GM IN THE NEWS

UAW juggles outside pressure

2007-07-14T00:30:00.000-04:00

Friday, July 13, 2007
Daniel Howes
UAW juggles outside pressure

The Wall Street analyst, eager to discuss the United Auto Workers' imminent contract talks with Detroit's automakers, looked across the table this week and told me what "the Street" expects come September:

First, a landmark deal to essentially shift some $70 billion in retiree health-care liabilities to union control. Second, a two-tier wage structure to pay new hires a fraction of what current workers make and offer fewer benefits. And third, obliteration of the pay-for-no-work "jobs bank," Detroit's monument to dysfunction.

Gee, is that all?

The start of potentially landmark contract talks still are roughly two weeks away. Yet armchair experts already are rushing ahead to declare more forcefully than the automakers themselves what must be accomplished, and they're trading accordingly.

But they're forgetting to ask what can be accomplished in dicey negotiations influenced more by economics, trust, relationships, internal union politics and public theater than outsized expectations shaped by computer models and elite MBAs.

Union mega-deal expected

Fueled by ratification of the UAW's concessionary deal with bankrupt Delphi Corp. and expectations of something similar in September, shares in former Delphi parent GM are up 23 percent since June 1 to $37.54 and Fitch Ratings on Thursday removed GM from negative watch. Ford shares surged more than 15 percent to $9.64 by July 2, but have since settled back to $8.96.

Bottom line: Wall Street already is pricing in the "transformational" deal Detroit's automakers would dearly love to deliver, but can't guarantee -- mostly because they understand better than twentysomething hedge fund sharpies that crafting a national contract is more complex than ordering a pizza:

"I'll take an extra large, please. Give me a Voluntary Employee Benefit Association that will enable the union to pay retiree health care, topped with lower wages for new hires. No jobs bank -- it gives me indigestion -- or I won't pay for it."

No wonder UAW President Ron Gettelfinger already sounds like a harried father wearied by incessant bleating from the back seat. "We're not going into negotiations in a concessionary mode," he said this week, striking a necessary tone of defiance.

His union is facing an existential crisis -- three automakers in various stages of distress, bankrupt suppliers like Delphi and Dana winning massive concessions to stay afloat, union wages and benefits under siege -- and everyone's already decided how this drama has to end.

Or what?

Just asking, but are the actions of Gettelfinger's UAW those of a union leadership refusing to come to grips with the life-threatening challenges facing Detroit's automakers and their biggest suppliers? Has there been a strike against Dana? Or Tower Automotive? Or Collins & Aikman? Or Delphi, the mega-supplier Gettelfinger and the UAW sound like they love to hate?

No, no and no.

These contract talks are likely to be a watershed for the UAW and, certainly, Gettelfinger's legacy as president. They're about making GM, Ford and Chrysler more financially competitive, not destroying the union and what it has to sell to current and would-be members.

Bargaining, not demanding

Establishing a mega-VEBA for retiree health care theoretically is the big play this time. It could safeguard those benefits from the ravages of a bankruptcy at GM, Ford or Chrysler and remove a costly liability from the automakers -- a potentially huge win for both sides.

Kill the jobs bank? Why, when a) massive buyouts basically are emptying them anyway and b) preserving them, if only as a mostly empty shell (for now), improves the chances of creating a VEBA with the UAW?

Demand two-tier wages? Now, when ranking labor relations executives at Detroit's automakers will tell you (privately) that pay scales rank about 17th on their list of issues with the UAW?

Back in 2004, the UAW agreed to two-tier wages for new hires at Delphi and Visteon, the former Ford Motor parts unit. But the dirty little secret, which became clear in the denouement of the UAW-Delphi talks, is that these pressured suppliers basically don't need more people -- at least not for very far into the future.

What those suppliers, and especially Detroit's automakers, need more are competitive work and operating rules at local plants -- rules that typically are shaped by local bargaining.

There's a reason they call this quadrennial Detroit dance "bargaining" and not "demanding." Viewed empirically, the UAW has more to give to help make the automakers competitive, but the union can't give enough to guarantee Detroit's success and still be the union that Reuther built.

By the sound of things, ol' Ron would be less cranky if the automakers didn't talk at all about the upcoming talks, if Wall Street just waited to form expectations and render judgments until, say, Sept. 15, if the news media didn't focus on the stakes, the pressure points and potential outcomes.

It doesn't work that way, anymore than jetting into Detroit for a few meetings and heading back to New York the same day is adequate to understanding one of the great industrial dramas of our time.

Daniel Howes' column runs Mondays, Wednesdays and Fridays. You can reach him at (313) 222-2106, dchowes@detnews.com or http://info.detnews.com/danielhowesblog. Catch him Fridays with Paul W. Smith on NewsTalk 760-WJR.

© Copyright 2007 The Detroit News. All rights reserved.

GM to offer diesels in range of U.S. lineup

2007-07-14T00:27:00.000-04:00

Friday, July 13, 2007
Auto briefs
GM to offer diesels in range of U.S. lineup

General Motors Corp ., the largest U.S. automaker, plans to introduce a range of diesel-powered vehicles in the United States, Vice Chairman Bob Lutz said. "We're doing a bunch of them," Lutz said in a video conference posted Thursday on GM's FastLane blog. He said Detroit-based GM will offer cars, sport utility vehicles and crossover SUVs with diesel engines, which are now available only on some large vans, heavy-duty pickups and medium-duty trucks. Selling more vehicles with diesel engines would help GM court buyers upset by rising gasoline prices and meet possible increases in U.S. fuel-economy rules. Engines that burn diesel generally are more fuel-efficient than gasoline models. Six-cylinder diesel engines would be offered on cars, light trucks and crossover SUVs, and eight-cylinder, 4.5-liter engines on SUVs, Lutz said. He didn't provide specifics.

Volkswagen car sales top 3 million for year

FRANKFURT, Germany -- Volkswagen sold more than 3 million cars during the first half of the year, the German automaker said Thursday, a 7.8 percent jump from last year fueled by an increased demand for VW and luxury Audi vehicles. The Wolfsburg-based company, Europe's biggest automaker by sales, said it sold 3.09 million cars from January to July, with its VW brand selling 1.8 million, up 7.4 percent from the same time last year. Growth was led by Europe, where sales rose 3.7 percent and in Asia, where sales were up 20.9 percent with 502,000 automobiles sold. Sales in North America rose 3.1 percent with 263,000 cars sold.

BMW shifts control of plant to partner DCX

Bayerische Motoren Werke AG transferred control of its half of a Brazilian joint-venture engine factory to partner DaimlerChrysler AG's Chrysler division. The transaction was effective Wednesday and the owners agreed not to provide financial details, Munich-based BMW said. Tritec Motors Ltd ., as the joint venture is called, was founded in 1997 and makes 1.4-liter and 1.6-liter motors. Chrysler is investigating long-term options for Tritec, which may include a sale to a third party, BMW said. The factory has a capacity to make 250,000 engines annually.

Actor Lowe helps pitch tax breaks for hybrids

WASHINGTON -- The chairman of the House global warming committee and actor Rob Lowe called for tax incentives for hybrid owners to convert their vehicles to plug-ins. To tout the effort, the pair tooled around Capitol Hill Thursday in a plug-in hybrid Toyota Prius surrounded by photographers and camera crews. U.S. Rep. Ed Markey, D-Mass., held a hearing to tout his proposal to offer hybrid owners a 35 percent tax break to convert their hybrids to plug-ins. Lowe's appearance drew network crews from Fox News and CNN. Markey's "Plug-in Hybrid Opportunity Act of 2007" would give gasoline-electric hybrid owners a 35 percent tax credit to defray the costs of converting their vehicle to plug-ins. Not all lawmakers support the proposal.

Detroit News staff, wire and Bloomberg News reports.

© Copyright 2007 The Detroit News. All rights reserved.

Equal work, unequal pay

2007-07-13T23:16:00.000-04:00

Thursday, July 12, 2007
2007 UAW CONTRACT TALKS / Fifth in an occasional series
Equal work, unequal pay
With new workers paid far less than their colleagues doing the same job, Chrysler's Belvidere plant may be the future
Josee Valcourt / The Detroit News

BELVIDERE, Ill . -- At $18.50 an hour with limited benefits, Forrest Ammons earns a decent living building cars at Chrysler's Belvidere, Ill., assembly plant.

But Ammons toils side-by-side with workers who make $10 an hour more than he does and enjoy full health care coverage, generous vacation time and a host of other benefits and protections.

Ammons, 35, is what's known at the Belvidere plant as an "enhanced temporary worker," a designation that not only sets him apart from his full-time co-workers but also UAW members at every other Big Three assembly plant in the United States.

The unique arrangement between Chrysler and United Auto Workers paved the way for a third shift at Belvidere, which was awarded three new vehicles -- the Dodge Caliber, the Jeep Compass and Jeep Patriot. But it also has sowed dissention on the plant floor and spawned a federal lawsuit by temporary workers.

The Belvidere situation provides a glimpse of what could be the future for American auto workers -- two classes of workers doing equal work but earning unequal pay.

Cost-saving two-tier wage structures -- where new hires make less than veteran workers -- have already become a reality for plant workers at auto suppliers Delphi Corp., American Axle & Manufacturing Holdings Inc., and most recently Dana Corp. Illinois-based equipment maker Caterpillar Inc. The UAW agreed to two-tier wages in 2005.

General Motors Corp., Ford Motor Co. and Chrysler are expected to press the UAW for more changes in key areas including wages when bargaining starts this month on a new national labor agreement. A broader two-tier wage structure that stretches into more domestic auto plants would help the Big Three become more competitive but also could have profound implications for union solidarity and worker morale.

"Two-tier is a flashpoint word especially for the UAW, which has such an embedded notion of solidarity," said Karen Boroff, dean of the Stillman School of Business at Seton Hall University in New Jersey.

UAW officials last month began calling plant-level union leaders to gauge opinions about the possibility of a two-tier wage structure, said Chris Sherwood, president of UAW Local 652, which represents GM workers in Lansing's Grand River plant.

"They're talking about the feasibility of two-tier wages in the next contract," said Sherwood. "Whether (automakers) are going to get it or not is another issue."

Belvidere serves as a case study for the benefits and drawbacks of creating separate wage structures within an auto plant. Without the agreement, the plant might never have snagged the new vehicles and the third shift that keeps it humming around the clock while many other U.S. auto plants have been idled or work on one shift. The 40-year-old, 3.9 million-square-foot Belvidere received a $400 million renovation to build the new vehicles.

Toyota utilizes temp workers

Toyota Motor Corp., the Big Three's most powerful competitor, has used temporary workers liberally to keep costs down. It also allows the automaker to easily adjust its plant staffing when demand rises or drops. As much as 20 to 25 percent of Toyota workers in U.S. plants are temporary at any given time, said Sean McAlinden, chief economist for the Center for Automotive Research.

Chrysler has similar flexibility for the first time in Belvidere. Thousands of workers jumped at the chance to interview for the 600 new jobs last summer.

But some of those who hired in as "enhanced temporary workers" for up to two years have become embittered about the disparity in compensation that goes well beyond wages.

Ammons and other enhanced temps hired in Belvidere receive no dental or vision coverage, no pension credits or sick pay and no guaranteed raises. They can be laid off at any time -- and more than 100 have been -- and are not eligible to receive pay through the jobs bank that protects other laid off UAW workers.

"Enhanced temp workers aren't treated like regular employees," Ammons said. "It's like a caste system."

The only equality is in work load. In teams of six or seven workers, enhanced temporary employees assemble the small cars and SUVs beside permanent production workers.

Workers file lawsuit

The situation is complicated further by a federal lawsuit seeking class action status filed late last year by a group of enhanced temporary workers, including Ammons.

The suit against Chrysler and UAW claims that automaker and the union never made it clear to workers that they were applying for lower-paying, less secure positions until they had already committed to taking the jobs. Chrysler has countered that all workers signed documents that clearly laid out the terms of the positions.

The UAW "sold its soul to get these three cars," said Jim Doser, a 57-year-old enhanced temporary worker who joined the lawsuit.

Chrysler doesn't view its move as a two-tier system because the lower-paid workers aren't permanent hires. But some workers and union officials say that's just semantics. Unlike temps in other places who work a few weeks or months at a time as fill-ins, the enhanced temporary workers at Belvidere can work year-round for up to two years.

"These people are not replacing people that are off work or absent," said one union official who asked to remain anonymous. "They're actually there as full-time workers. There's a difference. They're there doing a full-time person's job."

Last October, Tom Littlejohn, president of UAW Local 1268, which represents Chrysler workers in Belvidere, filed an unfair labor practice charge with the National Labor Relations Board against the UAW International and Chrysler. He asserted the "enhanced temporary employees" designation violates the union's labor agreement with Chrysler that allows temp workers for a maximum for 120 days. Littlejohn later said he was instructed by UAW officials to stop publicly discussing the issue.

Union leaders at Local 1268 acknowledge the situation has caused friction.

"Do I think we got problems with (enhanced temporary employees) and senior employees? Sure," said William Pruitt, vice president of Local 1268.

But he wants enhanced workers to know that "at my plant, they are no less important," he said.

Pruitt said he isn't sure how the issue will play out in the upcoming contract talks, which run through Sept. 14, but he'd like to see the enhanced temporary workers in Belvidere become permanent workers. "We'll know more when September gets here," Pruitt said.

Some permanent UAW workers at Belvidere find the situation unsettling for what it portends. "They shouldn't be here," said Mary Beth Craw, a UAW production worker making full wages and benefits. She recently was sent home early after logging about five hours of work.

While Craw and some co-workers headed to "Take 20," a local watering hole four miles from the plant, enhanced temporary workers remained on the job for "their full eight-hour shifts," she said.

"They're making things tough for the full-time employees," said Ron Weaver, a production worker, who sat on a bar stool next to Craw.

He wondered aloud whether Chrysler's soon-to-be new owner, private equity firm Cerberus Capital Management, will demand the lower wage scale all workers. "Cerberus is going to say, 'Hey, they're making $18 an hour. Why can't you?'" Weaver said.

Is solidarity at risk?

Doser, an enhanced temporary worker, said he understands the auto companies "have to be competitive, no doubt," he said, but not by surrendering its core values. Doser has been an UAW member since 1973 and laments the loss of unity and shared sacrifice.

"Where is the solidarity? If the union had to take a cut in the past, the entire union would take a cut," he said. "Now these people are turning around and selling me out. You better believe that I'm angry."

But times have changed for both the UAW and American automakers.

Twenty years ago, the Big Three automakers possessed nearly 70 percent of the U.S. retail car market in 2000. Now GM, Ford and Chrysler have a 51.9 percent stake while Asian rivals, and Europeans automakers account for the rest.

UAW membership has fallen in tandem with the Big Three's shrinkage, dropping below 600,000 last year from a high of more than 1.5 million in 1979.

"The thing with the UAW is they're dealing with how to save jobs," said Gary Chaison, labor expert at Clark University in Worcester, Mass.

"That's really their primary objective right now."

However, some union officials are doubtful that the UAW would backpedal on wages to shield jobs.

"I don't see Ron Gettelfinger doing anything like that," said Ed May, president of UAW Local 961, who represents workers at Chrysler's Detroit Axle plant.

For those who bargained in previous UAW contracts talks, the reality of givebacks -- particularly in wages -- is a tough pill to swallow.

"It's not good to see things that you worked your whole life for slipping away," said Robert Denison, a former UAW international representative for Chrysler workers before retiring in 2000.

"But this is a long fight and sometimes you take a whipping in the third round and come back in the seventh round and kick butt."

You can reach Josee Valcourt at (313) 222-2575 or jmvalcourt@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

UAW boss not in giveback mode

2007-07-13T23:09:00.000-04:00

Thursday, July 12, 2007
UAW boss not in giveback mode
Gettelfinger says union has already made sacrifices
Louis Aguilar and Sharon Terlep / The Detroit News

DETROIT -- United Auto Workers President Ron Gettelfinger said the union is not entering the upcoming contract talks with Detroit automakers with givebacks in mind and defended the controversial jobs banks program that provides pay and benefits for laid off workers.

"We're not going into negotiations in a concessionary mode, I'll tell you that," Gettelfinger said Wednesday after speaking at the NAACP national convention at Cobo Center.

Asked whether the UAW will fight to keep the jobs bank, which Detroit automakers have made clear they want to eliminate or modify, Gettelfinger responded: "That may be what the companies' position is," but "we've done a lot with the jobs bank, the companies know that."

Gettelfinger repeatedly told reporters he refuses to negotiate the contract in the press. The negotiations formally begin July 20 with Chrysler Group and Ford Motor Co. officials. Talks with General Motors Corp. kick off July 23.

Gettelfinger accused automakers of using the media to portray the UAW as entering the talks willing to give deep concessions in pay, retiree health care and pensions. "Which it appears the media is more than eager to do," Gettelfinger said.

He argued that the UAW already has made many compromises -- particularly on health care benefits and plant level operating agreements.

Detroit automakers already have begun to chip away at the jobs bank. In May, the UAW cut a deal with GM to clear about 400 skilled trades workers out of job banks in Flint and Lansing. And through local agreements and massive buyouts, the Detroit automakers have reduced the number of workers in jobs banks from 12,000 in 2006 to 4,200 currently.

The union also has agreed to changes on health benefits. This month, the UAW reached a deal with bankrupt auto supplier Dana Corp. that will transfer retiree health care responsibility and long-term disability benefits for workers to union-managed voluntary employees' beneficiary associations, or VEBAs.

Dana would cease providing those benefits and fund the VEBAs, which are separate trusts, with a payment of about $700 million in cash and $80 million of stock in the reorganized company.

"That is a precursor to nothing," Gettelfinger said. "This is a company that was in bankruptcy, and a lot of people were predicting that we would not get anything in regards to people's health care."

UAW Vice President General Holiefield, who leads the UAW's Chrysler unit, challenged the notion that this year's talks will be more difficult than past negotiations.

"They've always been called the worst and we've always managed to get the job done," said Holiefield, who was at the NAACP event. "I know that things are tough economically for the company but they also have very good products. I always tell UAW members that we've always managed to find a light at the end of the tunnel."

In his speech, Gettelfinger delivered a blistering attack on discount retailer Wal-Mart, the nation's largest private employer, before hundreds of enthusiastic NAACP convention attendees.

"The fact that one half of Wal-Mart workers have no health care coverage speaks volumes about what's wrong with American health care coverage," Gettelfinger said as the crowd began to rise to its feet. "It is always low wages that are behind those low prices. We can do better in America. We can fight to keep good-paying jobs, manufacturing jobs. We can work together to find a solution to fix a broken health care system.

"We can hold employers accountable for being part of the problem and encourage them to become part of the solution," Gettlefinger said as he strained his voice to speak over the cheering crowd. "Let's stand up. Let's speak out. Let's take charge. Let's fight together.

"Solidarity. Solidarity. Solidarity forever."

You can reach Louis Aguilar at (313) 222-2760 or laguilar@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Delphi bankruptcy bill: $200M

2007-07-13T22:38:00.000-04:00

Wednesday, July 11, 2007
Delphi bankruptcy bill: $200M
It may grow to $300M, making it one of top 10 costliest ever
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Delphi Corp. has racked up nearly $200 million in legal and accounting bills since it filed for bankruptcy in October 2005, and the tab could reach $300 million before it emerges by the end of the year, a Detroit News review of court filings shows.

With the Troy-based auto supplier spending $12.5 million per month, Delphi's bankruptcy is on track to become one of the 10 most expensive in U.S. history, said Lynn LoPucki, a professor of bankruptcy law at the University of California-Los Angeles who tracks Chapter 11 costs.

United Auto Workers leaders have vehemently criticized the bonanza of fees paid to teams of lawyers, accountants, turnaround experts and other firms that specialize in bankruptcies. Particularly galling to the union is that Delphi workers agreed to reduced pay and benefits to help the company emerge from Chapter 11.

"Bankruptcy is big business," UAW President Ron Gettelfinger told WJR-760 radio in Detroit on Monday. "One of these days, people will wake up and see what's happening here.

"We need to reform the bankruptcy laws. These guys are making a ton of money in this bankruptcy. Literally, it's obscene."

Delphi's Chapter 11 will easily end up as the most expensive in the history of the automotive industry, but other bankrupt auto suppliers also have amassed huge bills.

Federal-Mogul Corp., Dana Corp. and Collins & Aikman have all reported more than $100 million in bankruptcy expenses.

Toledo-based Dana's fees could reach $180 million by the end of the year. The trustee and judge overseeing the Dana case have questioned some of the bills, such as $300 cab rides taken by lawyers and expensive dinners in London.

On June 27, U.S. Bankruptcy Judge Robert Drain approved $49 million in fees and $3.3 million in expenses sought by Delphi's 38 law firms, accountants and consultants for the four-month period ending Jan. 31, 2006.

In total, Drain has approved $184 million in fees and $13 million in expenses at Delphi.

Delphi has hired 39 firms

None of those firms has submitted bills to the court for the past six months, which means the running tab for Delphi's Chapter 11 has likely surpassed $250 million.

A 39th firm hired by Delphi late last year, Detroit-based W.Y. Campbell & Co., on Tuesday submitted its first bill, for $500,000 for its advice on whether to sell a business unit.

The highest bills have been submitted by Delphi's lead bankruptcy law firm, Skadden, Arps, Slate, Meagher & Flom LLP, which has been paid $44 million for 15 months of work.

Drain has taken some steps to curb expenses, including limiting meal reimbursement to $20 for professionals, keeping photocopy expenses to 10 cents per page and limiting the number of attorneys at hearings.

But a review of hundreds of pages of billing records shows firms often bill Delphi for expensive meals and are still sending numerous attorneys to court hearings or conference calls.

Delphi's fee committee also has turned up some questionable expenses. One lawyer charged exactly eight hours for every day she worked -- between five and 10 days each month -- while Cadwalader Wickersham & Taft requested $10,000 in travel expenses for two lawyers without detailing any expenses. KPMG didn't appear to be billing its travel time at half its normal rate -- as is customary in bankruptcy court.

One FTI Consulting employee charged Delphi $185 for a taxi taken in June 2006 from the Newark, N.J., airport to his home.

Last year, Delphi hired Legal Cost Control Inc. to help reduce its legal and accounting fees. That firm billed Delphi $481,000 for the past four months.

PriceWaterhouseCoopers LLP has billed about $21 million since being hired in June 2006. While the bulk of work done by PWC has taken place in the United States, Delphi has also paid for work done by PWC employees in Morocco, India, Korea, Germany, Mexico, Turkey, France, China, Poland, Australia, Romania, Hungary, Czech Republic, Portugal and Italy, PWC's billing statements show.

Delphi didn't return calls seeking comment, but the company has previously defended the bankruptcy expenses as appropriate.

Delphi's cost called very high

LoPucki, the UCLA professor and Detroit native, said Tuesday that Delphi's bankruptcy costs were extremely high based on an economic modeling program he created with a colleague. That program is based on a review of 74 major bankruptcies over a six-year period.

The computer program also found that Skadden Arps billed for far more hours than other law firms in comparable cases.

LoPucki said that his study showed that bankruptcy fees in U.S. cases rose an average of 8.6 percent yearly between 1998 and 2004.

He also said cases filed in New York or Delaware, where many companies are incorporated, are more expensive. Delphi, which is headquartered in Troy, filed in New York.

"Based on where Delphi is today, they are clearly going to be in the top 10. These are very high costs," LoPucki said.

Enron's bankruptcy was the first to top $300 million in fees and remains the most costly by far, at $800 million, by one estimate.

Delphi reported $17 billion in assets when it filed for bankruptcy in October 2005, making it the fifth largest bankruptcy in U.S. history by revenue and 13th largest by assets.

Skadden Arps notes in court records that it has voluntarily shaved several million dollars off its bills. It cut its most recent four months of bills by 8.3 percent, or $1.2 million. The bills are justified by the "unique circumstances surrounding these unusually large and complex cases," Delphi's lead bankruptcy attorney, Jack Butler, wrote in a court filing.

Butler also noted that the bankruptcy court has thrown out 8,300 claims seeking $8.1 billion from Delphi after objections were raised by Skadden attorneys.

Experts suggest that large-scale corporate bankruptcies may be increasingly unlikely as the costs of court-overseen restructuring continue to skyrocket.

On Saturday, Delphi formally canceled its financing deal led by Appaloosa Management LP and Cerberus Capital Management LP to buy up to 70 percent of Delphi when it emerges from bankruptcy.

Appaloosa said it is in talks with Delphi to reach a similar deal, though without Cerberus, which dropped out in April.

