Posted on 06/09/2005 7:27:12 PM PDT by inchworm
June 07, 2005 GM to Layoff 25,000, Close Plants In his address to GM’s annual meeting of stockholders today, Chairman and Chief Executive Officer Rick Wagoner outlined in broad strokes his plan for turning around GM North America, which lost $1.3 billion in the first quarter of this year.
The basics of the downturn are pretty clear: GM’s costs are too high, sales are dropping, and the sales mix is skewing away from the high-profit SUVs to the lower-profit cars.
The highest profile action was his announcement of the closing of additional assembly and component plants over the next few years, and the layoff in the US of 25,000 or more workers in the 2005 to 2008 period to generate estimated annual savings of some $2.5 billion.
He also indicated that GM and the UAW are “in discussion” as to how to resolve the issue of the cost of health care. With plant closings and job losses as a potential threat, the union may be more inclined to negotiate some sort of concession on health care. Or maybe not.
On the product side, GM is advancing the timing of several high-volume, high-profit programs (refreshes and new designs) in the area of large pick-ups and mid- and large-utilities.
Looking out a little farther, we’re prioritizing our product development resources in the areas where we see the greatest volume, growth, and profit opportunities—crossovers of all kinds; entry luxury and premium models; hybrids and other technologies to improve fuel efficiency.
At least hybrids and fuel efficiency made it onto the future shortlist.
Separately, GM and DaimlerChrysler indicated that they each will invest up to US$500 million in a joint venture to develop the two-mode hybrid powertrain (earlier post). The two companies intend to make the first cars using the hybrid system by early 2008. (AFX)
It seems that GM, even in its turnaround plan, is still dependent on the large trucks and SUVs to pull it out of its decline. The riskiness of that approach is reflected in the recently revised credit ratings that brought GM paper to junk-bond status.
That’s not to say that GM hasn’t had its success with recent launches. The new Chevy Cobalt, for example, was the sixth best-selling car in the US in May (behind Toyota, Honda and Nissan models). (Car Buyer’s Notebook)
But that’s not going to close the financial gap created by the over reliance on larger-format vehicles that suddenly are not selling.
Short-term Technology Associations Automaker Technology GM – Ford Hybrids, H2ICE DaimlerChrysler Clean Diesel Toyota Hybrids Honda Hybrids, CNG And in the area of strategically associating itself with a short-term technology solution for fuel efficiency and sustainable mobility—which will become increasingly important as oil prices remain upwardly volatile and climate change issues come more to the fore—GM has no short-term position or traction.
That’s not to say that they don’t have technology development underway, but that there is no popular association of such a technology with a GM product that someone can walk into a showroom and buy now. Fuel cell development doesn’t count—that’s too far down the road (so to speak).
The GM North America situation is a very tough problem, and one that will have nasty ripple effects throughout the supply chain. I think that the company will have to get more aggressive on the product side than currently suggested (to wait until 2008 to manufacture hybrids is not a good idea)—and that it will have to cut more than currently announced.
June 07, 2005 in
Well, if we had the Fair Tax maybe GM could compete.
My 2002 Honda has lousy seats, a reality that hit me even more when I had a GrandPrix Rental. After several calls to Honda No-Service Customer Service I wrote to the president of America Honda, Kyoshi Kondo. That was three weeks ago.....no reply yet. Guess if I'm buying a Honda again?
NO.
Have they looked into the possibility of closing GM plants outside of the U.S. instead, I am worried for my brother -in-law who works the line.
There is nothing sad about this. The UAW union is fully responsible for destroying this company and they have reaped what they have sown.
And yet GM is opening plants in China.
We need to have a major discussion in a public forum about this.
Greedy executives + greedy unions + dopey cars = Chapter 11
On the contrary fellow Americans losing jobs is sad. The UAW didn't destroy the company - the company destroyed itself if it signed contracts that it shouldn't have. It takes two for a contract but you are blaming only one party.
Build a better car = more sales. Simple as that. I stuck to my "buy American" auto as long as possible. But when it started costing me dollars due to a vastly inferior choice I had to buy a foreign car. Just build a competitive product please.
The chevy aveo is made in korea, the buick rendezvous is made in mexico, honda accord and civic are made in marysville ohio.
No, the plants inside the US are older and need more upgrades than the newer ones overseas and the salaries and health care for US workers is more.
This is sad for GM since last week there was news touting that GM and Toyota have the highest reliability ratings
as stated above
Well, if we had the Fair Tax maybe GM could compete.
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If GM had not made the disasterous decision to build a welfare state that is now costing them $1600 loss from the sale of EVERY vehicle, they would be in very good shape. Hopefully this country will wise up to union extortion and learn how to compete in the real world...and the part of the world that is kicking GM's butt, does not build these ex-employee welfare states. And they are winning.
The UAW is culpable for GM's decline. GM did themselves no favors by signing these ridiculous contracts. Did you see the article in the Wall Street Journal about the drunk UAW members on the assembly line? The UAW is like the greedy farmer who sheared his sheep so close that he clipped the skin and the ship got an infection and died.
I definately agree with that
Unions served a purpose a long time ago when they promised a fairs days work for a fair days wage. Their sole purpose now is suck the life blood out of corporations while returning less production and inferior products. As others have posted, GM management is the other half of the problem for making a deal with devil. I have no sympathy for either side.
Right, some of us recognize outsourcing when we see it.
I thought about that when I heard they were discussing the new health care benefits. I hope managment is bluffing. I'm still not sure if unions are helpful or not. I wonder if the Chinese plant and the Mexican plant has a union?
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