GENERAL MOTORS-

Should It Be Broken Up?

IN the eyes of the U.S. Justice Department, General Motors is not only the world's biggest corporation but the most worrisome as well. The trustbusters think that G.M. is too big. In 1955 Trustbuster Stanley Barnes (see NATIONAL AFFAIRS) expressed concern because G.M.'s five auto divisions turned out 50.76% of all cars sold in the U.S. But G.M. keeps getting bigger. Though overall U.S. auto production was off 17% in the first two months of 1956, G.M. increased its slice of the market to 55%. Chrysler's share in the same two months dropped from 17.1%, its 1955 average, to 15%; Ford's output slid from 28.2% to 25%. American Motors and Studebaker-Packard each clung to 2.5% of total production. -

Last week Trustbuster Barnes gave G.M. his bluntest warning to date. Unless G.M. checks its approaching monopoly, said Barnes, the Government may have to take "extreme action," including "some rather stringent legislation." General Motors, suggested Barnes, could best reverse the trend by voluntarily spinning off one or more of its divisions as independent corporations.

Antitrust officials are worried about more than G.M.'s dominance in the auto market; G.M. last year built 43% of all trucks sold in the U.S., has built 60% of all the diesel locomotives in service. It is the world's largest overall producer of diesel engines; G.M.'s Frigidaire is the biggest maker of refrigerators. Last week the Justice Department said that it was mulling over the filing of an antitrust suit to force G.M. to get rid of its bus-building division, which has increased its share of the market from 28% to nearly 80% since 1946, while six of eight major competitors left the field. Trustbuster Barnes has hinted that General Motors Acceptance Corp., the world's biggest auto financing organization, had better be turned loose by G.M. even if he has to press for special legislation to force the issue. He also suggested that Congress might pass a law prohibiting a company from capturing more than a specified share of any one market.

To Barnes's proposals G.M. President Harlow H. Curtice last week snapped: "Ridiculous." Curtice does not believe that G.M. is too big. Nor does he believe that G.M. should limit itself to a set percentage of the market. "How," he asks, "can you put an artificial limit on size and still preserve the free enterprise system?"

Curtice is equally vehement in his belief that spinning off two divisions would benefit neither the consumer nor the competition. If Oldsmobile, for example, were separated from G.M., it would automatically be shut off from the vast pool of centralized engineers, research, styling and production-line know-how that have pushed G.M. ahead. Its cars would soon be out of date and would cost more. Spun off from G.M., Olds would have little hope of competing with the rest of the industry.

If G.M. were in fact forced to disband, it could not be done by merely spinning off a division or two; it would be necessary to realign the entire G.M. empire into separate companies, e.g., one corporation might be regrouped around Oldsmobile, Buick, Fisher Body and Frigidaire. Thus the staggering problem would be to regroup 514,000 employees and 119 plants into two or more independent companies that would not only be on competitive footing with each other, but also with Ford and Chrysler. Since one of G.M.'s biggest assets is its pool of executive talent, this might mean that the Government would have to assign the top brass to their new positions. Cracked one G.M. executive last week: "What would we do with Stylist Harley Earl? Split him into five pieces?"

Ultimately, the criterion of monopoly is whether the consumer is hurt. The fact that consumers are buying G.M. cars argues the opposite.

G.M. has long been a plump target for trustbusters. One of the biggest antitrust suits in U.S. history was the Government's five-year battle to make Du Pont unload its G.M. holdings. Though the suit was dismissed, there is little doubt that G.M. is now no ticeably more sensitive to outside criticism. President Curtice has promised to fight such marketing abuses as "gimmick" advertising and bootlegging, and has reacted with alacrity to meet complaints of the dealers. He has also announced a new program to strengthen ties between management and dealers. To see that the "new deal" works, Curtice last week picked Buick's popular, efficient General Manager Ivan L. Wiles for the new position of executive vice president in charge of dealer relations. Just as dealer complaints wrought this change, Barnes hopes that his campaign may cause G.M. to devise a way to keep from growing bigger, thus save the Government the task of trying to break up the corporation.

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