Following a slew of labor problems including the American Axle strike that cost an estimated $2 billion, General Motors is restructuring to accommodate the declining U.S. auto market. Following the lead of Ford and Chrysler, the move will likely include further cost cutting and layoffs, as production of thirsty truck and sport-utility vehicles is wound down to make room for more fuel efficient vehicles. Information is sketchy at this stage, but plan on learning the details when the restructuring is officially announced at the company's annual meeting on June 3. With its stock closing Tuesday at its lowest level in more than two decades and thousands of jobs at stake, GM had better get this next move right.
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Reader Comments (Page 1 of 1)
Justin @ May 29th 2008 2:11PM
Ford's the last company I would follow for anything.
tankd0g @ May 29th 2008 2:18PM
Step 1. Put Bob on boat to Shanghai.
Step 2. Collect Underpants.
Step 3. ????? (something Volt related)
Step 4. Profit.
warthog @ May 29th 2008 2:32PM
Riiiight for #1. Get rid of the one guy who has pushed GM to produce its best cars and trucks in 2 decades. Makes a lot of sense to me.
GM was doing well with it's restructuring plan up until gas prices jumped over $3/gallon. Yes, GM has too many SUVs, but it already implemented a plan to reduce it's dependency on body-on-frame trucks and put more money into small and mid-size car platforms. 3 Billion dollars on the new delta platform(cobalt,HHR,astra) anyone? Remember that? That was well before things got really bad. They're already making inroads in it's cars and crossover vehicles.
Ford may be in better shape financially, but GM has better, more competitive vehicles on the road and is well on it's way to becoming a design and engineering pioneer again. That's far more important to the future of the company then what Ford has been doing lately.
tankd0g @ May 29th 2008 2:36PM
What Bob did in the past is irrelevant. He's crazy now and that's a liability. The increase in the price of gas was a surprise to no one, not even GM, they just figured people would keep buying gas guzzlers regardless of fuel prices as long as the purchase price of the vehicle was kept low enough. Aparently the 1970s saw very little record keeping at GM.
why not the LS2LS7? @ May 29th 2008 2:20PM
Better get this one right? They got the last one right.
Things change.
Gas could fall to $0.75 the day after their restructuring. Does will that mean GM didn't get their restructuring right?
tankd0g @ May 29th 2008 2:25PM
They'll have plenty of flying pigs to sell on the pork market if that happens.
geo.stewart @ May 29th 2008 2:34PM
I agree. their product offering is up, way up. they are still fighting their legacy and associated costs. they have the right products in the pipeline, just a matter of accelerating to market if possible. if they can get a B-class onboard quickly, that will help as that is a growing market.
Tsunami Racer @ May 29th 2008 2:29PM
hey, i know! let's go on strike again! we'll flex our union might all the way to the unemployment office!! That'll show GM management!!
Frylock350 @ May 29th 2008 2:36PM
The American Axle strike hit GM hard. And it did affect truck sales for them. I have a friend who is looking to purchase a 2008 Silverado 6.0L and because he wants to custom order he has to wait until 2009. The dealer told him GM can't take orders and he'll either have to accept what's on lot or wait and order an 09. He's of course waiting as his current Silvy is still running fine, but I can see the same situation sending a GM customer to Ford.
Judy Zik @ May 29th 2008 3:15PM
GM has some great products but they are lacking in key areas. The Cobalt and Aveo are just not class competitive and with gas prices where they are this is where the demand is headed. If GM could replace them with products that are as well designed as their other new models they could do well. They also need a good small CUV to compete with the CRV and Escape. With high gas prices the smaller CUV's are going to see more sales as people downsize from Explorers and Suburbans.
ken_aisin @ May 29th 2008 3:25PM
Honestly, I don't think I would ever buy a Ford, GM, or Chrysler car in my life time. It'll probably take them decades to get back on track.
oby @ May 29th 2008 3:39PM
"Ford may be in better shape financially, but GM has better, more competitive vehicles on the road and is well on it's way to becoming a design and engineering pioneer again."
What planet are you living on? GM have possibly one competitive vehicle out of nearly 50 models in a class that counts. Forget trucks/SUV's/Cuv's with gas between 4 and 5 dollars/gal and rising. They don't have a good small car to compete with Civic/Corolla (they never had) and they have way too many lacklustre mid/large cars. The only competitive car they have is the Malibu and even then the best you could say about it is 'competitive'. It is not best in class nor has it yet proven itself to be better than Camcordima. The Volt is a joke (and a bad one at that) and the only other possible competitive car is a niche product (Corvette). There is nothing here good enough to save GM's butt. No GM is headed for a bankruptcy court, end of this year or early '09.
Brad2CV @ May 29th 2008 3:42PM
GM and Ford both have cars elsewhere in the world that can compete better than Cobalt/Aveo. You just can't ship them right over, and they're probably also waiting to see if gas goes down (which it won't). Same with VW, etc. The Toyota Aygo is even smaller than the Yaris so maybe someday....
