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GM CEO, Rick Wagoner: Why GM Deserves Support


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Why GM Deserves Support

Short-term government backing can preserve a vital industry.

By Rick Wagoner

Much has been said about the impact of the credit crisis on U.S. auto makers, and whether or not the government should assist the industry during this extraordinary financial turmoil. In these discussions, many critics simply ignore the substantial changes that U.S. auto companies have already made -- changes much like those the critics are calling for as part of any aid package.

At General Motors, we have been responding to fierce competition here and abroad by transforming our business. Over the past decade, we have taken tough actions to cut costs, at the same time investing billions in fuel-efficient vehicles and new generations of advanced propulsion technologies.

On the cost-cutting side, we have been streamlining our U.S. operations while simultaneously improving quality and productivity. Since 2000, we have reduced our U.S. hourly workforce by 52%, from 133,000 to 64,000, through buyouts and other programs. During the same period, we have cut our U.S. salaried employment from 44,000 to fewer than 30,000, and reduced our U.S. executive ranks by 45%.

However, we know we cannot just slash our way to prosperity. We have closed the quality and productivity gaps with the imports, as confirmed by J.D. Power and Associates (the consumer ratings firm) and the Harbour Report (which benchmarks North American plant-floor performance). New GM product programs launched earlier this decade have produced award-winning cars and crossovers like the Saturn Aura, Cadillac CTS and Buick Enclave. And that is just the beginning.

The new Chevy Malibu is a clear response to critics who say that GM cannot build cars that customers want. The Malibu leads its segment in highway fuel economy at 33 mpg (2009 EPA figures), and was named best midsize car for initial quality in the most recent J.D. Power and Associates study. No surprise that, even in the worst car market in decades, Malibu sales are up 39% so far this year.

GM has also been working to re-establish its leadership in advanced propulsion technology. We have committed to producing the Chevy Volt -- a revolutionary car that can go 40 miles on electricity alone -- in 2010 in a U.S. factory. We are expanding our family of hybrid vehicles, investing in advanced biofuels, and continuing development of hydrogen fuel-cell vehicles. We are also applying our global technical resources to improve the fuel economy of conventional vehicles. Just one example: The new Chevy Cruze, a global compact car that goes into production in Ohio in 2010, is expected to lead its segment in fuel economy.

GM's commitment to these new products and technologies will help everyone. Consumers will benefit from lower fuel costs, our nation will use less imported petroleum, and our air will become cleaner. Development and production of these new vehicles here in the U.S. will maintain our nation's competitive standing and provide good paying jobs here at home. It also ensures that the U.S. does not trade its current dependence on imported oil for a future dependence on imported batteries and technology.

The auto industry may be historically anchored in Detroit, but it reaches into every state and community in our nation. Take Kansas, for example. GM assembles the Malibu and the Saturn Aura in Fairfax, Kan., making us a major employer there. The wages of our 2,500 workers flow into that community through spending on everything from mortgage payments to high-school bake sales.

Fairfax is not unusual. U.S.-based companies have 105 assembly and component plants in 20 states, including California, Texas, Louisiana and Maryland, states not typically thought of as auto country. GM, Ford and Chrysler last year purchased $156 billion in parts, materials and services, supporting jobs in all 50 states.

Because of GM's deep commitment to its employees, dealers and communities, the company has been restructuring itself without the storm and drama some pundits mistake for actual progress. Working with the UAW, we have transformed our labor agreements to close the competitive gap. We have taken $9 billion out of our annual structural costs since 2005 alone, and we have substantially reduced legacy costs inherited from decades past. In the face of the current credit crisis, we have moved to improve our liquidity by $20 billion through 2009 through cuts in salaried employment, capital spending and other areas.

The future of the domestic auto business is critical to the health of the U.S. economy. It is a vital engine of economic growth and a foundation of economic stability. It remains a path of upward mobility for millions of American families. For America to compete in the global marketplace in the 21st century, it needs a strong manufacturing base and a vital domestic auto industry.

Nearly a half-century ago President Kennedy declared that his generation of Americans was living in extraordinary times and facing extraordinary challenges. Our times are no less challenging. They demand solutions that are creative and courageous.

Short-term government support to bridge the current financial crisis will enable GM to continue as an engine for prosperity and as a creator of vehicles and technologies that America needs. Such assistance will save millions of jobs now, and produce enormous benefits for years to come.

Mr. Wagoner is chairman and CEO of General Motors Corp.
Rob, the American people have shown their support. By not buying what Detroit is making. When are the big three going see the writing on the wall? They have failed to produce what the public want. Fuel efficient cars. They don't want a third of their pay going for fuel. Then when you add in the cost of buying and maintaining a car it's even a bigger share of their pay. The party is over for the Big Three. Chapter 11 and restructure for the future.
I don't know if I'm for or against the bail out yet. But I have to disagree with you Galen on two statements: that we're not buying what Detroit is making, and Detroil failed to make what the public wants.

Think of what is the biggest all time selling vehicle of all time,,,,,, It's the Ford F-150 pick up. Think of ALL of the SUV's, Crossover's, and big cars from detroit that are out there! If we (consumers) are not buying what Detroit is building, why are there so many of these cars/ trucks out there? If Detriot is not building what the public (consumers)wants,, then why are there so many on the roads? Face it, If we as consumers wanted the more fuel efficient cars and something different, we would have bought the imports and Detroit would've been bankrupt 20 years ago! Many of us on this forum should remember the gas shortages of 1973 (was that the year?). If you lived thru that, have you been driving a fuel saving car since then? I'm willing to bet not,,, I know I haven't been!! I'm a consumer too, and I like my cars with all the bells and whistles. I like my leg, head, foot room, power, the car has to be big. That's part of our American automotive culture. Detroit has been a good car maker, building what we as consumer have been buying. I believe that there has been lots of times that the Suburbans, Tahoes, Jimmys and other big SUV's couldn't be build fast enough to kept up with demand! People in sales and manufactoring know,, you sell what is in demand! Even Pet rocks (remember them)couldn't keep up with demand!

