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...buyouts certainly add a new sense of urgency to a turnaround effort that until now some critics, such as GM's newest board member, Jerry York, investor Kirk Kerkorian's man in Detroit, had considered stuck in neutral. But things are not looking up at GM these days. The automaker recently disclosed it had lost $10.6 billion in 2005, not $8.6 billion as the company reported in January. March sales estimates prepared by outside analysts suggest that GM's market share has dipped close to 21% in March, a far cry from the 45% GM commanded in its heyday...
...Ironically, while the buyout agreement could help cut GM's payroll, it could also end up exacerbating its other major problem, crippling employee retirement costs. John Murphy, the auto analyst for Merrill Lynch, warned in a note to investors, "The accelerated retirements at GM may result in a lower active headcount, but further exacerbates GM's already heavy burden of 2.5 retirees to active workers. Furthermore, GM continues to structurally shrink as it loses market share in the U.S., which means that a smaller company is supporting more retirees. Until GM stabilizes market share, rationalizes capacity at every point...
...Steve Harris, GM vice president of communications, insists Wagoner's job is not in any jeopardy. "A lot of very difficult things have been accomplished in a short period of time," Harris says. Not everyone agrees, of course. Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business, said the $10.6 billion loss GM posted for 2005 suggests the company needs new leadership. "GM needs a less expensive and more flexible labor contract, less overhead and red tape in marketing and design, brands realigned to attainable markets and a CEO who can convince employees...
...business, to a group of outside investors that includes Kohlberg Kravis Roberts & Co.and Goldman Sachs Capital Partners. Selling GMAC also will help cover the cost of the buyouts, which are expected to exceed $2 billion, pending approval by the bankruptcy judge presiding over Delphi's Chapter 11 filing - since GM also has agreed to assume Delphi's financial responsibility for post-retirement benefits as part of the deal with the union...
...under the buyout agreement. The buyouts give the union a little more room for bargaining on future concessions, says McAlinden. With the buyout agreement in place, representatives from the UAW and Delphi Corp. are slated to resume discussions on rewriting the bankrupt company's existing contract with the union. GM representatives also are expected to participate in the talks, suggesting that GM plans to keep a close eye on the discussions in an effort to head off any possibility of a strike that could cripple the automaker's operations across North America...