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.

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