Artie43 @ May 29th 2008 4:51PM
What is the deal on all of these upcoming layoffs. I read today that GM needs to cut large truck production by almost 50%. That is alot of UAW people. Who pays for these guys to make nothing? Not only will they be unable to sell vehicles, they will have to pay the workers to stay home. That gets real expensive real fast. I would bet that GM's hands are tied and they will pay until their money runs out. So much for the idiots at Rencenter that signed the death warrant for GM. And they pay these executives how much???
Tall Man @ May 29th 2008 5:08PM
GM lost over $600 million on their North American car business in the 1st Quarter 2008 while paying their Senior Executives handsomely.
It should not be news to anyone watching the auto industry that GM has too many brands, models and dealers chasing too few customers.
GM is organizing 8 Brands in 4 Divisions. http://www.thetruthaboutcars.com/general-motors-death-watch-173-eight-into-four-does-not-go/comment-page-3/
thetruthaboutcars.com above does a great job explaining the reorganization.
Divisions 4/08 Sales * Models CR **
Recommended
Cadillac, Hummer, Saab 18k 11 4
Buick, Pontiac, GMC 68k 14 1
Chevy 157k 14 4
Saturn 17k 5 2
Total 260k 44 11
Toyota, Lexus, Scion 217k 27 17
*http://www.autoblog.com/2008/05/01/by-the-numbers-april-2008/
**2008 Consumer Reports, Annual Auto Issue, April 2008
Like I said, too many divisions, brands and models chasing too many customers. Toyota sells about the same vehicles as GM with 3 divisions and about 1,700 dealers compared to about 6,500 GM dealers.
WARD'S 10 Best Selling U.S. Cars and Trucks
4 Months 2008
Cars Trucks
1 Camry 147,018 F Series 192,951
2 Accord 122,430 Silverado 160,010
3 Civic 111,695 Ram Pickup 93,068
4 Corolla/Matrix 99,482 CR-V 69,058
5 Altima 99,037 Escape 59,299
6 Impala 98,478 Sierra 57,403
7 Focus 72,920 Tacoma 55,363
8 Cobalt 66,660 Tundra 54,134
9 Prius 64,664 Econoline 49,196
10 Malibu 59,133 Caravan 47,936
Source: Ward's AutoInfoBank
©Copyright 2008, Ward's Automotive Group,
a division of Penton Media Inc.
Redistribution prohibited.
http://wardsauto.com/keydata/USSalesSummary0804/
When you look at top Ten best selling model through April 2008, Chevy and GMC are winners, but all GMC models are clones except Acadia.
Summary:
GM should consider going to 3 Divisions, Chevy, Cadillac and Pontiac. Fold GMC into Chevy and eliminate the clones. This the perfect time to eliminate GMC because their entire line of trucks are not desired by buyers . All Buick clones go bye bye. Pontiac is kept because of its sporty reputation. Saturn goes away. Cars that are recommended by Consumer Reports should be keep and folded into one of the three divisions. All clones should be consolidated into one world class car or truck, i.e. Malibu, Impala are the winners and Lucerne etc. is a loser.
Focus on the best sellers and the best quality cars and trucks and eliminate the rest in a hurry. Brutally get all dealers below 2,000 and support the hell out of them.
indyogb @ May 29th 2008 10:46PM
Pontiac has a reputation for sportiness? I am as big an American car homer as you will find, but even I have to admit that their reputation is for building junk. They haven't had the "sporty" reputation since GM went to the corporate (i.e. Chevy) engines in the 1970s.
I don't know that the General should eliminate brands, but they definitely should eliminate models, and try as hard as they can to reduce/consolidate dealerships. If Pontiac and Buick each build 2/3 models, they could be combined with GMC to form Pontiac/Buick/GMC dealers (which already exist in some places), Chevy, Saturn (which most definitely needs to stay - they are the brand with the most momentum), and Cadillac could each be their own dealerships. Saab/Hummer I guess would do whatever it is they do now (don't think I've seen too many Saab or Hummer dealers). I think the biggest problem is getting the dealers to agree to do this. I mean, honestly, who wants to give up their business without a fight (or some serious compensation).
Overall, I think GM will be fine. They just need to keep iteratively improving (as they are now). Also, it would be nice if the Aveo could actually compete with the Fit and Yaris in fuel economy (or advertised fuel economy, any way).
caveman @ Jul 15th 2008 10:03PM
No creativity. GM's turn around is BS and the existing executive team designing these solutions is a joke. It's the traditional bean counters at work with no creative thinking. Why haven't they come out and demonstrated a new way of working, building and designing cars and an innovative sustainable plan? From what I see, General Motors continues to screw its retirees and existing employees. Why would anyone want to work for this company? Workers were promised retiree benefits that included a pension and healthcare. Both have gotten either substantially cut or eliminated all together. This demonstrates they have no values. If they don't have values for their employees, how can they have values for the environment? They also mention no raises in 2009. If you're a young employee you should consider leaving now since you can still make something out of your career and you won't get a bump in pay in 2009. Why screw the employees and not do the hard things that can really show sustainable results? Come on GM, get creative! Eliminate your workers that aren't productive. You have a lot of slackers and non performers that should be fired before cutting into benefits of those people who once made you successful. If the GM board of directors was smart, they'd can the entire executive team. Look for downgrades from brokers and credit raters that will make it even more costly for them. People should comment on every blog out there about this BS plan. caveman