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Santeno
04-13-2005, 12:15 PM
From Today's Business Week:<p><TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD><i>Quote &raquo;</i></TD></TR><TR><TD CLASS="quote"><U>GM's Emerging Road Map</U> <br><FONT SIZE="1">With North American losses growing, any turnaround will demand cutting health-care costs and, possibly, a brand or two</FONT><p>Given the financial crisis facing General Motors (GM ), the carmaker's many watchers have been waiting for Chairman and CEO Richard Wagoner Jr. to drop a big bomb of a restructuring plan. GM said in March that yearend profits could easily fall below $1 billion -- a big drop from its January earnings guidance of as much as $3 billion. Analysts from Wall Street to Detroit have opined that cutting union medical benefits and shrinking the giant company are the only options to restore profits in North America, where expectations are that GM might lose more than $1 billion in 2005. <p>That line of thinking makes sense. GM will pay $5.6 billion in 2005 in health-care benefits for its 430,000 union workers and retirees. That cash drain and GM's weak sales make it difficult to support eight divisions and 89 different nameplates. Market share in the first quarter was 25.6%, vs. 27.2% a year ago. <p><B>"NEED TO FOCUS."</B> GM relies on offering rebates and sales to rental-car fleets to keep plants running and cash coming in. Analysts reckon that by shrinking the workforce, dumping weak-selling models, and whacking a division or two, GM could downsize itself to a market share of about 20% but end up a more profitable company. <p>Don't expect that kind of major restructuring plan -- at least not yet. Instead, count on Wagoner saying a combination of aggressive cost cuts and realigning GM's vehicle divisions can stave off the need to shrink the company. On Apr. 4, Wagoner seized control of GM's U.S. operations from Vice-Chairman Robert Lutz and former GM-North America President Gary Cowger. <p>Wagoner and newly promoted Mark LaNeve, vice-president for sales and marketing, will assume responsibility for fixing weak brands like Pontiac and Buick. Neither marque will die soon. "I don't think we necessarily need to kill off any brands," says LaNeve. "We just need to focus them better." <p><B>UNHEALTHY OVERHEADS.</B> To buy time for that, GM must cut its health-care costs. Cowger was demoted to his old job as group vice-president for manufacturing and labor relations. During contract talks in 2003, GM didn't have the nerve to tell the union that its health-care plan -- which has no co-pay -- is too rich. <p>Cowger now says he wants union workers to have the same plan as salaried workers, which means they would have to pay at least $100 a month toward their premiums, along with some other contributions. That move alone could save GM at least $1.2 billion a year, says the Center for Automotive Research in Ann Arbor, Mich. <p>While Cowger contends with labor in regard to health-care costs, Wagoner is taking over marketing and the chore of realigning GM's divisions. The biggest move, pairing up Pontiac, Buick, and GMC dealers, has been in the works for some time and is now being accelerated. Most of the dealers selling those divisional brands already carry all three. This will allow GM to get rid of redundant models without angering dealers, who are constantly asking for more vehicles to sell. <p><B>"BMW FOR POOR PEOPLE."</B> Plans to consolidate GM's huge and overlapping lineup of cars and trucks also are under way. Big Pontiac sedans like the Grand Prix and Bonneville are mostly just overstylized versions of the Buick LaCrosse and forthcoming Lucerne sedans. The bigger Pontiacs will go away, sources say, leaving Buick to sell big, comfy cars. When all of the dealers are paired up, GM could get rid of a minivan, since Pontiac and Buick each produce one. Says a GM spokesman: "The days of Pontiac selling one of everything are over." <p>Instead, GM may finally give Pontiac some pizzazz. Later in the decade, the brand could get a small, sporty car built on a version of the Pontiac Solstice roadster chassis. "That could be a BMW 3-Series for poor people," says John Wolkonowicz, an analyst with Global Insight in Boston. "It's a really good position for Pontiac." <p>Will it work? That depends on whether Lutz and his product-development crew can get some hot models for these struggling divisions, and fast. Daniel Gorrell, a partner with San Diego-based Strategic Visions, says Buick needs a lot of work. Its buyers are older, and it isn't bringing in enough new customers. <p><B>LESS LITIGATION?</B> Pairing up dealers has another advantage: That makes it easier to kill a brand. After GM announced the end of Oldsmobile in 2000, it took four years and millions of dollars to take the badge off the market. GM had to buy dealers out of their franchise agreements, and it's still in litigation with some former dealers. But those selling Pontiac, Buick, and GMC brands in one location would be less likely to sue if one were eliminated, since they would still have two brands and plenty of vehicles to sell. Says Gorrell: "This could be an interim step to doing away with a brand." <p>Still, Wagoner's plan could fail if GM lacks the resources to turn around all of its weak divisions. But it has a better chance of fixing them if it has fewer models to keep fresh. And it'll be easier to kill them if the market decides that Pontiac or Buick is no longer relevant. Either way, expect a long and bumpy ride.</TD></TR></TABLE>

