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GM Paves Way To Long Term Sustainability

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#1 ·
GM Paves Way To Long Term Sustainability
Notes from GM's global business conference.
www.GMInsideNews.com
August 9, 2011
By: Nick Saporito


Today General Motors hosted its annual Global Business Conference. This event is utilized to establish GM's long term strategies for business growth and sustainability. This is the second year the event has been held.

Below are notes pulled from the event. Investors in attendance at the conference were shown future product and even got to drive the upcoming Cadillac XTS and ATS.

Dan Akerson

GM CEO Dan Akerson was first to speak on the call, discussing overall results and the macro view of the company’s plans. Akerson stated that GM would begin manufacturing Cadillac models (SRX) in China by the third quarter of 2012. GMI has been told the ATS will also eventually see Chinese production.

Akerson stated that the company plans a 50% reduction in both engine platforms and vehicle platforms by 2018. This correlates with the company’s goal to reduce complexity and become more agile in product development. The reductions will also reduce product development costs.

GM will introduce 16 new or revised models in China over the next five years.

Dan Ammann

Next up was GM CFO Dan Ammann, who focused on the company’s financial status both short and long term. Ammann was explicit in stating that, because GM is currently profitable, the focus throughout the company is long-term results. He also stated that GM’s profit margins are ahead of Toyota’s, but lag behind Ford and Hyundai; citing they have work to do to improve margins.

Mary Barra

Mary Barra is the new senior vice president of GM product development. Barra claimed that GM wastes about $1 Billion annually in product development, “churn” if you will. GM tends to have a lot of start/stop development programs that lead to the cost disadvantage.

Barra, former head of human resources at GM, also alleged that the company has too many engineers working on non-product programs versus the competition.

Barra ended her discussion by showing investors several upcoming GM products, including the new Malibu, Cadillac XTS, Chevrolet Spark and next-generation Chevrolet Impala. Investors tweeted that she was not saying much about the new Impala.

Bob Socia

GM’s head of purchasing and supply chain management called GM’s relationship with suppliers “weak” in comparison to most of the competition. He claims GM aspires to be the “OEM of choice” for suppliers and hopes to leverage supplier capabilities more going forward.

GM plans on bringing suppliers in on development programs soon in hopes of capitalizing off their abilities more.

Diana Tremblay

Tremblay is GM’s chief manufacturing officer. Tremblay confirmed that GM has four plants under construction in China and one in Russia. She also stated that any excess capacity in North America has been removed, largely thanks to the bankruptcy. GM currently has the ability to expand North American capacity to accommodate a 16 million unit per year market.

Tremblay also stated that GM quality has improved to above the industry average with 49 problems per 100 vehicles; industry average is 52 per 100.

Joel Ewanick


GM’s new chief marketing officer fielded several questions about Buick and Cadillac. According to Ewanick, Cadillac will be marketed as a brash, aggressive luxury brand while Buick will be inviting and sculpted.

In regards to Opel, Ewanick said GM plans to move the brand up market in Europe to compete directly with Volkswagen. In China, Ewanick admitted that Buick will be a bit more mainstream and possibly overlap with Chevrolet.

Ewanick wants Chevrolet and Cadillac to be consumer brands, not just automotive brands.

Don Johnson

Don Johns is GM’s vice president of sales for North America. He started by saying GM believes there is pent up demand in the marketplace and that GM is working with dealerships to spiff up retail facilities. Johnson claims GM will have over 4,000 overhauled dealerships, representing 96% of their retail network by 2014. Over 460 stores will be renovated by the end of 2011.

Johnson also stated that 92.9% of dealerships are profitable, the highest number since the 1970’s.
 
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#4 ·
Investors in attendance at the conference were shown future product and even got to drive the upcoming Cadillac XTS and ATS.
How many shares do I have to buy before they let ME do this?

.... and next-generation Chevrolet Impala. Investors tweeted that she was not saying much about the new Impala.
Well, it is a ways out. I'm glad she didn't shoot off her mouth, it's too early.

GM’s head of purchasing and supply chain management called GM’s relationship with suppliers “weak” in comparison to most of the competition. He claims GM aspires to be the “OEM of choice” for suppliers and hopes to leverage supplier capabilities more going forward.
"A" for candor and I hope they achive the goal.


