GM: Getting Leaner or Getting Desperate?

June 7, 2005
The call came in early this morning as I was racing to catch a plane out of Quebec City, where I'd gone to test drive the new Saab 9-7X sport-ute. Since last December, most of us in the Detroit auto media community have been expecting big cuts at General Motors. Indeed, sources suggest a knife-sharp package was laid out late in 2004, then vetoed by CEO Rick Wagoner, who seemed sure 2005 would be a kinder-and-gentler year for the giant automaker. Sadly, he was mistaken, and at today's annual meeting, he declared, "We know we can't return to adequate levels of profitability without an extremely competitive cost structure."

Joe Szczesny, our man on the scene of the shareholders event was expecting a raucous meeting, but not the sort of cuts Wagoner wound up revealing. You'll find more on later today and tomorrow, but for the moment, check this report from CNN/Money, which reveals, the carmaker will cut 25,000 jobs over the next 3-1/2 years, part of a bid to cut annual costs by several billion dollars. That's the equivalent of 17 percent of GM's U.S. workforce, by the way, and would staff four to six assembly plants. Indeed, plant closings are coming, though we've yet to get a precise list. Don't be surprised, though, to see the underutilized Georgia minivan plant at the top of the list. There's Oklahoma City, which makes midsize SUVs, and is being cut to one shift. Other candidates include Kansas City, Moraine, Ohio -- and some folks even wonder whether GM would sell off its share of the NUMMI plant, near San Francisco, that it operates in a joint venture with Toyota.

Today's news -- here's another take from the AP -- has an unpleasant ring of deja vu. It seems like the automaker has been in constant reorganization since the mid-1980s. Indeed, Tuesday's announcement brought to mind a press trip in December 2000, this one down to the tip of Mexico's Baja Peninsula, for the launch of the then-new GM midsize SUVs. Most observers thought the new Bravada was the handsomest of the lot, but just as the unfortunate brand manager began describing the ute's attributes, we were called into a conference room to listen in on the announcement, from Detroit, that Oldsmobile was being abandoned. GM has so far refused to cut any other divisions, though it recently revealed Buick, Pontiac and GMC will be consolidated into one big channel. The sad thing is that few think the cutbacks are complete.

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