Industry Report: Feb. 20, 2006

February 19, 2006

DC Profits $3.4B in 2005

DaimlerChrysler earned $3.4 billion in 2005 with the Chrysler Group accounting for $1.8 billion of the profit, the company announced on Thursday.

The Mercedes Benz Group posted an operating profit of $1 million in the fourth quarter, and finished the year with a $600 million loss, but DaimlerChrysler AG executives insist the group is finally moving in the right direction.

DaimlerChrysler chief executive Dieter Zetsche, who continues to double up as Mercedes' CEO, said the Mercedes group is focused on trimming costs and improving the efficiency of its processes, even as it launches a new effort to improve customer satisfaction and continues to launch new products this year, including the new GL-Class, E-Class, and CL-Class cars and trucks.

DC Profits $3.4 Billion in 2005 (2/16/2006)
Chrysler Group gets nearly $2 billion in credit for the gains.  

End of the Line for Generous Motors?

It used to be conventional wisdom in American business that "Generous Motors" offered the richest benefits around. GM was an enormously rich company back in the 1950s and 1960s, and GM's top management used the company's wealth to attract and retain talent.

Fast-forward 50 years, and the old regime at GM has fallen into disarray. The rich benefits put in place decades ago are now fading into history as the company grapples with the challenges posed by an era of aggressive competition and globalization.

In one of the biggest blows to the old regime, GM chairman Richard Wagoner said GM will follow the lead of corporate giants such as IBM and Verizon, and will change the way pension benefits are calculated for active salaried employees hired before 1993.

Wagoner said GM still is evaluating ways to restructure salaried pension benefits in theU.S. But he left no doubt that big changes are in the works, including a cap on pension benefits for existing employees that would make them significantly less generous.

End of the Line for Generous Motors? (2/16/2006)
A new cap on pensions means the days of big bennies are out.


GM-UAW-Delphi Stuck in Neutral

The three-way talks between General Motors Corp., the United Auto Workers, and the bankrupt Delphi Corp. appear to be stuck in neutral.

Today will be a pivotal day in the talks, though, as a Feb. 17 deadline that Delphi nominally set for filing court motions to have its current labor pact with the UAW set aside passes. The betting is that Delphi will not file the motion as long as the tenor of the talks remains hopeful. Otherwise, Delphi runs the risk of provoking a crisis that could lead to a showdown, union officials have warned.

Claudia Piccinin, Delphi spokeswoman, said that the Feb. 17 date was not a hard-and-fast deadline and the company's preference was to let the negotiations move forward.
Delphi said in December it was withdrawing its previous contract proposals and planned to give negotiations time to work. The earliest the company would consider asking the bankruptcy judge to set aside the Delphi's contracts with the UAW and other unions was Feb. 17.

Robert "Steve" Miller, Delphi's tough-talking chief executive officer, said last month that the bankrupt supplier was prepared to give the three-way negotiations with GM and the UAW time to work.

The loss at Mercedes included charges on earnings totaling $1.3 billion in connection with the restructuring at smart and another $675 million relating to the staff-reduction program at the Mercedes-Benz car group, which was announced at the end of September 2005.

GM-UAW-Delphi Stuck in Neutral (2/16/2006)
Talks lay fallow, but zingers do too.


C&A Hires Mary Ann Wright

Bankrupt Collins & Aikman Corp. of Troy, Mich., has picked up some new management talent, signing Mary Ann Wright as executive vice president of commercial and program management. Wright formerly was director of sustainable mobility technologies and hybrid vehicle programs at the Ford Motor Co. In her new position, Wright will be responsible for organizing, planning, and implementing the overall marketing, sales, business development, and program management activities for Collins & Aikman. "Mary Ann is a respected, proven, and recognized industry leader," Collins & Aikman CEO Frank Macher said. "She brings a thorough understanding of our customers' needs in terms of product development processes, and program management. She is a valuable addition to our senior management team," Macher said. -Joe Szczesny


Ford Says Market-Share Slide to Continue

Ford's chief sales analyst expects the company's market-share slide to continue before stabilizing this year or next, the Wall Street Journal reports. George Pipas says Ford's sales may stabilize in the near future, but not from 2005 levels, which finished at 18.3 percent of the U.S. market. Ford executives have openly talked about being competitive as one of the U.S. market's "Big Six" automakers, and while Chairman Bill Ford has said the company will stop its market-share losses this year, and the Journal reports that his lieutenants have been finessing the statement ever since, adding that Ford has been on a market-share losing streak for much of the past decade. "We will likely continue to see a market-share decline to some point," Pipas said.

