GM's Bold New Measures for Success; Global Development Process Vital

[Ming]

GM trying out bold measures; Global development process vital
Sunday, March 04, 2007
BY RICK HAGLUND
Ann Arbor News Bureau
http://www.mlive.com

General Motors Corp. is about to undergo what analysts say could be a save-the-company move for an automaker besieged by foreign competition and about to be passed in sales by Toyota Motor Corp.

Instead of duplicating expensive design and engineering costs by developing similar vehicles in each of its divisions around the world, GM is greatly simplifying the way it develops cars and trucks worldwide. It's consolidating its automaking operations into four regions of the world, each responsible for engineering a different type of vehicle.

"GM has been an international company for nearly 100 years, but it's never acted like one,'' said Ron Harbour, president of Harbour and Associates, a Troy-based automotive consulting firm. "This is GM's version of tearing down the Berlin Wall.''

Harbour and others say GM could save billions of dollars by using common platforms - many of the parts beneath the sheet metal - that consumers don't see or care about.

That matters at a company that lost $10.6 billion in 2005 and another $3 billion in the first nine months of last year.

As an example, the Chevrolet Malibu, Opel Vectra and Saab 9-3 would all share similar underbody components.

"There are enormous economies of scale to be gained here,'' said John Wolkonowicz, a senior auto analyst at Global Insight Inc., a consulting firm in Lexington, Mass.

It's unclear what the impact of GM's new global development process will mean for U.S. employment, but the company has been shedding hundreds of engineering jobs in recent consolidations here, preparing for the new development process.

In the past, GM divisions, such as Chevrolet in the United States, Opel in Germany and Holden in Australia, acted almost as if they were independent companies.

Now North America is taking charge of developing large pickups, SUVs, crossover vehicles and high-performance, rear-wheel-drive performance cars, such as the Corvette and Cadillac XLR.

Despite the difficulty of taking a company like GM, which mainly consisted of largely autonomous units around the world, and merging them into one operation, GM executives say the process is moving faster than expected.

"One of the biggest challenges is getting used to the time zones,'' said Ronald Pniewski, vice president of GM North America and Global Portfolio Planning. "Frankly, 6 a.m. global conference calls are du jour around here.''

GM has 11 design and engineering centers around the world, allowing it to do around-the-clock design and engineering work. "We're very much in a 24/7 world now at GM,'' Pniewski said.

Pniewski wouldn't provide dollar figures, but said GM's global product development system is expected to save 20 percent in material costs as the company purchases higher volumes of common parts from a global supply base. GM also expects to save 25 percent in annual engineering costs and 25 percent in annual capital spending costs, he said.

GM Chairman Rick Wagoner recently said GM's capital expenditure budget this year will be about $9.5 billion.

Analysts say GM's new product development system is similar to that of successful Japanese automakers. Honda Motor Co.'s popular Accord model, for instance, is engineered in Japan, but features different styling in the various countries where it is sold.

Source: http://www.mlive.com/business/aanews...l=2&thispage=1

Also See: The Truly Global GM: One and a Half Years Later

[Koasterking]

I'm very excited about this! It can only get better from here on out......hopefully. I'm looking forward to see what new products will be coming to the US based on Gm's global development program.

If Ford does not learn, or even pick up on this, they'll be headed down hill.

[Buickman]

This is simply another round of cost cutting. These guys have no clue how to grow the business or what a brand mission should consist of. All future Saturns to be Opels? The real reason is that they cannot so easily and summarily dismiss German workers who are more closely protected by the government and far from the reach of corrupt UAW leaders who have been bought and paid for. The solution? Simply dump US workers and have the Germans build Saturns. Please don't mistake all this for leadership or any sign whatsoever that GM management has any idea about growing the auto business.

