Tag Archive | "General Motors Co."

GM’s Workers Guaranteed $12,500 in Bonuses in Tentative UAW Contract

United Auto Workers members working for General Motors Co. will be guaranteed at least $12,500 in bonuses over the next four years under a proposed deal that will also result in 6,400 saved or added jobs and $2.5 billion in additional U.S. investment.

That’s all if the deal is ratified by a majority of the 48,500 UAW members who work for GM, UAW President Bob King said Tuesday in a media briefing at the GM-UAW Center for Human Resources Center off Jefferson Avenue.

Earlier in the day, King and Joe Ashton, the union’s vice president for GM, briefed local union presidents on the tentative contract. Local leaders then voted to recommend it for ratification to their membership. They’ll now return to their respective plants to brief the rank-and-file, who will vote on the contract in the next week, reported The Detroit News.

“One of our main objectives is jobs, and I think we met that objective,” said Ashton, adding that 11,400 jobs have been recovered over the last two years, and there will be 6,500 more over the next two years.

But workers won’t be getting back cost of living increases or base pay raise. The jobs bank, which provided pay and benefits to laid-off workers, isn’t being restored.

Workers, however, will get jobs at five or more U.S. plants. Work also is coming back from Mexico.

GM will reopen its former Saturn assembly plant in Spring Hill, Tenn., which was idled in 2009 during the automaker’s bankruptcy. The automaker will add 500 workers within the year to the Spring Hill plant for one midsize car, and launch a second midsize car at the end of 2013, Ashton said.

Other plants to benefit include the Warren transmission plant; Wentzville, Mo.; Saginaw; and Fort Wayne, Ind., which will build a next-generation truck.
Wentzville gets an additional shift to make the next-generation of Chevrolet Colorado and GMC Canyon compact pickups.

A new compact car will be built at a site still to be disclosed in a move that will add or retain 500 jobs.

Work that would have been done in Mexico will remain in Saginaw.

Another 630 jobs will be retained at a pair of powertrain facilities: Romulus gets a new engine program and there is new transmission work for the plant in Warren under a plan to repatriate work from Mexico. Saginaw casting receives additional investment in a contract that ensures 1,400 of the additional jobs are at supplier plants.

The Shreveport, La., plant is still scheduled to close, but the Janesville plant remains on standby.

Other details being released Tuesday include confirmation of a $5,000 signing bonus, profit sharing as high as $12,000 and $1,000 inflation protection lump sums paid out in 2012, 2013 and 2014.

UAW members who work for GM will see a minimum profit sharing payout of $3,500 in 2012 for 2011 profits under a formula designed to be easier to understand and based on North American profits. Profit-sharing checks could total as much as $20,000 over the life of the agreement, but that will depend on GM’s North American profits, King said.

There is an additional $250 yearly award for meeting quality targets.

Entry level wages increase to $19.28 by the end of the agreement. About 4 percent of GM’s workforce is made up of so-called tier two workers who earn $14-$16 an hour, about half of veteran pay. Those workers will get an immediate increase to $15.78 an hour upon ratification, and they receive yearly increases for the next four years until they hit $19.28 an hour.

The proposed agreement doesn’t cap the number of entry-level workers GM can hire, but after 2015, it will be capped at 25 percent unless the union and company agree to change it in the next round of contract talks.

The contract also restores supplemental unemployment benefits, which tops off what they receive from the state.

Improvements to health benefits include unlimited $25 doctor’s office visits.
The union also proposes that 10 percent of each employee’s profit sharing go into the health care trust to meet obligations to retirees. King said the company is still exploring the legality, but the UAW wants the membership to ratify this move.

GM will offer buyouts of $65,000 to skilled trade workers who retire between Nov. 1 and March 31 and $10,000 for other eligible workers. The move makes room for GM to hire new workers at the lower wage, which helps keep the company’s labor costs competitive — a condition of the federal bailout received in 2009. King said there are 14,000 to 17,000 workers eligible to retire.

The UAW and GM reached their agreement late Friday.

King said he will meet with his leadership team to decide where their next focus is, but the odds-on favorite is Chrysler Group LLC, which was close to an agreement last week. Talks broke off Wednesday when King’s attention on GM angered Chrysler CEO Sergio Marchionne. Marchionne left for Europe last week and is returning to Auburn Hills today.

King declined comment on an angry letter sent to him by Marchionne late Wednesday. King added the union wouldn’t wait for ratification of the GM agreement to resume talks with the next company.

