Ignacio Lopez devotes one chapter of his autobiography, 'The American and German Adventure,' to his days at General Motors in Detroit and Volkswagen in Wolfsburg.
Lopez is the most famous Spaniard in the auto industry, because of his dramatic success in saving billions for two huge automotive companies, and because of the drama involved in how he came to move from GM to VW. The drama turned on his love of his Basque homeland, and his desire to help it prosper.
Beginning in 1991, Lopez had the idea for a modular and highly efficient factory for his hometown, Amorebieta. He encouraged a group of Basque bankers and entrepreneurs to fund it. They would invest $600 million in a supplier park that would feed a car factory. GM would get 60 percent ownership and management of the project for free.
It was a no-risk way for GM to get the leanest plant in the world.
Lopez conceived the plan, the Basque Group paid for it. Bob Eaton, who was then chairman of GM Europe, approved it. Soon after, however, Eaton moved to Chrysler and Lou Hughes replaced him as head of GM Europe. Difficulties and delays started. Hughes would tell Lopez, 'Yes, but ...'
The plant is doomed
Lopez was working out of Detroit at the time, but on 8 March 1993, he was in Europe. He learned that Hughes had advanced the idea for the lean plant, but it would be built in Poland or Hungary.
'The following day,' writes Lopez, 'I realized that the project of building a plant in Amorebieta was doomed. I wrote a resignation letter addressed it to Jack Smith and also called him on the telephone.'
Lopez does not give any details of how he was courted by Volkswagen. He writes: 'Jack knew that Volkswagen had been in touch with me, because I had told him.' He had been offered the job he eventually took: chief executive of purchasing and production for the whole group, at a much higher salary.
Lopez said, 'Jack, I'm going. I resign, because I can't stand what you have all done to me. I only ask you for a favor: no negotiations.'
Smith replied: 'Sorry, Inaki,' and he asked Lopez to delay his decision. 'Let's think about this situation. I will call a board meeting early in the morning. Will you please attend?'
Lopez expected a friendly farewell, but instead, Smith said: 'We want you to be president of GM North America with the same salary that VW offers you.'
Lopez says he didn't expect this at all. 'I told you yesterday I don't want to negotiate,' said Lopez. 'I have taken a decision.'
'Think of it, at least,' said Smith.
'It's too late to change,' said Lopez.
'OK, but please come to see me at noon,' said Smith.
After a couple of hours of reflection in his office, Lopez went to see Smith.
'I'm sorry Jack, but I'm going,' he said. Lopez said goodbye to his secretary and team, and Jack Smith called a meeting of more than 100 GM people. According to Lopez, Smith said, 'I have a speech to make, but I can't speak. Today Inaki has left, due to a serious mistake on our side. We did not suspect the strength of his feelings and his sense of commitment to building the plant in his country, and I hope that we never make a mistake of this magnitude again.'
The next day, Smith and several other GM bosses visited Lopez at home, pressuring him to reconsider. He says his family urged him to move to VW, but in the end they all yielded to the pressure.
A five-year contract
Lopez recalls that Harry Pearce, GM's top lawyer, called him at 10: 30 that Sunday night: 'Inaki, we have decided that you have to sign a contract to stay in the company five years.'
'Otherwise, you would have too many edges on us.'
'And the rest of the team?'
'No contract for them.'
'Let me think about it.'
Lopez felt deflated. The next day, people at the office looked glad, but Lopez felt strange. He phoned Pearce to say he wouldn't sign the contract. 'OK, it's all right,' said Pearce. That reaction worried Lopez even more. Everything had changed.
He was supposed to attend a mid-day press conference with Jack Smith, announcing his decision to stay at GM. Instead, at 10.30, he was fed up.
He called a colleague, Francisco Garcia, and asked to be taken home. He wrote a note to Jack Smith. And he left GM. His family flew to Germany and a new life with Volkswagen.
Lopez says it was a terrible time for him and for Smith. They regarded each other as friends. In his book, he casts no blame on Smith, but on two unnamed American executives working in Europe.
Lopez writes: 'They say Jack felt that two American executives in Europe were responsible for all that had happened. Those same people have tried to take revenge for the last four years, with cost no object. I'm convinced that these persons, feeling their future and their prestige in danger,' have obstructed an agreement between GM and Volkswagen.