I better quit, I'm ranting on! my $.02 worth.
Boy am I going to get bashed for this!!!
No bashing from me PBG ..... I don't like what has happened either - and no matter what I think or say it isn't going to fix the economy .... and I do agree with you. :patriot:

There will always be someone, or nation, who builds bigger and better whatever ... be it cars or tv's .... if we want our industries to survive, we have to support them .....

I don't want to see our auto industry disolve .... what good could possibly come from that?
No bashing from me either, you are correct, GM has been doing a lot to change and improve products. Yes, it was 1973 when we had the gas shortage. We returned from a two months cruise right in the middle of that mess and saw the long lines and high prices at the gas stations. Once more, our elected and highly paid government officials are not listening to we the people or to the people from Detriot. So many of them have been there so long they have forgotten what it is like back home where the people live that elected them. They might have started out wanting to represent their constitutients but once in the Capitol they are ruled by lobbiest, don't read the bills they vote on, live in big overpriced homes, could care less about anything except what they can do for themselves. I for one am appalled at the rude and aggressive way they treated the speakers in the hearings this week. They should calm down and listen to what is being said and then they would understand that our automakers have been making important changes. Just read this article in full and you will see what I am saying. I guess this must be at least my 99 cents worth. First Robin
Maybe the big 3 exec's should sell their big corporate jets and put all the related expenses,pilots,fuel,hanger,etc. towards the money they are asking for.:pat:
Well selling the corp jets might help in cost cutting. I think GM has taken great steps in cost cutting. GM is not just a United States company, they are a global company and just maybe they do need some corporate jets to fly to some of their factories. Maybe we really need to look at what has really been happening. As I have stated on other threads, this entire problem falls right back, smack dab into the laps of our elected officials when they deregulized the banks, insurance companies and wanted every family in the United States to own a home. Multitudes of these families could not financially qualify for a mortgage so our government stepped up and said "we demand you lower your requirements for a mortgage" so the lending firms did just that to comply with Mr. Clintons directives. Then the poor working man found he couldn't make his payments on his mortgage so he lost his house which he didn't pay much down on. Now the big over bloated investments firms are sliding down into that big dark hole so the government rushes in to bail them out. Gee, what is happening? So now Wall Street investors get worried and stocks fall, people are holding on to their hard earned money, they are not buying and now it hits the auto makers. Wow, we have big expense, we have to pay our retired employees health insurance and retirement benefits. Our products are good products but our consumers are not able to buy our products as no one is giving loans. Gee, where did the money go our government gave to the financial institutions to help the economy? Guess the banks put it in their own pockets instead of helping the people (taxpayers) that have to pay back the big loans from the foriegn companies we borrowed all that bailout money from and Paulson is still setting on three quarters of the bailout money. Maybe we (the auto makers) can borrow some of that bail out money to help us until the big wigs in DC get their heads out that place where the sun doesn't shine and come up with a better solution to get our economy back on track. So whats next folks or as an old saying goes that probably only Standby or myself remembers "Whats up Doc". Only time will tell but I sure hope they keep making the XLR and will still be here to stand behind my Warranty until 2012 and beyond. First Robin
The auto makers are disconnected from their customers. I don't deal with Chevy or Cadillac, instead the face of GM is their dealers.

Now our local Cadillac dealer is excellent, but I simply won't return to the dealer who sold me the Vette. For anything. In fact, I have a long list of dealerships where I have been abused to the point of simmering anger.

For many, price, quality and technology is a big factor in a car purchase, but probably the biggest is how one is treated by the dealer. Go to a Ford or Chevy dealership to look at what's new and try to get out of there without scratches and bruises.

Some of their sales problems could be addressed by changing their business model.
I'm not going to bash you either PBG. I agree with you. We are in a bad economy right now. People can't pay their house payments, they can't afford to go buy a new car right now. When ever times get tough people cut back on the luxury things, unfortunately cars happens to be one. I have said before that my dad worked for Ford and I was raised in a union house my entire life. I am torn on a bailout for the auto industry. Is the auto industry going to do good with the money and actually work at turning it around or are they going to go have a $400,000.00 party like AIG did? Ronald Regan once said that "Government is not the solution to the problem, but government is the problem." That to me speaks volume when we look at what the banking industry has done with the bail out they got. Absolutely nothing. If the heads of the big three really cared about American auto industry, they would make some cuts themselves. I don't want to see the auto industry fall. I do hope they make it. That is my .05, my cents is more I am a union bratt. :chuckle:chuckle
Chad, I was referring to the recent past. Not the last few years. If you don't think that statement is not true, just drive down to the nearest car dealer and take a look at the lot. Yes we have bought what they have made for two reasons, the big cars are comfortable to ride in, and brand loyalty. We must share in the blame game. If GM had made the Volt 5 years ago, they would have been laughed at. But I still fault GM and Ford for not having anything in the wings. They had to know this day was coming. They did know. And what did they do? They ask the government for development cost. At a tune of 25 billion. The big three were already in trouble. Like I stated before, the arrogant management needs to go. I have spent a ton of money on American cars and trucks in the past. I am one of those loyal customers. But I am also very disappointed in how inefficiently these companies have been managed.

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