There is no amount of reading into the history of General Motors that won’t bring up some comically incoherent bureaucracy, but even I was surprised when I realized there were a couple of years in the mid-1990s when General Motors was nominally in charge of both beaming satellite TV into American homes and Tomahawk missiles abroad.
The company at the middle of this was Hughes Electronics. That’s Hughes of Howard Hughes of both Spruce Goose and peeing in bottles fame. GM bought Hughes Aviation in the mid 1980s as part of then-CEO Roger Smith’s push to leapfrog the rest of the auto industry and become the most technologically advanced carmaker in the world. Smith wanted a GM of the future, and in the case of advanced electronics and Hughes Aviation, he was willing to buy it. GM dropped $5 billion in cash and shares for what it saw as the future, as the New York Times reported:
As reporters and camera operators crowded into the large basement meeting room, Mr. Smith seemed overjoyed at the big turnout. Sitting at a long table and smiling broadly, he said, ‘’This is exactly what G.M. needs to get where we want to be for the future. We think it’s the way to go.’’
‘’Electronics, he added, ‘’is the new frontier.’’
“We want to have the best products,” Smith added, “and the way to do it is to have the best technology.”
Hopefully that helps explain why GM bought Hughes. As for Roger’s legacy, it was hard to teach the old dog of GM new tricks, and this company-wide philosophy only shot out spurts of high tech here and there, like Saturn or the Quad 4. A lot of these 1980s waves crashed on the rocky shores of the 1990s, and Roger Smith ended up better remembered more by Roger & Me than anything else. No matter how it shook out, GM did have a shot, or at least the desire and the opportunity to become the most technologically advanced car company in the world.
What did Hughes do as part of GM? It helped form the basis of its modern electric car program, as recalled in this ancient university faculty blog post citing the book The Car That Could, a 1996 history of the GM EV1:
In 1985 GM bought Hughes Aircraft for close to six billion dollars from the Howard Hughes Medical Institute, a foundation Howard Hughes had created. Despite several marriages and numerous romances Howard Hughes never had any children and he left his estate to the medical institute. Hughes Aircraft dealt in the most advanced technologies and was heavily involved in the U.S. space program.
Hughes Aircraft did not exactly fit naturally into the GM organizational structure and its management was on the lookout for some way to show its technical expertise could be of value to the automobile company. In 1987 Hughes Aircraft, which built the solar panels for satellites, was invited to participate in a race of strictly solar propelled cars from Darwin in North Australia to Adelaide in the south. Hughes Aircraft passed the invitation on to GM and GM was interested because it appeared quite likely with the superior solar panel technology of Hughes Aircraft and the automotive design skills of GM that GM could win the competition. GM was hungry for something to illustrate that GM was on the forefront of transportation technology and not the technologically stagnant dinosaur it was reputed to be. However when Howard Wilson, the Vice President of Hughes Aircraft, pitched the proposal to Lloyd Reuss, the head of GM’s North American operation, Reuss turned it down. On his way out of Reuss’ office Howard Wilson saw Robert Stempel, who was in charge of GM’s truck and bus operations and GM’s overseas operations. Wilson pitched the proposal of GM entering the Australian solar car race to Stempel and Stempel agreed to support it.
GM ended up steamrolling the competition at those Australian solar car races, and folded that electric car expertise into what became first the 1990 Impact concept and eventually the EV1 in 1996.
There were other little projects, too, including the almost completely forgotten 1996 SSC concept from Delco, which included an integrated cellphone, a heads-up display, adaptive cruise control, as well as front, rear and side collision warning systems using Hughes’ radar expertise.
In the interim, Hughes (now divided into Hughes Electronics and Hughes Aviation) was still busy doing the same kind of military-industrial complex business it always did, and by 1987 had become “the nation’s biggest defense electronics contractor,” as the Associated Press recalls. That same year it spent $105 million to buy MA-COM Telecommunications Inc., which “accounted for more than half of the market in small earth satellite stations for data transmission,” per the AP.