Ewanick wants Chevrolet and Cadillac to be consumer brands, not just automotive brands.
Oh dear.

Johnson also stated that 92.9% of dealerships are profitable, the highest number since the 1970’s.


Not bad!
 
#8 ·
How come no word from Directors of Design and/or Engineering? Those are the people I'd like to hear from. How are the brands going to position their styling strategies in the market place, and what kinds of technology are they looking into for the future--Voltec 2.0?

And does anyone else think it's strange that the VP of Product Development used to be the HR Director? How on earth do the skill sets of those two jobs overlap?
 
#10 ·
And does anyone else think it's strange that the VP of Product Development used to be the HR Director? How on earth do the skill sets of those two jobs overlap?
From BusinessWeek:
BACKGROUND

Ms. Mary T. Barra served as Senior Vice President of Global Product Development at General Motors Company from February 1, 2011 to July 2011. Ms. Barra served as Vice President of Global Human Resources at General Motors Company from July 30, 2009 to February 1, 2011.

Ms. Barra served as an Executive Director of Vehicle Manufacturing Engineering of General Motors Corporation (now Motors Liquidation Company) until July 2009. She served as Vice President of Global Manufacturing Engineering at Motors Liquidation Company from February 1, 2008 to July 2009. She has also held a number of engineering and staff positions, including plant manager, Detroit Hamtramck Assembly Plant; executive director of Competitive Operations Engineering; and general director of Internal Communications for GM North America.

She began her career with General Motors in 1980 as a General Motors Institute (Kettering University) co-op student at the Pontiac Motor Division. She has been Director of General Dynamics Corp., since March 15, 2011. She serves on the Kettering University Board of Trustees and Inforum Center for Leadership Board of Directors.

Ms. Barra was named one of Automotive News' 100 Leading Women in the North American Auto Industry" in 2005, and again in 2010. In 2010, she also earned Kettering Alumni Association's Management Achievement Award for her specific contributions with positive and lasting effects in the field of management.

Ms. Barra received a GM fellowship to the Stanford Graduate School of Business. She holds a Bachelor of Science degree in electrical engineering from General Motors Institute (Kettering University). She graduated with an MBA in Business Administration from Stanford Graduate School of Business in 1990.
 
#9 ·
Akerson stated that the company plans a 50% reduction in both engine platforms and vehicle platforms by 2018.
Oh I just can't wait. (insert sarcasm smiley here)
 
#18 ·
Lets hope reducing platforms doesn't morph into badge engineering. I am all about reducing costs but not if they are going to make cookie cutter cars. If they do that, then cut the brands to one (pick one, I am partial to Chevy but it doesn't matter) and change the name of GM to that brand and be done with it.

Same thing with engines. I agree some of the them are redundant but lets not get too crazy. I am still a little hacked about going to corporate engines in the late 70's. Lets hope they are meaning to build engine families like the old SBC where you could get it in multiple displacements depending on the purpose for what vehicle it was stuck in. That way most of the parts interchange but you still have some variety. I can see a family of 4 cyl, V6's V8's, and a couple of diesels.
 
#23 ·
of course the downside of just a few global platforms is when there is a recall it will be of epic proportions. But for profitability purposes I agree that they should do exactly what they are saying.

Any talk of doing away with the Holden name and making it Chevy? Or since Australia is somewhat isolated does GM feel that Holden can live on?
 
#30 ·
For a change they may actually have a clue.

Chevrolet is the brand that gets you in at the beginning. Cadillac is what you aspire to.

As to the consumer market, what else are they? I mean, really? They want to sell cars. Thus, they will target consumers. If you're spending $10k or $100k, you're a consumer. The marketing, vehicles, etc. may be different but they're both consumer markets and should be targeted accordingly.

What will make or break this is execution. If they're going to make Cadillac "The best of the best" as per their slide, then they have a chance. But every Cadillac has to blow the doors off the competition.
 
#34 ·
But every Cadillac has to blow the doors off the competition.
But by Akerman's own admission, this is not the case. I'd rather they delayed the new cars and make them best of the best than bring something that doesn't "blow the doors off the competition" and be Just "competitive". That's not the way forward! Be the Best or don't bother!:yup:
 
#52 · (Edited)
It is a glaring omission that they do not even have the Middle East as a seperate market yet divide the EU into Europe, Germany and the UK.

