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GM to Layoff 25,000, Close Plants

7 June 2005

In his address to GM’s annual meeting of stockholders today, Chairman and Chief Executive Officer Rick Wagoner outlined in broad strokes his plan for turning around GM North America, which lost $1.3 billion in the first quarter of this year.

The basics of the downturn are pretty clear: GM’s costs are too high, sales are dropping, and the sales mix is skewing away from the high-profit SUVs to the lower-profit cars.

The highest profile action was his announcement of the closing of additional assembly and component plants over the next few years, and the layoff in the US of 25,000 or more workers in the 2005 to 2008 period to generate estimated annual savings of some $2.5 billion.

He also indicated that GM and the UAW are “in discussion” as to how to resolve the issue of the cost of health care. With plant closings and job losses as a potential threat, the union may be more inclined to negotiate some sort of concession on health care. Or maybe not.

On the product side, GM is advancing the timing of several high-volume, high-profit programs (refreshes and new designs) in the area of large pick-ups and mid- and large-utilities.

Looking out a little farther, we’re prioritizing our product development resources in the areas where we see the greatest volume, growth, and profit opportunities—crossovers of all kinds; entry luxury and premium models; hybrids and other technologies to improve fuel efficiency.

At least hybrids and fuel efficiency made it onto the future shortlist.

Separately, GM and DaimlerChrysler indicated that they each will invest up to US$500 million in a joint venture to develop the two-mode hybrid powertrain (earlier post). The two companies intend to make the first cars using the hybrid system by early 2008. (AFX)

It seems that GM, even in its turnaround plan, is still dependent on the large trucks and SUVs to pull it out of its decline. The riskiness of that approach is reflected in the recently revised credit ratings that brought GM paper to junk-bond status.

That’s not to say that GM hasn’t had its success with recent launches. The new Chevy Cobalt, for example, was the sixth best-selling car in the US in May (behind Toyota, Honda and Nissan models). (Car Buyer’s Notebook)

But that’s not going to close the financial gap created by the over reliance on larger-format vehicles that suddenly are not selling.

Short-term Technology Associations
AutomakerTechnology
GM
Ford Hybrids, H2ICE
DaimlerChrysler Clean Diesel
Toyota Hybrids
Honda Hybrids, CNG

And in the area of strategically associating itself with a short-term technology solution for fuel efficiency and sustainable mobility—which will become increasingly important as oil prices remain upwardly volatile and climate change issues come more to the fore—GM has no short-term position or traction.

That’s not to say that they don’t have technology development underway, but that there is no popular association of such a technology with a GM product that someone can walk into a showroom and buy now. Fuel cell development doesn’t count—that’s too far down the road (so to speak).

The GM North America situation is a very tough problem, and one that will have nasty ripple effects throughout the supply chain. I think that the company will have to get more aggressive on the product side than currently suggested (to wait until 2008 to manufacture  hybrids is not a good idea)—and that it will have to cut more than currently announced.

June 7, 2005 in Vehicle Manufacturers | Permalink | Comments (6) | TrackBack (0)

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Comments

I really think this is the way to go. With a strong commitment by the feds, we could grow and process all the biodiesel we need from algae grown around the Salton Sea.

This is what we should be building right now. In my opinion Ford and GM will go bankrupt before they even begin to catch on.

For about the past year I have offered anyone who would listen the following info: None of the American automobile companies have even responded. I have had some positive response from several educational institutions but - as far as I know - none have done any experimental work to verify my claims.

Here is what I have been proposing:

In one scale or another everyone of these systems have been proven.

Like to produce a vehicle that can burn rubber on takeoff on all four wheels and get 90+ mpg?

What I would like to see the automakers working on would have:

A turbocharged, two cylinder opposed, 2-cycle, air-cooled diesel directly
driving a generator. (It would not be running most of the time.) A 111 volt Lithium-Ion Polymer battery pack. Nothing but wires going from the controller to every wheel, except for the necessary additional friction
brakes (of course). An added advantage of this would be the ability to recharge from the electrical grid while at home, saving even more on fuel.

Each wheel, depending on the feedback to the controller from wheel speed sensors would drive with just the right power depending on the accelerator position. You would get recharging from deceleration just as you do in today's hybrids. You would also use this feedback to stop the wheel from skidding.