[poncho1982]

Originally Posted by Buickman

This is simply another round of cost cutting. These guys have no clue how to grow the business or what a brand mission should consist of. All future Saturns to be Opels? The real reason is that they cannot so easily and summarily dismiss German workers who are more closely protected by the government and far from the reach of corrupt UAW leaders who have been bought and paid for. The solution? Simply dump US workers and have the Germans build Saturns. Please don't mistake all this for leadership or any sign whatsoever that GM management has any idea about growing the auto business.

Don't worry, despite your "best" efforts, we will.

Give it a rest dude.

Th real reason Saturns are now Opels is because Saturns former lineup SUCKED, and didn't sell. Opel has a MUCH better lineup that fit in nicely, and has style. Simple. And it's working.

Does it pain you so much to see GM turning around? If it does, If I were you I'd just get used to the pain.

[A Bum In A Bus]

GM should have been doing this all along, there is no excuse for the dinosaur that was GM, except poor poor management. Until Lutz, GM was tangled in a nightmare of boardroom suffocation, being run by a good ole boy network that was clueless and careless of customer needs and desires. GM relied on past customers to continue to buy products that were poorly designed, poorly engineered, and poorly built, while the competition passed them by. While GM's customer base grew older and older the competion, Toyota and Honda appealed to a younger consumer base. Now that younger base has grown up and are buying Toyota's and Honda's for their offspring, so the cycle continues.

Fortunately for GM, todays American's have short memories and weak loyalties. If a manufacturer builds a better product the public will buy that product and GM is now building better products, but it will take time to change opinions.

Remember GM the first thing that attracts a buyer to an automobile is it's design, no one wants an ugly date and no one wants an ugly automobile. The Aztec hopefully was a lesson that will last a long time. There should be a picture of an Aztec posted above every GM design studio door with this lament, "We shall not pass this way again".

[01cavalier]

GM has finally gotten smarter with global development. Use products and sell them everywhere, makes sense to me. GM has seriously woken up, not just in product development, but reliability and customer service and satisfaction.

[guitarlix]

Shows you the importance of good management. These practises should have been instilled decades ago, not in 2007. Still, better late than never.

[Buickman]

Originally Posted by poncho1982

Don't worry, despite your "best" efforts, we will.

Give it a rest dude.

Th real reason Saturns are now Opels is because Saturns former lineup SUCKED, and didn't sell. Opel has a MUCH better lineup that fit in nicely, and has style. Simple. And it's working.

Does it pain you so much to see GM turning around? If it does, If I were you I'd just get used to the pain.

Saturns are now Opels because management FAILED miserably in the original quest to manufacture import fighting small vehicles here in the USA. It blows my mind how blindly some of you follow and naively believe the corporate BS. Wagoner can't produce a financial statement let alone disclose any earnings guidance. I would truly like to believe GM has turned the corner and we are on the way with real progress but I just don't see it that way.

[Havasavana]

Originally Posted by guitarlix

Shows you the importance of good management. These practises should have been instilled decades ago, not in 2007. Still, better late than never.

How true. What have they been thinking? Surely this topic has come up hundreds of times, and, for some reason, was not fixed. Maybe GM and Ford were hiring the same consultants; more likely they were both just poorly managed by lazy bums promoted way beyond their level of competency. Here's a snippet from a Det. News article of 1-13-07:

***
On Friday, Mulally hinted at his frustration at finding the Ford brand was actually six or seven different brands scattered around the world -- each with its own product lineup. He pointed to Ford of Europe's new Mondeo sedan, which was recently featured in the James Bond movie, "Casino Royale."

"Why aren't we driving that here?" he asked. "Hello! It's a great car."
***

I think I remember reading somewhere that Mulally had asked Bill Ford why they were duplicating things all over the world and things were so confused and Ford said "it works".

So both companies have to get their backs to the wall, drive several suppliers into bankruptcy and lay off tens of thousands of workers before they do what should have been done decades before. Yes, modern digital communications greatly facilitate this sharing, but other companies have done it way before this. One comment I've read from Mulally several times is "there's nothing but opportuniity". In other words, "we couldn't be doing it any worse".