GMC sells well in Saudi Arabia and Dubai and would have to be considered a prime market for Cadillac's Flagship, wonder if there were any Middle Eastern investors at the conference - can you say Akward?

We have considered the Middle East a very important and profitable global market for many years along with Turkey and Singapore/Indonesia/Malaysia, none of which are accounted for on the marketing slides. These regions account for a MAJOR portion of our current sales and profitability and have a long way to go before becoming "mature" markets.

Is GM aware that there will be profitable growth in countries like Turkey, Saudi Arabia, Dubai, Indonesia, Malaysia and Singapore just to name a few.

Add the poor EBIT perfomance comparasions to Hyundai and I have to wonder if GM's management truly has a grasp of what the global market is and how to maximize profits from it.
 
#39 ·
" . . . Akerson stated that the company plans a 50% reduction in both engine platforms and vehicle platforms by 2018. . . ."

GM's future platform and engine lineup (Prediction):
- One V8, RWD Cadillac Sedan
- One V8, RWD, full size pickup / SUV
- One V8, RWD Corvette
- Everything else FWD/AWD V6/I4/Hybrid/Electric
 
#41 ·
I don't know about India, but the Australian market is different enough that they probably wouldn't do very well right away. They may be worth shipping over at some point (when they have a proper flagship,) but I can't see the current lineup - even with the ATS - doing that well there.
 
#42 · (Edited)
Hey... Don Johnson got himself a new job?? Gave up on acting?

GM should make it official policy to take notice of what's written on this website about GM and GM products. They might learn something about public perception, how new developments are discussed, the competition is judged, etc. Personally, I don't think that anyone at HQ is taking notice.

Btw, how can some of the GM staff mentioned on page 1 be contacted? Anyone?
 
#47 ·
GM should make it official policy to take notice of what's written on this website about GM and GM products. They might learn something about public perception, how new developments are discussed, the competition is judged, etc. Personally, I don't think that anyone at HQ is taking notice.
That would be a great way to head back to BK...
 
#44 ·
In regards to Cadillac and Buick, I think that the two brands are waaaay too close as far as luxury brands go. Move Buick down market, it will definite overlap with Chevy. At any rate, theres not very much from any of the three brands that interest me. GM's gotta do something exciting with these brands. Ford and Chrysler upcoming midsized product is going to be very interesting.
 
#48 ·
What's interesting to me is that GM sees Cadillac as a true niche player, which means they can actually let Cadillac be what it's supposed to be: exclusive luxury. The past notion of making Cadillac a commodity was stupid. It has to be exclusive, like those consumer products that are stupidly expensive for those who truly don't consider cost a problem.

At 3% vs. Buick/Opel's 22% you can see what they're shooting at. 3% is a few hundred thousand sales for Cadillac worldwide. At those numbers you build an impressive, premium set of cars. For those that want attainable luxury have them go to Buick/Opel which can sell a few million cars worldwide each year.

As countless folks have repeatedly stated yet it needs repeating: Let's see if GM will actually execute.

Another point of interest is that the slides are very Lutzian. It's all about building the best cars. Those overly busy slides he lamented seem to have disappeared, which can only be a good thing. For those that didn't look at the presentation, these are the key points and there are only 4, all of which make sense especially as #1 will take care of #s 2-4.

  1. Design, Build and Sell the World’s Best Vehicles
  2. Strengthening Our Brand Value
  3. Growing Profitably Around the World
  4. Maintaining a Fortress Balance Sheet
 
#53 · (Edited)
GM's global market focus should only be divided into 3 main "groups"

Global Mainstream - Chevrolet and Holden (Australia/New Zealand) and make up 60% of sales

Global Premium - Buick-GMC/Opel-GMC/Vauxhall-GMC (UK) with 36% of sales to boost Global EBIT numbers

Global Luxury - Cadillac making up 4% of sales

All major markets would have all three "groups" represented and be based upon 12 to 14 unique "architectures" powered by one of 10 engine "platforms" with the only exceptions being isolated markets like Australia/New Zealand which would be served by a single "group" with select "additions" based on local market tastes and extremely large/regulated markets like China where Local brands are required for "special market needs" where brands like Baojun, FAW and Wuling are used.

Why complicate this?
 
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