Delphi's board is set to meet Monday and may approve a new financing deal. Drain will hold a hearing July 19 to approve the new labor agreement with the UAW and could approve an amended financing deal. Delphi said it hopes to have the deal in place by the end of July.

Delphi hopes to reach deals with its five other smaller unions by Aug. 16, the date of another court hearing. It is in "active bargaining" with its second- and third-largest unions.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Daniel Howes: GM's check engine light is flashing once again

2007-07-13T22:34:00.000-04:00

Monday, July 09, 2007
Daniel Howes: GM's check engine light is flashing once again
June's slumping sales echo former board member's warning that automaker isn't in clear.

Nine months ago Jerry York, billionaire Kirk Kerkorian's flamethrower-in-chief, quit General Motors Corp.'s board and expressed "grave reservations" about the staying power of its North American turnaround.

After the crappy June GM delivered -- sales plunged 21.3 percent for a year-to-date market share of 23 percent and an all-time low of 22.3 percent in June -- could ol' Jerry have been more on target than the General's management cares to admit, thanks to fewer incentives, $3-a-gallon gas and its impact on the sales of trucks and SUVs?

"I have grave reservations concerning the ability of the company's current business model to successfully compete in the marketplace with those of the Asian producers," York wrote in his resignation letter last October to George Fisher, GM's top outside director.

Officially, GM scoffed at York's "reservations." But since then, fuel prices have stayed stubbornly high. Democrats, now in control of Congress, are pressing hard to ratchet federal fuel economy rules sharply higher. A three-way deal between GM, the United Auto Workers and bankrupt Delphi Corp. has been ratified, raising hopes of a breakthrough UAW contract in September.

Yeah, but. Talk of yet another stalled GM turnaround (how many, I've lost count) is percolating because market share keeps sliding, cash continues to be burned and anyway you cut it, too few Americans are willing to buy the General's improved metal without being paid an incentive to do it.

Midway through the year, sales of GMC are up 4.9 percent and Saturn is up 21.4 percent compared with last year, according to Autodata Corp. But sales of Buick are down 27.9 percent, Cadillac is down 11.7. Chevrolet is down 7.2. Hummer is down 17.3. Pontiac is down 14. Saab is down 3.9.

That's hardly a rousing endorsement of GM's North American turnaround or its product offensive, however real it may be to critics or patrons of the new "Transformers" movie.

We've seen this real-life movie in Detroit before, and it always ends badly -- more cost-cutting, more plant actions, more tortured explanations. A favorite: The myriad reasons GM is taking hits on its high-margin pickups and SUVs even as the same forces seem to almost always steer clear of foreign rivals like Toyota.

Drive revenue -- or die

Tacticians looking to this summer's national contract talks might spy opportunity in these speed bumps, another chance to plead poverty with union negotiators. They may see a chance to create a fund to off-load GM's retiree health-care obligations and put them under union control.

Perhaps, but the gnawing reality of GM's predicament is that cutting costs, closing plants, killing jobs and extracting union concessions may help improve the business model, but they are no guarantee of success in the market.

Even fielding better products isn't enough to keep GM's "check engine" light off -- the most worrisome sign of all.

Daniel Howes' column runs Mondays, Wednesdays and Fridays. You can reach him at (313) 222-2106, dchowes@detnews.com or http://info.detnews.com/danielhowesblog.

© Copyright 2007 The Detroit News. All rights reserved.

Ford and GM expand deals to boost sales

2007-07-13T22:31:00.000-04:00

Tuesday, July 10, 2007
Ford and GM expand deals to boost sales
Bryce G. Hoffman / The Detroit News

Ford Motor Co. said Monday it is extending its July Fourth incentives through the summer and General Motors Corp. is doubling the incentives on its new full-size pickups as the automakers move to bolster sagging sales.

Ford's offers include zero-percent financing for 36 months on all 2007 Ford, Lincoln and Mercury models, as well as $2,007 in cash on trucks and SUVs. Customers can opt for up to $2,500 cash instead of the free financing.

Sales of Ford's domestic brands were down 8 percent last month and are down 11.3 percent for the year.

One bright spot in June was truck sales, which rose 2.6 percent -- a sharp contrast to the double-digit declines in truck demand reported by the other U.S. automakers. Ford F-Series outsold its top rival, the Chevy Silverado, by more than 20,000 units in June.

To maintain momentum, Ford is offering dealers that meet July F-Series sales goals a chance to sell one of 50 Shelby GT500 KR editions when they go on sale next spring. Ford plans to produce 1,000 of these 540-horsepower sports cars.

Ford spokesman Wes Sherwood would not comment on the initiative, first reported by Automotive News. "We're aggressively promoting our trucks to continue our 30-plus years of truck leadership," he said.

GM is trying to recover lost ground by offering up to $2,000 in cash on the Silverado and its sibling, the GMC Sierra. The automaker is also offering to pay up to six months' lease payments for owners of its midsize SUVs, as well as the Chevy Equinox and Pontiac Torrent, who trade up to a 2007 Buick Ranier, GMC Envoy or Chevy Trailblazer and finance through GMAC.

© Copyright 2007 The Detroit News. All rights reserved.

GM's risky challenge

2007-07-13T22:27:00.000-04:00

Monday, July 09, 2007
GM's risky challenge
Carmaker bets on showroom face-off with Asian cars
Sharon Terlep / The Detroit News

ANN ARBOR -- A look of disbelief crossed Karen Smith's face as a Saturn salesman handed her the keys to a shiny new Toyota Camry.

"Really, go ahead and drive it," he told Smith, who was car shopping for her teenage son. "Try the Honda, too."

Off she drove, rolling out of a Saturn dealer's lot in the hot-selling Toyota, her two sons and their grandmother in the car. For the next 15 minutes, the brood weighed the pros and cons of the Camry and the Saturn Aura, from the handling on a tight corner to the arrangement of the instrument panel.

The unlikely exercise is part of a new promotion from General Motors Corp.'s Saturn brand that pits the new Aura four-door against American car buyers' perennial favorites -- the Camry and Honda Accord -- in Saturn showrooms across the nation.

Not the type of risky tactic GM would likely have tried even a few years ago. The strategy could backfire if Saturn shoppers drive a Camry and Accord and like it better.

But after decades spent defending its dominance in the market, the auto giant is going on the attack against a bigger, healthier competitor -- Toyota Motor Corp. -- and trying to loosen Toyota's and Honda's grip on the sedan market.

"We want to make sure people understand we're unbelievably confident in our product," Saturn General Manager Jill Lajdziak said. "You've got to try different ways to cut through the clutter in a very crowded marketplace."

The Smiths make a perfect target for Saturn: a family of four living in the trendy Ann Arbor area, and Smith and her husband were once Ford Motor Co. loyalists. A run of malfunction-prone vehicles turned the couple toward the competition. In recent years, they have been happy owners of a Camry and a Honda Pilot SUV.

A desire to bolster Detroit's struggling auto industry has them tentatively considering buying American. Their 15-year-old, Kevin, will soon need a car, and they want something safe, practical and appealing. The family also is encouraged by signs that domestic automakers are closing the quality and reliability gaps with foreign companies.

"We're ready to try again," Smith said.

At first, the family compared the vehicles' exteriors. They all preferred the Aura's sloping front end to the flatter Camry.

Inside the Camry, Smith's sons complained they couldn't see the dash-mounted clock from the back seat. Having driven the Aura, they talked about the roominess and overall feel of both vehicles.

Kevin Smith, the soon-to-be driver, thought the Camry had "pep" and was impressed by its handling.

His grandmother, Beverly Good, was mostly pleased that the Saturn saved them the trouble of visiting a Toyota or Honda store.

When the drive was done, the foursome huddled. They mostly agreed on the Aura, though the Camry's cavernous trunk almost won Kevin over, since he needs space to haul hockey equipment to and from camp all summer. A final decision will come later, after Smith's husband gets a chance to weigh in.

"It's a good idea," Karen Smith said of the promotion. "If they're really confident in their product, they've got nothing to lose."

Strategy similar to Ford's

Buoyed by a slew of well-received products, GM desperately wants to convince consumers that it really can compete against foreign nameplates that have cannibalized sales of Detroit's Big Three. For the first time in 76 years, GM lost its claim as the world's largest automaker when Toyota outsold it worldwide in the first quarter.

"For years, people bought Japanese cars because they thought it was the smart choice," GM marketing chief Mark LaNeve said in a recent interview. "Our products are every bit as competitive."

As part of GM's assault, Saturn dealers nationwide bought or rented a Camry and Accord to have in showrooms for the "Side-by-Side-by-Side" national campaign that runs through July.

The automaker may try a similar promotion when the redesigned Malibu hits showrooms this fall.

GM's strategy is similar to Ford's, whose recent Fusion Challenge ads pitted the Fusion sedan against the Camry and Accord.

Battle to win back buyers

Winning back customers is going to be a battle for GM.

Among consumers who bought Honda Accords between November and January, only 1 percent had also seriously considered the Aura, according to data from J.D. Power and Associates' 2007 Initial Quality Study, which measures consumer satisfaction in the first 90 days of ownership. Among Camry buyers, none had considered the Aura.

Saturn's Lajdziak acknowledges the challenge of getting on some shoppers' lists.

Sales of the Aura, which won the North American Car of the Year award at the Detroit auto show in January, totaled 27,200 through June, compared to 212,500 Camrys and 180,000 Accords.

Mentioning the Aura along with the Accord and Camry will help consumers familiar with the Japanese models recognize the Aura as a midsize sedan, Lajdziak said.

Toyota, which saw sales jump 10 percent in June compared to GM's 21.3 percent drop, is taking the heat in stride. Having its vehicles shown in Saturn showrooms may even help draw customers who wouldn't normally buy an import, spokesman John McCandless said.

"We're being targeted as very good, high-quality products," he said. "I'm not so sure that's a bad thing."

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Baseball, hot dogs and hybrid vehicles

2007-07-13T22:23:00.000-04:00

Saturday, July 07, 2007
Business Insider
Baseball, hot dogs and hybrid vehicles
The Detroit News

For Tuesday's Major League Baseball All-Star Game in San Francisco, Fox Sports is renting 30 "environmentally friendly" vehicles for its personnel.

Fox Sports employees will drive vehicles from EV Rental Car, including the Ford Escape Hybrid, Toyota Highlander Hybrid, Toyota Prius and Honda Civic Hybrid. But they won't be driving any Chevy products, despite the fact that General Motors Corp. is a major sponsor of Major League Baseball.

"Driving hybrid vehicles falls in line with our company's environmental initiatives, and we wholeheartedly support EV Rental Cars in their efforts to share the experience of driving 'green' with those renting vehicles across the U.S.," said Jerry Steinberg, senior vice president of Field & Technical Operations at Fox Sports.

But Chevy isn't being totally shut out. On Friday, the Malibu hybrid made its public debut at the All-Star Fan Fest. On Monday, Chevy E85 flex-fuel vehicles will transport players in the All-Star parade, and on Tuesday night, the MVP of the game will win a Tahoe Hybrid vehicle.

GM spokesman Greg Martin noted that large SUVs can more efficiently carry lots of people and gear than smaller hybrids, especially if they are running on E85, an alternative fuel made mostly of ethanol. "Sometimes the rush to assume a green mantle outpaces common sense," Martin said.

A Chevy Tahoe running on E85 for 15,000 miles will use 130 gallons less gasoline than a compact hybrid. And the Tahoe can haul twice as many people and gear, Martin added.

Alive and blogging

General Motors Corp.'s Bob Lutz channeled Mark Twain on his recent video blog posted on GM's Fastlane Web site and on YouTube. In other words, rumors of his death and that of GM's Buick brand have been greatly exaggerated.

The silver-haired and still gimlet-eyed 75-year-old opened the video saying "Hello everybody, I sort of came to the conclusion that it's time to get on camera and assure you that that I am still alive and still working for the company -- still vertical and taking solid nourishment."

He then went to say that Buick, a brand born 104 years ago, also is alive and well.

We just call her Mary

You have heard of POTUS and FLOTUS, the Secret Service code names for the president and the first lady of the United States. But even Cabinet secretaries get cool nicknames these days.

In e-mails released by the Transportation Department this week about its efforts to lobby members of Congress to oppose California's proposed emissions standards, Transportation Secretary Mary Peters is referred to as "S1." The name refers to her mail code.

"Can you go brief S1 on the calls, etc. when she gets in? Should be any minute," wrote Husein Cumber to the department's deputy chief of staff Simon Gros on June 7.

Cumber, an assistant to the secretary, raised more than $200,000 for the Bush/Cheney re-election campaign as the youngest "Ranger" at age 28. Does that make him R1?

Contributors: David Shepardson, Mark Truby

© Copyright 2007 The Detroit News. All rights reserved.

Union's stake in Delphi fading

2007-07-13T22:21:00.000-04:00

Saturday, July 07, 2007
Union's stake in Delphi fading
By 2012, parts supplier expects to have one tenth of the UAW employees it entered bankruptcy with.
David Shepardson / The Detroit News

WASHINGTON -- Delphi Corp. expects to have as few as 2,300 United Auto Workers members working in four remaining plants by 2012, the company said in a court filing this week.

The estimates give the clearest picture yet of just how dramatically the giant Troy-based auto supplier is shrinking in the United States.

When Delphi filed for Chapter 11 in October 2005, it employed more than 24,000 UAW workers, including about 10,000 in Michigan. Only Detroit's Big Three Automakers employed more.

Delphi's UAW membership has since dropped to about 17,000 due to buyouts and early retirement programs.

By the end of 2007, the supplier will have 4,703 UAW employees, Delphi said. That will fall to between 3,101 and 3,604 by 2011, depending on new business added at the four UAW plants that Delphi intends to keep open in Kokomo, Ind.; Lockport, N.Y.; Rochester, N.Y.; and Grand Rapids. Total UAW employment could drop to as low as 2,306 in 2012.

Of those plants, Grand Rapids is expected to slightly increase employment -- from 535 workers in 2007 to about 543 in 2011, according to charts attached to the recently ratified UAW-Delphi contract, which was part of a 996-page document that Delphi filed in New York bankruptcy court this week.

Despite the cuts, Wall Street was counting on downsizing to be even deeper. CRT Capital Group LLC auto analyst Kirk Ludtke said the 2011 UAW staffing levels "are higher than the preliminary estimate (of about 1,600 UAW workers) we made late last week."

But Ludtke concluded in a research note Friday the contract that Delphi reached with the UAW will allow the company to reduce its work force "to a level at which Delphi should be able to reach its long-term potential." He rates Delphi stock a "buy."

Delphi spokesman Lindsey Williams noted that the company earlier had announced its intention to exit 21 of 29 core businesses. As a result "you're going to be a smaller business," Williams said.

Of 21 UAW plants, Delphi will continue to operate four, sell seven to other parties and close 10. Some employees will be eligible for $105,000 buy-down payments over three years, and others may get relocation allowances of up to $67,000 when plants close.

About 12,400 UAW-represented Delphi workers opted to retire by Jan. 1, 2007, while 1,400 took buyouts.

Delphi and the UAW reached a contract last month that voting union members subsequently ratified by 68 percent. Federal bankruptcy Judge Robert Drain will decide on July 19 whether to approve the contract, which will reduce the auto supplier's labor costs and help it emerge from bankruptcy this year.

Delphi has withdrawn motions asking Judge Drain to void its collective bargaining agreements and allow it to unilaterally reduce the benefits of certain UAW retirees.

Delphi hopes to reach agreements with its five other smaller unions by Aug. 16, the date of another court hearing. It is in "active bargaining" with its second- and third-largest unions -- the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers and the United Steelworkers.

The court also must still approve a financing plan. A group of investors led by Appaloosa Management LP wants to invest up to $3.4 billion for 70 percent of Delphi ownership.

It's not clear if a rival bid will emerge. Dallas-based private equity firm Highland Capital Management LP renewed its interest in Delphi after the court rejected its first bid earlier this year. Other investors also could add to Appaloosa's bid. Pardus Capital Management, which had previously teamed with Highland for a bid, has joined the Appaloosa group.

Earlier this year, Cerberus Capital Management LP, which is buying DaimlerChrysler AG's Chrysler Group, withdrew from the Delphi bidding.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Big Three's magic pill: Union-run fund may cure health care headache

2007-07-13T22:19:00.000-04:00

Friday, July 06, 2007
2007 UAW CONTRACT TALKS FOURTH IN AN OCCASIONAL SERIES
Big Three's magic pill: Union-run fund may cure health care headache
Bryce G. Hoffman / The Detroit News

-- This Rust Belt town of idled tire factories has long depended on Detroit's automobile industry for its survival. Now, the survival of Detroit's automakers may depend on a landmark labor agreement reached here.

In December, Akron's Goodyear Tire and Rubber Co. and the United Steelworkers signed a contract that transferred responsibility for retiree health care from the company to the union. Goodyear paid $1 billion up front, but it no longer has to carry those costs on its balance sheet.

Detroit automakers, desperate to rein in soaring health care expenses that undercut its ability to compete with foreign rivals, see a Goodyear-style deal as a potential game changer. The United Auto Workers, which proposed a similar arrangement during talks with General Motors Corp. in 2005, is studying the possibility.

When national contract negotiations begin later this month, a Goodyear-style health plan is expected to be a central issue at the bargaining table.

With a deal like this, the automakers would make a massive one-time cash payment to a union-managed fund, freeing the companies from all future responsibility for UAW retiree health care.

Analysts say such a deal would dramatically narrow the competitive gap dragging down Detroit automakers and give the UAW enough starting capital to guarantee retiree health benefits well into the future, assuming the funds are managed wisely.

The CEOs of GM and Ford Motor Co. have publicly expressed interest in such a deal, and sources familiar with the situation say they, along with DaimlerChrysler AG's Chrysler Group, see it as a way to bolster their tarnished credit ratings, improve cash flow and ultimately shore up earnings.

For the UAW, the agreement could preserve health care coverage at current levels for years to come and safeguard the benefits in case one or more of the automakers goes bankrupt in the next few years.

"There's probably no one single element that could have as big an impact as this one," one high-ranking company official told The Detroit News. "But this is not a slam-dunk by any means."

The Goodyear model

GM, along with Ford and Chrysler, will spend more than $10 billion on health care this year -- more than they will spend on steel, by some estimates.A study by the Troy-based Harbour-Felax Group found that health care costs add as much as $1,400 to the price of vehicles produced by Detroit automakers compared to those made by their Japanese rivals.

As U.S. automakers have downsized in the face of foreign competition, their retiree ranks have swelled. Of this year's $10 billion health care bill, $6.4 billion will go to retirees and their dependents.

While the annual costs are hard enough to shoulder, accounting rules compound the problem. They require the automakers to include the projected long-term cost of those benefits on their balance sheets. That is a big part of why credit ratings for GM and Ford are so low.

"The operations in North America can't sustain those types of expenditures anymore," said analyst Bradley Rubin of BNP Paribas. "It's just not feasible. They have to find a way to get rid of that if they're ever going to be profitable again."

Goodyear faced much the same dilemma.

"When I started, there were 14,000 workers out there," said Howard Kropff, benefits officer at USW Local 2 in Akron, as he gestured out his window at the quiet Goodyear factories that once produced many of the nation's tires. "That was 40 years ago."

Now, fewer than 500 workers labor there. But Kropff proudly notes that the other 13,500 all made it to retirement.

In October, the Steelworkers went on strike to protect the benefits promised to those retirees in better times. Though Goodyear had capped its contribution as part of a previous contract, the company insisted it could no longer afford to pay for retiree health care. The union said it already had given up enough three years earlier, citing the rising premiums retired workers were already being forced to pay.

As the talks dragged on without resolution, Goodyear proposed a novel solution. It would establish a voluntary employee beneficiary association, or VEBA, to pay for current and future retiree health care -- and transfer responsibility for those benefits from the company to the union.

The deal, which is awaiting final court approval, works like this: Goodyear will put $1 billion into a union-run trust fund to cover the cost of all current and future retiree health benefits.

That amount will be supplemented by contributions from active workers, who agreed to deposit a $1-an-hour cost-of-living raise into the retiree fund. The fund will be managed by investment professionals, but it will be up to the union to decide whether to continue offering the existing benefit plan or to modify it.

Goodyear will no longer have any responsibility for health benefits for union retirees. Prior to the deal, the cost of those benefits was set at $1.2 billion for accounting purposes, and Goodyear was able to eliminate that liability for 83 cents on the dollar.

According to the company, the deal will reduce its annual retiree expenses by an estimated $110 million and improve cash flow by $145 million annually.

As for the Steelworkers, the deal protects retiree health benefits from the threat of a Goodyear bankruptcy. Under the old system, those benefits were not guaranteed. If Goodyear had filed for Chapter 11 bankruptcy, retirees would have had to line up with all of the company's other unsecured creditors. If the union fund reaps strong investment returns, the union also may be able to eliminate some or all of the premiums retirees now pay.

"The money is there, and that's a big thing," Kropff said. "I'd rather have the money in our bank, with us managing the plans."

Active workers will still receive their health insurance through the company until they retire, when they will be covered by the union-run plan.

Goodyear shares, along with the company's credit rating, soared on news of the deal.

Help for Detroit

Many analysts believe a similar agreement could go a long way toward addressing Detroit's financial woes.

Himanshu Patel of JPMorgan believes GM and Ford could convince the UAW to take over retiree health care for 50 to 70 cents on the dollar.

At 60 cents on the dollar, Patel says Ford would see the most immediate relief, with earnings improving by 17 cents per share in 2008 and cash flow increasing by $600 million. Earnings would further improve by 25 cents per share in 2010, with Ford's cash flow up by nearly $1 billion.

GM's cash flow would also improve by $600 million in 2008, according to Patel's model, but the company would see little immediate earnings improvement. GM would generate $1.6 billion more in cash in 2010, with earnings improving by 73 cents per share.

Assuming the same 60 percent funding level, Patel estimates it would cost GM $29 billion to fund its portion of a Goodyear-style health care trust. He puts Ford's cost at $12.5 billion.

While that might seem like a steep price given the financial troubles at GM and Ford, Patel and other analysts say neither automaker should have too much difficulty raising the cash.

Both companies already have set aside significant sums to pay for retiree health care; the rest can be raised through asset sales and existing financing.

Wall Streeters like Patel have not analyzed how such a deal would work for Chrysler because it will no longer be a publicly traded company once its sale to private equity firm Cerberus Capital Management LP is finalized.

Patel notes that the UAW has hired its own financial advisers to advise it on a Goodyear-style health care deal.

"We think the UAW leadership will see the benefits of becoming an asset manager," he said.

UAW mum on health plan

Top UAW officials would not discuss the health care issue, but many members and retirees are already worried about the future of their health care benefits.

"It's caused me a lot of stress, and it's caused a lot of other people a lot of stress," said Bob Bowen, a Ford retiree and former president of UAW Local 849 in Ypsilanti. "You can see it in their eyes."

Bowen is the man many former Ypsilanti Ford workers go to with their questions and concerns. While he is worried that retirees could lose everything if Ford is forced into bankruptcy court, he is not sure a union-run trust like the one at Goodyear is the answer.

"At one time, I thought it would be ideal," Bowen said. "Now, I'm not certain they've got the expertise to handle that. We don't have the experience."

Bowen would rather see a national health care solution, and he believes the UAW's top leaders are missing an opportunity to make the union relevant again by leading the campaign to establish universal coverage.

Some observers say adopting a Goodyear-type plan could give the UAW far more clout in the national health care debate.

The UAW would become one of the largest health care providers in the nation. It would also become the manager of one of the country's largest private investment funds.

Using Patel's numbers, that fund would have a starting balance of nearly $42 billion -- higher if Chrysler also participated.

If UAW manages its own retiree health care, some say it could become a more attractive partner to other companies as well.

While the UAW has talked tough about maintaining the status quo, it has also shown some willingness to compromise on retiree health benefits. In 2005, workers at GM and Ford approved changes to their contracts that required retired workers to pick up a small part of their own health care tabs. Part of that agreement involved setting up a union-run VEBA, albeit on a much more modest scale.

That move saved the companies millions of dollars, but some analysts say it could also block a Goodyear-type deal until 2011 because the court settlements that finalized those deals prohibit either company from making further changes to retiree health benefits before then.

The high-ranking company official with knowledge of the companies' thinking says they will argue that they are not changing retiree benefits, but protecting them, since a Goodyear-type deal would preserve retiree benefits in the event of a bankruptcy.

That source said GM and Ford could fund their retiree health care obligations for something closer to 50 cents on the dollar.

