Lutz: Better cars are not enough

[Arizona Slim]

Lutz: Better cars not enough

Turnaround also requires reining in retiree costs

By Daniel Howes / The Detroit News


Lutz says, "I don't think it's going to take 20 years to turn around, but it's not going to happen in 20 months."


If it's possible to be positive and negative about General Motors Corp.'s fortunes, Bob Lutz is both.

"I don't for a minute believe that what we're doing is not going to work," Lutz, GM's vice chairman for global product development, told me Thursday. "The image turnaround of General Motors is under way. But there is a lag effect."

Yes, there certainly is.

That turnaround depends on what Lutz & Co. can deliver to GM showrooms. But their effort is hampered by a record of safety recalls, a 25-year reputation for big talk and passionless products, formidable competitors with deep pockets and the punishing $6 billion-a-year pension and health care obligations -- so-called "legacy costs" -- that GM has to its employees and retirees.

"Nothing is going to do any good if we can't do something about our legacy costs," Lutz said. "With the magnitude of our legacy cost burden, it would be difficult to concoct a scenario of sufficient shareholder return."

Translation: Building better cars and trucks is necessary to making GM's car business profitable again, but it's not sufficient. The old adage that "product, product, product" cures all is being turned on its cylinder head at GM.

Good product isn't enough to offset the scary reality facing Detroit's automakers and the United Auto Workers. Not if revenue can't cover mammoth costs, shareholders don't make money and would-be buyers aren't willing to take another look at GM.

Could GM's long-overdue bid to regain its car and truck cred be coming too late to make a difference to American consumers?

"Needless to say, I worry about the same thing," Lutz said. "But the other strategy of staying at about the level we were at is sure defeat. I don't think it's going to take 20 years to turn around, but it's not going to happen in 20 months."

The cars and trucks coming from Detroit's largest automaker, which GM will showcase next week to the news media, are better than ever. There are all-new full-size SUVs, the Pontiac Solstice sports car, the Chevy HHR crossover and the Chevy Impala. More are coming -- an all-new Cadillac CTS sedan, midsize crossovers from Saturn and Buick, gasoline-electric hybrid-powered Tahoe and Yukon SUVs by early 2007.

GM's union-built portfolio for North America is better looking, offers higher initial quality, garners more enthusiastic reviews from critics, dealers and customers, and showcases the kind of design, interior sophistication and emotional pull that the General hasn't delivered in a long time.

The simple response would be to give the 73-year-old Lutz -- yes, the top product guy for the world's largest automaker was born during the Hoover administration -- all the credit or, if you're in the vocal anti-Lutz camp, all the blame.

Both would be wrong.

Continued... http://www.detnews.com/2005/insiders...C01-324771.htm

[mbukukanyau]

negative, negative negative....
Gee compare the impala to imports, or the malibu...

[desmo9]

" ...the UAW isn't eager to help GM because its options for doing so are different versions of political suicide -- bad, worse and horrible. "

So it's better to just let the ship sink? The union can help secure a better future for GM and itself, with a short-term cost. Or they can continue to ride the gravy train to oblivion. Seems like an easy decision to me, but there's too much gluttony in the UAW's structure for the correct decision to be made. But since more is at stake than the union itself (considering all the non-union jobs and economics involved), that's why this decision cannot be made by the UAW -- GM must make it for them.

[goochman]

All I can say to the union is Pan Am..................

[camaro_freak]

as it is been stated before elsewhere.. the many levels of upper management should take a pay cut if they are going to play hardball with the UAW. The "axe" needs to fall at all levels, not just the manufacturing.....

the era of a bizillion dollar raises and signing bonuses should be at an end

[zaxxis]

Originally Posted by camaro_freak

as it is been stated before elsewhere.. the many levels of management should take a pay cut if they are going to play hardball with the UAW. The "axe" needs to fall at all levels, not just the manufacturing.....

Thank You. Glad to hear someone else saying it.

