Joined
·
14,692 Posts
Wagoner: Health care is GM's top challenge
Chairman says costs account for $5 billion in expenses yearly
By Ed Garsten
The Detroit News
WILMINGTON, Del. — Despite a 24-percent boost in profits during the first quarter of the year, General Motors Corp. still faces considerable headwinds because of weak performances in its car and truck business and rising health care costs, Chairman and CEO Rick Wagoner told shareholders Wednesday.
Speaking at the automaker’s 96th annual meeting, Wagoner told 102 shareholders that health care costs now account for $5 billion in annual expenses for the automaker. The staggering health care tab, Wagoner warned shareholders, has become a huge liability for the automaker.
“We need to further strengthen our balance sheet in order to secure our ability to fund future product programs and growth opportunities,” Wagoner said.
Wagoner predicted GM would show improvement in the annual Harbour Report on manufacturing and labor productivity scheduled to be released June 11. The report is an important indicator of how efficiently an automaker runs its factories. In last year’s report, GM showed a 7 percent improvement.
During the first quarter, GM surprised financial analysts by reporting profits of $1.28 billion, with the automaker’s finance arm contributing the bulk of earnings. GM also increased its full-year earnings forecast to about $4 billion — or $7 per share.
If the automaker reaches that target, it would mark GM’s best annual earnings performance since 2000. GM has told investors it plans to earn $10 per share by mid-decade.
In New York Stock Exchange trading Wednesday, GM shares closed up 36 cents at $45.38.
Even though its global automotive operations showed a 12 percent increase in first quarter earnings compared with the first three months of 2003, GM’s North American profits slid from $548 million to $451 million. Losses widened in Europe to $116 million from $65 million last year.
GM is launching a slew of new products this year, including new minivans for Saturn, Chevrolet and Buick, an all-new Cadillac STS, and the Chevrolet Cobalt — a successor to the long-running Cavalier. GM is counting on the new models to boost sales and market share.
Several shareholders, however, were not impressed with GM’s offerings or aggressive discounts.
Former Grosse Point resident Lucy Kessler, who now raises race horses in Mt. Airy, Md., chided Wagoner for complicated incentive programs that backfire by confusing customers and berated the style of GM’s product lineup.
“I implore you to offer value, elegance, affordability,” Kessler said.
Full Article Here
Rising health care costs:
Chairman says costs account for $5 billion in expenses yearly
By Ed Garsten
The Detroit News
WILMINGTON, Del. — Despite a 24-percent boost in profits during the first quarter of the year, General Motors Corp. still faces considerable headwinds because of weak performances in its car and truck business and rising health care costs, Chairman and CEO Rick Wagoner told shareholders Wednesday.
Speaking at the automaker’s 96th annual meeting, Wagoner told 102 shareholders that health care costs now account for $5 billion in annual expenses for the automaker. The staggering health care tab, Wagoner warned shareholders, has become a huge liability for the automaker.
“We need to further strengthen our balance sheet in order to secure our ability to fund future product programs and growth opportunities,” Wagoner said.
Wagoner predicted GM would show improvement in the annual Harbour Report on manufacturing and labor productivity scheduled to be released June 11. The report is an important indicator of how efficiently an automaker runs its factories. In last year’s report, GM showed a 7 percent improvement.
During the first quarter, GM surprised financial analysts by reporting profits of $1.28 billion, with the automaker’s finance arm contributing the bulk of earnings. GM also increased its full-year earnings forecast to about $4 billion — or $7 per share.
If the automaker reaches that target, it would mark GM’s best annual earnings performance since 2000. GM has told investors it plans to earn $10 per share by mid-decade.
In New York Stock Exchange trading Wednesday, GM shares closed up 36 cents at $45.38.
Even though its global automotive operations showed a 12 percent increase in first quarter earnings compared with the first three months of 2003, GM’s North American profits slid from $548 million to $451 million. Losses widened in Europe to $116 million from $65 million last year.
GM is launching a slew of new products this year, including new minivans for Saturn, Chevrolet and Buick, an all-new Cadillac STS, and the Chevrolet Cobalt — a successor to the long-running Cavalier. GM is counting on the new models to boost sales and market share.
Several shareholders, however, were not impressed with GM’s offerings or aggressive discounts.
Former Grosse Point resident Lucy Kessler, who now raises race horses in Mt. Airy, Md., chided Wagoner for complicated incentive programs that backfire by confusing customers and berated the style of GM’s product lineup.
“I implore you to offer value, elegance, affordability,” Kessler said.
Full Article Here

Rising health care costs:
