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Archive for Friday, July 10, 2009

New GM about to emerge

July 10, 2009

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— The new General Motors is about to roll off the assembly line as a leaner, greener model, maybe even a profitable one, too.

Once the world’s largest and most powerful automaker, the troubled company was expected to emerge from bankruptcy protection by early today cleansed of massive debt and burdensome contracts that would have sunk it without federal loans.

The new company, 61 percent owned by the U.S. government, will clear bankruptcy in record time to face a brutally competitive global automotive market in the middle of the worst sales slump in a quarter-century.

Yet despite massive cost reductions, experts say GM must produce vehicles that people want to buy, and change its image from a lumbering bureaucracy that makes gas guzzlers to one on the cutting edge of efficiency and quality.

“It is the smaller, leaner, tougher, better cost-focused GM,” said George Magliano, an automotive analyst with the consulting firm IHS Global Insight. “But they still have to deal with the problems that they faced longer-term.”

Rep. Gary Peters, whose Michigan district is home to three GM factories, said the company’s emergence signals a new era for the domestic auto industry and the thousands of people it employs.

“With bankruptcy in the rearview mirror, U.S. auto companies will even more aggressively pursue new technologies, become more globally competitive,” he said. “Decades from now, our nation will be glad we did not let a global credit crisis put an end to the American automobile.”

On Thursday, a bankruptcy court order allowing GM to sell most of its assets to a new company went into effect.

Under plans that CEO Fritz Henderson will announce today, GM will cut another 4,000 white-collar jobs, including 450 top executives. The company still employs 88,000 people in the U.S. and 235,000 worldwide.

Henderson also is expected to describe how GM will streamline its bureaucratic management structure to become profitable again. GM has said it will be able to make money even if the U.S. auto market stays at a depressed level of 10 million to 10.5 million vehicles sold.

For the first half of this year, sales have remained just under 10 million, after hitting more than 16 million as recently as 2007. Analysts expect a slight recovery in the second half.

“I’m very much looking forward to a point where we’re operating in clear air, and the name of the company not being associated with bankruptcy and loans and these things,” said Mark LaNeve, GM’s North American marketing chief.

GM ranked as the top global automaker in terms of sales for 77 years before Japan’s Toyota Motor Corp. snatched its crown in 2008. The company sold nearly 8.4 million cars and trucks around the world in 2008, falling short of Toyota’s nearly 9 million.

Once the largest corporation in America, GM held the top spot in the Fortune 500 ranking for 20 years before being pushed out of the top spot in 1973 by Exxon Mobil Corp. It reclaimed No. 1 status in 1985 and held it for another 15 years.

Experts say GM’s future success will depend largely on its ability to persuade consumers that it’s a different company, one that builds cars that will equal or outlast Japanese models. To illustrate the change, GM is considering a new name.

Turning a profit will not be easy. GM lost more than $80 billion in the last four years and survives only because it expects to receive $50 billion in U.S. government loans.

Without the loans, its executives have said the company would have been sold off in pieces.

The Obama administration has said it does not plan to interfere with day-to-day operations, though it ousted ex-CEO Rick Wagoner and has been involved in picking the new company’s board.

Most of GM’s model lineup is expected to stay unchanged for now. But the company today will probably show off its newer, more efficient models, as well as plans for a U.S.-made subcompact and rechargeable electric vehicles.

Comments

Lee Eldridge 5 years ago

Thank you Bush/Obama for spending millions of our dollars on a failing business that produces products that people don't want, while imposing higher standards that will drive up the cost of their products, without fixing their labor problems where GM has to pay a much higher scale (wages) for employees than their competitors (i.e. Toyota). This is not a formula for success.

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KEITHMILES05 5 years ago

Sorry, but what you wrote is just plain stupid.

Did you not even read that in 2008 GM sold 8.4 million vehicles?

Reading comphrension is not something you utilize.

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imastinker 5 years ago

Keith - WHAT??

I agree with that comment. What do you not understand?

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llama726 5 years ago

Thank you Lee for buying into the corporatist viewpoint that whenever something goes wrong, it must be the labor's fault, and not anyone else in the company.

Because the CEO making $2.2 million and other executives making in the $1 million range are not expendable, while the workers are.

Sorry, fair wage for a fair day's work offends you so. Even if their assembly line workers made $120,000, which is the grossly inflated number that has been thrown out there, it's still just 5% of what the CEO pulls in.

That's actually a lot better than most companies, I will grant you, but I hardly think it's unfair.

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Newell_Post 5 years ago

In 2005, I needed to buy a new vehicle. I looked at one of the Buick SUVs. This was a $40,000 vehicle with a tan leather interior. However, the dashboard and interior trim was all the cheapest, cheeziest plastic you have ever seen in your life, and was 4 different colors of tan. Some panels were greenish-tan, others were pinkish-tan, grayish-tan, etc. Also, the joints between the plastic panels were 1/32" in some places and 3/8" at the other end of the same joint. And, of course, the salesman was the usual sleazeball.

That was my last straw with GM, after buying many of their vehicles in my life.

If they built better quality, more attractive, more modern vehicles and sold them with a "no dicker sticker" they would be OK. Somewhere in another article I read they are negotiating with E-Bay to sell their cars online, to be delivered by a local dealer. That sounds like an improvement, to me.

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