[mrgto]

Originally Posted by Buickman

This is simply another round of cost cutting. These guys have no clue how to grow the business or what a brand mission should consist of. All future Saturns to be Opels? The real reason is that they cannot so easily and summarily dismiss German workers who are more closely protected by the government and far from the reach of corrupt UAW leaders who have been bought and paid for. The solution? Simply dump US workers and have the Germans build Saturns. Please don't mistake all this for leadership or any sign whatsoever that GM management has any idea about growing the auto business.

Please go back to the stone age where you belong becuase you don't have the mental capacity to understand what needs to be done for GM compete globally.

[macphisto]

Originally Posted by Buickman

This is simply another round of cost cutting. These guys have no clue how to grow the business or what a brand mission should consist of. All future Saturns to be Opels? The real reason is that they cannot so easily and summarily dismiss German workers who are more closely protected by the government and far from the reach of corrupt UAW leaders who have been bought and paid for. The solution? Simply dump US workers and have the Germans build Saturns. Please don't mistake all this for leadership or any sign whatsoever that GM management has any idea about growing the auto business.

I hate to tell you this, bucko, but many of those Saturns will be built here. The Aura is essentially a re-skinned Opel Vectra that is built here. The Astra will be built here in the future.

You continue to show how little you understand the whole car business, instead choosing to view it through your tiny world in Flint, a place where selling American cars is easy. I, once again, dare you to try the same stuff you've done there in California.

GM is consolidating their engineering and design. It will eventually give them leverage with all unions because it will enable them to move production to other plants throughout the world. It also means that individual divisions will no longer get the have large amounts of exclusive parts which end up raising cost.

Ultimately it is the consumer who wins. We'll get more in the car, GM will make more $$$, and plenty of the vehicles will still be built here.

[mgescuro]

Of course this is another round of cost cutting!!
But this is very VERY smart cost-cutting. The "sectors" of GM do what they do best.

For example.... Americans cannot, for the life of them, design a competent small/compact car. But GM Daewoo and Suzuki are global leaders in that field. Instant compact car.
Europeans design great mid-sized cars. Instant global mid-sized car.
Australians and Americans design great full-sized cars. Instant full-sized car. Etc Etc.

This way, if the Europeans need a large car, they can go to the US or Australia and get the car they need. If the US needs a compact car, they turn to Asia. Etc etc.

There's no need for Chevy to design a car that's already been designed elsewhere in the world.

GM is saving billions and billions of dollars in R&D costs by simply not designing and redesigning a car that already exists.

The key is to give each car an identity of its own. And I think this is where GM could fail its premium brands -- Saab and Cadillac -- if they are not careful.

[gmmerc5]

The idea of using "common platforms - many of the parts beneath the sheet metal - that consumers don't see or care about" have been tried before back as early in the 90's, obviously wasn't very successful, hopefully they could implemented much better this time around, lets hope with Lutz around, GM won't forget to produce cars/trucks with eye pleasing styling.

[Lichtronamo]

Originally Posted by Buickman

This is simply another round of cost cutting. These guys have no clue how to grow the business or what a brand mission should consist of. All future Saturns to be Opels? The real reason is that they cannot so easily and summarily dismiss German workers who are more closely protected by the government and far from the reach of corrupt UAW leaders who have been bought and paid for. The solution? Simply dump US workers and have the Germans build Saturns. Please don't mistake all this for leadership or any sign whatsoever that GM management has any idea about growing the auto business.

Wrong. This is trying to bring to bear GM;s global resources for all markets in so as to be more competitive. Specific to NA, GM cannot afford to develop unique models for each of its six brands. Using Opel and Holden to provide products other than rebadged Chevy's sold in the same market provides greater product range and economies of scale world wide.

[stevecmh]

well so far so good.. the global products have greatly increased the cars here and around the world.. who would have thought that Daweoo would be doing as good as it is now... that is really one of the biggest turn around stories in the auto industry