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DETROIT - General Motors has more work to do to complete its turnaround and meet its goal of cutting its structural costs to 25 per cent of net sales, the automaker's top North American executive said today.
In a speech to the Detroit Automotive Press Association, Troy Clarke, GM's president for North America, said the automaker's restructuring was "not yet finished."
"The GM I grew up in no longer exists," Clarke, who was tapped to run North America in July, said. "We're a much different company today, and we're not done with our transformation."
GM, which lost US$10.6 billion ($16 billion) in 2005, is closing 12 plants, has offered buyouts to more than 34,000 workers and has said it is on target to cut US$9 billion in annual structural costs.
Of the 34,410 GM factory workers who accepted buyout and early retirement offers, all but 6,200 have now left the company, Clarke said.
"The balance will leave at the end of the year," he said, adding that GM had brought in about 3,400 workers from former subsidiary Delphi Corp. under a "flowback" provision between the automaker and its major parts supplier.
Delphi filed for bankruptcy in October 2005 and has outlined plans to drop several business lines, close US plants and cut thousands of hourly and salaried workers to reorganize.
The parts supplier has been in talks with the United Auto Workers union and GM to cut wages and benefits. Clarke said GM's negotiations with Delphi were making progress.
"The talks are definitely moving forward," he told reporters after the speech. "There are a lot of moving parts...It's tough to forecast when they will come to a conclusion."
Earlier on Tuesday, UAW president Ron Gettelfinger told union rank and file that union leadership was not in active negotiations with Delphi over the terms of a final labor settlement, a deal that has been seen as key to GM's own recovery.
"The battle with Delphi is far from over," he said. "This process will require them to meet with our union."
Clarke, who has been working with GM since 1973, was previously president of GM Asia Pacific.
He was recruited by Chief Executive Rick Wagoner this year to head the automaker's North American unit, which lost US$8.2 billion in 2005. GM also has been losing US market share to foreign automakers such as Toyota Motor Corp. and Honda Motor Co. Ltd. .
Clarke on Tuesday said cost-cutting alone is not enough to turn things around. He said GM also has to convince consumers to buy its vehicles for reasons beyond just getting a rebate on the sticker price.
"Each brand, each product has to elicit an emotional response from our customers," he said.
Clarke also said the automaker needs to bring capacity more in line with demand.
GM's inventory was at a 76-day supply at the end of the third quarter. By comparison, Toyota, expected to surpass GM as the world's largest automaker within a year, was at about a 30-day supply of unsold vehicles.
"For GM to generate sustained profitability and sales, we have to get capacity right...," Clarke said. ". ...building whatever the market demands, when it demands...no more, no less."
- REUTERS
