Τα πράγματα με την παγκόσμια οικονομία φένεται οτι γίνονται πάρα πολύ σκούρα. Φένεται οτι αρχίζουνε να κρούουνε οι καμπάνες για την GM…

http://www.autopress.gr/fnews/show.asp?ID=8662

http://www.detnews.com/2005/autosinsider/0504/19/A01-155271.htm

============================================

GM must shrink to stop losses, analysts say

Experts say carmaker has to cut more than 20,000 jobs and close four assembly plants

By Ed Garsten / The Detroit News

General Motors Corp. must close plants, cut jobs, contain health care costs and eliminate at least one brand to stanch its bottom-line bleeding, some leading financial analysts say.

The automaker, which reported steep first-quarter losses today, is under severe pressure to prove to investors that it can fix its operations. GM's market value has plunged 35 percent this year and its credit rating is hovering one notch above junk-bond status.

In a bearish report Friday, Deutsche Bank analysts Rod Lache and Michael Heifler said GM likely will be forced to undertake a major restructuring that could mean the closure of four assembly plants and the elimination of 20,000 to 30,000 jobs in North America.

It could also entail dropping a brand -- most likely Buick -- renegotiating health care benefits with the United Auto Workers union and cutting benefits for laid-off workers who are collecting most of their base pay.

'A restructuring of this magnitude would be unprecedented in recent times,' Lache and Heifler wrote. 'The end result is that GM could emerge as a smaller but healthier automaker.'

Shrinking the world's largest automaker would be a bitter pill for both management and labor, but some industry experts say it's necessary given GM's market share losses. Others say with GM's overhead -- such as retiree health care and pension -- it doesn't make sense to retrench.

Riding high just a year ago on strong sales of its brawny, profit-hauling full-size pickups and sport utility vehicles, GM earned $1.3 billion in the first quarter of 2004 and its stock traded at near $50 a share.

But in the last 12 months, faced with increased competition and consumers choosing more fuel-efficient vehicles as gas prices skyrocketed, GM's U.S. market share has dwindled to 25.6 percent through March, from 26.8 percent last year, as sales fell 5.1 percent, according to Autodata Corp.

GM has already implemented several downsizing moves in the past year. The company plans to close its Baltimore, Md., assembly plant by the summer and permanently idle plants in Lansing and Linden, N.J. It's also paring down its salaried workforce by as many as 2,000 employees this year through early buyouts and attrition.

A restructuring plan for GM's European unit is aimed at cutting 12,000 jobs, saving the company more than $600 million a year.

Despite the cost-cutting moves, Morgan Stanley analyst Stephen Girsky concluded in a report last month that 'relative to its current market share, this company has significant issues in terms of too many employees (salaried and hourly), plants, vehicle models and dealers.'

Girsky estimates that discounted purchases by GM employees, retirees, and suppliers and others, and sales to fleet buyers such as car rental firms account for nearly one-third of its sales.

Craig Hutson, an analyst at Gimme Credit, a corporate bond research company, said GM may have to trigger a restructuring at some point, but that point has not yet arrived.

'The most important thing they need to do is get the product right,' said Hutson. 'But if this becomes a spiraling, continue-to-lose market share situation where they never regain 26, 27 percent, then they have to do something more dramatic.'

Two weeks ago, GM Chairman and CEO Rick Wagoner took control of the automaker's money-losing North American operations. Former GM North America chairman Bob Lutz was freed to concentrate on global product development and Gary Cowger, former president of GM North America, was made a group vice president with the task of shoring up global manufacturing and labor relations.

North America, GM's most lucrative market, is the focus of the rebound efforts.

'We clearly understand the challenges we face in North America and we are aggressively addressing those challenges,' GM spokesman Jerry Dubrowski said Monday.

GM shares inched back 59 cents or 2.3 percent to $26.19 Monday on the New York Stock Exchange.

In 2004, GM made an average pre-tax profit of $1,262 per vehicle but is expected to lose an average of $2,681 on every car or truck it produces this year, according to Deutsche Bank.

A key challenge for GM is dealing with escalating health care costs. The automaker's health care bill this year is expected to jump to $5.6 billion from $5.2 billion last year. Wagoner and other top executives laid out the automaker's plight last week at an annual meeting in Dearborn with the UAW, but union president Ron Gettelfinger told reporters afterwards he has no intention of opening the master labor agreement to renegotiate health benefits for his members.

The contract expires in September 2007.

