Who's in GM's Driver's Seat?

TALK ABOUT JOB STRESS. WHEN General Motors chairman Robert Stempel, 59, fell ill and was taken to a Washington hospital last week, doctors gave an official diagnosis of "elevated blood pressure." Given the problems he's been having at the office, that was no surprise. The world's largest industrial corporation (1991 revenues: $123 billion) is piling up some of the largest financial losses in corporate history, an estimated $16.5 billion on North < American auto operations (more than half the GNP of Ireland) for the three- year period of 1990-92. To avert disaster, the company is struggling to close 21 of its 120 plants and cut 74,000 of its 360,000 employees in the next two years.

The excruciating process has thrown GM into a management crisis. Stempel, who returned to work by the end of last week, is in a job that was once among the most powerful in U.S. industry and today seems only the most thankless. When he took charge two years ago, employees cheered the elevation of a leader with a strong engineering background and a nice-guy reputation. But GM's directors now seem to think that the automaker's predicament calls for a leader who can get tough with the company's suppliers, managers and unions. Among GM's challenges is the outbreak of guerrilla warfare among United Auto Workers locals, one of which staged a nine-day strike last month at a stamping plant in Lordstown, Ohio, resulting in the shutdown of nine other assembly plants.

Stempel finds himself increasingly remote from the centers of decision making. The process began last spring when GM's outside directors reshuffled top managers, demoting Stempel ally Lloyd Reuss from the president's post and installing John Smith Jr., 54, former head of the automaker's international operations. Smith, who took charge of both North American operations and the company's overall strategic direction, moved the inner circle of financial and marketing executives away from GM's landmark headquarters in Detroit to the technical center 10 miles away. That has left Stempel in a Shakespearean confine, prowling the vacated corridors of the 14th floor.

Indicative of Stempel's reduced role was the almost make-work nature of his one-day trip to Washington, which included a call on Environmental Protection Agency chief William Reilly and a meeting with an official of a business group organizing a conference -- appointments that in busier times a GM chairman could easily delegate to subordinates.

Alarmed by GM's sagging credit rating, the automaker's directors are said to be considering drastic measures. The leader of the outside directors, former Procter & Gamble chairman John Smale, might replace Stempel. In the most radical, if still remote, move of all, GM would seek bankruptcy protection under Chapter 11 as a way to force concessions in wage, pension and benefit contracts.

The main goal is to reduce GM's labor costs, which make it the least economical automaker among the major global competitors. GM spends nearly $800 more in labor costs per car than Ford and $500 more than Chrysler. Both rivals endured harsh restructurings during the 1980s, and now rank among the world's most efficient automakers.