Ford Motor Co. has been moving at the slowest pace and is prepared to be the last to reach and ratify a new contract. The Ford contract was extended indefinitely while the two sides continue to talk.

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GM Chief Akerson Buys Shares Before Decline to Low Since Automaker’s IPO

General Motors Co. Chief Executive Officer Dan Akerson purchased $250,500 in shares of the automaker, a day before the company fell to a new low.

Akerson bought 10,000 shares yesterday at $25.05, Detroit- based GM said in a regulatory filing. Akerson, 62, owns 103,600 shares after the purchase, today’s filing said.

The stock-market rout that sent the Dow Jones Industrial Average to its lowest since September 2010 helped send GM shares a new closing low in New York Stock Exchange composite trading since the automaker’s November initial public offering. GM fell $1.62, or 6.3 percent, to $23.92 as of 4:15 p.m, according to Bloomberg.

Akerson, GM’s CEO since September, said yesterday he was unsure whether “turmoil” in the securities markets may discourage consumers from buying new vehicles. The largest U.S. automaker has forecast at least 13 million new-vehicle sales in 2011, including medium- and heavy-duty trucks.

“We’re a little unsure of these numbers,” Akerson said at a conference with analysts yesterday. “When the market does recover, we should be able to really leverage it beyond what you’ve seen so far since our IPO.”

Akerson’s purchase of GM stock is the second in less than three months. He bought $939,900 in shares of the automaker on May 11, when GM traded at $31.33, according to a filing the following day.

GM will benefit from moves to cut costs planned for the next decade, Akerson and other executives said yesterday.
Dan Ammann, GM’s chief financial officer, said frequent changes to the automaker’s product plan waste $1 billion a year. Canceling or delaying product programs adds to engineering costs because GM has to pay more to suppliers when orders change, Ammann said during a presentation.

GM plans to reduce the number of architectures that its vehicles are built from to 14 by 2018, from 30 in 2010. The number of engine platforms will be cut by about half in the next decade, according to a slideshow presentation.

GM may be able to improve its profit margins by 2.3 percentage points from last year to 7.4 percent by 2015, Barclays Capital analyst Brian Johnson said today in a research note. GM didn’t commit to a specific margin target, said Johnson, who rates GM “overweight” and is based in New York.

At today’s closing price, the value of the U.S. Treasury Department’s stake in GM has plunged $7.53 billion since Jan. 7. GM shares closed that day at $38.98, the highest since the IPO.

Treasury holds more than 500 million shares, making it GM’s largest owner. The government’s stake is worth $12 billion, down from $19.5 billion as of Jan. 7.

The U.S. Treasury took a 61 percent stake in GM as part of its $49.5 billion bailout of the automaker. The Treasury sold $13.6 billion worth of stock in the November IPO.

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G.M. Sees Cost Cuts Continuing for Years in Effort to Sustain Long-Term Growth

DETROIT — General Motors, already much leaner and more efficient after going through bankruptcy and a painful reorganization, still has to undertake years of sharp cost cuts to ensure it remains profitable, its executives said Tuesday.

G.M. executives said that they intended to cut the number of different platforms and engines used in the company’s vehicle lineup roughly in half within the next decade, reported The New York Times.

By 2018, G.M. will use 14 different platforms globally, down from 30 last year. A platform is the basic underpinnings of a vehicle, and building multiple vehicles on a single platform reduces development and production costs.

The executives also said G.M. was working to eliminate wasted spending on new products by keeping its investments more stable from one year to the next, rather than trying to follow the ups and downs of the market

“The start-stop, herky-jerky, on-again, off-again product development was grossly inefficient,” the chief executive, Daniel F. Akerson, said, “and it resulted in poor product.”

The plans, outlined at an analyst conference that G.M. organized at its Detroit headquarters, call for using 12 engine families by 2018 and eventually just 10, compared to 20 in 2009.

Daniel Ammann, the chief financial officer, said G.M. had been putting about $1 billion a year into projects that were later canceled.

Last week, G.M., which is 26 percent government-owned, reported that it earned $5.4 billion in the first half of the year as second-quarter earnings grew 89 percent. Its profit margins have increased as a result of higher revenue as well as wrenching cost cuts that included closing many plants and eliminating tens of thousands of jobs.

On Tuesday, the company said that its annual manufacturing labor costs in the United States had fallen by $11 billion since 2005. The executives added that they were working to keep labor costs under control, even as demand for G.M. vehicles increased.

