Full employment for Mexicans and Chinese and Koreans and...-but not Americans with current management
GM's Wagoner sees more job cuts
DETROIT (Reuters) -- General Motors Corp. will cut more jobs in 2007 as it closes plants and tries to wrench more concessions from its major union in contract negotiations, Chief Executive Rick Wagoner said.
GM (Charts), which lost $10.6 billion in 2005, cut more than 34,000 jobs, unveiled plans to close 12 plants and reduce recurring costs by $9 billion in 2006. Wagoner said more limited job cuts were possible in 2007.
"I don't rule out continued steps," CEO Wagoner told reporters Thursday when asked about further cuts in 2007. "I think it'll be a lot more through attrition than buyouts, but I wouldn't rule it out."
"You won't see major chunks ... but there is going to be a continued need to improve productivity, to be competitive and to cover things like health-care costs," he added.
GM will also be looking for more concessions as it kicks off labor talks with the United Auto Workers Union this year, aimed at clinching a new four-year contract.
For GM, which has not faced a strike since 1998, the negotiations are expected to test a collaborative relationship with the UAW as the automaker seeks to unwind many of the costly obligations written into past contracts.
"Within a contract period, we've made a lot of progress," Wagoner said of the past year. "But we are not fully competitive yet we need to make progress in the 2007 negotiations. These are tough issues ... and health-care has put us at a $5 billion disadvantage."
GM's health-care costs average $1,500 per vehicle, compared with about $200 for Japanese rival Toyota Motor Corp. (Charts).
"The structure we have doesn't work in today's global industry," Wagoner said. "We've made some big moves, and I think it's in everyone's interest to make some more, so we can get to the position where positions can be added in the U.S. rather than always being downsized."
GM stock gained more than 50 percent through 2006, but some analysts have said further gains hinge on GM's ability to sustain profitability against increasingly successful competitors in a weak U.S. auto market.
Toyota may name 8th U.S. assembly plant Although GM still sells twice as many cars in the U.S. market as Toyota, it will likely be overtaken by the Japanese automaker for the global top spot in terms of production in 2007.
Toyota has said it will produce 9.42 million vehicles in 2007, while GM has not provided a forecast. "Obviously we have capacity to build more," Wagoner said. "I like being No. 1 and our people take pride in it ... we are not going to sit by and let other people pass us by."
Road to recovery When asked about a timeline for GM's North American operations to return to profitability, Wagoner declined to comment specifically.
"We don't just need to get profitable, we need to get in a position where we are generating significant cash flow because we put a lot of cash back in the business," he said. "This year is going to be a huge positive step in the right direction but we've got a lot more steps to get not just profitable but to get cash flow positive," he added.
GM increased its average transaction price in 2006, mainly by lowering incentives - a trend Wagoner expects will continue through this year. GM's ATP was $1,000 above the industry average in December.
Wagoner also said he expected GM to continue to expand overseas, with the strongest growth in China, India, South Africa and South American markets. He said he expected overseas sales to continue to surpass domestic sales, which first occurred in 2005.
Wagoner did not rule out the possibility of considering China as an export platform for the U.S. market, but noted that GM has no specific plans for that. Wagoner also said he thinks it will be three to five years before a Chinese vehicle is ready for the U.S. market.
Even as analysts expect flat to slightly lower U.S. auto sales this year, Wagoner said he was optimistic about 2007. "We are not as negative on the U.S. economy and industry as some others are," Wagoner said. "We think the industry here should be OK next year (2007) .... We look forward to more progress."
GM and Ford Motor (Charts) ended a difficult year with another plunge in U.S. sales, while DaimlerChrysler (Charts) fell to fourth place in full-year U.S. sales for the first time.
-- The brave might not live forever but the timid do not live at all