"The issue is going to come down to what the funding level is," the person said, acknowledging that neither Ford nor GM are in as good a position to bargain as Goodyear was because they have not capped retiree health care liabilities. "There's no question that the hurdle is much, much higher."

To clear it, the automakers would be willing to make their own concessions to the UAW. That could include agreements to spare plants already marked for closure or promises of new investments.

Whether that is enough will likely be the subject of many late-night bargaining sessions come September, when current UAW contracts expire. Until then, both sides are keeping a close eye on what is happening at Goodyear.

You can reach Bryce Hoffman at (313) 222-2443 or bhoffman@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM thinks design for green cars

2007-07-13T22:17:00.000-04:00

Wednesday, July 04, 2007
GM thinks design for green cars
Firm's success hinges on whether it can develop battery to make car appealing to the masses.
Sharon Terlep / The Detroit News

General Motors Corp. thinks it can clear technological hurdles involved in creating a plug-in electric car for the mass market.

Now the forces behind GM's Chevy Volt and other environmentally minded vehicles are going all out to make sure the vehicle's visual appeal matches its high-tech allure.

"GM is once more a design-driven company, so it's only natural that design keep pace with the engineering development of the E-flex system," Vice Chairman Bob Lutz recently wrote in a blog on GM's Web site.

E-Flex is the powertrain system behind a new generation of electrically driven vehicles GM hopes to build by the end of the decade.

The system matches battery power with several different energy sources. GM's success hinges on whether it can develop a lithium ion battery with the endurance, durability and affordability to make the car appealing to average consumers.

While hundreds of engineers and a number of battery suppliers tackle that job, Lutz says GM's top designers will dig in as well.

The automaker has opened a design studio within its Warren Technical Center campus to fine-tune the design of the Volt and vehicles built on the same architecture.

Bob Boniface, GM director of advanced design, will head up design work on the Volt. He was lead designer for the Chevy Camaro concept vehicle and the hydrogen fuel cell Sequel concept vehicle.

Boniface also worked for DaimlerChrysler's Advanced Product Design Studio, overseeing the architectural design of the popular stow-and-go seating for Chrysler minivans.

Lutz said exterior styling of the Volt is 90 percent complete and will include all the key design cues of the Volt concept GM showed off in January at the North American International Auto Show.

The Volt's front end, with its brawny face, wide bumper and narrow headlights separated by the narrow dual port grille, will be slightly less dramatic, he said, to accommodate safety regulations while fitting with GM's global architecture for small cars.

"This vehicle is so important that it is getting maximum attention from all of the top Product Development leadership and from the senior people in powertrain," Lutz told The Detroit News.

A Volt leadership team meets every two weeks to hammer out glitches and keep up momentum on the project, he said.

The steps aren't unusual in the course of bringing a new vehicle to market. The level of detail GM is making public, however, is atypical. The automaker's strategy aims to cultivate an Earth-friendly image at a time when the environment is a hot-button issue, while discrediting critics who have dismissed the Volt as a publicity stunt.

Lutz said last month that GM had probably spent "at this point" $100 million, "but ramping up very fast as it becomes a high-priority product for launch in '10."

GM has spent about $4 billion on advanced propulsion budget the past five or six years, he said.

GM must walk a fine line in designing the Volt, said Rebecca Lindland, a Global Insight analyst in Lexington, Mass. History has shown that hybrid vehicle buyers gravitate toward distinct vehicles. Toyota Motor Corp.'s hot-selling hybrid Prius, for example, looks unlike any other vehicle on the road. It's outselling Toyota's hybrid Camry, indistinguishable from the traditional Camry except for a badge on the rear, more than three to one this year.

The Volt won't succeed unless it is visually appealing, Lindland said. Lutz has repeatedly promised that the Volt won't "look like a science experiment."

Hybrid buyers, Lindland said, "really want people to know what good people they are."

© Copyright 2007 The Detroit News. All rights reserved.

Weak truck sales hurt GM

2007-07-13T22:16:00.000-04:00

Wednesday, July 04, 2007
Weak truck sales hurt GM
Aggressive discounting boosts Asian carmakers
Christine Tierney / The Detroit News

General Motors Corp.'s sales plunged in June as demand for its small cars sagged and unusually aggressive discounting by Toyota Motor Corp. hurt its pickups.

Of the major automakers, GM suffered the biggest monthly decline, with sales down 21.3 percent in a market that was slightly weaker than the previous June.

Overall, car and truck sales fell 3 percent from year-earlier levels, and the drop would have been steeper if there hadn't been an additional selling day last month.

On a seasonally adjusted basis, the annual selling rate fell to a weak 15.6 million vehicles in June from 16.2 million a year earlier.

Ford Motor Co.'s sales were down 8.2 percent, for an eighth consecutive monthly decline, and DaimlerChrysler AG's sales slipped 1.8 percent. But Japan's leading automakers reported big gains.

"The industry is substantially below normal levels right now and below where we'd like it to be," said Paul Ballew, GM's director of industry analysis.

In addition, "we weren't anticipating that Toyota would go zero (percent interest) for 60 (months) on a brand new truck, and that has hurt our results," he said.

Toyota, flexing its financial muscle, offered big discounts on the Tundra to put the truck's launch back on track. Demand for Toyota's first full-size truck was running below the company's annual sales target of 200,000 units.

But last month, Tundra sales more than doubled to 21,727 after the Japanese automaker offered no-interest loans and other incentives amounting to $5,083 per pickup, according to auto data firm Edmunds.com.

"The only large truck with a higher level of incentives in June than the Tundra was the (Dodge) Ram," said Alex Rosten, manager of pricing and market analysis at Edmunds.com. "Everybody else was lower."

GM's truck sales fell 22.9 percent, reflecting big declines in its relatively new GMC Sierra and Chevrolet Silverado pickups, which carried incentives averaging less than $3,700 in June. Sales of the GMC Sierra pickup fell 26.5 percent, while sales of the Chevrolet Silverado declined by 23.5 percent.

GM is weighing its response. "If we have to make changes in our incentives play, we will," Ballew said. "We're certainly not going to cede ground in a category where we're best in class."

Asked about the incentives on the Tundra, Jim Lentz, executive vice president of Toyota Motor Sales USA, said: "Any time a manufacturer puts incentives (on a vehicle), it's probably deeper than they want to go."

However, "in a segment like full-size trucks, customers expect and in some cases need incentives to help them out of negative-equity positions," Lentz added. He was referring to trade-in vehicles worth less than the payments owed.

Fleet sale cuts hurt Big 3

The fierce competition in the truck segment illustrates the difficulty U.S. automakers face as they try to correct bad habits, such as excessive discounting, which weakened their brands and their financial results in the past.

In recent months, they have reined in low-margin sales to rental car companies that had boosted their volumes but undercut their profitability.

That was the main reason for a 24.7 percent drop in Ford's car sales in June, said Ford industry analyst George Pipas.

"That's where the decline in daily rental occurred," he said. "There are 20,000 Tauruses that got shaved off the year-to-year comparison."

He said Ford's share of the retail market -- sales to individuals through dealers -- was stabilizing this year at about 13 percent, at a level consistent with the targets set in Ford's recovery plan.

GM executives said they had anticipated a slowdown in June as the company scaled back its business with rental car companies.

"Our retail performance for the month was also below the solid running rate we've experienced for the first half of the year, which we attribute to a soft industry and lower incentive spending than our competitors," said Mark LaNeve, GM vice president for North American sales.

"However, we continue to believe that maintaining a disciplined approach to both incentives and daily car rental sales is key to making our marketing strategy work in the long run," he said.

Shift to cars aids Japanese

By contrast with its bigger Detroit rivals, Chrysler reported a 58.2 percent surge in car sales, reflecting big gains for the Chrysler Sebring and 300 sedans, while its light trucks volumes fell 14.9 percent. Chrysler's overall sales were down 1.4 percent. The U.S. market's shift away from trucks and toward more fuel-efficient cars helped Japan's leading automakers. Car sales accounted for 49.3 percent of light vehicle sales last month, up from 47.7 percent a year ago.

Honda Motor Co.'s sales rose 11.5 percent in June, and Nissan's jumped 22.7 percent, helped by strong sales of the Altima and Sentra cars.

Toyota's sales increased 10.2 percent to 245,739, putting it just 200 units behind Ford in June.

"What's most important is to make sure you don't put all your eggs in one basket, and make sure you have a balanced lineup," Toyota's Lentz said.

Toyota's Yaris, Camry and Prius gas-electric hybrid cars all recorded strong sales gains as gas prices averaged more than $3 a gallon.

Although the U.S. passenger car market held steady in June -- edging up 0.2 percent -- GM's car sales were down 20.1 percent. Analysts say some of GM's small cars are aging and others are not competitive. "It's a category where we haven't been doing as well as we should be," Ballew said.

You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Big 3 seek to shut jobs bank

2007-07-13T22:14:00.000-04:00

Monday, July 02, 2007
2007 UAW CONTRACT TALKS
Big 3 seek to shut jobs bank
Union won't back down easily from program it fought decades to win
Louis Aguilar / The Detroit News

FLINT -- Paying factory workers nearly full wages and benefits even when they no longer have jobs is a practice Detroit automakers hope to drastically overhaul during contract talks this summer with the United Auto Workers.

The two-decades-old program, known as the jobs bank, is costing the companies billions of dollars at a time when they are losing billions.

Many also view it as symbol of a hidebound union that failed to change with the times.

But at UAW Local 599 in Flint, General Motors Corp. workers staunchly defend the jobs bank. They fought for many generations to secure their middle-class lifestyle and don't believe they should give up the safety net because someone in Mexico or China will build cars for a few dollars a day.

Half of Flint job bankers were laid off during the first Clinton administration; most others at the beginning of this century. Many worked in a plant that no longer exists, the sprawling Buick City complex that closed in 1999 and was razed.

Throughout those years, GM has paid them between $70,000 and $85,000 annually. They still enjoy health care coverage far more generous than the typical American worker. They continue to collect years of service toward their pensions, another benefit most U.S. workers no longer have.

While outsiders may criticize them for refusing to acknowledge that such guarantees are unsustainable in today's ultra-competitive global auto industry, they consider protecting the jobs bank a mission.

"We want to save the American auto industry," said Terry Everman, a Local 599 official who helps oversee the jobs bank. "We know what kind of trouble we face, but to give up the jobs bank is to give up everything the union fought decades to win.

"None of these workers wanted to stay in the bank for this long. But they stayed because GM made them a promise that if we cooperated, which we have all along, if we worked hard and produced quality, which we have, then we would keep our jobs. How do you save the American auto industry by sacrificing the rights and protection of workers?"

Changing fortunes shift deal

The jobs bank was created more than 20 years ago in exchange for the UAW's help in making auto plants more flexible and automated. The union, bruised by the loss of half a million jobs during the recession of the late 1970s and early 1980s, wanted to preserve the jobs that were left.

The theory was that if GM and other automakers had to pay laid-off workers, they would always make sure they had work.

But Detroit's automakers have lost huge chunks of market share and, as importantly, have become more efficient, no longer needing as many workers to run a plant.

The situation reached a boiling point as plant closings and production cuts funneled more than 12,000 workers into jobs banks at GM, Ford Motor Co. and the Chrysler Group.

Stories proliferated about jobs bankers sitting in rooms for eight hours a day, filling out crossword puzzles, watching World War II movies and even taking naps. It received less attention that many in the jobs bank did important work in the community.

Waves of buyouts across the industry have reduced the number of workers in jobs banks to about 4,200, a number that automakers privately say is still untenable.

The UAW has recently shown a willingness to compromise. In May, GM cut a deal with the UAW that will allow it to eliminate the jobs bank for skilled trade workers in Flint and Lansing. Under the agreement, GM can force workers who refuse buyout and early retirement offers to retrain for another skilled trade, move to an unskilled production job or relocate to a plant in another city or state. The program will clear out 100 skilled trades workers in Local 599's jobs bank.

"This is about GM and the UAW continually looking for ways to improve competitiveness," GM spokesman Dan Flores said.

Some see it as a trial run for how Detroit's automakers may try to close the jobs bank for good during the coming contract talks.

Detroit automakers declined to say how much they currently spend on their jobs banks, but the four-year labor contracts they signed with the UAW in 2003 established contribution caps that give a good idea of the expense.

GM agreed to contribute up to $2.1 billion over four years. Chrysler set aside $451 million for its program, along with another $50 million for salaried union employees. And Ford agreed to contribute $944 million.

"The domestic auto companies are playing by rules that no longer apply to the 21st century global economy," said Dana Johnson, chief economist for Comerica Inc.

Workers want promises kept

Job bankers like Dean Braid in Flint say the program should remain until Detroit automakers start investing more in America rather than shifting production to lower-cost countries.

"We made one of the best products in the world and yet, here we are," said Braid, a 28-year GM veteran, as he sat in the conference room at Local 599 with several others in the jobs bank. He believes the UAW granted too many concessions in recent years and agreed to close too many plants.

"Do we want the Wal-Mart standard for all workers?" he asked. "Who's going to able to afford to buy a car or truck if we all get paid that way?"

Workers at Local 599 say the cost of abandoning the jobs bank is too high for union members in Flint and elsewhere, today and in the future.

"It's about the social contract being broken," said Everman, the UAW Local 599 official. "It's about not letting the companies ship all those jobs to Mexico and China. It's about not walking away from the American worker. It's about not letting what happened to the American steel industry happen to the American auto industry."

A long history of union clout

It's not hard to understand the workers' sense of betrayal after spending time at Local 599 and in Flint, where the culture is grounded in celebrating the auto industry and the jobs and rights the UAW earned the hard way -- through strikes and tough bargaining.

The factories and jobs in Flint have been vanishing for decades, but the workers aren't ready to give up on their ideals.

The lobby of Local 599 feels like a museum. It's quiet these days, as membership has dwindled from a peak of 28,000 to 2,500.

A two-story montage of photos on the lobby wall displays the deep bond between UAW and this broken city. There's a photo of throngs of UAW workers involved in the storied Flint sit-down strike of 1936-37. The strike legitimized the UAW as a powerful force.

There's a 1950s-era photo of President Truman visiting a local plant, and a 1960s era photo of black and white GM workers sitting together in a diner. Local 599 members played an active role in desegregating area businesses.

"The UAW has set the standard for the common men and women in so many ways, and for so long," said Local 599 President Bill Jordan. "General Motors never gave us anything. We fought for every right we have."

A look outside Local 599 tells the story of how much has been lost. The union hall now overlooks 235 acres of empty weed-choked concrete where Buick City once stood.

At the time of its closing, it was ranked one of the top plants in the world for efficiency and quality. But fewer and fewer people were buying Buicks. When the plant closed, the brand accounted for 1 percent of the U.S. market.

What remains is Flint Powertrain North. The factory on the complex that builds a 3.8-liter V-6 engine for GM passenger cars will be shuttered in 2008. The entire facility will close two years later as part of GM's plan to become profitable again in North America.

A physical sense of abandonment pervades much of Flint, from its struggling downtown with boarded-up stores to its many desolate neighborhoods.

"If GM would have built just one plant here that they built in Mexico, we wouldn't have people in the jobs bank," Everman said. "And you know Flint wouldn't be as bad off."

Jobs bank part of city's fabric

The jobs bank has been around so long at Local 599 that it will be a painful rip in Flint's social fabric when the workers leave as a result of the May agreement. Dozens of charities count on the idled workers to collect toys for children, clean area parks, raise money for veterans, build wheelchair ramps and organize food drives.

Braid spends at least 40 hours a week helping an old high school friend, Doug Conn, who is in a wheelchair. Braid customized Conn's 1984 Econoline van, rebuilt his garage and made Conn's home in Owosso more accessible by build ramps, among other things.

"He's been invaluable to me," Conn said as he watched Braid inspect the van. "I hate it when guys like him are called lazy or noncaring. That's just a lie."

Braid has heard all the arguments about how Detroit automakers need to cut labor costs to become competitive and profitable. "I just ask, at what cost are we going to sacrifice the rights of workers to save GM?" he said. "What goal is being achieved by lowering the standard? Who are the people who benefit from this? Does Flint look like it's benefiting? Does Michigan look healthy to you?"

You can reach Louis Aguilar at (313) 222-2760 or laguilar@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Fuel rules scrap some GM concept cars

2007-07-13T22:12:00.000-04:00

Tuesday, July 03, 2007
Fuel rules scrap some GM concept cars
John D. Stoll / Dow Jones Newswires

DETROIT -- General Motors Corp. Product Chief Bob Lutz said the company has killed some of its concept-car ideas because of an increased emphasis on fuel economy and sensitivity over the automaker's public image.

Lutz, speaking during a video podcast on the company's Web site released over the weekend, said GM has "arranged our priorities on now getting more fuel efficient, (and) spending a lot more money on alternative(s)."

Those alternatives include hydrogen fuel-cell vehicles, and hybrid-electric vehicles with a battery that can be recharged by plugging in. Congress is debating fuel-economy legislation that would boost requirements significantly.

Lutz said it is challenging to make certain show cars a reality when operating "in an era where everybody is talking about 36 miles per gallon by 2017 and 4 percent (increase) a year after that.

"Something had to give at the other end," Lutz said, referring to the company's decision not to build meaty sedans such as the Cadillac Sixteen super-luxury car concept, and the Buick Velite roadster and instead focus on more fuel-efficient technologies. "We had to prioritize" and the Velite "got prioritized out."

GM's move to become more fuel-efficient in its product line has eaten up considerable investment in current and longer-term technologies, and has come following years of criticism related to the its product line.

© Copyright 2007 The Detroit News. All rights reserved.

Sales decline weighs on GM

2007-07-08T04:06:00.000-04:00

Friday, July 06, 2007
Sales decline weighs on GM
Wall Street drives stock down after June demand drops 21 percent; dealer calls for higher incentives.
Sharon Terlep / The Detroit News

Slumping truck sales and hand-wringing on Wall Street have cast doubt over General Motors Corp.'s turnaround bid, threatening to overshadow the automaker's cost-cutting and product successes of the past year.

This week's June sales report showed surprising weakness in GM's new full-size pickup trucks, a linchpin of the automaker's comeback plan.

An investment analyst downgraded GM on Thursday, fueling a 3 percent decline in GM shares.

And with GM still burning cash in its key North American operations, analysts say second-quarter earnings due out later this month are expected to be less than stellar.

"We believe the near term outlook may get rocky," Deutsche Bank analyst Jochen Gehrke wrote in a research note in which he reduced GM's 2007 production and earnings forecasts. "We see no reason for GM to post strong earnings or market share trends over the next few months."

GM's June sales were down 21 percent from a year ago, with sales down 7 percent year to date.

Particularly troubling is that sales of GM's redesigned full-size pickup trucks fell 23 percent, while sales of Toyota's new Tundra, its first full-size pickup, more than doubled. The Tundra was helped along by no-interest loans and other incentives adding up to $5,083 per pickup, according to auto data firm Edmunds.com.

"The bottom line was that it was a tough quarter and a first half that was weaker than we expected," GM sales analyst Paul Ballew said.

GM blamed the decline on its strategy of scaling back incentives and low-margin fleet sales, though the extent of the drop surprised many industry watchers. GM's foreign competitors also offered more aggressive discounting than expected, which hurt each of Detroit's automakers.

Knoxville, Tenn.-based Chevrolet dealer Jim Quinlan said GM's Chevy Silverado is as good as advertised but it is being hurt by attractive deals on the Dodge Ram and Toyota Tundra. "We are just not in the game on incentives," he said. "We are not competitive at all."

Pointing to disappointing June sales as well as a market made volatile by rising gas prices and continuing worries in the mortgage market, Bear Sterns analyst Peter Nesvold downgraded GM's stock to a peer perform rating from outperform.

Nesvold bolstered his GM rating less than two months ago, saying the automaker could gain significant concessions from the UAW.

GM's stock has climbed since then, and Nesvold, in his Thursday note, said it's time for investors to cash in.

He then quoted economist John Maynard Keynes: "When the facts change, I change my mind."

GM shares closed Thursday at $36.76, down $1.22, or 3.2 percent.

GM's troubles put even more pressure on the automaker and the United Auto Workers to reach a deal that will help the automaker cut labor costs.

The labor question is the lingering unknown in a turnaround that began after a $10 billion loss in 2005, said auto analyst John Casesa of the Casesa Shapiro Group.

Since then, GM has successfully eliminated waste and downsized to cut costs. It's also becoming clear that the automaker's market share woes aren't going to lift dramatically anytime soon, he said.

"On revenue, the company is struggling, on cost it has done a fabulous job -- the open question is labor relationship," Casesa said. "The turnaround will hinge on automaker's ability to forge a radically different relationship with the UAW."

Casesa said the stock price drop isn't cause for too much concern, given GM's gains over the past year.

Even after Thursday's drop, GM shares are up more than 20 percent from a year ago.

Some promising product launches, namely the redesigned Chevrolet Malibu and Cadillac CTS sedans, are set for later this year. Analysts also seemed hopeful that GM will strike a favorable deal with the UAW.

"We nonetheless believe structural changes will be significant," Gehrke wrote. "And that these changes will prevail in the intermediate term."

You can reach Sharon Terlep at (313)223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM credit rating drops after 'surprisingly weak' June sales

2007-07-08T04:03:00.000-04:00

Thursday, July 05, 2007
GM credit rating drops after 'surprisingly weak' June sales
The Detroit News

Bear Stearns & Co. dropped its rating on General Motors Corp. shares to "peer perform" after the company reported a decline in its June U.S. sales from a year earlier, according to Bloomberg News.

Analyst Peter Nesvold, in a note to investors today, wrote that GM's shares may fall to as low as $33 as the automaker battles increased discounting by Japanese rivals and higher gasoline prices. Nesvold had rated the shares as "outperform."

GM's shares fell $1.41 to $36.57 at 7:47 a.m. before the start of regular New York Stock Exchange trading. They closed at $37.98 on July 3.

Meanwhile, Deutsche Bank AG, calling the June sales "surprisingly weak," lowered its full-year earnings estimate for GM to $2 a share, a 30 percent reduction.

The automaker's annual sales may be 2.8 million vehicles, less than its target of 3 million, analyst Rod Lache wrote in a note. He maintained his "buy" rating on the shares.

© Copyright 2007 The Detroit News. All rights reserved.

General Motors gets $5.6 billion for Allison Transmission; shares trade at 2-year high

2007-07-08T03:55:00.000-04:00

Thursday, June 28, 2007
General Motors gets $5.6 billion for Allison Transmission; shares trade at 2-year high
The Detroit News

General Motors Corp. today said it will sell its Allison Transmission unit for $5.6 billion.

The news drove the auto maker's shares two a two-year high, with investors betting the influx of cash will help GM's bargaining position as it enters this summer's contract negotiations with the United Auto Workers.

Shares of GM closed at $38.15, the highest price since January 2005.

The sale, to The Caryle Group and Onex Corp., includes seven plants in Indiana and Allison's global sales network. Allison employs 3,400 workers worldwide.

GM said it will keep a truck and SUV transmission plant in Baltimore, however.

Carlyle is a private equity firm; Onex is a publicly traded Canadian corporation with a private-equity unit.

GM said in a statement that the deal could close by the third quarter of 2007.

© Copyright 2007 The Detroit News. All rights reserved.

GM gives Buick, Pontiac, GMC ad business to one agency

2007-07-08T03:54:00.000-04:00

Tuesday, June 26, 2007
GM gives Buick, Pontiac, GMC ad business to one agency
The Detroit News

General Motors Corp. said today that one advertising agency will handle creative work for GM's Buick, Pontiac and GMC brands effective October 1.

The Leo Burnett company, owned by the Publicis Groupe, was awarded the work.

The automaker said the move isn't a reflection on prior ad agencies but will better support its strategy of aligning those brands at the retail level.

"We believe having one dedicated agency will help us get there effectively and efficiently," said Jim Bunnell, general manager for Buick, Pontiac and GMC.

© Copyright 2007 The Detroit News. All rights reserved.

General Motors shares rise in early trading

2007-07-08T03:51:00.000-04:00

Monday, June 25, 2007
General Motors shares rise in early trading
Detroit News wire services

General Motors Corp.'s shares rose as much as 3.9 percent after Goldman Sachs rated the stock a "buy," Bloomberg News reported today.

GM's shares gained 91 cents to $36.37 at 9:51 a.m. in New York Stock Exchange composite trading, after rising as high as $36.84.

Saying the United Auto Workers union may offer larger concessions than expected to the biggest U.S. automaker, Goldman Sachs analyst Robert D. Barry today raised his rating on the Detroit-based automaker from "neutral," Bloomberg reported.

