Re: AudiWatch Update (Tm) #11

[tomh@metrics.com (Tom Haapanen)]

Glen Powell wrote:
> AudiWatch Update #11, 4-2-93
>
> LATEST ON LOPEZ
> 
>   Volkswagen is on the verge of a major mangerial reorganization
> and reportedly is trying to court GM's controversial, cost-cutting
> purchasing boss, Igmacio Lopez, for the No.3 post at VW, that of
> international production manager.
>   GM chief Jack Smith confirmed that VW is wooing Lopez.
> "They need him. He's a major player in the auto industry today,"
> Smith was quoted, adding, however, that he's been assured by Lopez
> that he plans to stay with GM. The company recently promoted
> Lopez, making him one of GM's nine top-ranked executives.

As it happens, Lopez did join VW.  Below is a copy of my posting in
rec.autos.vw, reproduced from The Economist:


[The Economist, March 20, 1993; reproduced without permission]

Lopez elopes
------------

General Motors has lost an intercontinetal tug-of-war with the defection of
its cost-cutting tsar to Germany's Volkswagen.  The resignation on March
15th of Jose Ignacio Lopez de Arriortua left GM officials surprised and
embarrassed.  They had called a news conference earlier that day to announce
that the 52-year-old executive was not, after all, leaving to work for VW
and would be promoted to president of North American operations -- the 
third most powerful executive position in GM.

Yet Mr Lopez could not be found anywhere in Detroit.  A friend then delive-
red his resignation to GM's president Jack Smith and the following day Mr
Lopez appeared at a meeting of VW's management board in Wolfsburg.  There
he was appointed board member for "product optimisation and purchasing."

The Lopez saga began last May.  After 13 years with GM's now profitable
European operations, the Spanish-born executive was summoned by Mr Smith to
take over purchasing in Detroit.  Mr Lopez's talent for wringing savings
out of suppliers had been spotted by Mr Smith when he was running GM Europe.
Mr Lopez arrived in Detroit to find the car maker losing as much as $300m a
month from its North American operations.

Mr Lopez approached the task with religious zeal.  He ordered his staff to
take their watches off their left wrists and put them on the right, as a 
reminder that it was time to change.  He reopened long-standing contracts
and ordered suppliers to cut their prices by as much as 20% -- or lose GM's
business.  Insiders estimate Mr Lopez cut as much as $1 billion a year from
GM's North American parts bill.

That drew the attention of Ferdinand Piech, who became the chairman of VW
in January.  While VW is Europe's biggest car maker, it has some of the
industry's highest costs.  On the same day that Mr Lopez joined VW, the
firm revealed that net group profits had tumbled more than 80% last year,
to DM 147m (US$ 94m).

To lure Mr Lopez, VW dangled a five-year contract worth an estimated $20m.
But it also promised to consider adopting Mr Lopez's dream of advanced
production, a concept he calls "plateau 6".  This is a factory which Mr
Lopez reckons would require just ten man-hours of direct labour to produce
a car -- a task that at present takes some American and European plants as
much as 60 man-hours.

Not everyone in Detroit is disappointed to see Mr Lopez go.  "A lot of us
are partying tonight," admitted one supplier.  But that mood may not last.
Mr Smith says that, even without Mr Lopez, GM's purchasing team will
continue its aggressive cost-cutting.  And he also plans a feasibility
study to see whether GM can realise Mr Lopez's dream assembly plant.

--
[ /tom haapanen -- tomh@metrics.com -- software metrics inc -- waterloo, ont ]
[       "stick your index fingers into both corners of your mouth.  now pull ]
[          up.  that's how the corrado makes you feel."  -- car, january '93 ]