Gimme Credit's Hutson is not surprised by Gettelfinger's stance but he believes a continuing financial slide by GM could give the company an advantage when negotiations get underway in about 14 months.

'The worse things are for GM in 2007, the more negotiating leverage they have with the UAW, 'Hutson said.

Deutsche Bank estimates health care costs GM $10,000 annually for each employee. But if the automaker could equalize benefits spending for hourly and salaried workers, 'it would translate to $2,500 in annual savings per hourly worker and retiree.'

Peter Morici, a business professor at the Robert H. Smith School of Business at the University of Maryland, says any GM recovery must include shrinking the broad gap in pay rate between executives and hourly workers.

'Change the whole compensation structure to bring it into line with international competition and make it more incentive based,' Morici said. Most analysts agree that what GM really needs to halt its regression is a string of hit vehicles -- not just any vehicles, but those capable of bringing in high profits, such as full-size trucks.

GM's new line of big pickups and SUVs won't arrive in showrooms until early next year, but even then there is no guarantee they will revive the automaker, given rising fuel prices and intense competition.

'Gains could well be offset by market share erosion in other segments, 'Himanshu Patel, an analyst at J.P. Morgan, said in a note to investors last week.

Gimme Credit's Hutson has remained more upbeat about GM's prospects, taking into account guidance from the automaker's executives that 2005 will be a down year with a rebound in 2006 and 2007.

'It will depend largely on how the reception is to the truck platform,' Hutson said. 'GM is still the market share leader in large SUVs and if these new products are very impressive, 2005 could just be a trough year.'

Τα πράγματα με την παγκόσμια οικονομία φένεται οτι γίνονται πάρα πολύ σκούρα. Φένεται οτι αρχίζουνε να κρούουνε οι καμπάνες για την GM…

http://www.autopress.gr/fnews/show.asp?ID=8662

http://www.detnews.com/2005/autosinsider/0504/19/A01-155271.htm

============================================

GM must shrink to stop losses, analysts say

Experts say carmaker has to cut more than 20,000 jobs and close four assembly plants

By Ed Garsten / The Detroit News

General Motors Corp. must close plants, cut jobs, contain health care costs and eliminate at least one brand to stanch its bottom-line bleeding, some leading financial analysts say.

The automaker, which reported steep first-quarter losses today, is under severe pressure to prove to investors that it can fix its operations. GM's market value has plunged 35 percent this year and its credit rating is hovering one notch above junk-bond status.

In a bearish report Friday, Deutsche Bank analysts Rod Lache and Michael Heifler said GM likely will be forced to undertake a major restructuring that could mean the closure of four assembly plants and the elimination of 20,000 to 30,000 jobs in North America.

It could also entail dropping a brand -- most likely Buick -- renegotiating health care benefits with the United Auto Workers union and cutting benefits for laid-off workers who are collecting most of their base pay.

'A restructuring of this magnitude would be unprecedented in recent times,' Lache and Heifler wrote. 'The end result is that GM could emerge as a smaller but healthier automaker.'

Shrinking the world's largest automaker would be a bitter pill for both management and labor, but some industry experts say it's necessary given GM's market share losses. Others say with GM's overhead -- such as retiree health care and pension -- it doesn't make sense to retrench.

Riding high just a year ago on strong sales of its brawny, profit-hauling full-size pickups and sport utility vehicles, GM earned $1.3 billion in the first quarter of 2004 and its stock traded at near $50 a share.

But in the last 12 months, faced with increased competition and consumers choosing more fuel-efficient vehicles as gas prices skyrocketed, GM's U.S. market share has dwindled to 25.6 percent through March, from 26.8 percent last year, as sales fell 5.1 percent, according to Autodata Corp.

GM has already implemented several downsizing moves in the past year. The company plans to close its Baltimore, Md., assembly plant by the summer and permanently idle plants in Lansing and Linden, N.J. It's also paring down its salaried workforce by as many as 2,000 employees this year through early buyouts and attrition.

A restructuring plan for GM's European unit is aimed at cutting 12,000 jobs, saving the company more than $600 million a year.

Despite the cost-cutting moves, Morgan Stanley analyst Stephen Girsky concluded in a report last month that 'relative to its current market share, this company has significant issues in terms of too many employees (salaried and hourly), plants, vehicle models and dealers.'

Girsky estimates that discounted purchases by GM employees, retirees, and suppliers and others, and sales to fleet buyers such as car rental firms account for nearly one-third of its sales.

Craig Hutson, an analyst at Gimme Credit, a corporate bond research company, said GM may have to trigger a restructuring at some point, but that point has not yet arrived.