Overall, sentiments were mixed on Wall Street this morning.

In the first hour of trading, the Dow Jones industrial average rose 1.78, or 0.01 percent, to 13,362.04. The Standard & Poor's 500 index fell 2.91, or 0.19 percent, to 1,499.65, and the Nasdaq composite index fell 6.84, or 0.26 percent, to 2,582.12.

The Associated Press contributed to this report.

© Copyright 2007 The Detroit News. All rights reserved.

Wagoner to investors: Battery research a 'top priority' for General Motors

2007-07-08T03:44:00.000-04:00

Tuesday, June 05, 2007
Wagoner to investors: Battery research a 'top priority' for General Motors
Sharon Terlep / The Detroit News

General Motors Corp. Chairman Rick Wagoner told investors today that the automaker has signed two suppliers to develop advanced battery technology for the Chevy Volt's E-Flex system.

GM is in a race with Asian rivals to develop an affordable battery with sufficient lasting power -- a development critical to automaker's efforts to build an electric vehicle.

In January, GM announced plans to build the Volt electric vehicle, which would be powered by a lithium ion battery. The company is developing a system for the Volt called E-Flex, which matches battery power with several different energy sources.

The challenge is to create a battery that can recharge quickly, last long stretches of time and not overheat, while being small and cost-effective enough to sell on the mass market.

"Given the huge potential that the Volt and its E-Flex system offers to lower oil consumption, lower oil imports and reduce carbon gas emissions, this is for sure a top priority program for GM," Wagoner said.

The two new technology suppliers are Troy-based Compact Power Inc. and Continental Automotive Systems, a subsidiary of Continental AG. They were picked from a field of 13 contenders.

Compact Power will launch a yearlong development program that aims to have a battery pack ready for an in-car test by next summer, the company said in a statement.

In addition to the Volt, GM is developing a number of battery-powered hybrid systems, including a plug-in Saturn Vue hybrid and a system for full-size SUVs.

GM's annual meeting got under way shortly before 9 a.m. today at the Hotel du Pont in Wilmington, Del.

Wagoner, in his speech, outlined priorities for GM in 2007:

*A labor deal with the United Auto Workers union will be key, as will resolving negotiations with bankrupt part supplier Delphi Corp. Tackling GM's suffocating health care costs, which last year amounted to $4.8 billion, is also critical, Wagoner said.

*GM will continue to focus on its businesses outside the United States, which last year accounted for more than 60 percent of the company's global sales. The company also will work to further integrate its global operations, cutting costs by adopting uniform standards throughout its worldwide operations.

*Finally, Wagoner said, GM will focus on developing advanced fuel technology to will reduce vehicle dependence on fossil fuels with programs such as the E-Flex system.

"It's not about short-term initiatives to react to short-term challenges," he said. "We're taking the profound actions necessary to transform the company for the long haul."

Wagoner has responded good-naturedly to barbs -- and some name-calling -- from a few activist shareholders, several of who have already spoken on a number of issues. He has listened even as speakers surpassed their two-minute time limits, talking through the loud bell that indicates their turn is up.

One longtime activist shareholder, Evelyn Davis of Washington, D.C., labeled Wagoner and executives "accounting flunkies." She then announced that even though she is a Republican, she plans to vote for Hillary Clinton.

"I'm sure Senator Clinton will be happy to hear that," said Wagoner, who also clarified that his degree isn't in accounting, as Davis had said.

Following Wagoner's speech, executives began addressing questions from shareholders, including a core group of company critics who make annual trips to the shareholders' meetings.

Fritz Henderson, GM's chief financial officer, spoke to criticism over faulty accounting practices that have forced GM to restate financial results for several years and resulted in an investigation by the Securities and Exchange Commission.

"We're not at all proud of that," Henderson said of the restatements.

To address the problems, Henderson said, GM has brought in a new controller, a new chief accountant and added more than 30 people to its accounting staff.

Shareholders again voted down a proposal that would have forced GM to reduce its emissions by a set amount. The board of directors had opposed that measure as well, arguing that the automaker already is working hard to make its vehicles cleaner and more environmentally friendly.

As is typically the case, each of the shareholder proposals that came up for a vote failed, most by wide margins. The most popular proposal, which would have given shareholders the authority to call special meetings with GM leadership, received 41 percent support with 55 percent of shareholders voting no and 3 percent abstaining.

Analysts had predicted a more upbeat tone at this year's gathering compared to last year, when the automaker was facing shareholder ire about its $10.4 billion 2005 loss and continuing to founder amid oceans of red ink. GM posted a $2 billion loss for 2006.

Since late 2005, GM has trimmed more than $7 billion in yearly expenses and cut 34,000 hourly workers. It posted a $62 million profit in the first quarter of 2007, despite an $85 million loss for its North American business.

Come back to www.detnews.com all morning for continuing updates from the meeting room floor.

© Copyright 2007 The Detroit News. All rights reserved.

A GM town fears for its future

2007-07-08T03:41:00.000-04:00

Friday, June 29, 2007
2007 UAW CONTRACT TALKS: Second in an occasional series
A GM town fears for its future
As carmakers look overseas to cut costs, workers have to decide how far they will go to try to save jobs in the industrial heartland
Sharon Terlep / The Detroit News
LORDSTOWN, Ohio

In a part of Ohio known as Steel Valley, where deep green ravines hold the ghostly remnants of a once-mighty industry, locals remember the day Youngstown Sheet and Tube said it was leaving town.

Word came on a late summer Monday in 1977. Within a decade, the region's other steel giants would be gone as well, the jobs shipped overseas.

Today, cheap labor in foreign lands again looms over the Mahoning River Valley, home to Lordstown Assembly, one of General Motors Corp.'s biggest plants.

The automaker, bleeding money and market share, says it must drastically cut costs at Lordstown, the valley's last bastion of good-paying blue-collar jobs, located just a few miles west of beleaguered Youngstown.

If the United Auto Workers union and GM can't agree on ways to save hundreds -- possibly thousands -- of dollars on each Chevrolet Cobalt and Pontiac G5 built there, the work could go to another plant, maybe in Mexico.

Among the key questions going into national contract talks this summer between the UAW and Detroit's Big Three is whether American plants can compete with those of foreign automakers and whether the union is willing to make the sacrifices needed to perform at that level.

The thorniest issues in that discussion are playing out in Lordstown, where national UAW leaders are involved in a clash with GM over changing factory rules and workers' fear for their jobs.

The challenge in Lordstown comes as Detroit's automakers are making big moves to save money by building vehicles outside the United States for sale here. The Chrysler Group has a deal with China's Chery Automobile Co. Ford Motor Co. is considering building a small car in Brazil. And GM will launch the compact Belgium-made Saturn Astra here this fall.

"They've made all these strides in productivity, job performance -- the scary thing is, who knows if that's enough," said Michael Chaffee, mayor of Lordstown, a village with a population smaller than the 3,400 people who work at GM.

"It's counter to everything we learn in life: You do your job well and everything will fall into place. Well, you can do everything right and it still might not work out."

Population, jobs lost

Streets near the Lordstown plant are lined with split-level ranch homes and above-ground pools that signal a comfortable blue-collar way of life made possible by GM and other now-defunct industrial companies. American-made cars sit in front of most homes, framed by well-manicured lawns.

The towns of Steel Valley, which sit at the geographic center of the U.S. manufacturing belt, are home to just under 600,000 people, about 100,000 fewer than in the 1960s and '70s, when the steel industry was booming.

Youngstown, the region's economic and population center, estimates that it has lost more than 40,000 factory jobs in the last few decades. Its population, at 82,000, is about half of what it was 40 years ago.

The valley's decline evokes some of Detroit's worst fears. Financial pressures from leaner foreign competitors forced steel companies to consolidate or go out of business. Labor strife exacerbated the financial woes until the companies closed or moved abroad.

The valley, much like Detroit, never managed to diversify beyond its core industry.

An exodus of jobs and people left the region with vast tracts of abandoned buildings, undeveloped land and dilapidated housing.

Still-rural Lordstown escaped the same fate largely because many of the workers who rushed to the region earlier in the century never settled there, instead moving to larger towns nearby.

Decades later, tension about the plant's future is palpable throughout the community. Locals worry about home values and keeping jobs that depend on business from the plant. An online message board at the local newspaper is filled with verbal volleys between plant workers and anti-union zealots.

Lordstown's Mayor Chaffee, after driving around town for a week in his mother's late-model Toyota Corolla, promptly received calls from two local television stations investigating a tip that he had purchased a foreign car.

"With the steel mills gone, we're the only game in town," said Jim Graham, president of UAW Local 1112, which represents GM workers in Lordstown. "If GM went down, this whole valley would implode."

Fears have returned

Lordstown has been through this before.

In 2000, Lordstown and surrounding communities launched a massive campaign to secure production of the Cobalt and G5.

The city and state gave GM millions of dollars in tax breaks. The union agreed to work rule changes to make the lines cheaper to operate. And people in the community, from plant workers to civic leaders, snapped up T-shirts and bumper stickers declaring, "Bring It Home! Get the Next Generation of GM Cars for Our Valley."

The crusade was launched because, years earlier, GM had moved production of full-size vans out of the plant and torn down part of the factory, a move many felt was meant to deliver a message of vulnerability to the union.

"We realize Japanese plants are small and competitive -- they educate us well on that," said Richard Bower, who has worked for GM in Lordstown since 1983. "They're always dangling that out there. You have to do everything the company wants, or they'll shut us down."

With GM again looking to cut costs, the fear of losing work has returned.

But this time, community and union leaders say, there's a sense the plant's fate is out of their hands.

GM hasn't approached government officials looking for tax incentives. And talks about the next product for the plant are being handled by national UAW leaders who got involved to make sure local union officials don't give away too much and compromise the UAW's authority nationally, according to several people close to the talks.

At Lordstown, as at other plants, GM is pushing the UAW to agree to money-saving work rule changes -- from reduced break time to more leeway to outsource jobs -- that mirror policies in plants run by foreign competitors, especially Toyota Motor Corp.

Plant-by-plant battles like the one in Lordstown have broad implications at the national level because they could set a conciliatory tone for the UAW heading into the contract talks, which begin in July. GM wants to be firm on ending money-wasting practices, and the union doesn't want to appear too ready to give up hard-won safeguards in the workplace.

GM was close to cutting a deal with local union leaders in Lordstown when officials from the UAW in Detroit stepped in. The national leaders halted the talks. In response, GM temporarily stopped pre-production work to ready the plant for GM's next-generation small car. The move was considered largely symbolic, driving home the point that, at any time, GM can move the work done at Lordstown elsewhere.

The conflict in Lordstown is exacerbated by the fact that GM loses an average $1,400 on every vehicle it builds in the United States, according to the Harbour Report, a closely-watched annual study of auto plant productivity.

The Lordstown plant, according to Harbour, is one of the most efficient small car factories in the United States. But that's not helping GM, scrambling to pull its North American operations out of the red, make money on the fast-selling vehicles.

"Despite all we've done together, we're still not generating positive cash flow in North America," said GM spokesman Dan Flores, who declined to specifically discuss Lordstown. "Fundamental competitive gaps still exist."

The workers of UAW Locals 1112 and 1714 in Lordstown are known for being fiery and well-informed. The union has a history of using strikes to muscle GM into meeting demands, and its workers have resorted to rogue tactics. The phrase "The Lordstown Syndrome" was coined there in the 1970s, when a work force seen as hostile and disaffected came to represent everything wrong with organized labor.

Today's workers, with an average 1 1/2 years of college experience, talk about efficiency and a global economy.

"Years ago, you would exercise muscle," Graham said, sitting under a larger-than-life portrait of Bill Clinton in his union hall office. "Now you have to have more of a business-type approach and think three times about every step you take.

"They can put up a new plant somewhere else in nine months these days, not two years."

Workers are quick to point out that they're aware of the challenges created by globalization of the auto industry. They quote figures from the Harbour Report and express a willingness to work with GM on cost cutting.

"We can keep doing things the way we've been doing them, but we're not necessarily going to stay in the game that way," said Stephen Lucas, who started at the Lordstown plant in 1979.

Sipping beer at the local bar, Lucas described a work force divided. Lots of workers are willing to bend to GM's needs if it means keeping their jobs, he said.

Others are wary, wondering if GM is doing all it can to cut costs and skeptical the automaker will keep its word even if the union makes concessions.

"Some people are aware of the global value of the industry, and some people don't look past traditional values," Lucas said. "They need to wake up -- it's a different game today."

You can reach Sharon Terlep at (313)223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM unloads transmission unit for $5.6B

2007-07-08T03:37:00.000-04:00

Friday, June 29, 2007
GM unloads transmission unit for $5.6B
Sharon Terlep / The Detroit News

Private investors snapped up another piece of the U.S. auto industry Thursday, with General Motor Corp.'s decision to sell its Allison Transmission unit to a pair of buyout firms for $5.6 billion.

GM, which has lost more than $12 billion in two years, will use the money to cover turnaround-related expenses such as plant closings, worker buyouts and the development of new models.

The automaker agreed to sell Allison's commercial and military business, based in Indianapolis, to investment firms The Carlyle Group and Onex Corp. A production facility in Baltimore that builds conventional and hybrid transmissions for pickup trucks and sport utility vehicles will remain with GM.

GM's move is a key part of the automaker's strategy to build up reserves by shedding units not related to the core business of building passenger cars and trucks. Not counting the Alison deal, the automaker has sold more than $16 billion in assets in the past two years, including last year's $14 billion sale of the GMAC financial services company to private equity firm Cerberus Capital Management LP. The automaker also is considering selling a Flint-based unit that makes medium-duty trucks.

Wall Street on Thursday responded positively to news of the Allison sale, sending GM stock up 2 percent to $38.15 -- its highest level since January 2005.

"This is another important step to strengthen our liquidity and provide resources to support our heavy investments in new products and technology," GM Chairman and Chief Executive Officer Rick Wagoner said in a statement.

Private equity's clout in the struggling American auto industry is growing as cash-rich companies tackle buyouts that would have been unheard of even a few years ago, most notably Cerberus' decision to buy the Auburn Hills-based Chrysler Group from parent DaimlerChrysler AG.

"It's a sellers' market for business like that," auto analyst David Healy at Burnham Securities said. "We're probably seeing kind of a peak in that kind of activity. Maybe GM sees that, too."

Healy estimates that GM's liquidity position will be better this year than last, and said the Allison deal made sense because the unit wasn't a major source of income for the automaker.

A number of analysts projected the unit was worth significantly less than the $5.6 billion GM commanded.

JP Morgan analyst Himanshu Patel said in a note that GM could use proceeds from the sale to pay for a trust fund that would cover workers' health care, similar to a deal between Goodyear Tire & Rubber Co. and the United Steelworkers union.

Allison, which employs about 3,400 people, had 2006 sales of $2.2 billion. GM made about $340 million off the company last year. In the first quarter of this year, GM made a razor-thin $62 million profit globally, but lost $46 million on its North American operations.

The Allison deal is expected to close as early as the third quarter of 2007, if approved by the United Auto Workers union and federal regulators.

The Carlyle Group is a Washington, D.C.-based private equity firm. Onex Corp. is a Toronto-based investment conglomerate.

You can reach Sharon Terlep at (313)223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM cars play action heroes in 'Transformers'

2007-07-08T03:35:00.000-04:00

Wednesday, June 27, 2007
GM cars play action heroes in 'Transformers'
Ann Job / Special to The Detroit News

HOLLYWOOD, Calif . -- The folks at General Motors Corp. are walking around a little starry-eyed these days, with an extra spring in their step and Hasbro toys in their hands.

In a product placement coup, four GM vehicles, including a new generation Chevrolet Camaro due out in 2009, won starring roles in the heavily hyped new action flick, "Transformers."

While automakers regularly wheel and deal to place their cars in films, GM's vehicles are cast as shape-shifting action stars in the expected summer blockbuster directed by Michael Bay.

"This is a wonderful opportunity for General Motors to get its product in front of millions of people," said Tim Calkins, clinical professor of marketing at the Kellogg School of Management at Northwestern University. "It keeps (GM) current; it builds awareness."

While vehicles starring in a movie won't necessarily "drive people into showrooms like a rebate program will drive them into showrooms, it will reach people in a very different setting," he said.

The other GM stars in "Transformer" are the Pontiac Solstice, a Hummer H2 and GMC TopKick pickup truck.

"We're the heroes, all four of our vehicles are good guys," said Dino Bernacchi, who oversees GM's movie deals. "They all are cool cars that fit the personalities of the characters."

GM officials will be on hand for today's Hollywood premiere of the DreamWorks Pictures and Paramount Pictures production. The movie opens Tuesday.

If you're not up on Transformers lore, it was a popular toy line and TV cartoon in the 1980s and has a cult following worldwide. Good autobots battle evil Decepticon robots, with cars and trucks transforming from vehicles into giant robots.

More than meets the eye

GM officials didn't have to search out this film opportunity. Hollywood came to them, even before the automaker's executives had decided to show a Camaro concept coupe at the auto show in Detroit in 2006, and later to put the new Camaro into production.

"This is the ruby of rubies for a car company," said Michael Bay, "Transformers" director. Bay previously worked with GM on "Bad Boys II" and "Armageddon."

Still, GM wasn't a shoo-in for the prime vehicle roles. In fact, Bay initially was considering another carmaker for at least one character. The original Bumblebee autobot was a yellow Volkswagen Beetle. But the yellow Camaro concept became the inspiration for the movie Bumblebee after Bay saw a picture of the concept car and later a full-scale model.

It's a perfect fit because "it's a muscle car and still state of the art," he said. "The biggest problem was that the car wasn't being made."

This didn't stop Steve Tihanyi, who was then overseeing GM's movie deals, and the automaker's design staff from using whatever they could to create the Camaro and fiberglass shells in time for filming in 2006. Tihanyi is a Cadillac regional/divisional marketing manager.

Pontiac's Solstice won the role of Jazz, which was played by a Porsche in the cartoon. The Solstice also had to be created because GM was only selling it as a convertible as filming began. Bay wanted Jazz to be a gray, hardtop Solstice.

Search-and-rescue vehicle Ratchet is played by a Hummer H2 that's painted a fluorescent light green and modified with a winch and brush guard in front, shovels on its sides and off-road lights. And rugged off-roader Ironhide is played by a GMC TopKick pickup truck with a Duramax diesel engine.

Ford Motor Co. also has a presence in "Transformers." A Saleen Mustang police car, complete with light bar on the roof and a push bar, is a Decepticon.

Endless possibilities

The film is poised to attract a wide audience, which means the exposure for GM's vehicles, especially the Camaro, could be huge.

"The fact is, we're showcasing really exciting products, like the Hummer, like the Solstice and the Camaro, and they can be cool and hip for a new generation worldwide," Tihanyi said.

GM won't release details of its studio financial arrangement.

The film's debut is just the start of marketing opportunities. "Transformers" is expected to be out on DVD before Christmas, and Hasbro already has crafted toys of the film characters.

"You're talking about a film that should bring in $700 million to $1 billion across the globe. You don't always get these big, blockbuster opportunities," Tihanyi said.

It may be only the beginning for GM's "Transformer" stardom. The movie's ending leaves plenty of room for a sequel.

Ann Job is a freelance automotive writer and can be reached at annjo84@hotmail.com.

© Copyright 2007 The Detroit News. All rights reserved.

Gettelfinger: Big Three are 'posturing'

2007-07-08T03:33:00.000-04:00

Saturday, June 23, 2007
Gettelfinger: Big Three are 'posturing'
UAW head dismisses talk that union must cut worker pay by $30 an hour.
Sharon Terlep / The Detroit News

DETROIT -- UAW President Ron Gettelfinger disputed U.S. automakers' claims that they must cut workers' pay and benefits by $30 an hour to compete with foreign rivals.

In an online chat Friday with United Auto Workers members, Gettelfinger dismissed the figure as "posturing" and said he will not debate the issue in the press.

"Unfortunately, the newspapers keep repeating that the auto companies 'need' a $30 reduction in hourly wages and benefits," Gettelfinger said in the morning chat. "In our opinion, this is nothing more than posturing by the auto companies."

The Detroit automakers are expected to press for deep concessions from the UAW when negotiations on a four-year national contract begin this summer.

The automakers have stressed cost disadvantages compared with Toyota Motor Co. and other foreign companies with U.S. plants, which pay hourly wages similar to the domestic companies but don't have the high health care and retiree costs.

Informal contact talks have begun, and formally begin on July 23. The contract with the automakers expires in September.

© Copyright 2007 The Detroit News. All rights reserved.

GM adds deals to transform its sales

2007-07-08T03:31:00.000-04:00

Tuesday, June 26, 2007
GM adds deals to transform its sales
The Detroit News

General Motors Corp. will try to pump up summer sales with another round of interest-free loans for up to three years, coupled with $1,000 discounts for some 2006 and 2007 models, the automaker said Monday.

The promotion runs today through July 9 and centers on the new film, "Transformers," which features four GM vehicles.

Offers will apply to models including the Chevrolet Tahoe and GMC Envoy sport-utility vehicles and Pontiac G6 sedans.

"We're pretty pumped up about it, anything to drive traffic in here," said Brady Brown, a new-vehicle sales manager at Bob Tolkan Buick Pontiac GMC Truck in Milwaukee.

GM has curbed incentives while not ceding too much market share to Asian rivals. Sales were down 3 percent the first five months of 2007 compared with 2006. GM said it stabilized its share of the retail market.

Bloomberg News contributed to this report.

© Copyright 2007 The Detroit News. All rights reserved.

Chinese carmakers not planning mass U.S. sales

2007-07-02T00:02:00.000-04:00

Thursday, May 17, 2007
Chinese carmakers not planning mass U.S. sales
Sharon Terlep / The Detroit News

DEARBORN -- Chinese automakers aren't likely to start selling Chinese-made vehicles in the United States on a mass scale anytime soon, China's vice minister of commerce said Monday during a visit to the Detroit area.

Ma Xiuhong, in town promoting Chinese-U.S. trade and alliances with the auto industry, said Chinese car companies are too consumed with the ultra-fast growth in their homeland to focus on selling cars to Americans.

The hurdles involved in creating a dealer network, setting up financing operations and building infrastructure make it unlikely that Americans will see Chinese vehicles in the near future, she said.

"I don't believe now is the right time for Chinese auto producers to export large numbers of vehicles into the United States," Xiuhong said in an interview after a speech to the Detroit Chinese Business Association. "Automobiles are a special kind of product. Going to market requires a more complicated and sophisticated approach than in any other industry."

The Chinese are building their auto industry with an eye toward joining the Japanese and South Koreans as big exporters to the United States, which remains the world's most profitable auto market.

Earlier this year, DaimlerChrysler AG's Chrysler Group announced plans to bring subcompacts built by China's Chery Automobile Co. to North America and other markets. Most analysts, however, say the Chinese still have a long way to go before they are capable of producing vehicles that can compete globally and in the hyper-competitive U.S. market.

Several executives from Detroit's automakers were on hand Wednesday for a ceremony in which U.S. companies signed trade agreements with Chinese officials.

"The opening of China's doors has created benefits that would (previously) have been unimaginable," said Ken Cole, GM vice president of global public policy.

General Motors Corp., which has a number of joint ventures in China, is exporting $700 million in automobiles and components to that country. GM's China operations have been a reliable source of income for the automaker, turning a profit every year since 2001.

© Copyright 2007 The Detroit News. All rights reserved.

GM may ditch medium-duty truck business

2007-07-01T23:59:00.000-04:00

Thursday, May 17, 2007
GM may ditch medium-duty truck business
Jeff Green and Mike Ramsey / Bloomberg News

General Motors Corp., the largest U.S. automaker, may sell its medium-duty truck business as it focuses on making a profit from building cars and light trucks.

"We are considering options for our medium-duty truck business to better position the unit for growth," GM spokeswoman Melisa Tezanos said Wednesday. She wouldn't comment on potential buyers. GM doesn't break out the unit's financial results.

The unit last year built about 40,800 Chevrolet Kodiak, GMC TopKick and Isuzu T-Series models, for uses such as dump trucks and delivery vehicles. The Flint Journal reported this week that Navistar International Corp. may be interested in the Flint-based unit, which employs about 500 people. Roy Wiley, a spokesman for Warrenville, Ill.-based Navistar, declined to comment.

"This deal makes so much sense, I hope it gets done," Bear Stearns analyst Peter Nesvold said Wednesday.

