Delphi Asks Court to Toss Contracts by Joseph
Supplier plots new course — and asks the judge to turn it that way.
At the very end of last
week, General Motors Corp. finally got a bit of good news as a federal judge in
The announcement capped off another week of reports and pronouncements that underscored the depth of GM’s problems, from the disclosure the automaker has lost another point of market share in the first quarter to the news that GM is now facing a widening investigation by the Securities Exchange Commission.
GM also confirmed it was planning
to sell off its stake in Isuzu as part of its continuing effort to raise cash,
and that it had been forced to reduce its spending on research and development.
Another part of GM’s turnaround plan, the sale of a controlling interest in
General Motors Acceptance Corp., is also nearly in place, pending the completion
of very detailed contracts, according to a report in the Wall Street Journal.
Nevertheless, the changes to
employee healthcare plans are considered one of pillars of chairman and chief
executive officer Richard Wagoner's efforts to revive GM. The welcome court
ruling on healthcare cuts allowed Richard Wagoner, GM’s embattled chief
executive officer, a chance to take a swipe at his critics, both in the media
and in the investment community.
“This approval allows us to
fulfill those important objectives as we continue to rapidly implement all
aspects of our North American turnaround plan,” Wagoner noted in statement
released late Friday.
The plan reduces GM’s retiree
healthcare liabilities by about $15 billion, or 25 percent of the company’s
hourly healthcare liability. It also reduces GM’s annual employee healthcare
expenses by about $3 billion on a pre-tax basis and will yield about $1 billion
in cash savings.
GM also has announced plans for an
accelerated attrition program and has altered the pension plan of salaried
employees in the
Wagoner added the various initiatives, when fully implemented, are expected to significantly reduce GM’s structural costs. The cost-reduction actions in
“In addition to the progress
we are making to reduce costs, we also are firmly committed to the
revenue-enhancement elements in our huge cost-reduction initiatives of our
turnaround plan, specifically product excellence and revitalizing our sales and
marketing strategy,” Wagoner said.
Wagoner also said GM expects to
increase its capital spending in 2006 to $8.7 billion as it launches its new
“It’s easy to announce stuff. It’s not so easy to do stuff, particularly if you can’t do it yourself, if you’ve got to do it in cooperation or in conflict with unions, if you do it with Delphi, if you need partners to consider a partial sale of GMAC,” noted Wagoner in an interview published in Newsweek. “What has been done in the last six months borders on unprecedented accomplishments and advances. This stuff didn’t happen because someone decided on Jan. 15, why don’t we do stuff? This stuff happens because we’re working on it, we’re ready to do it, we’re talking to people, and when we have it ready, we announce it.”