little to lose, Buck and I decided to be totally straightforward in disclosing what we learned from talking with a small sampling of dealers, suppliers and automotive reporters.
In a casual setting in the then-new General Motors Building overlooking the Plaza Hotel and Central Park, we met with Oscar Lundeen, number two in the GM management hierarchy and Tony DeLorenzo. For the better part of two hours, we shared our hand-written verbatims expressing the antagonistic and deep-seated feelings of dealers, suppliers and reporters. Our audience of two were rapt listeners (actually DeLorenzo had a strong inkling of what we would say and he didn’t dissuade us from pursuing what we assumed would be a suicidal course of action). Mr. Lundeen’s first comment was along the lines of “you’re telling us that our PR is not working,” a statement that shook up my friend and fellow-public relations professional Tony DeLorenzo (I could tell by the look in his eyes that I had better have a good answer; he was the person who signed off on our invoices!).
My response was along the lines that, in a sense, it was a breakdown in the public relations process, but “not at the level of your public relations staff.” Rather, I explained that any public relations outcome is based on two components. First – where General Motors is failing – is behavior and behavior is a factor of policy – policy set by senior management often without professional public relations input. The second is communications – at which I thought General Motors is superb. After being graciously thanked for our input, Buck and I, on the return walk to our office, commiserated with one another by agreeing we weren’t going to get the business regardless of what we said.
An hour or so later, the telephone rang; it was Tony DeLorenzo. His first words were “Oscar thinks Jim Roche should hear what you and Buck told us.” Roche was GM’s chief executive officer. Even though we would meet with GM’s CEO, we still were dubious that we were a serious contender. Mr. Roche was a good listener, but palpably more aggressive defending GM actions as voiced by those we interviewed. At the least, he agreed that the behavior of General Motors was a misunderstood – meaning that his public relations department was not communicating the essence of the company and what it stood for.
Because General Motors became the “target” for labor negotiations with the United Auto Workers, the decision on hiring a public relations firm went on the back burner. Though DeLorenzo and I talked regularly by telephone, it was late November when he called to inquire if I would be in my office the following Tuesday. After my affirmative reply, he said “Oscar would like to see where you live when he’s in New York for our next board meeting.” Though I didn’t ask him directly, I knew the game was over and we had won; it was simply inconceivable to me that the second ranking officer at General Motors would take time to visit the offices of three public relations firms.
Buck and I worked the account in tandem. Our frequent presence on the 14th floor of the General Motors Building on Detroit’s Grand Avenue was a heady experience. GM’s internal public relations staff was superbly qualified, though not always heeded by corporate management. The fact is that for many years GM management was more adept at making money than at making automobiles the American public wanted. Smart and hard-working, they failed to recognize the competitive potential of Japanese car makers, especially on how quickly they could establish a dealer organization capable of delivering coast-to-coast service. Also, few of their new models were really new; mainly they were enhancements of existing models. Having operated in a protected market for so many years, General Motors, like its other U.S. counterparts, lost sight of what its customers wanted in an automobile. GM’s share of market peaked in 1974 at 54 per cent. In each succeeding decade it dropped approximately ten percentage points and is now in the low 20s.
But the impact on us – with our existing clients and in new business -- was palpable. Even though neither we nor our new client issued a news release on our appointment, for the better part of the year our winning the GM account was the talk of the public relations community. Our corporate practice expanded at least three-fold as new clients joined our roster. The topic at most first meetings with companies interested in our services was how life was lived at General Motors.**
Our relationship with General Motors ended in 1981 at our initiative. We had joined forces with Young & Rubicam two years earlier. Ford’s Lincoln-Mercury Division was a major Y&R client. On the GM side of the equation, our third CEO, the affable and effective Tom Murphy, had retired. Even more significantly, so had our friend and mentor, the unforgettable Tony DeLorenzo. Though our GM association had been “grand-fathered” after our merger with Y&R, our B-M management team thought it made good long-term business sense to seek Ford as a client in tandem with our parent company.
Though somewhat diminished in comparison to its glory years, General Motors was still a company to be reckoned with. It would have been considered insane to consider it a candidate for bankruptcy a quarter century later. But, as in all of life, “stuff” happens to corporations, for the better and for the worse.*** Only one of the original 30 companies on the Dow Jones Industrial Index remains about a century later.
* The most defining event in the history of Burson-Marsteller was establishing an overseas office (Geneva, Switzerland) in 1961.
** At that time, CEOs played a significant role in the selection of public relations firms.
*** Only one of the original 30 companies comprising the Dow Jones Industrial Index remains today, 113 years later. It is General Electric.