He estimated that the medium-duty truck business has annual revenue of about $2 billion and is worth $450 million to $500 million. If Navistar were the buyer, the new production could add 50 cents to $1 a share to that company's earnings, he wrote in a report Tuesday.

GM has sold more than $16 billion in assets in the past two years to pay operating costs as the Detroit-based company posted net losses of $12.4 billion.

Chief Financial Officer Fritz Henderson said last month that GM is still reviewing options for assets, including the Allison Transmission unit in Indianapolis, that are outside its main automotive operations.

The company is under pressure to increase sales of cars and light trucks in the U.S. after Toyota Motor Corp. outsold GM worldwide last quarter for the first time ever.

GM forecasts global sales of 9.2 million cars and trucks, while Toyota expects to sell 9.34 million.

GM's asset sales include 51 percent of its finance unit to a group led by Cerberus Capital Management LP, raising $13 billion over three years, and stakes in Suzuki Motor Corp., Isuzu Motors Ltd. and Fuji Heavy Industries Ltd., raising $3 billion.

GM's cash, marketable securities and funds available from a retiree health care fund fell to $24.7 billion at the end of March from $26.4 billion at the end of December as GM made a $1 billion payout to GMAC and another $1 billion for a convertible bond payment.

Nesvold, who is based in New York, rates GM shares "outperform" and Navistar shares "peer perform."

GM shares fell 23 cents to close at $31.74 Wednesday. Navistar's rose 45 cents to $64.85.

© Copyright 2007 The Detroit News. All rights reserved.

Hydrogen GM vehicles pass real-world test

2007-07-01T23:58:00.000-04:00

Wednesday, May 16, 2007
Hydrogen GM vehicles pass real-world test
John McCormick / Special to The Detroit News

TARRYTOWN, N.Y. -- A 300-plus-mile odyssey Tuesday across rural New York in a Chevrolet Sequel hydrogen vehicle -- without refueling -- underscored General Motors Corp.'s commitment to produce a commercial fuel cell vehicle within four years.

The real-world fuel mileage test not only proved that hydrogen fuel cell powered vehicles can compete with conventional vehicles on range, but that they can do it without producing any emissions. Even the electricity used to produce the hydrogen was from a green source -- Niagara Falls.

Larry Burns, GM's vice president for research and development, says the next step is to continue work on production engineering of the Chevrolet Volt fuel cell E-flex system, which contains the same basic fuel cell, battery and electric drive combination as the Sequel.

The decision to go ahead with production engineering of the Volt -- with a plug-in, gasoline engine version as well as the fuel cell variant -- was recently firmed up.

"We are now entering into a mainstream vehicle production process that typically lasts three to four years," Burns says. "We are no longer in the skunkworks stage."

In the New York test, GM put its two existing Sequel development vehicles on a cross-country run that included numerous hills and temperatures in the mid-80s. Despite the challenges, both vehicles completed the run with only a few precautionary stops to check on temporary fault readings from sub-systems.

The vehicles each used less than seven kilograms of compressed hydrogen and averaged an equivalent of 43 mpg, impressive for large bodied SUV-style vehicles that weigh 5300 pounds.

"What makes this different is we're on real roads with real speeds," Burns said. "We've taken the world's most technologically advanced vehicle on a 300-mile road trip to show we've overcome a big hurdle toward commercializing our fuel cell vehicles -- achieving the driving range expected by today's consumers.

"Sequel and GM's other fuel cell vehicles address these very real concerns pointing the way to a new energy future a future in which hydrogen is a common energy currency for our vehicles in which hydrogen and electricity become interchangeable energy carriers in which both are created from diverse, and largely renewable, energy resources."

End of line for Sequel

Many of the same engineers and technicians who developed the Sequel are now on the Volt team. The Sequel gets a power boost with the help of a pack of lithium-ion batteries, the same as those found in computers and cell phones.

However, the Sequel has no plug-in capability and can only drive for a few miles on stored energy once the hydrogen tanks are empty. The test vehicles also carry a host of technologies, such as steer-and brake-by-wire controls instead of standard hydraulics, wheel hub motors and a lighter weight aluminum structure.

The 300-mile voyage was a victory for GM, but in some ways the end of the line for the Sequel. The Sequel is packed with GM's fourth-generation fuel cell stack. But GM's fifth generation, designed to fit snuggly into the Volt, is half the size.

The concept fuel cell system also will propel the Volt an estimated 300 miles. Included in that range is about 20 miles worth of electricity stored from plug-in battery power.

Engineers working on the Sequel said they've managed a 30 percent increase in energy efficiency since September. Chris Borroni-Bird, GM's director of advanced technology vehicle concepts, said the Sequel will be indicative of future automobiles, which will benefit from advancements in electronics rather than mechanics.

"We haven't changed any of the hardware (since September)," Borroni-Bird said. "We've improved the software."

John McCormick is a Detroit News online columnist.

© Copyright 2007 The Detroit News. All rights reserved.

GM will invest nearly $400M in two northwest Ohio factories

2007-07-01T23:56:00.000-04:00

Saturday, May 19, 2007
GM will invest nearly $400M in two northwest Ohio factories
Associated Press

TOLEDO, Ohio -- General Motors Corp. announced two major investments Friday in a pair of northwest Ohio plants that will maintain hundreds of jobs.

The governor says the announcements will give auto workers hope and show that Ohio still has a future in the industry despite its gloomy outlook.

"We will not give up on the manufacturing sector of our economy," Gov. Ted Strickland said.

GM will spend $332 million to build a new six-speed, front wheel drive transmission at its Toledo plant, securing 600 jobs. It also will invest $61 million at its Defiance plant to make aluminum engine blocks, retaining 120 jobs.

Workers at the plants celebrated the news Friday, even though the investments won't create additional jobs. The company is going through a restructuring that has cut 35,000 production jobs.

Ohio's economic development office put together a package of grants and loans to spur expansion at five GM plants in Ohio, including Toledo and Defiance, Lt. Gov. Lee Fisher said.

© Copyright 2007 The Detroit News. All rights reserved.

Wagoner sees no 'rush to privatize'

2007-07-01T23:54:00.001-04:00

Friday, May 18, 2007
Wagoner sees no 'rush to privatize'
GM's chief executive says he doesn't expect his company, or Ford, to go the way of Chrysler.
Sharon Terlep / The Detroit News

General Motors Corp. CEO Rick Wagoner, in his first public comments on news that the Chrysler Group is being sold to private equity firm Cerberus Capital Management, said Thursday it's unlikely other auto companies will share the same fate as the Auburn Hills automaker.

While Wagoner said he expects further consolidation in the industry, he said he does not believe DaimlerChrysler AG's decision to sell Chrysler is the beginning of a trend.

His comments were part of a wide-ranging talk Thursday to a group of women business leaders in which Wagoner discussed diversity at GM, the automaker's efforts to create energy alternatives to fuel and the impact of gas prices on the U.S. auto market.

"I don't see a rush to privatize in the auto sector," Wagoner told reporters after his speech before Inforum, a women's business group formerly known as the Women's Economic Club.

Germany's DaimlerChrysler announced Monday that it was selling Chrysler to Cerberus in a $7.4 billion deal that will make Chrysler an all-American car company again.

Wagoner said he doesn't anticipate that GM or Ford Motor Co. will be purchased by private equity firms.

"I don't think you can rule anything out because the amounts of money that are tossed around are so big," he said. "But we're not thinking along those lines at this point."

Wagoner used his speech to take a shot at proponents of federal legislation that would force automakers to significantly boost the average fuel economy of their vehicle fleets.

He drew applause when he said GM is pursuing technology-backed ways -- and not "pie-in-the-sky theories, or unfunded mandates, or ill-conceived exercises in regulation" -- to make its cars and trucks more fuel efficient and reduce emissions, which have been linked to global warming. "We at GM are interested in real-world technologies that will make a measurable difference in reducing oil consumption and CO2 emissions today," Wagoner said.

Responding to questions from reporters, Wagoner said talks with bankrupt auto parts supplier Delphi Corp. are moving along, but that a resolution is not "imminent."

He also said rising gas prices may prompt consumers to shift to smaller vehicles, but won't likely drive them to compact or mini-cars.

"You begin to see a shift downward," he said. "That doesn't necessarily mean a shift to small vehicles."

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM profit falls 90 percent from year-ago

2007-06-23T23:59:00.001-04:00

May 3, 11:26 PM EDT
GM profit falls 90 percent from year-ago
By TOM KRISHER
AP Auto Writer
AP Photo/Bob Child

DETROIT (AP) -- The troubled mortgage market spilled onto General Motors Corp.'s balance sheet Thursday as first-quarter profits dropped 90 percent from a year ago due mainly to losses at GM's former financial arm.

But the fact that the nation's largest automaker still lost money on its North American operations seemed to trouble industry analysts more than losses at GMAC Financial Services because GM is more than a year into a massive restructuring plan that includes cost cuts and multiple new products.

The net profit of $62 million, or 11 cents a share for the January-March period, was GM's second consecutive quarterly profit, although it was down from $602 million, or $1.06 per share, a year ago.

GM said in Thursday's report it had record vehicle sales of 2.26 million worldwide and showed improvements in its automotive operations in the latest quarter.

Its earnings excluding one-time items fell short of Wall Street expectations and its shares fell more than 5 percent.

The company attributed the year-over-year decline to losses in GMAC's residential mortgage business. GM sold a 51 percent stake in GMAC to private equity investors last year, but still owns 49 percent of the business.

Chief Financial Officer Fritz Henderson attributed the decline primarily to a $115 million loss from the company's stake in GMAC. The financial company on Wednesday posted a first-quarter loss of $305 million, mainly due to a $910 million loss from its troubled residential loan business.

While GM's North American performance improved, the company still lost an adjusted $85 million on its core operations. A year ago, GM reported an adjusted loss of $251 million in North America.

Investors appeared skeptical of GM's performance, sending its stock price down $1.75, or 5.3 percent, to $30.69 on Thursday.

Industry analysts focused on North America, with some questioning whether GM's earnings would continue to be dragged down by GMAC, and whether GM had cut its costs enough.

KeyBanc Capital Markets analyst Brett Hoselton downgraded GM to "Hold" from "Buy" because of the credit deterioration in GMAC's residential mortgage operation. He had rated GM favorably because he anticipated cost savings and better sales from the launch of new pickup trucks.

Lehman Brothers analyst Brian Johnson also questioned his earlier assumption that GM would see improvement from the rollout of new pickups.

"Without substantial labor concessions, meaningful improvements in profitability are unlikely in our view," he said in a note to investors.

Henderson said the company is on track to reduce annual costs by $9 billion this year. By the end of last year, it had achieved an annual cost reduction of $6.8 billion largely through the departure of thousands of hourly workers due to buyout or early retirement offers.

But Henderson conceded that more must be done as it heads into national contract negotiations in June with the United Auto Workers union.

"When we look at the results in North America, it's good to see improvement. It's not good to be operating at a small loss, clearly, given where we are in our product cycle," he said. "Frankly, our business is not generating the kind of returns that we expect, and clearly we have to continue to make significant improvements."

GM also reported $32 million of special items largely due to restructuring in its Europe and Asia Pacific divisions. Its results a year ago were also inflated by a one-time after-tax gain of $395 million due to the sale of its equity ownership of Suzuki Motors.

Excluding special items, GM's net income was $94 million, or 17 cents per share, compared with net income of $350 million, or 62 cents per share in the first quarter of 2006. Those results fell short of Wall Street expectations.

Fifteen analysts polled by Thomson Financial predicted earnings of 87 cents per share, excluding special items.

GM's revenue fell to $43.9 billion for the quarter, down 16 percent from $52.4 billion in the same period a year ago. GM said the decline was almost entirely due to GMAC revenue no longer being included in GM's consolidated results.

Automotive revenue for the quarter was $42.9 billion, down from $43.6 billion a year ago.

But while automotive revenue slipped, the number of cars and trucks GM sold globally rose 3 percent.

Henderson said the average transaction price per vehicle in North America rose by about $1,000 year over year, but GM also had production cuts of 192,000 units for the first quarter as it tried to reduce low-profit fleet sales and incentives.

"Clearly being down 192,000 units is a big headwind," Henderson said.

---

On the Net:

General Motors Corp.: http://www.gm.com

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© Copyright 2006 The Detroit News. All rights reserved.

Cadillac loads up on safety

2007-06-23T23:58:00.001-04:00

Saturday, May 12, 2007
Cadillac loads up on safety
Built in Lansing, the redone STS adds radar, cameras and computer.
Scott Burgess / The Detroit News

MILFORD -- Bad drivers need Cadillac's 2008 STS sedan. Good drivers will relish it.

General Motors Corp.'s luxury brand has loaded up the refreshed luxury sedan with radar, cameras and an onboard computer. They collectively protect drivers from spinning out on slick roads, inadvertently drifting into another lane or swerving into a vehicle in their blind spot. The luxury sedan can even warn a driver of an approaching vehicle.

But safety was only part of the story Friday as Cadillac showcased the new STS at its Milford Proving Grounds. The STS has been substantially reworked, giving it a more refined and powerful look. A larger new grille, based on the Cadillac Sixteen concept vehicle, marks the new face of the brand. The STS also has new rocker moldings on its sides, refreshed front and rear fascias and 18-inch wheels.

"There was a push to address more details to show it belongs in the premium segment," said Charlie Klein, vehicle line director for the STS. Some of those details include new chrome door handles, Sappele wood and metallic trim in the interior and a new instrument cluster.

While the changes add to the luxurious feel, the most important changes take place under the car's sheet metal. The Lansing-built STS will be the first GM vehicle with the optional direct injection V-6. The engine provides 302 horsepower and 272-pound-feet of torque.

"It wasn't even 10 years ago, that if you wanted more than 300 horsepower, you'd have to get Cadillac's (V-8) Northstar, which was a very impressive engine" said John Smith, GM's vice president of global product planning.

The direct injection V-6 operates at a higher compression ratio than a traditional engine, which allows it to produce more power without using more fuel. According to GM, the engine is 3 percent more efficient than the previous V-6 and can continue to run on regular gas.

Additionally, Cadillac will add a new automatic six-speed transmission that was silky smooth during acceleration tests that brought the STS up to 125 mph.

When it arrives at dealers in July, the STS will feature a number of firsts for the brand. It will debut the newest version of StabiliTrack, GM's electronic stability control.

StabiliTrack 3.0, an option on V-8 all-wheel drive STS models, incorporates traditional monitor systems such as the brakes and suspension, but adds an active front steering technology.

This allows the STS to adjust the steering wheel to right the car. If the system detects a sharp turn, it can help the driver adjust in milliseconds.

The STS features a lane-departure warning system that uses a camera to monitor road lines and beeps when the vehicle starts to cross one. A blind spot alert system employs a radar to detect vehicles coming up the rear. A warning light on the side mirrors warns a driver of a potential threat.

"We're really stepping out in the prestige luxury segment as the technology leader with this STS," said Vince Muniga, a Cadillac spokesman. "And we have no intention of slowing down."

Scott Burgess is the auto critic for The Detroit News. He can be reached at (313) 223-3217 or sburgess@detnews.com.

2008 Cadillac STS

New features include:

6 liter direct-injection V-6 engine.

New compact six-speed transmission

StabiliTrak 3.0, third-generation electronic stability control system.

Lane departure warning system

Side Blind Zone Alert System
Source: General Motors Corp.

© Copyright 2007 The Detroit News. All rights reserved.

GM sued over OnStar change

2007-06-23T23:57:00.001-04:00

Thursday, May 10, 2007
GM sued over OnStar change
Sharon Terlep / The Detroit News

A disgruntled Cadillac owner, whose OnStar service will go dead next year as a result of upgrades to General Motors Corp.'s peace-of-mind roadside assistance feature, filed a class-action lawsuit Wednesday against the automaker.

Robert Weaver of Virginia bought a new Cadillac El Dorado in 2002 equipped with GM's OnStar, a much-advertised communication system that links motorists with live operators who can offer driving directions and emergency help.

Weaver is among 1.5 million owners who will be affected when OnStar completes its switch from an analog system to a more current digital network.

While newer GM vehicles are equipped with digital receivers, many older models are not, meaning they will lose OnStar when the analog service shuts down starting next year. Some vehicles made between 2002 and 2004 can be upgraded, but all pre-2002 models will become obsolete.

GM says about 500,000 vehicles have analog systems that can't be upgraded and 1 million have digital-capable systems. A small number of Acura, Audi, Subaru and Volkswagen models are affected.

The switch is a result of a 2002 Federal Communications Commission decision to let cell phone companies shutter their analog networks starting in February. OnStar is carried by Verizon Wireless.

GM has heavily promoted OnStar with commercials featuring dramatic real-life calls between motorists and operators, such as one from a child phoning for help after a car accident.

In the lawsuit, Weaver charges that GM knew it was switching to an all-digital network but continued to sell analog-only systems and failed to inform customers they were to be phased out.

He calls for GM to reimburse all affected customers the $199 cost of the OnStar system along with subscription fees. The suit also seeks to block GM from shutting off service or from charging customers the $15 cost of an upgrade.

The suit was filed in the U.S. District Court for the Eastern District of Michigan on behalf of Weaver and any affected OnStar customers. Weaver's attorney could not be reached for comment Wednesday.

GM, in a statement, said switching to digital was the only way it could maintain comprehensive coverage in the United States and Canada as cell phone companies cancel their analog service. Nearly 90 percent of OnStar subscribers have vehicles that either have the digital system or can be upgraded, according to GM. For those who don't, GM will provide a year of free OnStar service on any new vehicle leased or purchased by the end of the year.

The company said it has sent letters advising affected customers of their options. In addition, by charging only $15 for the upgrades, GM is covering most the cost, said Bill Ball, OnStar vice president of public policy.

"It's a very frustrating situation for subscribers and for us," he said. "The engineers have done their best to try and provide a solution for as many folks as we're capable of doing."

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

SEC wrapping up GM investigation

2007-05-20T02:38:00.001-04:00

Thursday, May 10, 2007
SEC wrapping up GM investigation
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The Securities and Exchange Commission is nearing the end of its 2 1/2-year investigation into accounting errors at General Motors Corp. following the testimony of more than a dozen current and former GM executives.

The SEC may decide whether to bring civil charges by the end of the summer, people familiar with the investigation told The Detroit News on Wednesday.

The previously disclosed probe centers on GM's relationship and transactions with its former parts unit, Delphi Corp., as well as GM's use of credits from other suppliers. The SEC also has investigated whether GM improperly sought to influence Delphi and whether it properly spun off the unit in 1999. Nobody at GM has been accused of any wrongdoing.

Since first receiving a subpoena in October 2004 as part of an inquiry into pension practices at large companies, GM has been forced to repeatedly restate its financial results and has admitted to numerous accounting errors. The company vowed to improve its balance sheet and hired a new controller, a new chief accounting officer and a consulting firm to shore up its financial practices.

The SEC has repeatedly expanded its investigation into other areas of GM's accounting. The SEC has also sought information about GM's pension obligations for Delphi employees in the wake of the Troy-based supplier's 2005 bankruptcy filing, among other issues.

The U.S. Attorney's Office in New York, aided by a federal grand jury, has been looking into GM's accounting for supplier credits since early 2006.

GM spokeswoman Renee Rashid-Merem reiterated the company's position Wednesday that it is cooperating with the investigations but declined to discuss details of the investigations.

The SEC has essentially concluded its interviews with current and former GM officials, along with people at other companies who were involved in transactions with the Detroit automaker.

Within three months, the SEC could be ready to decide whether to bring civil charges against the automaker or any current or former executives, said people familiar with the investigation.

Before that, GM could engage in settlement talks, especially in the wake of its admissions in March that its accounting had suffered "material weaknesses."

Peter Henning, a Wayne State University law professor and former SEC attorney, said GM likely will seek a settlement that carries only an administrative penalty.

Henning said the accounting problems at GM have never risen to the level of those at Delphi, which resulted in the eventual departure of former Delphi Chairman and Chief Executive J.T. Battenberg III and other executives. "My sense is that was at a lower level at GM," he said.

The most troubling accounting issue for GM is its use of "supplier credits," which are rebates that help boost revenue or earnings, and whether that use misled investors.

The issue is at the heart of a number of auto sector-related accounting investigations.

The SEC has said large auto suppliers -- including Delphi and Southfield-based Collins & Aikman -- have pressured suppliers to kick back money in order to meet earnings targets or used fraudulent accounting tricks to boost revenue.

The SEC has settled allegations of accounting misconduct against both auto suppliers, while filing civil charges against former executives at both companies.

GM chairman and CEO Rick Wagoner has testified before the SEC -- though not in connection with the accounting probes at GM, people familiar with the investigation said. It is not clear what the focus of that testimony was.

Wagoner told shareholders in the company's annual report "that management is focused on continuing to strengthen our internal accounting resources and financial reporting."

In October, the SEC charged Delphi and nine former company officials, including Battenberg, in a wide-ranging accounting fraud complaint. The Justice Department is continuing a parallel criminal investigation into the conduct of former Delphi officials.

In early 2000, a dispute between GM and Delphi arose when GM demanded $800 million in pre-spinoff warranty claims.

In a recent court filing, Battenberg's lawyers said the request was without merit. When GM spun off Delphi in 1999, it established only a $53 million reserve for warranty claims, and warranty claims had averaged just $30 million a year prior to the spinoff.

Battenberg admitted that senior GM officials suggested in September 2000 that the two companies account for a "settlement asymmetrically," allowing both companies to benefit.

In March 2006, GM admitted to a number of accounting mistakes, including overstating net income in 2001 by $405 million -- or 35 percent -- because it incorrectly recorded supplier credits, mainly involving Delphi.

GM subsequently restated earnings for 2002-05, and for the first three quarters of 2006. "Errors that require restatements are unacceptable and embarrassing for the corporation and for me personally," GM Chief Financial Officer Frederick "Fritz" Henderson wrote in an e-mail to employees in January, when the latest restatements were announced.

GM has reviewed millions of pages of records and turned over hundreds of thousands of pages of records to the SEC. Lawyers for GM have interviewed dozens of GM finance and accounting workers while collecting documents and e-mails in connection with requests by the SEC.

GM has hired a number of lawyers to represent the company and its executives in the probe, including Anton Valukas, a former U.S. attorney in Chicago, and Thomas Newkirk, a former associate director in the SEC's division of enforcement.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM tightens exec exit policies

2007-05-20T02:37:00.001-04:00

Friday, May 11, 2007
GM tightens exec exit policies
Before they could get millions in takeover; now firing without cause is the only way to collect.
Sharon Terlep / The Detroit News

Like many Fortune 500 CEOs, General Motors Corp.'s Rick Wagoner has a multimillion dollar golden parachute to protect him if the automaker is ever to be taken over.

But this year, GM tightened its policies under which its top executives can receive severance payouts.

Wagoner stands to receive up to $14 million in severance and stock payouts, according to GM's proxy filed April 27. Other top execs have similar exit packages.

In the past, only a change of control at GM was required to trigger the payouts. But under GM's new policy, the executives also would have to be fired without cause to receive the payouts. Corporate governance experts say revised policy is more fair to shareholders.

The requirement may be one reason why GM decided to change its policies this year.

"It's a combination of 'We have to disclose this stuff, so we need to make it as pretty as we can,' and just wanting to be more responsible," said Dan Moynihan, an executive pay expert with Compensation Resources Inc. in New Jersey. "Companies are doing this out of a desire to make executive compensation as shareholder-friendly as possible."

This the first year the SEC has required public companies to disclose details about what executives could get in total compensation if they were to be fired.

The new rules come in an era of heightened scrutiny surrounding corporate accounting practices and executive pay packages.

The disclosures show the severance packages have become commonplace among large corporations. That's especially true in the auto industry, where the growing clout of cash-rich private equity firms combined with the diminishing capital of auto companies is making even the biggest players more susceptible to takeovers.

"In the current environment, every company needs to be concerned with protection from a takeover," said analyst John Casesa, managing partner of Casesa Shapiro Group. "It's not unusual anymore."

Wagoner's payment would come in the form of $9.4 million in stock and options that would become fully vested upon his termination. He would then be eligible for up to three times his annual $1.65 million salary -- or about $5 million, according to GM's proxy.

Tightening the policy was "a good thing to do from a corporate governance standpoint," GM spokeswoman Julie Gibson said, adding that such provisions are increasingly common in corporate America.

GM has provisions in place for four other executives. Vice Chairman Bob Lutz has the second richest deal, with $4.8 million in stock and options and potentially $3.5 million in severance pay.