[cyboexpo2002]

"GM Vice Chairman Robert Lutz checks out the 2007 Chevrolet Yukon at the General Motors Tech Center in Warren. The new Yukon is just one of the vehicles Lutz is pegging his corporation's return to profitability on."

Umm... Chevy Yukon huh? lol, silly auto journalists

[dindak]

No doubt it will take years to turn the ship around but GM Europe is turning and GM Asia seems pretty solid. Now GM needs to convince people in it's own country to give them another try.

[jbartley]

Originally Posted by Arizona Slim

More are coming -- an all-new Cadillac CTS sedan, midsize crossovers from Saturn and Buick, gasoline-electric hybrid-powered Tahoe and Yukon SUVs by early 2007.

ooo this excites me!

[goblue1999]

Originally Posted by desmo9

" ...the UAW isn't eager to help GM because its options for doing so are different versions of political suicide -- bad, worse and horrible. "

So it's better to just let the ship sink? The union can help secure a better future for GM and itself, with a short-term cost. Or they can continue to ride the gravy train to oblivion. Seems like an easy decision to me, but there's too much gluttony in the UAW's structure for the correct decision to be made. But since more is at stake than the union itself (considering all the non-union jobs and economics involved), that's why this decision cannot be made by the UAW -- GM must make it for them.

Thank YOU!!
The UAW will not make the tough decisions, Mr. Kerkorian will do it for GM, since Mr. Wagoner can't either.

[goblue1999]

Originally Posted by zaxxis

Thank You. Glad to hear someone else saying it.

You obviously have no idea what is going on at GM. "Management" has already taken a cut, no raises or bonuses this year, possibly none next year.

The UAW gets 3-4% raises ON TOP OF cost of living adjustments. THis means they get 3-4% real raises. Meanwhile, the salaried folks have gotten an average of 3.5% for each of the last 5 years, essentially keeping pace with inflation. In other words, the already overpaid UAW "workers" now have a higher pay, relative to the salaried employees, than they have ever had.

[goblue1999]

Originally Posted by goochman

All I can say to the union is Pan Am..................

Add to that Northwest, and Caterpillar, and Toyota.

[paul3230]

Originally Posted by goblue1999

Add to that Northwest, and Caterpillar, and Toyota.

Toyota?

[Canuck]

Originally Posted by camaro_freak

as it is been stated before elsewhere.. the many levels of upper management should take a pay cut if they are going to play hardball with the UAW. The "axe" needs to fall at all levels, not just the manufacturing.....

the era of a bizillion dollar raises and signing bonuses should be at an end

Such a simplistic viewpoint. Talent costs money. GM needs to attract top talent for Design, Finance, and negiotiating with the UAW. If GM adopted your idea then it would fail to attract the very people who can save GM. If you had the talent to run GM would you work for GM if they offered you a tenth of the salary of Toyota? or Ford? The UAW got fat and happy when times were good. Times are not good and they need to recognize North America is not the only place GM can build cars.
If shareholders accept the wages paid to the executive then we as fans of GM need to accept the shareholders viewpoint.

[yoblues]

Here is my basic problem with GM suits. Take the HHR. I liked this concept from the beginning. It was aimed right at the PT Cruiser type vehicles and I see nothing wrong with that. However what was the one big complaint against the PT Cruiser, not enough power? Finally Chrysler offered the turbo engine to correct this. GM had five years to study the PT Cruiser and they knew what the major complaint was against it and what to they do? They do not offer a powerfull engine right out of the box. This is not a light vehicle. The reviews have been good for the HHR except they say it's underpowered. They did the same thing with the Equinox with that idiot Chinese engine in it. They did the same thing with the Malibu, the initial design was pathetic, there was no passion in it at all, it said blah. Why do they do things like this all the time? Why not release vehicles that are class leading across the board right out of the box? Take a big jump not a small step. It's like Toyota with their new 2006 RAV4. They took a major jump with the new one. Right to the head of the small crossover class. It's not like GM can't do it. What is this GM suit mindset that is always cautious instead of taking bold steps? This caution also inhibits GM from dealing with the UAW in any meaningful way. People complain about the union a lot but managment signs the contracts.