Word: gm
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Dates: during 2000-2009
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...perception is reality, here's one Lutz might like: Wall Street is warming to the idea that GM isn't dead yet. After losing $10.6 billion last year, the company reported a first-quarter profit of $445 million, its first quarterly gain since 2004. Much of that was due to accounting optics - and GM still lost $503 million in its North American auto operations. But in recent weeks the stock has rallied 42% from its 52-week low of $18.33. "There's more optimism than there was a month ago," says analyst Brian Johnson of Bernstein Research, noting "glimmers...
Decades of downsizing have turned GM into a retirement home with a car factory in back. Every active U.S. employee supports 3.2 retirees and surviving spouses, amounting to "legacy costs" of about $1,500 per vehicle and wiping out profits on all but the priciest models. Yet that dismal state also makes CEO Rick Wagoner's plan fairly straightforward: shrink GM to a defensible market share. Then wait for the retiree costs to go down, around 2010, as GM vets increasingly qualify for Social Security and Medicare. To bridge itself to 2010, GM is shedding factories and workers, offering buyout...
...Wagoner, the next 18 months will define his stewardship, if not GM's future. GM, Delphi and the U.A.W. are locked in a complex feud over how to restructure the partsmaker, whose fate is tied to the automaker's. GM has agreed to take back as many as 5,000 Delphi workers, and thousands more are being offered buyouts. But Delphi chief Robert (Steve) Miller has asked the bankruptcy court for permission to void labor contracts, which would allow him to slash wages if the unions won't concede--a move that could spark a strike. He also wants more...
...easy stuff to see your way through," Wagoner says. The situation is complicated by the fact that Miller wants better terms for supply contracts with GM, while GM claims it pays too much already. The judge heard arguments over the labor contracts last week and is expected to rule this summer. GM CFO Fritz Henderson said, however, he expects to reach a settlement with Delphi and the U.A.W. within 60 days. GM, meanwhile, is stockpiling parts in case of a strike. "The consequences of our not addressing this effectively are big," says Wagoner. "Nobody wins with a long strike...
Keeping the labor peace is critical for Wagoner since he will soon have bigger issues to face: reaching a deal with the U.A.W. for a master contract to replace the one expiring in September 2007. Under the current contract, GM can close factories but can't lay off workers; they go into a "jobs bank" and collect wages and benefits even if they sit around and play cards. Wall Street estimates the program costs $600 million a year. "Clearly, it's an area of uncompetitiveness," Wagoner says. It's sure to be on the agenda. So too will GM...