DETROIT, Nov. 21 - General Motors, the world's largest auto company, announced details on Monday of a three-year blueprint to revive its fortunes, including 5,000 job cuts on top of 25,000 previously announced. Analysts immediately questioned whether the plan was enough, saying it lacked the speed and breadth that had helped rivals make comebacks. þþRick Wagoner, G.M.'s chief executive, said the jobs cuts along with plant closings were ÿnecessary for G.M. to get its costs in line with our major global competitors.ÿ þþMr. Wagoner said he was confident the restructuring would help reverse more than $2 billion in losses this year at G.M., a company that once dominated the industry but whose prospects have turned bleak.þþG.M. is not alone: Ford, poised a few years ago to catch G.M. in American sales, said last week that it would reduce the number of salaried jobs as it prepared its second revamping in four years.þþThe job cuts at G.M. and the closing of all or parts of a dozen installations in the next three years will still leave the company with the capacity to build more cars and trucks than it is selling in the competitive American market. Analysts say that such inefficiency, along with hesitant leadership, lackluster car designs, management missteps and costly health care and pension plans, are creating disadvantages in the competition with Toyota and some other foreign automakers.þþAmong G.M. workers, the restructuring plan was met with a mix of surprise and resignation. [Page C1.]þþAll told, Detroit companies and their suppliers have announced plans to eliminate 98,000 jobs, according to Challenger, Gray & Christmas, the outplacement company. The total could easily pass 100,000 this year - the largest cuts since Ford started an earlier restructuring plan in 2002. Though jobs will be eliminated across the country, there will be special pain in Michigan, which had unemployment of 6.4 percent. The national rate was 5.1 percent.þþAll this comes as foreign rivals are luring customers with better car designs and increasing their market share. The biggest foreign rival, Toyota, is building two more plants in the United States and Canada, and is pondering where to put another North American factory.þþIf anything, G.M.'s corporate revamping plan drew a collective yawn from Wall Street, where its shares declined modestly, after an initial lift. The company had already tipped its hand that the cuts were coming.þþIn the meantime, over the last few years two rival car executives - Carlos Ghosn at Nissan and Dieter Zetsche at Chrysler - have rolled out popular new models, made steep spending cuts and in the process become auto industry stars. Both have gained power: Mr. Ghosn is now running both Nissan and its French partner, Renault. Mr. Zetsche is about to become the chief executive of the parent, DaimlerChrysler.þþBut G.M.'s chief, Mr. Wagoner was economical with details on Monday. He would not say when G.M. expected to make money again, and he would not say how much in savings the revamping would yield. G.M. expects to take a significant charge reflecting the plan's costs. Last week, Mr. Wagoner sent an e-mail message to G.M.'s 325,000 employees to dispel rumors that it would soon seek bankruptcy protection. þþAll told, Monday's cutbacks, plus earlier reductions in health care benefits, would reduce costs $7 billion by the end of 2006, $1 billion more than the previous target. That is about one-sixth of G.M.'s annual spending of $42 billion. þþÿThe decisions we are announcing today were very difficult to reach,ÿ Mr. Wagoner told employees in a telecast, ÿbecause of their impact on our employees and the communities where we live and work.ÿþþBut John Casesa, an auto analyst with Merrill Lynch, was unimpressed, saying the plan was vague with little that investors did not already know, except for the locations of the plants G.M. would close and a modestly bigger estimate of savings.þþThe program ÿis only the beginning of a long restructuring process,ÿ he wrote in a research report. þþG.M. is long acquainted with the process of corporate restructuring, particularly in working with union contracts that have prevented it from making unilateral cutbacks. In 1992, Mr. Wagoner, then a rising young executive, helped the company carry out a more comprehensive plan that called for 75,000 job cuts and the closing of 21 factories. Coupled with the popularity of new sport utility vehicles and pickup trucks, G.M. was on track to strong profits the rest of the 1990's.þþG.M. has more new pickups and S.U.V.'s in the works early next year, as the linchpin of its latest comeback effort. But those vehicles have lost popularity, in the face of steeply higher gasoline prices this fall. þþAnd Mr. Wagoner, 52, has lost the buzz that surrounded his appointment five years ago as a chief executive focused on new technology as a way to make money. On Monday, he was asked whether he planned to step aside, a possibility raised in recent weeks, as concerns about a possible G.M. bankruptcy filing worried investors.