Diana Tremblay, G.M.’s global chief manufacturing officer, said the company did not need to add plants anytime soon, even though its capacity utilization rate — a measure of how fully and efficiently plants are used — was near 100 percent. G.M. is particularly hesitant to add production capacity in the United States during a time of such volatile economic and market conditions. Ms. Tremblay said that G.M. could meet demand largely by adding shifts, running plants on overtime and finding creative ways to run existing plants more efficiently.

Leaders of the United Automobile Workers union, which is negotiating a new contract with G.M., could have a difficult time persuading the automaker to reopen idled plants in Tennessee and Wisconsin. They are also trying to prevent the planned closing of a plant in Louisiana, a top priority during the talks.

Mr. Akerson expressed some doubt about whether total industry sales across the country would reach 13 million vehicles this year. G.M. and other automakers had generally projected sales between 13 million and 13.5 million, up from 11.6 million in 2010; from January through July, the industry sold 7.4 million vehicles.

“There’s a lot of turmoil in the business and turmoil means uncertainty,” Mr. Akerson said, “so we’re a little unsure of these numbers.”

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G.M.’s Profit Jumps 89% as U.S. Sales Grow Quickly

DETROIT — General Motors built surprisingly strong second-quarter results on the most basic automotive arithmetic — higher prices plus lower incentives.

The nation’s largest automaker said Thursday that it earned $2.5 billion during the quarter, an 89 percent increase from the year earlier period, beating investors’ expectations, according to The New York Times.

The company was profitable in all its global regions, but the biggest contribution by far came from its rapidly improving North American division.

G.M. said it earned $2.2 billion in its home market before interest and taxes, primarily because it was able to charge higher base prices on its cars and trucks and rein in rebates. G.M. increased base prices twice this year, and it will do so a third time when 2012 models appear in showrooms this fall.

The combined increases resulted in about a 2 percent rise in sticker prices, or about $500 per vehicle.

“We were able to get prices up and incentives down and that really highlighted the value of the product,” Daniel Ammann, G.M.’s chief financial officer, said in a conference call with reporters. “It was another solid quarter.”

Analysts, however, said G.M. would be hard-pressed to maintain the higher margins in the second half of the year. Demand for new vehicles has been soft, and automakers in Japan are increasing production after disruptions that resulted from the March earthquake and tsunami there.

Mr. Ammann said G.M. expected income in the second half of the year to be “modestly lower” than in the first half because of uncertain market conditions.

The company sliced its incentive spending in the United States by about 20 percent a vehicle during the second quarter compared with the first three months of the year, Mr. Ammann said. The average rebate in the quarter was $2,800, about $800 less than in the first quarter.

“Pricing and mix should naturally be expected to fade in the second half from unsustainably strong second-quarter levels,” Adam Jonas, an analyst for Morgan Stanley, said in a research report.

This year, G.M. has proved that its product revival is gaining traction with consumers.

The company improved its American sales by about 16 percent in the first seven months of the year compared with 2010. The overall market, by comparison, has risen about 11 percent.

New products like the Chevrolet Cruze compact car and Buick Regal sedan have led to a 24 percent increase in sales of its passenger cars.

And there are more new cars on the way. G.M. said on Thursday that it would begin building two new Cadillacs — a large sedan and a rear-wheel-drive compact car — beginning next year.

Mark Reuss, G.M.’s head of North American operations, said the product offensive was critical to the company’s future as it continued to shift more resources into cars rather than the light trucks it had relied on for years.

Fresher models are allowing G.M. to charge higher prices, Mr. Reuss told reporters at an industry conference in northern Michigan. “You can’t do that if you don’t have highly desirable product,” he said.

Mr. Reuss also said that G.M.’s biggest brand, Chevrolet, was in the midst of renewing and expanding its car lineup with the introduction of the Sonic subcompact this fall and a new mini-car, the Spark, next year.

The company, which shed debt and downsized drastically in its 2009 bankruptcy, has also amassed an impressive cash hoard to keep the new models coming.

G.M. ended the second quarter with $39.7 billion in cash reserves and available credit, compared with $33.6 billion in the period a year earlier.

The company is committed to keeping a large cash reserve to preserve what Mr. Ammann called a “fortress balance sheet” that can finance new products and insulate G.M. from a downturn in the market.