'The most important thing they need to do is get the product right,' said Hutson. 'But if this becomes a spiraling, continue-to-lose market share situation where they never regain 26, 27 percent, then they have to do something more dramatic.'

Two weeks ago, GM Chairman and CEO Rick Wagoner took control of the automaker's money-losing North American operations. Former GM North America chairman Bob Lutz was freed to concentrate on global product development and Gary Cowger, former president of GM North America, was made a group vice president with the task of shoring up global manufacturing and labor relations.

North America, GM's most lucrative market, is the focus of the rebound efforts.

'We clearly understand the challenges we face in North America and we are aggressively addressing those challenges,' GM spokesman Jerry Dubrowski said Monday.

GM shares inched back 59 cents or 2.3 percent to $26.19 Monday on the New York Stock Exchange.

In 2004, GM made an average pre-tax profit of $1,262 per vehicle but is expected to lose an average of $2,681 on every car or truck it produces this year, according to Deutsche Bank.

A key challenge for GM is dealing with escalating health care costs. The automaker's health care bill this year is expected to jump to $5.6 billion from $5.2 billion last year. Wagoner and other top executives laid out the automaker's plight last week at an annual meeting in Dearborn with the UAW, but union president Ron Gettelfinger told reporters afterwards he has no intention of opening the master labor agreement to renegotiate health benefits for his members.

The contract expires in September 2007.

Gimme Credit's Hutson is not surprised by Gettelfinger's stance but he believes a continuing financial slide by GM could give the company an advantage when negotiations get underway in about 14 months.

'The worse things are for GM in 2007, the more negotiating leverage they have with the UAW, 'Hutson said.

Deutsche Bank estimates health care costs GM $10,000 annually for each employee. But if the automaker could equalize benefits spending for hourly and salaried workers, 'it would translate to $2,500 in annual savings per hourly worker and retiree.'

Peter Morici, a business professor at the Robert H. Smith School of Business at the University of Maryland, says any GM recovery must include shrinking the broad gap in pay rate between executives and hourly workers.

'Change the whole compensation structure to bring it into line with international competition and make it more incentive based,' Morici said. Most analysts agree that what GM really needs to halt its regression is a string of hit vehicles -- not just any vehicles, but those capable of bringing in high profits, such as full-size trucks.

GM's new line of big pickups and SUVs won't arrive in showrooms until early next year, but even then there is no guarantee they will revive the automaker, given rising fuel prices and intense competition.

'Gains could well be offset by market share erosion in other segments, 'Himanshu Patel, an analyst at J.P. Morgan, said in a note to investors last week.

Gimme Credit's Hutson has remained more upbeat about GM's prospects, taking into account guidance from the automaker's executives that 2005 will be a down year with a rebound in 2006 and 2007.

'It will depend largely on how the reception is to the truck platform,' Hutson said. 'GM is still the market share leader in large SUVs and if these new products are very impressive, 2005 could just be a trough year.'

Τα πράγματα με την παγκόσμια οικονομία φένεται οτι γίνονται πάρα πολύ σκούρα. Φένεται οτι αρχίζουνε να κρούουνε οι καμπάνες για την GM…

http://www.autopress.gr/fnews/show.asp?ID=8662

http://www.detnews.com/2005/autosinsider/0504/19/A01-155271.htm

============================================

GM must shrink to stop losses, analysts say

Experts say carmaker has to cut more than 20,000 jobs and close four assembly plants

By Ed Garsten / The Detroit News

General Motors Corp. must close plants, cut jobs, contain health care costs and eliminate at least one brand to stanch its bottom-line bleeding, some leading financial analysts say.

The automaker, which reported steep first-quarter losses today, is under severe pressure to prove to investors that it can fix its operations. GM's market value has plunged 35 percent this year and its credit rating is hovering one notch above junk-bond status.

In a bearish report Friday, Deutsche Bank analysts Rod Lache and Michael Heifler said GM likely will be forced to undertake a major restructuring that could mean the closure of four assembly plants and the elimination of 20,000 to 30,000 jobs in North America.

It could also entail dropping a brand -- most likely Buick -- renegotiating health care benefits with the United Auto Workers union and cutting benefits for laid-off workers who are collecting most of their base pay.

'A restructuring of this magnitude would be unprecedented in recent times,' Lache and Heifler wrote. 'The end result is that GM could emerge as a smaller but healthier automaker.'