Now, the entire history of the origin of DirecTV is too long to include in this article, certainly not down to every detail of Mississippi Lexus dealership sales manager Lemoyne Martin buying the first 18-inch dish in 1994 for $699 from a local store called Cowboy Malone’s. Sound and Vision has a comprehensive account here if you want to read it. I will excerpt this section as it relates to Hughes and GM:
While the government and broadcasters increasingly used satellites to distribute TV signals throughout the 1960s and 1970s, it wasn’t until 1980 that consumers were able to buy their own enormous C-band satellite TV receiving dishes. In 1981, Minnesota TV station owner Stanley S. Hubbard and his sons Stanley E. and Robert founded United States Satellite Broadcasting (USSB). Certain that the satellite TV business would be big, in 1991 the Hubbards bought five transponders on General Motors’ Hughes Aircraft broadcast satellite for more than $100 million to start their own satellite TV business.
Around the same time, another consumer satellite TV enthusiast, Eddy Hartenstein, was named president of a new Hughes-owned subsidiary to develop direct-to-home satellite TV service with USSB using the higher-frequency Ku-band. Hartenstein assembled an executive team and created DirecTV.
DirecTV first went out to Mr. Martin in 1994, the same year that Hughes started another new venture: making Tomahawk missiles. The Navy awarded Hughes the contract, making GM $356.8 million, as the Chicago Tribune reported at the time:
The Hughes Missile Systems division of General Motors Corp. has been awarded $356.8 million in Tomahawk missile contracts, the Navy said, in a blow to rival defense contractor McDonnell Douglas Corp. The award of contracts to Hughes will effectively put McDonnell out of the Tomahawk business, Navy officials said.
In truth, Hughes and GM had been in the business of Tomahawks for a few years already. It was in 1992 that Hughes Aircraft bought General Dynamics Corp.’s missile business for $450 million in stock, as the LA Times reported, focusing largely on how many layoffs would be involved in the deal.
In addition to making cruise missiles, Hughes would also be in charge of Stinger missiles and others, per the LA Times:
In addition to the Tomahawk and Advanced Cruise weapons, the major General Dynamics missile programs acquired by Hughes include the Standard shipboard surface-to-air missile, the Stinger portable anti-aircraft missile, the Phalanx shipboard anti-missile gun and Rolling Airframe Missile ship self-defense systems.
Hughes started looking for a buyer in 1996, the same year that GM started producing the EV1. By January 1997, GM had finalized a deal to sell Hughes’s defense operations off to Raytheon in 1997 for $9.5 billion, getting out of the cruise missile and the satellite TV businesses at the same time.
The sale detached Hughes Electronics, which ran DirecTV, from the missile side of things. DirecTV made its full migration into the regular world of broadcast media when News Corp bought it up in 2003 (after the FCC blocked an earlier sale to EchoStar), but that brief overlap of cable and missiles was already gone. Still, it marked the end of an era, as the New York Times pointed out when GM put DirecTV up for sale in 2001. “The last significant remnant of Roger Smith’s strategy is being dismantled.”
It’s hard to know what to make of the brief 1990s overlap between missiles, cables, and Chevy Luminas. You could channel your Gen X existential angst and rail on about corporate takeovers and the collapse of the American empire, but that’s been pretty well covered. Most of this merger nonsense was mapped out (slightly erroneously) on the inside sleeve of Godspeed You! Black Emperor’s 2002 album Yanqui U.X.O as a “six-degrees-of-bomb-makers, where Tomahawk cruise missile manufacturers Raytheon Industries are traced, through a twisted labyrinth of corporations to the recording industry’s major labels,” as Pitchfork put it.
You could take it as a reminder that big manufacturing corporations often find themselves with fingers in a lot of pots without it hurting core operations. It’s easy to forget that Mitsubishi, for instance, is the largest bank in Japan. As much as we Americans spend our time obsessing over Monteros and Evos, Mitsubishi basically operates as a banking company that makes cars as a hobby. These kinds of mega conglomerates are probably more common in the East than the West, but it’s relevant.
It’s also a bit of a not-quite-coda to the tight relationship between automakers and the military, business that boomed during WWII and the “arsenal of democracy,” and probably peaked with Chrysler making our first nuclear missiles. GM is still in the war business, recently winning a $214 million contract to make a Mad Max version of the Chevy Colorado ZR2.
What I find most interesting about the whole thing is to see how confused a simple operation can become when it enters the bureaucracy of GM. A plan to get better electronics out of Hughes morphed over the course of a decade into $9.5 billion from Raytheon to get out of making Tomahawks. What is a corporate culture like when both cable TV and cruise missiles aren’t even “dial nine for an outside line” kinds of calls? I’m not all that surprised that GM went from the world’s largest automaker at the start of this affair to bankrupt only a few years and a recession after its end.