Each wheel would have a stationary stator and a series of fixed magnets closely adjacent all around the inside of the wheel. In a sense it would operate each wheel in a very similar fashion that the mag-lev trains use,
except the motion would be circular, of course. Something very different about this type of motor is that the stators are fixed to the axles and the magnets are driven around them. This gives a significant increase in
mechanical advantage. That's like turning an ordinary electric motor inside out.

There would be no need for ordinary electric motor brushes. In fact, many electric motors operating today are brushless.

Such motors already exist in the model airplane field and their efficiently
is amazing - approaching 90%. I've got a couple and doubt that I would ever buy any other type.

It's possible to hang the model on the prop right out in front of you and
accelerate straight up, like a rocket, with this type motor

In the vehicle the motor/generator would not turn on to recharge the
batteries until they needed it. There are already experimental Lithium-Ion
driven cars that can get in excess of 200 miles before they have to be
recharged by plugging them in. You would top off your batteries overnight by plugging them in. Some cutting edge research by Toshiba - employing nano-technology - indicates that recharging can be done so fast that you could top off while eating lunch.

Lithium -Ion battery technology is so new that I doubt that very many
automotive engineers have even heard of them, much less thought to use them in this manner. Their energy density exceeds that of any other form of rechargeable energy storage.

The Lithium Ion battery is the most efficient battery available right now. So is the outer rotor electric motor the most efficient motor.

Build an Automobile right and it will weight less and have simpler, easier to repair/replace modules.

Lets see what we can eliminate while improving performance and efficiency.

Transmission - None

Ignition system - None

Liquid cooling - None

Valves and valve train - None

Use bio-oil/fuels for both fuel and lubrication.

Feel free to pass this along to anyone you know in the Transportation business.

I bought a Honda Civic Hybrid last summer. I enjoy it more than any vehicle I've ever owned. I will Never buy another vehicle that isn't a Hybrid and doesn't get at least 50 mpg.

As far as I can tell, Detroit isn't even thinking the same way I and the vast majority of it's potential customers are.

William Lucas Jones
490 Mauldin Rd.
Sautee, GA 30571-3159

(706) 219-3333

I'm reading a 10 year old book right now, CAR WARS, by Jonathan Mantle.

It is sure deja vu all over again, both on the union battles, and the "surprise" shift to smaller cars.

The book also mentions (I'm not done yet) the legendary competition between GM America, and GM Europe (including Opel).

I'm sure there are some Opel models that could be sped to market here, and would be well-accepted. If fuel prices rise to $3-4 a gallon, we might even look at a temporary acceptance of Euro safety and emissions standards ... I'd support that. I'd think the Bush administration (given their enviro record) would too.

I didn't finish my thought ... the reason GM themselves will probably not propose this is that competition ... who in Detroit would want to accept German designs ... even if they are GM German designs?

Its not that at all.

1 The fact is healthcare and labor costs have destroyed utterly gm and fords ability to make a good low margin high mpg car. They simply cant do it its mathmaticaly impossible.

2 Because gm and ford havnt been able to do that ina very long time for the above reason they simple arnt known for good small cars.. so even if they could do it who would buy them? Its bluntly obvious to them they cant sell a small car in the us even when they can sell the same exact car in europe.. because people wont buy it from them in america.

3 In the end it doesnt matter anyway in order to adapt to the need for smaller higher milage cars gm and ford have had to do something completely odd...

They are pushing most all r&d way into the future.. very odd for an american company... And they are basicaly just waiting for market forced to give them the ammo they need to rip down thier labor costs as they mothball old factories and cann employies by the tens of thousands.

In the end they dont have a choice the only way to the future is by burning down the house.

not only will gm loose 25,000 employees but they will loose a lot more customers a year, alot more. Gm just lost everyone down here in south fl as a customer, and i have been a gm guy all my life. I own a 04 monte carlo ss now, but my next vehicle is gonna be a ford, at least it's a company who dosn't lay off 25,000 of their american employees.

Hello,

how are you today i am intrested in buy generators and plants. i will need 50 each please do get back too me asap.

Regards,

Sumi

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