Chief Financial Officer Fritz Henderson would get $2.9 million in stock and options and up to $3.5 million in severance; and manufacturing chief Gary Cowger would get $1.4 million in stock and options and $2.6 million in severance.

At Ford Motor Co., chief executive Alan Mulally could get $27.5 million if he were to be fired as part of a Ford buyout.

© Copyright 2007 The Detroit News. All rights reserved.

GM ramps up truck discounts

2007-05-14T21:25:00.000-04:00

Wednesday, May 09, 2007
GM ramps up truck discounts
Free financing, rebates offered for Chevy Silverado, GMC Sierra
Sharon Terlep / The Detroit News

General Motors Corp.'s new full-size pickups just got a little cheaper.

The automaker, aiming to increase sales of its redesigned 2007 Chevrolet Silverado and GMC Sierra in a slumping pickup market, increased incentives on the trucks and for the first-time will offer zero-interest loans on new models.

New deals on the trucks let customers choose between free financing for up to 36 months or between $1,250 and $1,500 cash back on the 2007 models. The previous offer was reduced-rate financing and $750 to $1,250 cash back. Other offers are available on 2006 models.

The deals run through July 9.

In addition, dealers informed The Detroit News of two other unadvertised discounts on the trucks: Dealers can offer $1,000 in bonus cash on Silverado and Sierra models that have been sitting on dealer lots for 90 days or more; and they have the discretion to offer up to four $250 discount coupons to buyers of the new pickup.

GM is walking a fine line in the incentive battle, looking to stay competitive without abandoning its strategy of limiting discounts that cut profits and lower resale value.

"We've been tactical and strategic in how we're responding to the competitive action out there in the market place," GM spokesman John McDonald said. "We're seen a lot of incentive spending by our competitors."

GM has increased its share of the full-size pickup truck segment to 38.8 percent from 36.7 percent this year through April, despite intense competition that includes Toyota Motor Corp.'s first ever full-size Tundra pickup.

Overall, GM's full-size pickup sales are about flat this year to date through April.

While that's better than most competitors, the performance has fallen short of what both GM and analysts expected given that the trucks are completely new and heavily advertised.

"The good news is that although the industry is down overall, GM is up," said Jesse Toprak, chief economist for Edmunds.com. He said a double-digit gain should be the target with a new truck line.

The new Silverado and Sierra, launched late last year, have been well received by critics and the public. Even so, they're taking longer to sell than the outdated models they replaced, and are leaving showrooms with only a few hundreds dollars less in incentives.

Big pickup sales are suffering in the midst of a prolonged slowdown in the U.S. housing and construction markets. Truck sales depend heavily on contractors who use the vehicles for work.

Industrywide, full-size pickups, which account for 22 percent of vehicle sales for Detroit's automakers, were down 10 percent in 2006, according to Autodata Corp.

Sales for the segment were down another 5 percent for the first four months of 2007 compared with the same time last year.

Competition is intense, between Toyota's surprising incentives on the new Tundra and discounts as high as 20 percent on pickups from Ford Motor Co. and the Chrysler Group's Dodge Ram division.

McDonald said GM's internal numbers for the trucks, which account for two fewer selling days in April, show sales up 3.6 percent year to date.

"The bottom line," he said, "is that more people are choosing our trucks over our competitors."

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM will let top executives trade company's shares

2007-05-14T21:23:00.000-04:00

Wednesday, May 09, 2007
GM will let top executives trade company's shares
Company had banned them from buying and selling stock on fears over insider trading.
Jeff Green / Bloomberg News

General Motors Corp. will let Chief Executive Officer Rick Wagoner and about 20 other top executives buy and sell the company's shares, after a two-year ban because of concerns about inadvertent insider trading.

The executive trades will be allowed until May 31, spokeswoman Renee Rashid-Merem said in an interview. The Detroit-based automaker banned such trading in 2005 at about the same time it halted financial forecasts. GM doesn't intend to begin forecasts again, Rashid-Merem said.

"We have resolved a lot of significant matters and provided a lot more detail on pending matters," such as the sale of a stake in its finance unit and labor issues such as health care and buyouts, she said in an interview.

Executives with significant future financial information not available to the public may still be prevented from trading, Rashid-Merem said.

Resuming the trading is another sign of confidence at GM, the largest U.S. automaker, after Wagoner and his top two deputies last month regained half of a 2006 pay cut and in March received their first restricted stock grants since 2003.

Wagoner reiterated last week that he expects automotive operations to improve this year from a $2 billion loss last year.

"If you saw executives buying now, if Rick Wagoner buys some shares, that would probably be a positive signal to the market," said John Novak, an analyst at Morningstar Investment Service Inc. in Chicago who rates GM shares the equivalent of a sell.

"These people have had their hands tied for two years, some people at lower levels may need to sell."

GM hadn't allowed top executives to buy and sell its shares since 2005's first quarter, just before the automaker in April of that year stopped giving profit estimates. The company said it wanted to prevent those with internal financial information from inadvertently engaging in insider trading.

The automaker told employees of the decision on executive trading in an internal announcement Tuesday.

The ban is being lifted after Wagoner narrowed GM's loss to $2 billion last year from $10.4 billion in 2005. The automaker paid 34,400 union workers to leave, closed plants and sold assets that will raise about $16 billion.

Last week, GM said first- quarter profit fell 90 percent because of losses related to home loans at a finance unit and continued North American losses.

Wagoner on April 25 reassured employees that his plan to end losses is working after Toyota Motor Corp. passed GM in first- quarter global sales.

GM said last week it expects to sell 9.2 million cars and trucks worldwide this year, while Toyota forecasts sales of 9.34 million. GM has been No. 1 in global sales for 76 years.

Wagoner's last share activity was in March 2005, when he bought 50,000 shares valued at $1.5 million.

GM shares were the best performers in the Dow Jones Industrial Average last year, climbing 58 percent. In 2005, they tumbled 52 percent.

The shares fell 14 cents Tuesday to close at $29.77 on the New York Stock Exchange and have declined 3.1 percent this year.

© Copyright 2007 The Detroit News. All rights reserved.

GM to raise non-U.S. sales above 60%

2007-05-14T21:19:00.000-04:00

Saturday, May 05, 2007
GM to raise non-U.S. sales above 60%
CEO Rick Wagoner says he hopes the increase doesn't come at the expense of domestic sales.
Greg Bensinger / Bloomberg News

General Motors Corp. plans to increase sales outside the U.S. to more than 60 percent of the company's total, as its domestic sales decline.

The automaker reached 60 percent in the first quarter because of increases in China and other emerging markets.

"That number is just going to continue to grow," Chief Executive Officer Rick Wagoner said Friday on a conference call from New York.

"I hope not by reducing our sales in the U.S."

GM may lose lead to Toyota

GM expects to sell 9.2 million vehicles worldwide this year, company sales analyst Paul Ballew said on the call.

It would be Detroit-based GM's highest total since 9.55 million in 1978.

That may not be enough to fend off a challenge for the annual global sales lead from Toyota Motor Corp., which has forecast sales of 9.34 million vehicles this year.

Toyota sold 2.35 million vehicles worldwide in the first quarter, beating GM's 2.26 million and threatening the U.S. company's 76-year reign as the world's biggest automaker.

GM hasn't had an annual sales gain in the U.S. since 1999 and got 55 percent of its total outside its home market last year.

The U.S. sales declines contributed to $12.4 billion in losses the past two years.

GM said first-quarter profit fell 90 percent to $62 million.

Markets outside the U.S. may eventually account for two- thirds of the company's vehicle sales, Ballew said.

Forecasting a record

"We will do well over 5 million units this year outside the U.S. market," he said. "That will be an all-time record for us." Last year, such sales totaled 4.2 million.

GM's sales in its Asia-Pacific region probably will rise to 1.5 million this year. Ballew said. The region's total last year was 1.26 million.

During the past six weeks, GM has "seen some softness in large-truck sales in the U.S.," mainly because of rising gasoline prices, Ballew said.

The company's large sport-utility vehicles have been most affected, he said. GM on May 1 reported April declines of 26 percent for the GMC Yukon large SUV and 12 percent for the similar-sized Chevrolet Tahoe.

GM's 8.375 percent note due July 2033 fell 0.44 cent to 91 cents on the dollar, yielding 9.3 percent, according to Trace, the NASD's bond-price reporting service.

© Copyright 2007 The Detroit News. All rights reserved.

GM ramps up truck discounts

2007-05-14T21:17:00.000-04:00

Despite cuts, GM stuck in low gear

2007-05-07T00:07:00.000-04:00

Friday, May 04, 2007
Despite cuts, GM stuck in low gear
Sharon Terlep / The Detroit News

General Motors Corp. has broken sales records, turned out critically acclaimed vehicles and shaved tens of thousands of workers from its payroll.

But all that progress couldn't save the automaker from another money-losing quarter in North America -- a stark reality that underscores GM's competitive disadvantages and why it desperately needs a money-saving labor deal this year with the United Auto Workers union.

GM on Thursday reported a $46 million net loss in its North American operations for the first quarter and a narrow $62 million profit on its global operations. The results fell 80 percent short of projections by investment analysts surveyed by Thomson First Call.

While the North American loss is a $246 million improvement from last year, it comes at a time when GM is benefiting from aggressive cost-cutting measures, a deal with the UAW to cut its health care tab and a dramatically smaller work force.

In addition, GM's re-energized product lineup is bringing in $1,000 more in revenue per vehicle sold in North America than it did just a year ago.

But those improvements continue to be overshadowed by GM's crushing labor and retiree costs.

"If you look at the cost burden we bear in this area versus international competitors, it's really massive," GM Chief Financial Officer Fritz Henderson said in an interview with The Detroit News. "Health care remains for us and for the industry a major source of competitive disadvantage. It diminishes margins, diminishes cash flow."

GM is working urgently to close its labor-cost gap with Japanese competitors. Company leaders have said cutting health care costs -- a $4.8 billion tab for GM in 2006 -- will be central to labor talks.

Henderson said GM will enter labor negotiations with the UAW this summer "with a high sense of urgency." The goal is to secure a new labor agreement when the current four-year pact expires in September.

A 2005 deal with the UAW helped. Under that agreement, which shifts more health costs to retirees, GM is saving $1 billion a year.

But GM says it needs more -- especially when it comes to retiree health costs.

GM estimates it spends $3.3 billion a year to insure retirees and dependents, a cost not shared by foreign competitors, which offer less generous post-retirement benefits and have fewer retirees.

UAW talks a 'key event'

In addition to draining the bottom line, health care costs divert money from new product development, GM said. The automaker's 2007 capital expenditures are expected to fall more than $5 billion short of what Toyota Motor Corp. spent last year.

"The absolute key event looking ahead is the negotiations with the UAW," said auto analyst John Casesa, of Casesa Shapiro Group. "That's what's weighing on investors right now. There is more riding on this contract than there has been in decades."

UAW spokeswoman Christine Moroski declined to comment Thursday.

Union leaders in recent months have talked to rank-and-file workers about the need to help Detroit automakers become competitive and the sacrifice that will entail. But while they're warning of difficult negotiations ahead, the union also has said it's not going to cave in just because times are tough.

Tony Perrucci, a member of the UAW Local 595 in Linden, N.J., questions whether labor costs weigh on GM as much as the automaker says. The company already has outsourced a great deal of work, he said.

"We have all been through this before," Perrucci said. "And ultimately many people will lose their jobs if GM has its way in the name of their so-called competitive efficiencies."

Besides the labor costs, a number of factors played into GM's less-than-stellar first quarter.

The faltering housing industry is partly to blame. Defaulted mortgages led to a $305 million first-quarter loss at General Motors Acceptance Corp., the lending company still partly owned by the automaker. Also, GM results last year were inflated by the $395 million sale of its stake in Suzuki Motors.

Revenue down from '06

GM's overall first-quarter revenue was $43.9 billion, down from $52.4 billion a year ago, although the company sold a record 2.26 million cars and trucks worldwide through March.

GM also has increased the cost estimate of a settlement with Delphi Corp., its former parts operation, to $500 million this year instead of $400 million.

"I was looking for considerably better from them," said analyst David Healy at Burnham Securities. "The numbers were disappointing."

During a conference call with analysts and reporters Thursday, Henderson was pressed to explain how GM posted a North American loss after making so many improvements from a year ago.

"You're in a good spot right now in your product cycle; mix is up," Rod Lache, an analyst at Deutsche Bank, said during the call. "And you're not quite where you need to be by your own acknowledgment."

Henderson wouldn't forecast whether GM would make money in North America in the second quarter, but he expects global auto operations to improve. Gas prices, the housing sector and the rollout of key products, including the redesigned Chevrolet Malibu, will be deciding factors, he said.

"We need to stick to our plans, stick to the cost cutting," he said. "Keep doing what we're doing."

One analyst called GM's improvement in North America "paltry," especially since it managed to increase its revenue per vehicle by $1,000 from a year ago.

"This seems like a weak year-over-year performance to us given we are at the peak of GM's product cadence and GM North America revenue per unit showed significant strength," Goldman Sachs analyst Robert Barry wrote in a research note.

Investors sent GM's stock price down $1.75, or 5.4 percent, to $30.69 in trading Thursday.

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GMAC loss another bad sign for GM

2007-05-06T23:53:00.000-04:00

Thursday, May 03, 2007
GMAC loss another bad sign for GM
Nation's poor housing market drags down home-lending unit; will impact GM earnings.
Sharon Terlep / The Detroit News

General Motors Corp.'s recovery effort took another blow Wednesday when GMAC, the lending company partially owned by the automaker, reported a surprising $305 million first quarter loss.

The loss, caused almost entirely by the nation's faltering housing market, will weigh on GM's first-quarter earnings to be announced this morning. GM sold a controlling interest in General Motors Acceptance Corp. last year to Cerberus Capital Management, but retained a 49 percent stake.

GMAC's loss was an $800 million reversal from a year ago, when it posted a $495 million profit in the first quarter.

"This was a disappointing quarter for us," said Sanjiv Khattri, GMAC executive vice president and chief financial officer. "We can not turn this business around soon enough."

GMAC's red ink alone typically wouldn't shake GM, but the automaker is likely to have a tougher time absorbing the loss in the midst of other challenges, particularly in its North American unit.

GM's new full-size pickups, a pillar of its strategy to return profits to North America, aren't selling as well as expected.

Auto sales industrywide are being affected by soaring gas prices, low consumer confidence and the poor housing market throughout the United States.

"Combined with everything else going on, it could be a bad day for GM," analyst Brad Rubin of BNP Paribas said.

In a sentiment shared on much of Wall Street, Morgan Stanley analyst Jonathan Steinmetz said in a research note that GM's auto business must deliver "better than expected" results for the first quarter if it's to meet expectations despite the GMAC hit.

After losing a staggering $10.5 billion in 2005, GM narrowed its losses last year to $2 billion. Its North American operations, though, remained in the red.

GM officials could not be reached on Wednesday.

One bright spot is that GM won't bear the entire brunt of GMAC's losses. This is the first full quarter in which GM's stake in GMAC is only 49 percent.

Through March, GMAC's home-lending unit, Residential Capital LLC, or ResCap, lost $910 million in the first quarter, compared with a $495 million profit in the first quarter of 2006.

The loss was largely due to defaulted mortgage loans made to high-risk borrowers, a trend that's shaking the lending industry.

GMAC's other businesses have been fairing better.

Its auto financing unit made $396 million, compared with $186 million a year ago. And the company's insurance business made $66 million, up from a $21 million loss a year ago. GMAC has taken several steps in recent months to decrease its exposure to the shaky subprime mortgage lending segment, Khattri said. He said ResCap likely will lose money in the second quarter, but significantly less than in the first three months of the year.

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Despite cuts, GM stuck in low gear

2007-05-05T23:41:00.000-04:00

GM promotes three designers to new jobs

2007-05-04T23:26:00.000-04:00

Wednesday, May 02, 2007
Auto briefs
GM promotes three designers to new jobs

DETROIT -- General Motors Corp. on Tuesday promoted Bryan Nesbitt, who helped create the Chrysler PT Cruiser, to vice president of design for North America as the automaker revamped design responsibilities worldwide. Nesbitt, 38, moves to the new North American post June 1 from executive director of design for GM's European operations, the automaker said Tuesday. GM named Mark Adams as design vice president for Europe and Kenneth Parkinson to the similar job for the Asia-Pacific region.

NHTSA investigates Jeep Commanders

U.S. regulators stepped up an investigation of DaimlerChrysler AG 's Jeep Commander sport utility vehicles after 495 complaints that the engine can stall during driving. The inquiry covers 2006 and 2007 models and affects as many as 136,444 of the SUVs, the National Highway Traffic Safety Administration said Tuesday on its Web site. The agency said the complaints included 445 reported to the automaker. Two cases involved crashes. NHTSA raised the investigation to an engineering analysis, the second step in its review process. The agency began its inquiry in February, with 50 complaints.

Jon Pepper leaves Ford for Hess Corp. post

Ford Motor Co. announced Tuesday that Jon Pepper, its director of global corporate communications, is leaving the company to become vice president of communications for Hess Corp ., an oil firm based in New York. Ford also named Ray Day executive director of global corporate communications. Pepper, a former reporter and columnist for The Detroit News, is expected to leave Ford on May 18 and will begin work for Hess in June.

Spartan reports $7.2M profit, to add 3 plants

Chassis-maker Spartan Motors Inc. reported record first-quarter earnings and sales Tuesday, and said it will add three manufacturing facilities. The Charlotte, Mich.-based company posted profits of $7.2 million for the first three months of 2007, up from $4.5 million a year ago. Sales were $143 million, compared to $103.7 million in the first quarter of 2006. Spartan said in a statement that its order backlog is up more than 37 percent, the largest in its history, prompting the addition of production capacity. However, the company, a leading supplier of motorhome chassis, said it does have concerns about the effect of fuel prices on the RV market.

Detroit News staff, wire and Bloomberg News reports.

© Copyright 2007 The Detroit News. All rights reserved.

Tahoe, Yukon debut hybrid versions

2007-05-04T23:21:00.000-04:00

Wednesday, May 02, 2007
GM / GMC
The GMC Yukon gas-electric hybrid will improve gas mileage by 25 percent.
Tahoe, Yukon debut hybrid versions
Electric motors and gas engine power SUVs, with computer deciding which option is most efficient.
Scott Burgess / The Detroit News

MILFORD -- General Motors Corp. unveiled working versions of its large SUV hybrid Tuesday.

The Chevrolet Tahoe and GMC Yukon will offer the gas-electric hybrid by the end of the year, improving the vehicles' gas mileage by 25 percent, GM officials said.

"We're still in the development stages, but we're on track to have these vehicles ready by the fourth quarter of this year," said Larry Nitz, GM's executive director of hybrid technology.

The hybrid system powers the SUVs using electric motors (mounted inside the transmission), the gas engine alone or a combination, said Tim Grewe, GM's chief engineer for rear-wheel drive powertrain hybrids. Additionally, the electric motors can be locked out of the drive train during times the engine's power is needed, such as in towing up to 6,000 pounds.

Both models include a valve shutoff system that allows the 6-liter V-8 to operate on half of its cylinders to help conserve fuel when at cruising speed.

A computer monitors the entire system and determines every 1/100th of a second what method is the most efficient means to propel the vehicle, Grewe said.

When moving in slow traffic, the electric motors drive the car -- with the engine turning on only when needed or to help recharge the batteries. When the vehicle brakes, some of that energy is captured and returned to the 300-volt battery packs that are stored under the floor of the second row seats.

GM used a number of tools to improve the vehicle's gas mileage. Besides the hybrid system, it lightened the SUVs by more than 300 pounds. It replaced the hood and front tailgates with aluminum and changed the front fascia, side rails and back of the vehicle. It also redesigned the vehicle grille and made other improvements to make it more streamlined, said Mary Sipes, vehicle line director for full-size SUVs.

The insides of the Tahoe and Yukon closely resemble their gas-only namesakes.

In a short test drive, the Tahoe transitioned from electric to gas power during acceleration. Its handling was driven by its new electric power steering. In slow driving, the Tahoe could reach 25 mph without starting the gas engine.

A small gauge in the dash helps drivers know if they're saving energy or losing it through heavy acceleration or heavy braking.

Scott Burgess can be reached at (313) 223-3217 or sburgess@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Trucks hold back GM

2007-05-04T23:10:00.000-04:00

Tuesday, May 01, 2007
Trucks hold back GM
Turnaround hurt as weak housing market, rising gas prices hit industry
Sharon Terlep / The Detroit News

DETROIT -- A slumping pickup market is hindering General Motors Corp.'s turnaround effort in North America just as the automaker was gaining momentum.

GM was counting on its new full-size GMC Sierra and Chevrolet Silverado pickups to be smash hits, but the new trucks launched late last year are taking longer to sell than the outdated models they replaced, and they're leaving showrooms with just $420 less in incentives.

GM sold 200,505 of the trucks through the first three months of 2007, according to Edmunds.com, a figure one GM insider said fell well below internal projections.

The impact of the sagging truck market will come into sharper focus this week as GM and other major automakers report April sales today and GM releases its first-quarter financial results Thursday.

The prolonged slowdown in the U.S. housing and construction markets, combined with rising fuel prices, is weighing on pickup sales nationwide -- a high-profit segment on which Detroit's automakers are heavily dependent.

"Things aren't falling apart, but those external factors are having an impact," Jesse Toprak, chief economist for Edmunds.com, said of GM's pickup sales.

GM officials declined to discuss truck sales, saying the automaker doesn't comment on sales and earnings ahead of announcements. Analysts expect GM to post a profit overall in the first quarter, but will be closely watching North American earnings for signs of progress.

GM hoped the high-profit Chevy Silverado and GMC Sierra would far exceed sales of the 2006 models that were running out of steam after a four-year run.

While the new Silverado and Sierra are generally outperforming the competition, they have been hurt by the down market.

GM increased Silverado and Sierra production 11 percent in the first quarter in anticipation of strong demand. But sales are up just 4.8 percent through March compared to a year ago, according to Edmunds.com.

Moreover, the trucks are being discounted $2,453 on average and are sitting on dealer lots 81 days, according to Edmunds' data for the first quarter of 2007. The old models carried $2,874 in incentives and moved in 55 days during the same period a year ago.

Considering the trucks were completely made over -- bigger, more powerful and available with more features -- GM and Wall Street were expecting more.

"Usually, you'd want to see a double-digit gain" on new products, Toprak said.

Automakers feel pinch

Troubles in the truck market have been looming for GM and other automakers.

The segment is heavily dependent on contractors who use the vehicles for work. As a result, demand has slumped with the housing market, as fewer workers build fewer homes.

Industrywide, full-size pickups, which account for 22 percent of vehicle sales for Detroit's automakers, were down 10 percent in 2006, according to Autodata Corp. Sales for the segment were down another 4.6 percent for the first three months of 2007 compared to the same time last year.

Toyota Motor Corp. surprised many in the industry by discounting its new full-size Tundra pickup months after it debuted.

Ford Motor Co. saw sales of its F-Series fall 14.1 percent in the first quarter of 2007, according to Autodata, following a year in which the Dearborn automaker's sales benefited from a post-Hurricane Katrina construction boom on the Gulf Coast.

"The housing market doesn't seem to be getting any better -- that is a concern," Ford sales analyst George Pipas said. "The prospects for a rebound are more remote today than they were four months ago."

Hopes were high

GM had hoped the new Sierra and Silverado, widely regarded as well-executed improvements on their popular predecessors, would offset some of those market forces. The automaker, like many in the industry, also was surprised by the depth of the woes in the housing market.

In the past couple of weeks, GM Vice Chairman Bob Lutz has made public statements reflecting concern about the impact the housing downturn will have on the auto industry.

But while the trucks have performed well -- their share of the large pickup segment increased nearly 4 percent -- they haven't delivered all GM hoped.

Research firm Global Insight is predicting that Silverado sales will be up 4.6 percent through April and Sierra sales will jump 5.9 percent.

And one analyst estimates GM's April truck sales fell 3 percent.

GM's U.S. sales in April may have dropped an adjusted 4 percent, falling as much as 7 percent for cars and 3 percent for trucks, Christopher Ceraso of Credit Suisse Holdings in New York said in an April 25 note. GM's large pickups "may struggle broadly given the weak housing market," the note said.

Truck competition heats up

The tough market forces come at a time of intense competition in the truck market. Toyota is out with the new Tundra. Nissan Motor Co. unveiled longer and heftier versions of its Titan truck. Ford's new F-Series Super Duty truck lineup hit showrooms in January. And both Ford and DaimlerChrysler AG's Chrysler Group are discounting their older pickups by up to 20 percent, Edmunds' Toprak said.