mzoltarp
04-20-2005, 03:58 PM
Deposing Lutz is either smart or dumb. With as much intertia as there much be in GM one has to wonder if Lutz vehicles are still in the pipeline that ultimately will be successful. Interesting question.

wasabi
04-20-2005, 04:39 PM
More news from Detroit News - via link from 4car<p><A HREF="http://www.channel4.com/4car/news/news-story.jsp?news_id=12110" TARGET="_blank">http://www.channel4.com/4car/n...12110</A><p>General Motors has reported first-quarter losses of $1.1billion - its worst losses since 1992. This was due to a poor performance in North America, with a shortfall of $1.3billion put down to increased competition and pressure on prices, the huge healthcare costs for employees and retirees and decreased production, as well as a failure to offer the type of vehicles customers are moving towards, such as more fuel-efficient models. The company has refused to offer share earnings guidance for the rest of the year, but indicated that full-year profits could be as much as 80 percent less than forecast. GM shares have fallen in value by around 35 percent so far this year, and US credit ratings firms have the shares at only one notch above junk bond status.<p>GM Europe lost $103million in the first three months of this year - though this is $13million less than last year. Profits were, however, seen at GMAC, GM's finance business, which propped up the final results. Sales fell by 5.1 percent last month and market share is now down to 25.4 percent, from 26.7 percent this time last year.<p>GM HQ<br>GM has cut its workforce by a third over the past five years in North America, and 2,800 jobs have already been cut this year. Production will end at plants in Baltimore (Maryland), Linden (New Jersey) and Lansing (Michigan) later this year. A GM statement this week said that "we have well thought-out plans to address poor performance, starting with aggressive product introductions this year, value-focussed marketing initiatives and further reductions in our cost structure." Expect further production cuts, closures and lay-offs - analysts predict the redundancies of as many as 30,000 and the closure of four more factories, as well as the dropping of an unprofitable brand, probably Buick, though the future of Saab is by no means assured.<p>An industry website, supplierbusiness.com, even reported this week that "the speculation on Wall Street last week was how long it would be before General Motors declared bankruptcy," though it went on to say that "Wall Street can over-react both on the upside and on the downside, and the crisis of General Motors is probably not as imminent as investors seem to fear... it has a product renewal programme that gives it at least one more shot at stabilising its market share in its core market." It went on to warn, however, that "it is difficult to see a long-term turnaround path for the group. The problems of General Motors have been widely known and recognised for at least a decade, but the company seems incapable of taking effective action... products are widely panned as uninspiring. The discounting and incentives of the last three years have flooded the market with nearly-new GM products. Fully a third of GM's new vehicle sales are to employees, their relatives or fleet rental buyers, while private new-car buyers are staying away from GM's profile in droves. The company is suffering from the liabilities and attitudes that entrenched themselves decades ago when the company dominated the North American market." Does all this sound familiar? The current problems in the West Midlands could appear horribly insignificant in comparison to the impact on Detroit, Ontario (where GM is the largest employer) and many other car-producing areas on a global scale if the negative predictions are in any way accurate. (Detroit News/Detroit Free Press/Supplierbusiness.com)<p>Bai bai GM<p>Wasabi

knicks125
04-20-2005, 07:26 PM
see this thread...i'm pretty sure it's the same article...<p><A HREF="http://www.carspyshots.net/zerothread?id=14893" TARGET="_blank">http://www.carspyshots.net/zerothread?id=14893</A><p>from 4/19