General Motors faced huge losses in the early 1990s due to inefficient operations and a bloated workforce. Their first restructuring in 1991 closed plants and laid off workers but did not go far enough, as competitors improved and GM's market share continued to drop. A second restructuring in the mid-1990s consolidated operations, reduced models, implemented lean manufacturing techniques like just-in-time inventory, and outsourced more assembly tasks. This made GM more efficient and profitable, allowing them to surpass Ford by 2002 through improved productivity, quality, and profitability.

1. GENERAL MOTORS
RESTRUCTURIZATION
LEAN OPERATIONS AND ORGANIZATION STRUCTURE
SYNDICATE 5 1

2. PROBLEMS
Huge losses in subsequent years
 $ 2 Billion in 1990
 $4.5 Billion in 1991
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3. CAUSES
• Inefficient work force and managerial problems
• Low capacity utilization
• Too many divisions and models
• High-cost suppliers
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4. COMPETITOR COMPARISON
Sales
($ Billion)
Employees
(in $K)
Sales per
Employee
(in $K)
GM 123.1 756 162.7
Ford 88.3 333 265.4
Chrysler 29.4 123 238.8
123.1
756
162.7
88.3
333
265.4
29.4
123
238.8
0 100 200 300 400 500 600 700 800
SALES
EMPLOYEE
SALES PER EMPLOYEE
US Automobile Industry
Chrysler Ford General Motors
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5. RETURNS TO SCALE
Constant Returns to Scale Increasing Returns to Scale Decreasing Returns to Scale
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6. THE FIRST RESTRUCTURIZATION (LATE 1991)
Actions Taken
• Closed 21 plants
• Fired around 74.000 workers (white and blue collars combined)
Results
• New capacity declined into 5 – 5.5 million production/year (reduced around 2
million/year)
• Market share just reduced around 2%
• Before restructurization, market share was 35% - in 1991
• After restructurization, market share was 33%
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7. LESSON TAKEN
The action of restructurization on late 1991 was not sufficient
• Competitors also changed and improved
• Lagged productivity compare the competitors
 34 worker-days to produce average car
 Competitors can did it within 32 (Chrysler) and 30 (Ford)
• Market share down to 28% in 1998
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8. THE SECOND RESTRUCTURIZATION (MID 1990’S)
• Consolidation of North America and International Operations
• Reduced further the number of produced models
• Made more efficient manufacturing time per vehicle
 Lean manufacturing system
 Just-in-time inventory approach, etc.
• Stop the GM auto components group operations
 Delphi Automotive Systems (spare parts business production)
 Made efficient in business operations and focus
• Outsourced more to cover the assembly task
• Integration of Sales, Service and Marketing system into centralized
framework
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9. RESULTS
Surpassed Ford in 2002
• Vehicle productivity
• Quality ratings
• Profitability
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10. SUMMARY
• Increase the energy (bigger organization size, more worker for manufaturing
resource, etc.) will not always better in term of the result – manufacturing industry
case focus
• Efficiency through the company operations especially in the core production
activities can be established by outsourcing some of the steps, automation
technology optimization and proper inventory management
• Integrated management system for optimum, effective and efficient of business
operations performance
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