Full employment for Mexicans and Chinese and Koreans and...-but not
Americans with current management
GM's Wagoner sees more job cuts
CEO says more plants to close, seeks union concessions, vows to fight Toyota
for No. 1 spot.
January 5 2007: 6:35 AM EST
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
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
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