VW stood strongly behind Lopez, despite the pressure brought by the two GM executives.
Lopez says press campaigns against Ferdinand Piech for recruiting new executives were started by the top ranks of GM Europe and Opel and its PR department. The two companies exchanged harsh accusations with each other during this period, prosecutors began criminal investigations, and the companies sued each other. After a few years, a possible agreement was hinted at, but GM would sign nothing if Lopez stayed at VW, and VW executives said they would never fire Lopez. It was a classic dilemma.
1/8I'm ready to resign'
Then last fall, Lopez met with his ally, Volkswagen Chairman Ferdinand Piech.
'After a meeting with Dr. Piech, president of the German group, I suggested a way out,' Lopez writes.
'Why can't we take a wiser decision? I'm ready to resign, because this will open the way to a solution. I will establish my own company, and I'll also work for other companies. This way there is no excuse for the two groups not to reach an agreement.'
Piech thought it was a good way out. Soon after, GM and VW signed an agreement in which they exchanged letters of apology, VW agreed to buy parts from Delphi Automotive Systems, and Lopez and some of his aides agreed to resign.
Lopez says the clause that describes VW purchases of GM components is not important, because VW was purchasing GM parts before. The amount of $100 million is lower than the litigation costs would have been if the case had gone on, he says. Lopez believes the apology letters were mutual. He says the image people have of the agreement depends on the ability of the PR teams more than the content of the letters. Lopez says the agreement was only reached because the two GM executives who were against him were removed from the negotiations.
A month after the VW-GM battle was resolved, the magazine that started the first campaign alleged a new scandal. That magazine, Der Spiegel, tells of bribes demanded from contractor ABB in the deal for a new paint shop at Skoda's plant in the Czech Republic. The story was picked up around the world.
'I feel compelled to explain these points to defend the truth, and the honor of the VW team,' writes Lopez.
He says every possible supplier in the world was asked to bid on the Skoda job, and seven of them did. Bids were reviewed by teams in a process that took months. The ABB offer was best in price, quality and service, and the final decision was taken by committee, not any one person. Why would someone seek a bribe if ABB knew they couldn't influence the decision, Lopez asks. 'That's nonsense.'
Lopez uses a journalistic trick to raise other possibilities. He raises some ideas then knocks them down, but they are left in the reader's mind.
He notes that ABB came back to VW looking for an extra $80 million on a contract line budgeted at $400 million, and was turned down. Granting ABB's request would have meant their bid was no longer the most attractive.
He notes that Percy Barnevik, president of ABB, was appointed a member of the GM board in December 1996.
Then he writes that while some people say these things could be related to ABB's charges, the remarks 'seem to look for sensationalist aspects, when there is probably no more than the normal tension between supplier and customer.'
The Amorebieta plans
Lopez also deals with the accusation that he took the plans for the lean assembly plant from GM to VW.
'As for the draft plans for the Amorebieta factory, I have these two points: they do not belong to General Motors, but to the Amorebieta Basque Group. Second, every industry insider knows these charges were just a smokescreen, nothing more and nothing less, to prevent VW from benefiting from my ideas and techniques.'
Lopez says there was not a single secret in all the documents taken to Volkswagen by him and his team members. He says the auditors KPMG Peat Marwick studied the documents for six months, analyzing each document line by line, and never found a matter of confidentiality. The papers either did not belong to GM or were openly public.
'The famous 20 boxes 1/8full of secrets' which they said we took to VW were, in fact, sent to my home in Busturia (the Basque country) by Opel employees. They declared under oath they were packed personally by them and did not contain any secret document. They were magazines, private letters and general information.' These declarations were suppressed, says Lopez.
The boxes found in an apartment of one of Lopez's assistants contained no confidential matters, he writes.
The boxes had material 'with no strategic value, mere working notes.' If they had wanted VW to have the material, they wouldn't have left it behind, says Lopez.
He says he developed his 'secrets' through many years of a professional career, with the help of colleagues and suppliers.
'They have never been secrets,' he writes. He and his teams at GM and VW have held 20,000 workshops where they fully explained his ideas, and his book does so again.
'It is not the GM I knew and loved that attacks me. They are two twisted minds, who have never been able to create anything. They have failed in the missions they have undertaken. But they have power and are very dangerous. And now VW has the chance, thanks to our system, to reduce costs and become the undeniable industry leader in Europe.'