þþMr. Wagoner said he did not plan to do so - although he acknowledged that he was frustrated with the gloom surrounding the company. Still, ÿit goes with the turf,ÿ he said.þþJohn Paul MacDuffie, an associate professor at the Wharton School of the University of Pennsylvania, said the training that Mr. Wagoner received might have made him the perfect chief executive in an era when G.M.'s market power intimidated competitors.þþBut Mr. Wagoner's company is now competing with prosperous automakers like Toyota and Honda that have clear identities, a commitment to environmentally friendly products and customers who do not need to be enticed with incentives.þþG.M., by contrast, has been hustling to catch up, finally embracing hybrid-electric vehicles that its executives once derided, promoting the fuel economy and safety of coming S.U.V. models rather than their heft, and promising that its next vehicles will be the best yet - even as it rolls out bigger discounts to help move those that are not selling.þþFord, although not seen as being in as dire a situation, is in a similar market position - and foreign makers are benefiting as a result, Professor MacDuffie said. þþThe foreign rivals' new plants, along with lineups of vehicles attuned to American tastes, have broken Detroit's hold on buyers. ÿThere has been a certain core group of people who were always willing to buy American products,ÿ Professor MacDuffie said. ÿThey are now taking a look around at foreign competition.ÿ þþAnd G.M. has made matters worse by repeatedly resorting to the incentive programs whenever sales flagged, like the ÿemployee discountsÿ it made available to customers this summer.þþThe strategy worked, leading to some of the industry's strongest sales ever. But last month, G.M. and Ford sales crashed once the incentives were eliminated.þþThe employee discounts were ÿthe finance guy's idea of the strategy,ÿ Professor MacDuffie said of Mr. Wagoner. þþG.M. said it would shut assembly plants in Oklahoma City; Lansing, Mich.; Doraville, Ga.; as well as Oshawa, Ontario. It will eliminate the third shift at a plant in Moraine, Ohio, and at another car plant in Oshawa. Seven parts factories and distribution centers will be closed in Pennsylvania, Michigan, Oregon and Ontario.þþThe cuts were particularly bad for a group of plants that were considered among the company's best. Among these are the Saturn plant in Spring Hill, Tenn., known for its labor-management cooperation, where an assembly line will shut down. Often, the elimination of an assembly line puts a factory's survival in doubt, but G.M. executives took pains on Monday to say they had no plans to close the Saturn plant. The plants in Oklahoma City and Oshawa, Ontario, were ranked among the best in quality surveys, and their presence on G.M.'s list proved that neither quality nor cooperation could ensure auto workers their jobs. þþMr. Wagoner, speaking at a news briefing after addressing G.M. employees at company headquarters here, said he regretted that such standout plants were being shut.þþThey and the others in the announcement, he indicated, could not survive the company's declining financial condition.þþG.M., which in 1960 sold more than half the cars and trucks in the United States, held less than a quarter of the American car market last month. For the year, it holds 26.2 percent of the American market, according to Autodata, an industry statistics firm in Woodcliff Lake, N.J. þþOnce G.M. completes the plant closings, which will begin next year and be finished by 2008, it will be able to build about 4.8 million cars and trucks in North America, down 20 percent from 2002.þþG.M. said it expected the job cuts to take place through attrition including retirements and buyout packages that it is negotiating with the United Automobile Workers. þþUnder terms of its labor agreements, the G.M. plants technically will not be closed until the two sides can reach a deal in the next set of national contract talks.þþU.A.W. leaders denounced the move as ÿdisappointing, unfair and unfortunate.ÿ þþÿWe have said consistently that General Motors cannot shrink itself to prosperity,ÿ the U.A.W.'s president, Ron Gettelfinger, and vice president, Richard Shoemaker, said. ÿIn fact, shrinking General Motors only exacerbates its problems.ÿþþBut analysts said the cuts would not be enough if the company did not introduce appealing cars and trucks.þþÿThe primary question,ÿ said Brett D. Hoselton of KeyBanc Capital Markets, ÿis are you going to be able to produce cars and trucks that are compelling enough to sustain or even gain market share.ÿ þþ
Source: NY Times
