Word: gm
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Dates: during 2000-2009
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...save his company, Wagoner will have to persuade the U.A.W. that what's good for GM is good for labor, even if it means shutting down plants and laying off workers. The company can't slim down easily, a legacy of earlier battles with the U.A.W. and labor deals that make it prohibitively expensive to shutter factories. What happens to a GM worker when his or her plant shuts down? Not much. Under GM's contract with the U.A.W., laid-off workers are entitled to 95% of their salary plus benefits for nearly two years. So while closing factories saves...
...GM's decline, which goes back to the energy crisis of the 1970s, has been accelerating lately, compounded by competition from Japanese and Korean brands, another burst of high gasoline prices, the bankruptcy of its largest parts supplier, Delphi, in Troy, Mich., and perhaps most critically, a glut of SUVs and sedans. For all those reasons, Wall Street is discounting GM's chances of survival. Bearish analysts say there's a 40% chance the company will go bust in a couple of years. "The forces working on the auto industry--not just on GM--are gigantic," says Gerald Meyers...
...does GM get out of this mess without a trip through bankruptcy court, which could conceivably lead to a breakup of its storied brands? The company's problems run so deep that only a major overhaul could do the job--and then only if a smooth road lies ahead. Wagoner is getting plenty of advice about how to fix things, from cutting GM's $1.1 billion stock dividend to demanding deeper wage-and-benefit cuts from hourly workers. A confrontation over labor issues is looming, in fact, since GM's contract with the United Auto Workers (U.A.W.) expires in September...
...sound obvious that GM needs to sell cars that people want to buy, but that's at the top of Wagoner's list of challenges. Wall Street is uneasy over GM's production plans, heavily weighted toward light trucks at a time when consumers are veering away from gas guzzlers. The overreliance on big vehicles is partly a result of bad luck. GM execs have admitted they never anticipated gas prices rising as fast as they did during the hurricane season, when a gallon of gas cost more than $3 in some regions. Yet GM relied for years...
Meanwhile, GM is playing catch-up in the hot market for hybrids because it has been losing sales to Toyota and Honda. The Japanese companies began developing hybrids in the '90s, when Detroit scoffed at the technology as economically unviable. "GM's reasoning with hybrids was, Why bother when trucks are selling?" says Matheson. Toyota put hybrids on the market even when the company knew they wouldn't make money right away. "Detroit doesn't think that way," Matheson says. Both GM and Ford are coming to market with their first hybrid models, while Toyota and Honda are already selling...