Buzz Hargrove, the CAW president, said he is concerned about GM and the intense competition in the industry. However, his members have earned the improvements in wages and benefits they are seeking with improvements in both quality and productivity, he said.
Hargrove reiterated the union also is looking for major improvements in pensions both for current retirees and older workers who will be retiring in the next few years. The current contract expires in September and Hargrove said the union will pick its target shortly in early September.-Joe Szczesny
Morgan Stanley's Girsky To GM
General Motors Monday said it hired leading automotive industry analyst Stephen J. Girsky from investment bank Morgan Stanley to be a special advisor to GM Chairman and Chief Executive Officer Rick Wagoner, and GM Vice Chairman and Chief Financial Officer John Devine. He starts August 1 at GM.
The announcement took industry watchers by surprise, as Girsky is widely considered to be the top Wall Street analyst covering the auto sector. He is a sought-after speaker and presenter at industry conferences, among the most quoted analysts and one of the few who still do regular interviews with the news media.
"We are pleased to have Steve join General Motors. His deep knowledge and experience in the global auto industry will enable Steve to contribute significantly in support of our key business strategies, including the turnaround of GM North America," said the GM chairman and CEO Wagoner. Girsky not only knows Wagoner and Devine from his years as an analyst, but he was also, at one time, an analyst in GM's Treasurer's Office.
Girsky has been managing director at Morgan Stanley and the senior analyst of the Morgan Stanley Global Automotive and Auto Parts Research Team. Prior to joining Morgan Stanley, he was managing director of PaineWebber's Automotive Group.
Morgan Stanley has been in a period of tumult. Its CEO Philip Purcell was forced to retire recently. And he was succeeded by John Mack four years after forcing him out as president. More than 55 traders, bankers and managers have left the firm in the past three months, including five members of the 14-member management committee.
While Morgan Stanley has jumped to first in mergers and acquisitions for the first time in five years, the New York-based firm has slipped in businesses such as initial public offerings and high-yield debt underwriting. Second-quarter earnings fell 24 percent, the steepest drop in more than four years, as trading slumped.-Jim Burt
GM Gets New Credit Rating Warning (7/10/2005)
Even in a strong year, GM and Ford still are hurting.
Dealers Paying Up For GM's Blowout
The automotive employee-discount deals may be an expensive program for participating dealerships, according to analysis by auto buying information Web site Edmunds.com.
According to Edmunds, in June, the discount from GM's average sticker price increased $952 compared with May. GM dealers shouldered 71 percent of that difference, says Edmunds.
"In essence, GM dealers purchased most of the sold vehicles at invoice price, expecting to sell them above that amount, but the employee discount deal dictates that those vehicles be sold for approximately three percent below invoice price," says Jesse Toprak, Senior Analyst for Edmunds.com. "This represents a painful cut in dealer profits, especially for models that are in high demand compared with supply." The reduction in profit is not as great as it may appear. For each vehicle sold, dealers collect a "holdback" from the manufacturer. In the case of General Motors dealers, the holdback typically equals three percent of the total MSRP. During the "Employee Discount for Everyone" program, GM has increased the payment to five percent of MSRP. Many consumers opt to buy a more expensive vehicle instead of taking a lower price on the vehicle they set out to buy.
GM enjoyed a 47-percent increase in June sales compared with the prior year. Ford and Chrysler have followed the automaker with competitive offerings of their own in July. The deals will probably be extended through August. But GM dealers have reported that the crush of showroom traffic in June has already backed way off.-Jim Burt