“We want to be able to withstand any external shock that comes along,” he said. “Nothing is more important than getting the right vehicles on the road.”

G.M. had less impressive results outside of North America. In Asia, it reported pretax income of $600 million in the second quarter, while in South America and in Europe it earned about $100 million in each region.

Over all, the company produced 2.4 million vehicles in the quarter, compared with 2.25 million in the same period a year earlier. Its global market share was 12.2 percent, up from 11.6 percent in the second quarter of 2010.

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GM Surpasses Toyota as World’s Largest Automaker

General Motors Co. outsold Toyota Motor Corp. globally in the first six months to become the world’s largest automaker after the record March earthquake disrupted production in Japan.

GM sales rose 8.9 percent to 4.536 million units in the half-year ended June 30, the Detroit-based automaker said in a statement yesterday. That compares with 4.13 million units at second-ranked Volkswagen AG and 3.71 million units for Toyota, including its luxury Lexus marque and affiliates Daihatsu Motor Co. and Hino Motors Ltd., according to statements by the companies.

Output at the Toyota City, Japan-based automaker slumped 23 percent to 3.37 million units in the half-year after the company halted production following the magnitude-9 temblor and tsunami in March, reported Bloomberg. Toyota expects to enter a production recovery phase in September, one month earlier than previously announced, it said Aug. 2.

“Even if Toyota recovers production, it will take another few more months for sales to actually recover” as it takes time to deliver vehicles to dealers, said Takeshi Miyao, an analyst at consulting company Carnorama in Tokyo. “Toyota’s sales may trail behind Volkswagen in the full-year as well.”

GM’s U.S. sales climbed to 669,065 vehicles in the second quarter, according to industry researcher Autodata Corp. The Chevrolet Cruze was the top-selling car in the market in June and the Chevy Silverado full-size pickup remained the second- most popular vehicle, behind only Ford Motor Co.’s F-Series line.

Hyundai Motor Co., South Korea’s largest automaker, had a 11 percent jump in first-half deliveries of 1.96 million units.

Toyota shares fell 3.8 percent to 3,020 yen as of the 11:30 a.m. trading break in Tokyo. The benchmark Nikkei 225 Stock Average declined 3.4 percent.

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Lawsuit Says GM Failed to Fix Thousands of Impalas

DETROIT — A lawsuit claims General Motors Co. treated the police better than it did average citizens when taking care of a defective part in 2007 and 2008 Chevrolet Impalas.

The lawsuit alleges that Impalas from the two model years have defective spindle rods, which connect the suspension to the rear wheels. The defect causes the wheels to misalign, which makes the tires wear out faster. The tires could also wear out unevenly, increasing the risk of a blowout, reported msnbc.com.

GM fixed the part on police versions of the Impala three years ago but didn’t correct the same problem in hundreds of thousands of other Impalas, according to the lawsuit filed last week in Detroit.

Donna Trusky of Blakely, Pa., who bought a new Impala with Goodyear tires in February 2008, claims that before she reached 6,000 miles, the tread on her rear tires was so worn she had to replace them. Typically, tires should last for 30,000 miles or more. Her lawyers are asking the judge to certify her lawsuit as a class action.

According to the lawsuit, GM sent a bulletin to dealers in June 2008 telling them to replace the spindle rods and tires on affected police vehicles. It also authorized dealers to reimburse police who had purchased replacement tires as long as the reimbursement request was made before July 31, 2009.

But GM allegedly didn’t offer the same remedy to non-police owners. The company sold a total of 423,000 Impalas from those model years. GM spokesman Alan Adler said 12,500 of those cars became police models.

Adler confirmed that GM issued a service bulletin for police cars from the 2007 and 2008 model years because of rear suspension problems. But he said the company wouldn’t comment further.

“We routinely do not comment on matters in litigation,” he said.

Trusky’s Chevrolet dealer paid to replace the tires and have the front end of her car realigned, but didn’t replace the spindle rods or mention the police bulletin. Trusky continued driving the car, but by the time she hit 24,000 miles two years later, her rear tires were worn out again. This time, she paid $289.77 to replace them. She says that amount should have been covered under her warranty.

At least 30 other drivers have sent complaints about the issue to the National Highway Traffic Safety Administration. While none has reported an accident or injury related to the problem, several drivers said the rear of the car tends to swing out, especially when driving on snow or ice. NHTSA hasn’t opened an investigation into the Impala’s suspension system, which is usually the first step in the process that can lead to a safety recall.

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