To the the cheers of a mostly sympathetic press, General Motors has swallowed up the giant Hughes Aircraft Co., the nation's seventh largest defense contractor. When GM Chairman Roger Smith flew back from Europe to New York to announce that his $5 billion bid had won the prize, he proudly described it as a "lulu" of an acquisition for stockholders.
With Hughes' expertise in electronics, added to Electronic Data Systems Corp.'s sophisticated computer know-how (GM had bought EDS last year for a mere $2.55 billion), admiring reporters and editorial writers said GM would be in position to revolutionize the car business, using high technology to redesign the car of the future.
The vision conveyed was one of push-button magic, electronic circuitry, "smart" computer aids -- here a chip, there a chip, everywhere a chip-chip.
But conveniently forgotten in the hype over this latest industrial "Star Wars" game is incontrovertible fact that the GM absorption of Hughes is merely one more example of concentration of corporate power, 1960s-style. Under the influence of the Reagan administration's distaste for dealing with antitrust issues, no one seems to care anymore about conglomerates and monopoly.
The ultimate irony, as Ralph Nader says, is that at the very time Smith was fast-talking an obliging press about the magic new technology it would be using, GM was in Washington begging for relief from fuel-efficiency standards, complaining that it couldn't meet the schedules set by the environmental agency.
But there are plenty of GM press releases on how the company will feed Hughes-company expertise into its $5 billion, much-advertised Saturn car project, announced earlier this year as the answer to Japanese quality and performance in an American-built subcompact car.
Remember how GM and the others begged for restrictive quotas on imports to "provide time" for them to shape up to the Japanese competition? But after four years of quotas and high prices that yielded huge profits, the companies are using their cash surpluses not to build competitive cars, but to make purchases of technology and electronics capability.
By spending $5 billion to get into the defense business, GM is carrying out a further diversification that underscores its willingness to give up the small car as an American product, and join in cartel arrangements with Japanese producers to divvy up the market.
Thus, GM had already made a deal with Toyota to build a "new" subcompact in California called the Nova. (Toyota supplies the car, based on the existing Corolla line, GM only the plant facility.) And GM is buying large volumes of other Isuzu, Suzuki and Korean cars to replace unsuccessful homemade models.
"I am a firm believer that the major gains in the automotive industry are going to come in electronics," Smith said in touting his "lulu." "The automobile is, in some respects, still in its infancy . . . .The big thing left is electronics. It's the new frontier."
Maybe so. But there's hardly reason to think that the Japanese will be standing still in feeding electronics and new technologies into their cars.
What bothers me most is the gee-whiz attitude expressed my some of my colleagues in the news business, caught up with the fact that GM's acquisition of Hughes was one of the biggest ever, outside of the oil business.
Still number one in the auto business, GM would now also be the number one supplier of defense electronics, and probably number three or four overall in defense contracting.
Thus, there is a further concentration of the defense contracting business at a time when inadequate competition for the Pentagon dollar has already led to waste measured in the billions.
As The Wall Street Journal was careful to point out, Detroit hasn't often solved a problem by throwing money and technology at it. In the 1960s, when GM was even then looking for a subcompact to compete with imports, it spent a fortune designing the Vega from scratch, complete with an aluminum block engine and a state-of-the-art assembly plant at Lordstown, Ohio. Said the Journal: "The Vega was a failure as an import fighter, and the assembly plant . . . became a symbol of labor unrest."
All of GM's technological and public relations razzle-dazzle diverts attention from its failures: GM has been losing market shares to Ford and Chrysler. For most of this year, GM has slumped to 55 percent of the market from a peak of 60 percent in the second quarter of last year. (In the first few days of June, GM was recovering its position. Whether this will be sustained remains to be seen.)
Despairing of getting labor costs down to anything like the Japanese costs, Detroit's game now is to play footsie with the Japanese, pump as much sophisticated automation as possible into the production process, reduce already pared-down work forces, and hold out the Korean connection as an ultimate potential answer to the Japanese.
Thus, the Ford Motor Co., a loser to GM in the Hughes deal, is beating the bushes for some other technology company.
If it comes up with enough money, it doubtless will buy one. Chrysler is similarly active, on a lesser scale. Why not? The Department of Justice is looking the other way.