2006 Chicago Auto Show: Last Words by TCC Team (2/13/2006)
To sum it up: there are a lot of trucks here, aren't there?

Ford of Canada Confirms It's Building Hybrids

Confirming a story reported from this year's Detroit auto show by TheCarConnection, Ford of Canada says its production facilities will build the new Ford Edge and Lincoln MKX hybrid crossovers due by the end of the decade. The new vehicles will be assembled at Ford's plant in Oakville, Ont., where the standard gas-engined versions of the models are to be built this year for sale as 2007 models. The hybrid versions are expected to be on sale by 2010. Ford has committed to building 250,000 hybrids a year by that date.

Lincoln Abandons Names, Mostly by TCC Team (2/13/2006)
Zephyr's gone with the wind; are MKZ, MKX, MKS too alike?


GM Confirms $545 Million to Mich.Plants

General Motors Corp. plans to spend $545 million upgrading factories around Detroit. The new investment also will add 280 jobs in the months to come, according to Joe Spielman, GM vice president for North American manufacturing operations. Most of the jobs will be at GM's Pontiac Assembly Plant, which is gearing up to build new Chevrolet Silverado and GMC Sierra pickup trucks. Another investment will pay for a new hydroforming line at the stamping plant on the north side of Pontiac that will be used to build parts for the new Saturn Sky, Pontiac Solstice and, starting next year, a new Opel roadster that will be exported back to Europe.

"GM's investments demonstrate our commitment to continuously improve our products," said Spielman. "They also show our dedication to strengthening our Michigan manufacturing operations." Spielman also said the remaining money will finance the 120,000-square-foot expansion of the body shop at the Lansing Grand River plant where the company plans to build a new car next year, Spielman said. The rest of the money will be used to pay for construction of a new six speed transmission line at the GM transmission plant in Ypsilanti Township and a series of changes at an engine plant in Romulus.  

Meanwhile, Michigan Governor Jennifer Granholm was quick to hail the new investments. "GM's decision to invest more than a half billion dollars in these manufacturing plants clearly signals their belief in our highly skilled and dedicated workforce," Granholm said. "Because the automotive industry is such an important cornerstone of our state's economy and livelihood, we are thankful that GM has chosen to further invest in Michigan."

"We want you to know that your success - and we know GM will have success in turning it around - is our success," she added. "There is no vision of Michigan's future that does not include a vibrant and growing auto industry," added Granholm, who noted that the GM investment not only creates new employment opportunities but also protects an estimated 3600 jobs around the state.

GM Slashes Exec Pay, Dividend by TCC Team (2/13/2006)
Still more "shared pain" could be in the offing, CEO Wagoner suggests.


Ford Says It's Number One for 2005

Ford is going after Chevrolet's claim that it was the best-selling brand in the U.S. in 2005. Chevy bases its claim on sales data as reported by the manufacturers. However, new data from R.L. Polk indicates that Ford registered more vehicles in 2005, and actually beat Chevrolet by more than 5000 units, which means it kept its sales leadership for the 20th consecutive year, according to Ford spokesman Jim Cain. "To us, the Ford versus Chevy race is a remnant of the old Big Three mindset.  We're managing our business to emerge a winner in the Big Six shootout, and that means looking farther east than

Jefferson Avenue
to measure ourselves," he said. "That said, the industry standard for advertising claims is R.L. Polk. The Polk data doesn't support GM's claim of Chevrolet leadership, so we will be contacting GM and asking them to stop making the claim," he told TheCarConnection. GM chief executive officer Rick Wagoner told Automotive News that Chevrolet wasn't going to drop its claim of being number one. -Joe Szczesny

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