"They have sold more trucks in this weak market that they did last year," he said of GM. "At least that trend is positive."

Dealer Steve Cook, owner of the Cook GM Superstore in Vassar, is seeing the pickup problems firsthand.

"It's a competitive market and manufacturers are having a hard time getting people to feel it's a good time to buy a truck," Cook said.

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM's Wagoner Gets $10.2 Million in 2006 Total Pay

2007-05-01T00:13:00.000-04:00

GM's Wagoner Gets $10.2 Million in 2006 Total Pay (Update4)
By Jeff Green and Greg Bensinger

April 27 (Bloomberg) -- General Motors Corp., the largest U.S. automaker, said Chief Executive Officer Rick Wagoner's total compensation for last year was $10.2 million, as the company narrowed its loss.

Pay for Wagoner, 54, included $1.28 million in salary, $769,566 in other compensation, and stock options and awards valued at $6.67 million, the company said in a U.S. regulatory filing. Detroit-based GM also is proposing two new board members.

Wagoner's salary was 42 percent less than the $2.2 million he got for 2005, because of a 50 percent pay cut he agreed to in February last year. GM said today that Wagoner's salary for this year will be $1.65 million, restoring half of the cut.

``Maybe it's a little too early for a salary increase, but the automaker has made a lot of progress over the last year,'' said Mirko Mikelic, who helps manage $14 billion at Fifth Third Asset Management in Grand Rapids, Michigan, including GM debt. ``The union also made a lot of sacrifices so maybe it would be better for salaries to be flat going into negotiations'' that start in July for a new contract with the United Auto Workers.

The compensation details come three days after Wagoner learned that Toyota Motor Corp. had unseated his company as the global auto-sales leader in the first quarter, threatening GM's 76-year reign. GM's shares rose 58 percent last year, the most of any company in the Dow Jones Industrial Average. The company's net loss narrowed to $2 billion from $10.4 billion in 2005.

GM has shifted more of Wagoner's 2006 and future compensation from salary and direct pay to pay based on the company's performance, spokeswoman Renee Rashid-Merem said. About 83 percent of his 2006 pay was ``at risk,'' GM said in the Securities and Exchange Commission filing.

Proposed Directors

The automaker is proposing the election of new board members Errol Davis and Kathryn Marinello. Davis, 63, is chancellor of the Georgia state university system and a director of BP Plc, Union Pacific Corp. and PPG Industries Inc. Marinello, 50, has been CEO of Minneapolis-based Ceridian Corp., a provider of human-resources and payroll services, since October.

The SEC approved rules last year that require companies for the first time to provide a single figure for total compensation of their five top-paid executives and made other changes in the way stock options and stock grants are valued. The changes make it difficult to compare figures from the previous year.

GM a year ago reported Wagoner's total pay as $5.48 million for 2005, including stock options valued at $2.88 million. He hasn't gotten a cash bonus since 2004. Based on GM's adjustment to compare this year's options on the same accounting basis as last year's, his total 2006 compensation was about $4.88 million.

Stock Awards

GM disclosed March 22 that Wagoner received $2.8 million in restricted stock units this year, the first such grants since 2003, and 500,000 stock options. Those awards will be included in future compensation and aren't part of the filing today.

Shares at GM have risen 40 percent in the 12 months through yesterday and fell 89 cents to $31.56 at 4:21 p.m. in New York Stock Exchange composite trading.

Wagoner's 2006 total compensation is less than the $28.2 million that Ford Motor Co., the second-largest U.S. automaker, reported on April 5 for Chief Executive Officer Alan Mulally. Pay for Mulally, who took over at Ford in September after heading Boeing Co.'s commercial airplane business, included a $7.5 million hiring bonus and $11 million to make up for payments he would have gotten from the planemaker.

Lutz, Henderson

GM Vice Chairman Bob Lutz, head of product development, got $8.44 million in compensation, including $1.16 million in salary, GM said in the filing today. His 2007 salary, effective March 1, will be $1.32 million.

Chief Financial Officer Fritz Henderson, 48, received $5.19 million in compensation, including $1.16 million in salary. Henderson took over as the top financial executive in January. His 2007 salary will also be $1.32 million.

Lutz, 75, and Henderson agreed to 30 percent pay cuts in February last year. Salaries for Lutz and Henderson are still 15 percent lower than they were at the start of 2006.

Wagoner has promised to cut $9 billion from North American costs this year as part of a plan to close 12 North American locations and end losses. GM last year persuaded 34,400 union workers to either accept incentives to retire or leave.

The automaker's shares have fallen 54 percent since Wagoner took over as CEO in June 2000. Wagoner's salary was $2 million in 2001, his first full year in the top job. He got a raise to $2.2 million for 2003 and received that annual amount until accepting the pay cut last year.

GM's $12.4 billion in losses the past two years were its first consecutive annual losses since 1990 to 1992.

The company has sold assets totaling more than $17 billion to fund its restructuring plan. Wagoner hasn't forecast when GM will return to profit.

Wagoner and other top GM executives have been restricted from buying or selling GM shares since April 2005 when the automaker abandoned a profit forecast for the year. GM hasn't given financial forecast since.

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net ; Greg Bensinger in New York at gbensinger1@bloomberg.net .

Last Updated: April 27, 2007 17:53 EDT

2007 Bloomberg LP

2007 Bloomberg LP

XM's Rogue Antennas Amplify Signals, Merger Scrutiny

2007-05-01T00:11:00.000-04:00

XM's Rogue Antennas Amplify Signals, Merger Scrutiny (Update2)
By Christopher Stern

April 24 (Bloomberg) -- XM Satellite Radio Holdings Inc. became the nation's largest satellite broadcaster with a network of hundreds of antennas that were built and operated in violation of U.S. Federal Communications Commission rules.

At least a third of the 800 antennas that beam XM's radio channels to millions of customers were placed in unapproved locations or emitted signals that were too strong, according to a review of FCC filings. XM says some now comply with the rules, though it doesn't know how many.

The misplaced antennas may result in fines or a shutdown of part of the company's network. Lawmakers including U.S. Representative Edward Markey say regulators should take the violations into account when they consider XM's plan to combine with Sirius Satellite Radio Inc.

``This series of apparent violations by XM does provide fuel to opponents of the merger and gives them reason to think they can get the deal rejected,'' said Paul Gallant, a Washington-based policy analyst with Stanford Washington Research.

Sirius and XM need approval from the FCC and Justice Department for their all-stock combination, worth $3.42 billion at today's closing prices.

The extent of the breach hasn't been widely disclosed by XM. The company told shareholders on Feb. 22 in a Securities and Exchange Commission filing that ``certain'' antennas had unapproved locations or power without giving further details, and said that the FCC had begun an investigation.

`Administrative Problems'

XM Chief Executive Officer Hugh Panero told investors on a Feb. 26 conference call that while ``clearly there were mistakes or administrative problems,'' the FCC isn't likely to force the company to make changes that would affect customers. The company is ``just working with'' the FCC to find a solution, Panero said.

``XM voluntarily disclosed these variances to the FCC, took unilateral action to eliminate many of them, and continues to work directly with the FCC to address any concerns,'' XM spokesman Chance Patterson said. The differences between the approved and actual locations or signal strength are ``generally immaterial,'' he said.

XM depends more on its ground-based network than Sirius, whose satellites give better coverage. Sirius Chief Executive Officer Mel Karmazin told Congress last week that 11 of the company's 138 antennas violated rules and that he switched them off in October.

Four Hearings

Lawmakers have no direct authority to block the merger, though they might influence the outcome by making their feelings known. Congress has held four hearings on the proposed combination at which legislators raised concerns over issues including XM's violation of FCC rules.

Shares of XM fell 20 cents to $10.93 at 4 p.m. New York time in Nasdaq Stock Market trading. They've dropped 22 percent since the purchase by Sirius was announced. Sirius shares were down 3 cents at $2.77 and are down 25 percent since the announcement.

The two companies ran afoul of the FCC last year, when the agency said they were selling radios with signals that were too strong. Sirius and XM pulled the radios off the market temporarily while they were fixed.

XM uses antennas, or repeaters, to boost signals where buildings or hills block reception from orbiting satellites. The unapproved repeaters are dotted throughout 59 markets including Los Angeles, New York and Chicago, Washington-based XM said in an FCC filing in January.

42 Percent

In the filing, XM said the antennas in violation serve 42 percent of its network. In Los Angeles, 23 of XM's 39 antennas are in breach of the rules, the company said. In New York, 35 of 91 are.

XM said in December filings that turning off Los Angeles repeaters would have a ``drastic and adverse impact'' on reception and a New York shutdown ``would devastate'' service.

Some antennas were erected thousands of feet from their approved location, said XM, which has 7.5 million subscribers. In Chicago, an antenna was more than 11 miles from the authorized spot. In Austin, Texas, a repeater sanctioned for a height of 490 feet was 900 feet high.

Consumer groups including the Consumers Union and the National Association of Broadcasters, the trade group for broadcasters that provide free radio, said the violations show why the companies shouldn't be allowed to combine.

``Given their repeated lack of candor in dealing with the FCC, it is astonishing that XM and Sirius would now seek a government-sanctioned monopoly,'' said Dennis Wharton, spokesman for the broadcasters' group. FCC spokesman David Fiske declined to comment.

Raising Doubt

XM's failure to follow FCC rules indicates it may not live up to Karmazin's promises that the combined company will offer consumers more choice and lower prices, said Markey, who chairs the House Telecommunications and Internet Subcommittee.

``What is the expectation it will follow through or fulfill any public interest conditions?'' Markey, a Massachusetts Democrat, said in an e-mailed statement.

XM committed the violations as it raced against Sirius to begin service in 2001 and sign up customers. The two have racked up combined losses of more than $6.4 billion in five years as they built their networks. Annual sales at XM grew from $20 million to $933 million in four years. Sirius had revenue of $637 million.

The companies say the merger won't stifle competition because of the availability of alternative providers of entertainment and information such as Apple Inc.'s iPod as well as high-definition and traditional radio.

To contact the reporter on this story: Christopher Stern at and cstern3@bloomberg.net

Last Updated: April 24, 2007 16:27 EDT

2007 Bloomberg LP

Wagoner paid $10M despite GM losses

2007-05-01T00:02:00.000-04:00

Saturday, April 28, 2007
Wagoner paid $10M despite GM losses
Sharon Terlep / The Detroit News

DETROIT -- General Motors Corp. CEO Rick Wagoner earned $10.2 million in 2006, a year in which the automaker continued to lose money and market share but managed to trim billions in losses.

In his seventh year leading GM, Wagoner received $1.28 million in salary, down from $2.2 million in 2005, the company said in a U.S. regulatory filing. Wagoner's salary for this year will increase to $1.65 million.

His other 2006 compensation included $6.67 million worth of stock options and awards and $769,566 in other compensation, according to a filing on Friday with U.S. regulators.

The 54-year-old CEO, who's spent three decades working for GM, made $5.5 million in 2005 and $10 million in 2004. However, GM noted that changes in accounting rules last year mean his 2006 compensation should not be compared with previous years. If Wagoner's compensation were calculated under the old rules, he would have made $4.8 million in 2006, GM said.

GM also said the majority of Wagoner's compensation was tied to future performance.

The decision to cut the base salaries of Wagoner and other top executives came last year after Jerry York, a top aide to billionaire investor Kirk Kerkorian who later joined the GM board of directors, publicly urged GM to cut its executive pay.

GM's Chief Financial Officer Fritz Henderson, 48, and Vice Chairman Bob Lutz also took pay cuts, bringing each of their base salaries to $1.32 million.

Overall, Lutz, 75, made $8.4 million last year, including his salary, $2.93 million in stock options and awards and $445,679 in other compensation. Henderson made $5.2 million in total compensation.

Wagoner's 2006 compensation was a little more than one-third of the $28.2 million Ford Motor Co.'s new president and CEO Alan Mulally earned during his first four months on the job.

Last year was a critical one for GM, which debuted a string of well-received new vehicles and cut $9 billion in costs, but continued to burn cash and cede market share to Japanese rivals.

For the first time in 76 years, GM this week lost its claim to being the world's largest automaker when Toyota Motor Co. surpassed GM in sales for the first quarter of 2007.

But Wagoner's relentless drive to cut costs has played well on Wall Street. GM's shares rose 58 percent last year, the most of any company in the Dow Jones Industrial Average.

Executive pay has emerged as a hot-button issue as Detroit's struggling automakers have looked to the United Auto Workers union for concessions in tough times.

A little more than a year ago, GM, in a show of shared sacrifice to UAW leaders, halved its dividend, capped health care benefits for salaried retirees and slashed the pay of Wagoner and other top executives and directors.

"He's got a tough job and he should be well compensated," said Brad Rubin, an analyst at investment firm BNP Paribas. "But the UAW is going to be very disappointed considering all the concessions and givebacks they're providing."

GM lost $2 billion in 2006, a more than $8 billion improvement compared to its restated $10.4 billion loss in 2005. The automaker is in the midst of a sweeping restructuring plan that includes slashing more than 34,000 jobs and closing 12 plants.

In a letter sent earlier this week to top executives, Wagoner acknowledged frustration with being passed by Toyota, but said the company's overall strategy is a good one.

"What's important is that we stay focused on implementing our business strategies around the globe," he said. "Because they are working."

Wagoner and other top GM executives have been restricted from buying or selling GM shares since April 2005 when the automaker abandoned a profit forecast for the year. GM hasn't given a financial forecast since.

The automaker is proposing the election of new board members Errol Davis and Kathryn Marinello.

Davis, 63, is chancellor of the Georgia state university system and a director of BP Plc, Union Pacific Corp. and PPG Industries Inc. Marinello, 50, has been CEO of Minneapolis-based Ceridian Corp., a provider of human-resources and payroll services, since October.

Bloomberg News contributed to this report. You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM opens up to a fresh way of doing things

2007-04-30T23:58:00.000-04:00

Friday, April 27, 2007
New ideas wanted
GM opens up to a fresh way of doing things
Sharon Terlep / The Detroit

Texan Ross Perot, during his brief stint on General Motors Corp.'s board of directors, once described the automaker as "isolated and insulated" from the American driving public.

Nearly two decades later, amid a massive overhaul at the world's largest automaker, signs are starting to emerge that GM is shedding that top-down, out-of-touch style of management.

Jolted into action by unprecedented market share declines and billions of dollars in losses, GM is taking a more fluid and open approach to doing business in an industry it once ruled.

Twenty-something hipsters in the company are getting called on to help make critical decisions.

Design teams have new freedom to whip up vehicles with no advance approval from the top.

And, in a first for GM, the public could have final say in picking a new vehicle to be sold around the world.

"The company that I hired into no longer exists -- which is a good thing," said John Manoogian, design director for Cadillac, who started his GM career 30 years ago in the now-defunct Oldsmobile division. "There's a new sense of where we are and what we have to go to. We have senior managers saying, 'You guys show us what you can do.' "

With its supremacy over the world auto industry ending as foreign rivals get stronger and international markets grow in influence, GM's situation may have gotten dire enough to spur some actual change in that way of thinking.

Some of this is evident in the attitude of upper management toward the lower rungs. People are more able to give suggestions and question company strategy.

On a public level, GM is reaching out more for input, even putting a decision on producting a concept vehicle up to a vote.

"This is a team game, and to get the team functioning at its most efficient level, you have to have all the players playing to their strengths," GM Vice Chairman Bob Lutz said this month before unveiling a set of new concepts for mini-cars. At a loss for which vehicle should debut at the New York Auto Show, GM decided to show all three and then let the public vote on which should see production.

"If that means a great idea is born in one spot and develops into reality somewhere else," Lutz said. "So be it."

Shift emerges to public

The change has been gradual. Some say it started nearly a decade ago, when GM adopted a team approach to vehicle development that has people from various departments coming together to make important decisions. That was a shift from when managers would send orders down the ranks.

For several years now, particularly since Lutz took on the role of product czar in 2001, designers at GM have talked about feeling more valued and empowered.

But it's been only recently that the shift in thinking has begun to trickle down into GM's public face -- its products, marketing and ads.

"There's a lot less Detroit tunnel vision than there used to be at GM," said David Healy, a Burnham Securities auto analyst. "You can see it in the new models that are coming out. And that's what's important."

Designers set free

Case in point is a new set of vehicles set to debut next year at the Detroit Auto Show.

The ideas for the vehicles -- which GM won't discuss-- emerged from a small team of designers over at Cadillac.

Historically, designers get directions to make vehicles based on a market need or hole in GM's product lineup. In this case, the team branched out and came up with some clay models of vehicles they thought GM should build.

Soon after the models were done, the designers got word that Lutz and CEO Rick Wagoner were coming down to the Warren design center to see them.

"We brought them out on the patio, and they just said, 'Hey, let's do this,' " Manoogian said. "For me that was the epiphany -- when the light bulb went on that we were doing things differently."

Mike Jackson, vice president of advertizing and marketing, said the new culture has infused energy throughout GM.

"We're particularly proud of our new products," he said. "There's a lot of confidence here."

© Copyright 2007 The Detroit News. All rights reserved.

GM, UAW feud over work rules

2007-04-30T23:56:00.000-04:00

Friday, April 27, 2007
GM, UAW feud over work rules
Union halts bargaining; plants may lose future work
Sharon Terlep / The Detroit News

General Motors Corp.'s push to implement money-saving rule changes at its factories has the automaker at loggerheads with the United Auto Workers union, with two plants now at risk of losing future work.

GM has halted preparations under way at plants in Kansas City, Kan., and Lordstown, Ohio, to get the facilities ready for new vehicles. The stoppage came after the UAW ordered its local negotiating teams to stop bargaining with the company on work rules designed to make the factories more competitive.

The conflict is the first time the union and the automaker have openly butted heads over rule changes GM has been pushing for months at its plants as it struggles to cut billions of dollars in costs.

"The management and union leadership at both Lordstown and Fairfax are in discussions about improving the competitiveness of both plants and putting both plants in a better position to secure future products," GM spokesman Dan Flores said.

Flores said the company doesn't comment on future products or labor negotiations.

UAW Spokesman Roger Kerson couldn't be reached for comment Thursday.

Union officials at the Lordstown complex have been working to secure production of the next generation Chevrolet Cobalt small car.

The plant has been under intense pressure to cut costs as GM struggles to eke out a profit on small cars produced in North America.

Meanwhile, GM's Fairfax assembly plant in Kansas City hopes to produce the next vehicle to be built on the architecture of the Chevrolet Malibu sedan. The plant is producing the 2008 made-over Malibu, set to hit showrooms later this year.

Current work on the Cobalt and Malibu isn't affected, Flores said.

Word of the skirmish spread after the UAW Local 1112 at Lordstown posted a flier informing workers that GM has "suspended two new vehicle programs for North America."

"The International Union has contacted your Shop Chairman and requested that he along with the Shop Committee suspend all meetings immediately," according to the flier.

Thinning the gap

In recent months, GM leaders have been visiting plants to push for changes that range from getting workers to take on more jobs to outsourcing work not directly related to building vehicles, such as plant maintenance.

GM's goal is to make its plants fully competitive with those of its Japanese rivals in the United States.

GM loses $1,300 on average for each vehicle it makes in North America, while Toyota Motor Corp. makes about $2,100 on each car and truck it builds here, according to the Center for Automotive Research in Ann Arbor.

While more flexible factory rules won't eliminate that gap, GM says they could save hundreds of dollars per vehicle.

National talks lie ahead

The conflict comes before the UAW and Detroit's automakers are set to begin negotiating in earnest this summer. The goal is to secure a new labor agreement when the current four-year pact expires in September.

"The union wants to see a more competitive GM, and it's made some tough choices," said Harley Shaiken, labor professor at the University of California, Berkeley. "But it's not willing to abandon what it's built up over so many decades."

Shaiken said trouble at the local level doesn't necessarily bode badly for the national talks. If the union and GM are able to work out tough issues early on in local contracts, bargaining could go more smoothly at the national level, he said.

"This will make the national talks less contentious, not more," Shaiken said. "It's not a preview necessarily, but rather a drawing of the line."

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM boss vows fight for sales

2007-04-30T23:55:00.000-04:00

Thursday, April 26, 2007
GM boss vows fight for sales
In e-mail to top officials, Wagoner touts long-term strategies, attributes Toyota's gain to reduced fleet sales.
David Shepardson / Detroit News Washington Bureau

General Motors Chairman and CEO Rick Wagoner told senior executives the company hasn't given up the fight despite being outpaced by Toyota in global sales in the first quarter of the year.

"We still have the majority of the year in front of us, and we will fight hard for every sale -- all the while staying focused on our long-term goals as a global, growing company," he told high-level company officials in an e-mail Tuesday shortly after Toyota's sales numbers were released.

Wagoner said GM was surpassed by Toyota largely because of its move to reduce unprofitable sales to fleet customers and the fact that Toyota crushes GM in sales in Japan.

"Like many of you, I woke up to news reports today of Toyota passing GM in global sales in the first quarter this year, for the first time ever," Wagoner said in the e-mail obtained by The Detroit News. "I didn't welcome this morning's news, and I know you didn't either. But what's important is that we stay focused on implementing our business strategies around the globe, because they are working."

Officials within the company are trying to emphasize profitability over sales.

A strategy of reducing fleet sales "cost us about 70,000 units in lower daily rental sales in the U.S. and Canada in the first quarter this year nearly the entire amount of our global sales gap versus Toyota. But it was the right thing to do. Our sales and marketing strategy requires patience, but it's working, and we need to stick with it," Wagoner wrote.

Reached Wednesday, GM Vice Chairman Bob Lutz offered a curt response to Toyota's outpacing GM in the first three months of the year: "My reaction is 'So what?' "

GM has been the worldwide leader in auto sales since 1931, when it surpassed Ford Motor Co.

GM sold 9.1 million vehicles in 2006 worldwide, down from 9.17 million in 2005, reporting a net loss of $2 billion, narrowing its $10.4 billion loss in 2005.

Toyota sold 8.8 million vehicles in 2006, up 8 percent and earned more than $11 billion in its last fiscal year. The company said it expects to sell 9.34 million vehicles this year. GM hasn't disclosed what it expects to sell.

In his e-mail, Wagoner noted that GM outsells Toyota in 12 of the 15 top auto markets worldwide, and still outsold Toyota by 1.5 million units in the United States in 2006.

"One question is where did Toyota pass us in sales? Basically, Toyota beats us badly in their home market of Japan (by 2.4 million units on an annual basis), and we win in most other markets," he wrote.

He also noted that GM is "staying focused on further reducing our still huge health care cost disadvantage versus Toyota and other non-U.S. based manufacturers."

Toyota lobbies D.C. harder

On Wednesday, Toyota stepped up its lobbying efforts in Washington, emphasizing its investment in the U.S. at a time when some company officials fear a backlash.

Some 100 U.S. Toyota employees -- including assistant regional managers, plant executives and financial executives -- fanned out on Capitol Hill to take part in a prescheduled "grassroots lobbying effort," spokeswoman Martha Voss said.

"They are here to touch base and say, 'We're here, we're from your district. Here's what kind of jobs and investments we have,' " Voss said, adding the timing had nothing to do with the sales milestone.

Toyota's lobbying efforts haven't gone unnoticed.

"They outspend us," Lutz said in January. "It is my considered opinion that Toyota has more clout in Washington than we do."

At the same time, an issue domestic automakers have been complaining loudly about is the value of the Japanese yen.

President Bush is set to meet with Japanese Prime Minister Shinzo Abe today and Friday.

Automakers argue Japanese currency "manipulation" unfairly gives Toyota, Honda and Nissan up to a $4,000 per vehicle subsidy, by making American cars more expensive in Japan and Japanese imports less expensive here. Japan and Japanese automakers reject the charge.

Two-thirds of the U.S. $88 billion trade deficit with Japan is auto-related.

Japan subsidy edge touted

Last month, U.S. Sen. Debbie Stabenow, D-Lansing, introduced a bill dubbed the Japanese Currency Manipulation Act, which would force Japan's government "to take action to stop subsidizing millions of auto exports to the U.S. by bringing its currency into proper alignment with the U.S. dollar," said a statement from the Automotive Trade Policy Council, a group representing GM, Ford and DaimlerChrysler AG.

The group says the subsidy provides a windfall that ranges up to "$10,000 per vehicle for higher-end Japanese imported SUVs such as those sold by Toyota under the Lexus brand."