Shrinking the world's largest automaker would be a bitter pill for both management and labor, but some industry experts say it's necessary given GM's market share losses. Others say with GM's overhead -- such as retiree health care and pension -- it doesn't make sense to retrench.

Riding high just a year ago on strong sales of its brawny, profit-hauling full-size pickups and sport utility vehicles, GM earned $1.3 billion in the first quarter of 2004 and its stock traded at near $50 a share.

But in the last 12 months, faced with increased competition and consumers choosing more fuel-efficient vehicles as gas prices skyrocketed, GM's U.S. market share has dwindled to 25.6 percent through March, from 26.8 percent last year, as sales fell 5.1 percent, according to Autodata Corp.

GM has already implemented several downsizing moves in the past year. The company plans to close its Baltimore, Md., assembly plant by the summer and permanently idle plants in Lansing and Linden, N.J. It's also paring down its salaried workforce by as many as 2,000 employees this year through early buyouts and attrition.

A restructuring plan for GM's European unit is aimed at cutting 12,000 jobs, saving the company more than $600 million a year.

Despite the cost-cutting moves, Morgan Stanley analyst Stephen Girsky concluded in a report last month that 'relative to its current market share, this company has significant issues in terms of too many employees (salaried and hourly), plants, vehicle models and dealers.'

Girsky estimates that discounted purchases by GM employees, retirees, and suppliers and others, and sales to fleet buyers such as car rental firms account for nearly one-third of its sales.

Craig Hutson, an analyst at Gimme Credit, a corporate bond research company, said GM may have to trigger a restructuring at some point, but that point has not yet arrived.

'The most important thing they need to do is get the product right,' said Hutson. 'But if this becomes a spiraling, continue-to-lose market share situation where they never regain 26, 27 percent, then they have to do something more dramatic.'

Two weeks ago, GM Chairman and CEO Rick Wagoner took control of the automaker's money-losing North American operations. Former GM North America chairman Bob Lutz was freed to concentrate on global product development and Gary Cowger, former president of GM North America, was made a group vice president with the task of shoring up global manufacturing and labor relations.

North America, GM's most lucrative market, is the focus of the rebound efforts.

'We clearly understand the challenges we face in North America and we are aggressively addressing those challenges,' GM spokesman Jerry Dubrowski said Monday.

GM shares inched back 59 cents or 2.3 percent to $26.19 Monday on the New York Stock Exchange.

In 2004, GM made an average pre-tax profit of $1,262 per vehicle but is expected to lose an average of $2,681 on every car or truck it produces this year, according to Deutsche Bank.

A key challenge for GM is dealing with escalating health care costs. The automaker's health care bill this year is expected to jump to $5.6 billion from $5.2 billion last year. Wagoner and other top executives laid out the automaker's plight last week at an annual meeting in Dearborn with the UAW, but union president Ron Gettelfinger told reporters afterwards he has no intention of opening the master labor agreement to renegotiate health benefits for his members.

The contract expires in September 2007.

Gimme Credit's Hutson is not surprised by Gettelfinger's stance but he believes a continuing financial slide by GM could give the company an advantage when negotiations get underway in about 14 months.

'The worse things are for GM in 2007, the more negotiating leverage they have with the UAW, 'Hutson said.

Deutsche Bank estimates health care costs GM $10,000 annually for each employee. But if the automaker could equalize benefits spending for hourly and salaried workers, 'it would translate to $2,500 in annual savings per hourly worker and retiree.'

Peter Morici, a business professor at the Robert H. Smith School of Business at the University of Maryland, says any GM recovery must include shrinking the broad gap in pay rate between executives and hourly workers.

'Change the whole compensation structure to bring it into line with international competition and make it more incentive based,' Morici said. Most analysts agree that what GM really needs to halt its regression is a string of hit vehicles -- not just any vehicles, but those capable of bringing in high profits, such as full-size trucks.

GM's new line of big pickups and SUVs won't arrive in showrooms until early next year, but even then there is no guarantee they will revive the automaker, given rising fuel prices and intense competition.

'Gains could well be offset by market share erosion in other segments, 'Himanshu Patel, an analyst at J.P. Morgan, said in a note to investors last week.

Gimme Credit's Hutson has remained more upbeat about GM's prospects, taking into account guidance from the automaker's executives that 2005 will be a down year with a rebound in 2006 and 2007.

'It will depend largely on how the reception is to the truck platform,' Hutson said. 'GM is still the market share leader in large SUVs and if these new products are very impressive, 2005 could just be a trough year.'