General Motors is on a mission to cut costs, and of course that means, cutting jobs. The corporation plans to cut about 25,000 jobs and close assembly and component plants in the U.S. over the next several years.
GM’s Chairman and CEO Rick Wagoner broke this news at an annual shareholders meeting. The company lost $1.1 billion in the first quarter, and Wagoner told shareholders that GM expects to save more than twice that each year as it cuts its costs.
“Let me say up front that our absolute top priority is to get our largest business unit back to profitability as soon as possible,” said Mr. Wagoner. Amy Joyce of the Washington Post writes:
GM, once a towering icon of U.S. industry, has stumbled badly in recent years. Sales — particularly of its once-hot sport-utility vehicles — have plummeted, and the company is weighed down by rising health-care and pension costs. Meanwhile, its foreign rivals continue expanding their share of the North American market with more efficient factories, lower health-care and pension costs, and fewer unionized employees.
Some industry observers think the job cuts and plant closings will do little to perk up GM’s business. The jobs will be cut mostly through attrition, and because of union contracts, workers at closed plants will receive most of their pay until a new contract goes into effect in 2007.
“The most challenging and important operating issue we face is getting GM North America, our biggest business unit, turned around and back into a profitable position,” said Wagoner.
Wagoner discussed improvements that need to be made in the North American branch of the company. He broke down four initiatives for re-tooling its sales and marketing strategy:
“First, we are clarifying and focusing the role of each of our eight brands, giving them distinctive, clear, compelling roles in the GM portfolio. We start with our foundation brand Chevrolet in the mainstream of the market, and Cadillac at the premium end. Both of these brands are in good shape, and we have plans to make them even stronger. Our other six brands — GMC, Pontiac, Buick, Saturn, Saab and Hummer — will focus on targeted market niches, offering distinctive, differentiated products with easy-to-grasp brand promises. In some cases, such as Pontiac and Buick, it will mean fewer but stronger entries in the future.”
“Second, we’ll go to market with a total value proposition. This means, simply, going back to selling cars and trucks on the basis of the great value that they have to offer customers, with lessening emphasis over time on incentives. It means strong product offerings at compelling prices that represent great value — like the Chevy HHR at $15,995; the Pontiac Solstice at $19,995; and the Hummer H3 at $29,500. It means improving our total value proposition by including industry leading content, features, and technology — like offering OnStar and Stabilitrak as standard equipment on all GM cars and trucks.”
“Third, we’ll focus on improving our sales performance in major metropolitan markets. Simply stated, we need to perform as well in the top 25 markets in the U.S. as we do in other parts of the country. This means strengthening our position in markets like Miami, New York, Washington, and Los Angeles.”
“Fourth, we’re accelerating our drive for consistent, world class distribution networks. This means getting our dealers on channel — Chevrolet and Saturn remaining as standalone facilities; Buick-Pontiac-GMC grouped together; Cadillac, Hummer and Saab as premium channels but in many cases under the same owner. We’ll work with our dealers to get in the right locations, with competitive facilities.”
General Motors shares went up 4.2% or $1.29 to $32.02 today as Kirk Kerkorian announced that his Tracinda Corp. raised its stake in the company to 7.2%.
Chris is a staff writer for murdok. Visit murdok for the latest ebusiness news.
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