THE END CAME WITH ALL THE BITTERNESS of a military surrender. For weeks General Motors chairman Robert Stempel had tried to ignore the signals of discontent radiating from a hostile band of outside directors. When Stempel was hospitalized with an attack of high blood pressure, board members did not bother to phone him get-well wishes. When rumors flew that Stempel was about to be ousted, the board issued a statement that conspicuously lacked a denial. Finally, Stempel, 59, bowed to a point-blank demand from a third-generation GM board member, who told him it was time to leave the post he had taken scarcely two years ago. Even then, Stempel showed flashes of defiance, disdaining an offer that would have allowed him to save face by resigning for health reasons. Instead, he laid the cause of his departure at the feet of the directors, thereby calling attention to the board’s handling of the coup they seemed to be planning. Declaring that “the effects of rumor and speculation” had crippled his chairmanship, Stempel stepped down on Oct. 26 from the helm of the world’s largest company. The resignation of Stempel, a popular “car guy” who was the first engineer since the 1950s to run the company, stunned employees who had heralded him not long ago as an automotive redeemer who would bring out the best in GM. Like soldiers in a conquered army, many roamed aimlessly last week along the corridors of the company’s limestone-clad Detroit headquarters. The ouster shook even Stempel’s union adversaries, who feared what life would be like after the boardroom coup led by John Smale, 65, the hard-charging retired chairman of Procter & Gamble. Smale has emerged as a possible Stempel successor and the real power inside the embattled company. Employees braced for a take-no-prisoners conquest. Together with president Jack Smith, 54, the former head of GM’s profitable overseas operations, Smale and the board seemed poised to purge Stempel’s top lieutenants and embark on a sweeping new round of layoffs to restructure the former flagship of American industry. “GM is spooked and in complete turmoil,” said a longtime supplier. “It is faced with total upheaval caused by an outside force — something that once was unthinkable.” The bloodletting promises to be deep and wide and painful. Impatient with Stempel’s slowness in carrying out plans to close 21 of GM’s 120 North American plants and cut 74,000 of its 370,000 employees over three years, directors now want to eliminate a total of 120,000 jobs during the decade. A major goal: to slash GM’s labor costs of nearly $2,360 per car, which is almost $800 more than Ford’s and $500 more than Chrysler’s. “It’s going to be brutal,” warns a GM director. “If the unions won’t cooperate, GM will have to play real hardball. We don’t even have the luxury of thinking about a product strategy. We aren’t going to be thinking great thoughts. GM has a three-year mission to restore its financial soundness.”
