GM chief exec puts his job on the line

DETROIT - General Motors Corp said on Monday that chief executive Rick Wagoner will take day-to-day control of North American automotive operations from two deputies, putting his job on the line to turn around the money-losing business.

The shake-up at the world's largest automaker follows GM's warning last month that it expected its biggest quarterly loss since it nearly went bankrupt in 1992.

Such troubles have sent its bond rating down to just one step above "junk" status at two ratings agencies, and its stock price to the lowest in more than 13 years as foreign competition has eroded its once-dominant US market share to about 25 per cent.

"Rick is saying, 'I'm putting my neck in the noose on North America and that's going to be my primary task,"' said David Cole, chairman of the Centre for Automotive Research in Ann Arbor, Michigan.

Reaction to the news was muted, with GM shares edging down 33 cents to close at US$29.05 ($41.63) on the New York Stock Exchange.

Wagoner will take the helm from Bob Lutz, chairman of GM North America, and Gary Cowger, president of GM North America, who will both now focus on global responsibilities.

GM named Lutz and Cowger to their North American posts in November 2001, when GM commanded more than 28 per cent of the US market.

Lutz, the 73-year-old former Chrysler executive who Wagoner recruited to revitalize GM's car and truck lineup, will lead GM's global product development activities.

Cowger will focus on global manufacturing and labour, including efforts to wring concessions from GM's biggest union, the United Auto Workers (UAW) union, particularly to combat soaring health care costs.

"Given the challenges we face in North America, it makes sense for me to assume control of GMNA's (General Motors North America) day-to-day operations and shorten the lines of communication and decision-making," Wagoner said in a statement.

GM's US sales have fallen 5.1 per cent through the first three months of 2005 from a year ago, and its market share has tumbled to 25.6 per cent from about 27.3 per cent for all of 2004 and compared to 32 per cent 10 years ago, despite generous sales incentives.

Wagoner had been head of GM North America before being named chairman and chief executive.

The move puzzled Efraim Levy, an automotive equity analyst with Standard & Poor's, who said it only cuts one layer of management.

"It removes the opportunity to blame somebody else," he said. But it will be a few years before analysts can judge Wagoner's effectiveness, given the long time-lag in the automotive industry between launch of new vehicles.

Wagoner said that Lutz had requested the change in order to devote his time to integrating GM's car and truck development around the world.

Some industry analysts have criticized some of GM's new cars and trucks launched under Lutz's tenure, including the Buick Lacrosse and the Pontiac G6 sedan.

But those vehicles were already under development before Lutz arrived at GM in 2001, and the true test of his leadership will begin with the new Solstice roadster due this year, Cole said.

The shift in executive duties at the top of GM -- the third largest US company as measured by sales -- is the second in the last two months.

Last month, GM reorganized its global vehicle development and engineering operations, combining four regions into a single system to speed up the launch of new cars and trucks.

"Now's the right time to accelerate the global integration of two of our most important functions, product development and manufacturing/labor," Wagoner said on Monday.

Cowger, who had led GM in past labor negotiations with the UAW, said last month that a "competitive" health care plan for both its unionized and salaried workers would save GM billions.

GM, the largest private US provider of health care, has estimated that its US health care costs for more than 1 million current and retired workers and their families will grow to US$5.6 billion this year from US$5.2 billion in 2004.

- REUTERS