General Motors will close its New York Treasurers office and move the operation to Detroit by the middle of next year in what amounts to a wholesale shakeup of GM’s corporate culture, which has long been dominated by finance operating from offices high above Manhattan’s traffic clogged streets – and arguably out of touch with the maker’s Detroit headquarters or the rest of the country.
For decades, the New York office, which keeps track of GM’s cash and finances, has served as GM’s nerve center. In fact, for many decades, the giant automaker’s powerful chairman, starting with Alfred P. Sloan, was based in the Big Apple, rather than Detroit. Since the 1950s, New York is where high potential employees on the fast track went to win promotions to big jobs inside or even outside GM.
Until 2009, GM Chairmen including the late Roger Smith, Jack Smith, Rick Wagoner and Fritz Henderson — Henderson the last man standing when GM filed for bankruptcy — had all worked in the New York office.
Jack Smith and his merry band from New York, Rick Wagoner, Mike Losh and Lou Hughes among them, defined GM’s internal culture during the 1990s and ultimately left the company stuck on the road to bankruptcy before it was finally rescued by the Obama administration.
GM’s plunge into insolvency was abetted by financial engineering, such as a decision to enter the mortgage business in a large way, inspired by the company’s New York brain trust. At the height of the post 9/11 housing boom, the profits from the mortgage business masked the operating problems in the company’s car and truck business.
The mortgage business wound up costing GM billions, helped scuttle GM’s own finance company, GMAC, and left the automaker stuck on the track when the bankruptcy express came barreling through the station. What was GMAC Mortgage is still locked up in bankruptcy court.
The fabled New York Treasurer’s office was also responsible for writing excuses for GM’s faltering European operations, which have now lost billions over the past 14 years.
Thus the shift of the Treasurer’s office out of New York represents a significant step in changing the company’s internal dynamics. The announcement also comes just as GM’s internal culture becomes part of the story line in AMC’s popular dramatic series, “Mad Men.”
The antics of GM’s brass and ad men in the most recent episode of the popular show quite literally drove the personnel at the fictional Sterling Cooper ad agency crazy even as Don Draper, the show’s central character and the agency’s creative director, tried to use his unique understanding of the American psyche to put a new model, presumably the Vega, into garages and carports all across America.
Draper opines at one point that, “whenever we get a car (client), this place turns into a whorehouse.”
Despite the usual distractions, such as drinking and inter-office affairs, the real focus was on GM. In the opening sequence, Ken Cosgrove returns to New York, limping after an evening out in Detroit where the GM guys were apparently experimenting with drinking games that could have morphed into beer pong. Who knew GM was responsible for one of the world’s favorite drinking games.
Granted Mad Men’s promoters may be trying to appease notable sponsors such as Chrysler and Lincoln. Nonetheless, the latest season has managed to offer a fair glimpse of what outsiders have long considered to be the hallmarks of GM’s fussy, wasteful, bureaucratic, insensitive and remote corporate culture.
The maker has insisted that has been changing since GM emerged from Chapter 11 in 2009. The move of the treasurer’s office appears to be another step in the right direction.