General Motors heads to Silicon Valley
General Motors has leased 55,000 square feet of San Francisco office space to get its fledgling e-GM unit closer to Silicon Valley employees and ideas.
Headed by former vice president of small car operations Mark Hogan, the 8-month old e-GM consolidates a wide range of the automobile maker's products and services, such as its GMBuyPower Web site and OnStar technology. Hogan's lofty goal is to use e-GM to transform the world's largest manufacturing company--perceived by many outsiders as a symbol of lumbering Rust Belt bureaucracy--into an e-commerce juggernaut.
"We have to move beyond Motown and get out of Detroit," Richard Christensen, e-GM director of business development, said today at the eAuto 2000 conference in San Francisco. "With all the good ideas coming out of this part of the country, we want to take advantage of that."
Like other companies that have moved divisions or headquarters to the Bay Area, GM decided to relocate part of its business-to-consumer e-commerce unit to take advantage of the region's large pool of Internet-savvy employees.
Few of e-GM's 200 employees will be asked to relocate from Detroit. Instead, the company intends to hire new employees to staff the office--employees that the company has struggled to lure to Detroit. Eventually, said Christensen, about one-third of e-GM's employees will work in San Francisco.
GM also wanted to be closer to Silicon Valley start-up companies specializing in online marketing and sales. e-GM will aggressively search for partners and acquisitions to help streamline its 150 official Web sites and help its dealers clinch sales online, Christensen said.
GM's decision to move to San Francisco comes a year and a half after Ford Motor sent more than 120 sales, marketing and product planning staffers from its Lincoln-Mercury division to Irvine, Calif., a move that helped revive the aging brands and allowed employees to escape Ford's stifling bureaucracy in Dearborn, Mich. e-GM's move to the West Coast could prove equally successful, according to analysts.
"GM is a 1950s company stuck out there in Detroit, and this move will let them learn from the dot-coms," said Charles Sciandra, vice president of marketing for e-business consulting firm Informative of South San Francisco.
"GM will come here and hopefully learn that bureaucracy is dead. Businesses out here move at warp speed," Sciandra said. "GM needs to empower decisions at the lower level of the company. I doubt you can do that in Detroit."
The move to San Francisco also comes three months after GM, Ford and DaimlerChrysler announced a sweeping online trade exchange--one of the world's largest virtual marketplaces and a clear indication of the importance of the Internet in the auto industry. The exchange will link 30,000 suppliers and could result in a substantial savings.
But simply moving e-GM to the hip South of Market District--the haunt of Internet start-ups, coffee houses and converted warehouses--does not guarantee e-commerce success, experts say. They note that GM is still a "dirt" company steeped in old economy formality.
The roots of GM were planted in 1897, when the Olds Motor Works plant on Detroit's east side produced the first Oldsmobile. By 1916, the corporation already had its own stock. By 1940, the automaker had produced 25 million cars.
Such a legacy, though rich in history, could be a strike against e-GM in free-wheeling California, said Michael Forrest, who commutes from Laguna Beach, Calif., to Ohio as president of Cleveland-based JobOptions. Forrest predicted that GM will have an especially difficult time hiring workers in the Bay Area, where recruitment and retention problems plague even the most progressive employers.
"When you talk about compensation and retention, the smaller dot-coms are tough. GM and other large companies are often not resilient enough in terms of bonus packages--not to mention work hours, dress, salaries, benefits, housing allowances and everything else," Forrest said. "How does a 'dirt company' with a bad reputation compete with a company that has a great options package and its own sushi bar in the cafeteria?"
Efraim Levy, an automotive analyst at S&P Equity Group in New York, was dubious that San Francisco's plethora of dot-coms and dressed-down workers can inject urgency and youth tonic into GM's comparative listlessness.
"I don't see GM being transformed into an Internet company anytime soon, to say the least," Levy said. "They are definitely giving the Internet attention, and they're to be commended for that...But it's difficult to uproot entrenched practices. A lot of it is inertia, and it's hard to overcome."