National Security Council spokesman Dave McCormick defended the administration's approach and said Wednesday that "we look to have open markets in all areas, and are focused on continuing to find ways for Japan to open up its markets, particularly for foreign investment in the automotive sector."

© Copyright 2007 The Detroit News. All rights reserved.

Toyota tops GM in 1Q global sales

2007-04-29T23:25:00.000-04:00

Apr 24, 8:49 PM EDT
Toyota tops GM in 1Q global sales
By YURI KAGEYAMA
AP Business Writer

TOKYO (AP) -- For the first time ever, Toyota sold more vehicles globally in a quarter than General Motors, preliminary January-March figures show, the clearest sign yet that the Japanese company is on track to overtake its U.S. rival as the world's top automaker.

Toyota Motor Corp.'s success is fueled by robust demand for its reliable, fuel-efficient models, including the Camry, Corolla, Yaris and gas-electric hybrid Prius.

It also comes at a time when General Motors Corp., which lost $2 billion last year, has been forced to scale back production and cut costs in a bid to revive its sliding fortunes, even as it leads in China's booming market.

Final bragging rights as the world's top automaker - a title GM has held for 76 years - won't be decided until global vehicle production numbers get tallied for the full year.

But Tuesday's data show that Toyota is getting closer. The Japanese company sold 2.35 million vehicles worldwide in the first quarter, Toyota said, surpassing the 2.26 million vehicles GM said it sold in the period, according to preliminary figures.

In 2006, Toyota's global output rose 10 percent to 9.018 million vehicles, while GM and its affiliates produced 9.18 million vehicles worldwide - a gap of about 162,000. In the first quarter, Toyota made 2.37 million units while GM had expected to produce 2.34 million during the same period, and has not given a final number.

Analysts say Toyota is building on its lead by investing in ecological technology, opening plants around the world, developing new models and wooing drivers with solid marketing that drives home its brand power.

Those are precisely areas in which GM has fallen behind Toyota, analysts say. GM will be hard pressed to play catch-up, making it more likely that Toyota will outstrip GM for the full year, they say.

"Toyota sales are booming because of its good image around the world about reliability and ecological technology," said Koji Endo, auto analyst with Credit Suisse in Tokyo. "It's just the opposite for GM, and its image is deteriorating."

GM said although Toyota won the first quarter, the fight for global leadership is not over for the year. A company spokesman said it would not chase market share solely to recapture the lead from Toyota, and it has no special plan to retake the lead.

"We also had a record first quarter globally. We set sales records in three out of our four regions," said spokesman John McDonald. "We've got our first quarter underneath our belt. Let's see what the rest of the year holds for us. We're going to fight for every sale," he said.

The cycle of good news keeps getting better for Toyota, however, as it can use its profits to keep growing. With the company doing so well, morale is high at Toyota, keeping the positive cycle going, while GM tends to be dragged down by battles with its union, Endo said.

But Endo also warned that increased size also brings other problems like trying to ensure quality and manage a sprawling network of manufacturing and sales.

"As your volume gets bigger and bigger, in many cases efficiency tends to drop," he said. "There might be a risk of being over-stretched."

Toyota was founded in 1937 by the Toyoda family, whose members continue to play key roles and are a symbol of emotional unity for the company and its employees.

Perhaps more famous than the Toyoda family are the company's innovators, such as Taiichi Ohno, credited with inventing just-in-time production to reduce inventory, and the philosophy of worker-empowerment called "kaizen," allowing workers to keep improving production methods and hold the critical power of shutting down the assembly line at any time.

Companies around the world, including those outside the auto industry, have adopted Toyota's methods. Universities, both in and outside Japan, study the Toyota method.

Toyota is also well-known for nurturing worker loyalty by offering lifetime employment. The last time Toyota resorted to massive job cuts was during hard times in 1950.

Toyota has beaten GM in profitability for the past four years, with 1.4 trillion yen ($11.8 billion) profit for the fiscal year through March 2006.

GM, meanwhile, has been negotiating severance packages with thousands of workers in an effort to turn around its North American operations. In the fourth quarter of 2006, it reported a profit of $950 million, a big turnaround from a loss of $6.6 billion a year ago.

Modesty is also a Toyota trademark, and executives have repeatedly played down the prospects of overtaking GM.

Asked that question last week in Detroit, Toyota President Katsuaki Watanabe emphasized that Toyota must continue to improve its quality from the top down to remain a leader in the auto industry.

"We're still developing in many regions of the world. I don't regard that as a success yet," he said.

GM doesn't give yearly forecasts, but Toyota is shooting for global output of 9.42 million vehicles and sales of 9.34 million units.

While Toyota appears on course to supplant General Motors this year, GM's moves to boost overseas production could keep it in the running. The company's sales in China jumped 32 percent last year to 876,747 units, making it the No. 1 seller there. It is also building a new factory in India, another market with tremendous potential.

But analysts note that Toyota's success required long-term planning and years of hard work.

"Winning didn't happen overnight," said Koichi Shimokawa, business administration professor at Tokai Gakuen University. "Japanese makers built their business, slowly but surely, accumulating technology and developing good cars."

Endo believes the trend of Toyota outdoing GM is very difficult to reverse: "Everybody on the road expects Toyota to overtake GM in 2007."

---

Associated Press writers Hans Greimel and Kozo Mizoguchi in Tokyo and Tom Krisher in Detroit contributed to this report.

© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.

Copyright 2007 IndyStar.com. All rights reserved

MapQuest, OnStar team up on maps

2007-04-28T23:47:00.000-04:00

Wednesday, April 25, 2007
MapQuest, OnStar team up on maps
Jeff Karoub / Associated Press

DETROIT -- General Motors Corp.'s OnStar service is working with MapQuest to let drivers link their desktop with the blacktop.

The automaker and the online mapping service of AOL LLC said the expansion of OnStar's in-vehicle navigation system is designed to let its subscribers plan their driving route at MapQuest.com and send information on their destination directly to their cars.

OnStar Web Destination Entry being announced today will be launched in a pilot program this summer with a random sample of 3,000 customers. It's expected to be available by the end of the year on more than 2 million GM vehicles with OnStar's Turn-by-Turn Navigation capability.

The navigation system was introduced last year as part of the decade-old OnStar system, which offers driving directions, roadside assistance and other services through about 2,000 advisers at three North American call centers. The system also alerts emergency rescue officials when an air bag deploys or the vehicle is involved in a crash.

Web Destination Entry will allow customers to log onto MapQuest and create up to five destinations, which are then stored on secure OnStar servers. The driver can send them to and access them through the vehicle's OnStar system, which calculates the route and provides voice-guided, step-by-step directions from the vehicle's location.

Although drivers can already get the directions by calling an OnStar operator, OnStar and MapQuest officials said Web Destination Entry adds convenience.

"If you think about Web destination planning end to end today, you've kind of got a static origin and static destination," said OnStar President Chet Huber. "This literally allows the origin to be serendipitously determined at whatever point you want to start that trip."

Jim Greiner, MapQuest's senior vice president and general manager, said the move is responding to customer demand. "Our mission, our vision in life, is to help people find places, whenever and wherever they need to be. We think this partnership is one step, one giant step toward ... fulfilling our vision."

The companies did not disclose financial details.

By teaming with MapQuest, the GM subsidiary is making a "leadership move" in the North American market, although it won't be alone for long, said Phil Magney, principal analyst with Telematics Research Group.

BMW AG recently announced a tie-up with Google Maps. The German automaker said it is launching the service first in Germany, but plans to spread to all markets that employ its telematic system known as Assist.

Ford Motor Co. also has announced a deal with Microsoft Corp. to develop the wireless Sync system. While Sync differs from OnStar in that it links cars with cell phones and personal music players, Ford has said it someday could include laptop computer links, vehicle diagnostics and other services.

Even with the financial struggles facing the domestic automakers, Magney said they can't afford to ignore developing in-vehicle technology and communications systems. Services such as OnStar provide automakers recurring revenue through subscriptions, enhance the technological value of the car and serve as an important tool for enhancing the relationship with customers, he said.

"(They all) realize that long-term, the automaker has to have a wireless connection to the vehicle," he said.

OnStar is standard on more than two-thirds of 2007 model year GM vehicles and will be included on nearly all 2008 vehicles. As an option, it costs $695, which includes the hardware and first year's subscription fee.

© Copyright 2007 The Detroit News. All rights reserved.

Big 3 will offer training in China

2007-04-28T23:45:00.000-04:00

Thursday, April 26, 2007
Big 3 will offer training in China
Automakers want to educate suppliers about labor laws and safe working standards.
Associated Press

SHANGHAI, China -- General Motors, Ford and DaimlerChrysler announced Wednesday they will provide training for their suppliers in China on how to keep their working conditions safe, healthy and legal.

The plan has the backing of the China Association of Automobile Manufacturers, a government-supported industry group, the three automakers said in an announcement.

General Motors Corp. has more than 20,000 employees in China and relies on suppliers employing thousands more. Ford Motor Co. and German-American automaker DaimlerChrysler AG similarly have many suppliers based in China.

Senior executives of the three automakers were in China's commercial capital for the weeklong 2007 Shanghai Auto Show, which ends Saturday.

The automakers will use training designed by the Automotive Industry Action Group aimed at educating suppliers about Chinese labor laws and improving compliance with safe working standards, the statement said.

"The single most important resource at any of our member companies is people," J. Scot Sharland, the action group's executive director, said in the statement.

"Given the tremendous growth of North American investment in the developing Chinese automotive supply chain, it is imperative that these companies are cognizant of local labor laws and fundamentally understand that Ford, GM and DaimlerChrysler expect 100 percent compliance."

The training is due to begin by the middle of 2007, it said.

The statement cited an unnamed official from the Chinese automotive industry group noting the need for companies to abide by domestic labor laws.

Multinational companies operating or sourcing in China are under intensifying scrutiny for labor conditions at their factories and those of their suppliers.

Meanwhile, China has been urging foreign-invested companies to let employees join the government-sanctioned labor federation.

© Copyright 2007 The Detroit News. All rights reserved.

GM's global sales rise, while market share falls

2007-04-27T22:19:00.000-04:00

Friday, April 20, 2007
GM's global sales rise, while market share falls
Automaker reports gain of 66,814 sales over year-earlier period; still loses ground worldwide.
Greg Bensinger / Bloomberg News

DETROIT -- General Motors Corp., defending its standing as the world's largest automaker against Toyota Motor Corp., said first-quarter global sales rose 3 percent while its market share fell.

GM sold 2.26 million vehicles in the three months ended March 31, a gain of 66,814 over the year-earlier period, the Detroit-based company said Thursday in a statement. Global market share dropped to 13 percent from 13.1 percent, GM said.

The results indicated that GM's efforts to grow outside North America are succeeding as the company works to stem $12.4 billion in losses over two years. GM added sales in every region except North America, and boosted international sales to about 60 percent of its business, up from 55 percent at the end of 2006.

"This makes apparent the drag the U.S. is having on GM's performance," said Efraim Levy, a Standard & Poor's equity analyst in New York. "For a sustained turnaround, they have to be profitable in the U.S., the most lucrative market."

North American sales fell 6 percent, GM said. Levy said the automaker "probably would have gained market share if they didn't lose it at home."

Industrywide global sales grew 3 percent, to 17.41 million vehicles, and were on a pace to reach nearly 70 million by the end of the year, according to GM estimates.

GM's global sales fell about 0.8 percent to about 9.1 million last year. Toyota City, Japan-based Toyota has forecast 9.34 million sales for 2007. GM hasn't issued its projection.

GM's European sales rose 5.8 percent during the first three months and more than doubled in Russia, the fastest sales growth in the period, the automaker said.

Sales grew 17 percent in GM's Latin America, Africa and Middle East region, and 20 percent in the Asia-Pacific region.

GM has been focusing much of its overseas expansion on China, where it expects to almost double production to 1.7 million vehicles over the next three years. China sales rose 25 percent to 289,915 vehicles, GM said.

Hummer sales, down 23 percent to 15,177 vehicles, suffered the largest decline of any of GM's global divisions. Pontiac sales fell 19 percent and Saab sales dropped 11 percent.

Chevrolet, GM's largest division, gained 3.8 percent to 1.04 million vehicles last quarter, GM said. A 33 percent jump in European sales helped offset a 4.7 percent decline in North America.

Shares of GM fell 33 cents to $31.37 at 4:01 p.m. in New York Stock Exchange composite trading. They have gained 2.1 percent this year.

GM's 8.375 percent note due July 2033 rose 0.19 cent to 90.63 cents on the dollar, yielding 9.34 percent, according to Trace, the NASD's bond-price reporting service.

© Copyright 2007 The Detroit News. All rights reserved.

Toyota overtakes GM

2007-04-27T22:15:00.000-04:00

Wednesday, April 25, 2007
New world order
Toyota overtakes GM
No. 2 GM: Profit, not size, is the goal
Sharon Terlep / The Detroit News

DETROIT -- Just three months after Rick Wagoner vowed General Motors Corp. would fight to remain the world's largest automaker, Toyota Motor Co. has toppled it from the No. 1 spot for the first time in 76 years.

The historic reversal is largely symbolic and widely anticipated. But the new reality, as well as the speed at which Toyota closed in, has implications for both companies.

Toyota's new role is bound to have a deep psychological impact on one of the last manufacturing sectors where America still leads.

Gone are GM's bragging rights in an industry dominated by image and marketing might. Also dwindling is the automaker's ability to dominate price wars and smaller players.

At the same time, Toyota will find itself grappling with pressures long familiar to GM -- intense scrutiny from the outside and the threat of complacency within.

"This wasn't news that we wanted to hear," GM spokesman Tom Wilkinson said. "But it won't distract us from the business at hand: designing, building and selling the best cars and trucks for customers around the world."

Industry analysts have maintained that, for GM, finding a competitive business model in which it can shave costs and boost sales is far more crucial than maintaining its role as sales leader.

GM and Toyota do battle in nearly every segment and every region in the world, with Toyota drawing strength from its superior profitability.

On Tuesday, Toyota announced that it sold 2.35 million vehicles worldwide in the January-March quarter, surpassing the 2.26 million vehicles that GM sold in the same period. Toyota's totals include its Hino heavy truck and Daihatsu small-car brands.

Toyota's sales marked an 8 percent increase over the previous year. It expanded in most regions of the world but slipped 5 percent in its weak domestic market.

Toyota's worldwide production rose 2.6 percent to 2.37 million vehicles in the first quarter.

Toyota produced 1.04 million vehicles overseas, and exported nearly 700,000 from Japan. The Japanese automaker is rapidly expanding production facilities abroad, and Toyota President Katsuaki Watanabe attended the groundbreaking last week of Toyota's eighth vehicle assembly plant in North America, in Blue Springs, Miss.

GM aims to close plants

GM, meanwhile, is in the midst of massive downsizing in North America that calls for closing 12 plants by 2012.

But while GM's North American sales were down about 6 percent -- largely because of cutbacks in less profitable fleet sales -- the automaker's worldwide sales rose 3 percent to a record high.

It's still not certain whether Toyota will end 2007 on top of GM, but many analysts expect it will.

Jeff Schuster, an analyst with J.D. Power and Associates, forecasts that Toyota will sell about 280,000 more cars than GM this year and about 850,000 more by 2009. "We don't see this as a one-quarter phenomenon," he said. "They are both going to grow, but Toyota is growing faster."

GM marketing chief Mark LaNeve told Chevrolet dealers Tuesday in Las Vegas that GM wasn't stressed about Toyota passing them and said he was surprised it was making so much news, said one dealer who asked not to be named.

LaNeve told the dealers that the GM-Toyota race isn't over since Toyota is traditionally strong in the first quarter of the year and GM is strong in the second quarter.

Toyota has been gaining on GM for years, buoyed by billions in cash reserves, soaring sales in the United States and an Earth-friendly image at a time when global warming is emerging as one of the biggest issues.

All the while, GM is fighting a host of demons: image problems, soaring health care costs, an oversized staff and too much reliance on gas-guzzling trucks and SUVs.

"There's good big and there's bad big," said auto analyst John Casesa, managing partner of Casesa Shapiro Group. "Good big is when you're efficient and large. Bad big is when you're big but have an uncompetitive cost structure. And that is what GM is moving away from."

Both companies on Tuesday played down the stake they have in being No. 1. But it's clear that the shift is significant.

Wagoner, GM's CEO, predicted in 2005 that GM would stay on top for another 70 years. He backed off that statement, but as recently as January said GM would fight to keep the "world's largest" title -- something GM mentions every time it sends out a news release.

"It's not something where we would sit back and let somebody pass us by," Wagoner said in a January talk with reporters. "But the other side of it is we're going to fight for every sale and do it in a way that's consistently building the value of the enterprise from a shareholder perspective."

In many ways, however, losing the No. 1 spot will bring some relief to GM, which for months now has been dogged by questions about that fateful milestone. GM leaders have long maintained that their focus is on becoming leaner and more profitable, even at the risk of losing market share. In that case, Tuesday's signpost shows they're serious.

Analyst: Toyota has fears

Toyota has fought to grow sales, but at the same time fears what being No. 1 could mean, said Anand Sharma, manufacturing expert and co-founder of TBM Consulting Group.

"They think the moment you are on top is the moment you are sliding down," Sharma said. "In a way they've dreaded it and feared that it may lead to some complacency in their ranks."

And while Toyota has long maintained its focus is on quality and customers rather than size, its climb has been relentless.

"Don't believe for a second Toyota's goal -- or Watanabe's goal -- isn't to surpass GM," said Michelle Krebs, senior editor of Edmunds' AutoObserver.com. "Toyota desperately wants to be No. 1. The automaker just worries about what goes along with being No. 1."

It's a worldwide fight

The battle between GM and Toyota spans the globe, with competition intense in fast-growing markets such as China, where GM last year sold more than 1 million vehicles.

Even with GM's success abroad, Toyota is growing faster in most parts of the world and especially in North America.

Given the momentum, it is unlikely GM will be able to win back the top spot that it won in 1931 when it overtook another automotive giant: Ford Motor Co.

"It's devastating to me -- and it could have been prevented," said dealer John Rogan of John Rogan Buick-Livonia. He said while GM has cut back on unattractive fleet sales, it hasn't done enough to replenish its product lines.

"We eat sleep and breathe the sales of automobiles, and this is just an indication of the larger trend," Rogan said. "But the year is not up, so watch out."

Detroit News Staff Writer Christine Tierney contributed to this report. You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Toyota passes GM for first time in global sales

2007-04-24T23:46:00.000-04:00

Tuesday, April 24, 2007
Toyota passes GM for first time in global sales
Hans Greimel / Associated Press

TOKYO -- Toyota Motor Corp. became the world's top auto seller in the first three months of the year, passing rival General Motors Corp. for the first time, the Japanese automaker said Tuesday.

Toyota sold 2.348 million vehicles worldwide in the January-March quarter, company official Satoshi Yamaguchi said, surpassing the 2.260 million vehicles that GM said it sold during the same period.

The results mark the first time Toyota has beat GM in global sales on a quarterly basis, he said.

While the figures represent only quarterly sales results, they foreshadow a tough challenge for GM as it fights to hold onto it title as world's top automaker -- a claim usually staked on annual production figures.

In 2006, Toyota's global production surged 10 percent to 9.018 million vehicles, while GM and its group automakers produced 9.180 million vehicles worldwide -- a gap of about 162,000. In the first quarter, Toyota made 2.367 million vehicles worldwide, while GM had expected to produce 2.335 million.

It's no time to start popping the champagne, however, because overtaking GM is not Toyota's first priority, said Paul Nolasco, a spokesman for the Japanese company.

"Our goal has never been to sell the most cars in the world," Nolasco said. "We simply want to be the best in quality. After that, sales will take care of themselves."

Indeed, it is Toyota's sterling reputation for quality and fuel efficiency that has lifted its global sales, including the popular Camry, Corolla and Prius gas-and-electric hybrid.

GM, meanwhile, cut production last year as high fuel prices drove people away from its trucks and sport utility vehicles. To shore up earnings, it has cut jobs and closed plants.

Toyota has been gaining steadily on GM in recent years, and analysts have been saying it is only a matter of time before it eclipses its Detroit-based rival, which has seen its market share shrink in the United States even as it leads sales in China.

In the vital American market, Toyota's sales rose 12.9 percent last year, catapulting it past DaimlerChrysler AG as the No. 3 seller of autos in the U.S. Toyota's share of the U.S. market climbed to 16 percent in March, behind GM's 22 percent and Ford Motor Co.'s 17 percent.

A copy of Toyota's "global master plan" leaked to the news media late last year calls for grabbing 15 percent of the world car market by 2010 in the company's quest to unseat GM.

GM hasn't released a forecast for this year, but Toyota is shooting for global output of 9.42 million vehicles and sales of 9.34 million units.

While Toyota appears on course to supplant General Motors this year, GM's moves to boost overseas production could keep it in the running. The company's sales in China jumped 32 percent last year to 876,747 units, and it is also building a new factory in India, another market with tremendous potential.

GM launched a major restructuring in November 2005 that called for closing 12 plants by 2008, slashing its work force, reducing capacity and cutting costs.

But as Toyota rolls on, its executives are growing concerned about a possible political backlash in the U.S., even though American consumers continue to flock to Toyota dealerships. U.S. lawmakers from manufacturing states charge that the Japanese government has kept the yen artificially low, giving Japanese automakers an advantage.

"We are certainly concerned," Toyota Senior Adviser Hiroshi Okuda said earlier this year, adding that Toyota needed to "significantly" increase the number of foreigners on its board.

At that time, there were no foreigners in top positions at Toyota. But earlier this month, Toyota promoted American James Press, president of the automaker's North American division, to the inner circle.

Toyota's shares closed down 0.54 percent to 7,370 yen (US$62.46) on the Tokyo Stock Exchange on Tuesday.

© Copyright 2007 The Detroit News. All rights reserved.

UAW member perks cut

2007-04-24T23:43:00.000-04:00

Tuesday, April 24, 2007
UAW member perks cut
Tough times force Big Three, union to scale back tuition, other programs
Josee Valcourt / The Detroit News

Steep production cuts and shorter working schedules at Detroit's automakers are forcing the companies and the United Auto Workers union to scrap or pare back worker programs that had offered everything from job training to education.

The programs are funded by the companies and by a fraction of workers' salaries based on straight time and overtime, both of which have fallen due to plant closures, layoffs and production cutbacks.

General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler have all revised the courses they partly subsidize, eliminating or freezing many programs that are not directly related to workers' jobs.

Last month, a governing body comprised of five union members and five Ford representatives decided to slash a plethora of skill-enhancement programs used by workers, retirees and spouses.

"The reduction in hours worked, and particularly the decrease in overtime hours worked, has reduced revenue to the point where Joint Programs is in an unsustainable financial condition," the UAW-Ford National Programs Center said in a letter distributed to union officials, plant managers and plant human resource managers last month. "Unless significant program reductions are made immediately, the UAW-Ford National Programs will be in a deficit situation before the end of 2007."

Gone are services such as individual tutoring for college classes, computer software training, math enrichment sessions and English as a second language. General Educational Development classes, which allow students to earn the equivalent of a high-school diploma, also have been cut.

Educational and training programs tailored for retirees and personal finance courses have been temporarily suspended.

Some programs still offered

But automakers say many programs are still available.

"There is still very important job-related training and educational services that are continuing for employees," said Ford spokeswoman Marcey Evans.

For instance, employees will still be reimbursed for the costs incurred in earning certain degrees from accredited colleges.

The carmakers and unions are focusing on maintaining programs on health and safety, job security, quality improvement, sourcing, and plant-operating efficiency, according to company and union officials.

But employees are feeling the cuts.

In addition to the previously announced closure of the child care centers, workers say fitness centers at Ford's Dearborn and Louisville, Ky., truck plants have been shuttered.

At the Rouge plant in Dearborn, self-improvement classes where workers could learn about plumbing or computer programming have been cut.

Moves surprise workers

That is affecting workers who were counting on such courses to help them launch second careers.

"They closed the Rouge Academy completely. They closed all of that," said Ron Turner, who worked in the plant's paint shop for more than 30 years until accepting a buyout several weeks ago.

He had planned to apply for a grant through the UAW-Ford National Programs Center to study broadcasting at the Specs Howard School of Broadcast Arts in Detroit.

"They were supposed to fund up to $4,600 toward my course but when I went to apply, they said that all self-improvement programs have been cut," Turner said. "I'm going to have to come up with some other way to fund my class."

Detroit's automakers have little choice, given pressures to cut costs across the board.

The three domestic automakers are struggling in a cutthroat U.S. market, where their combined market share has slumped, falling 7.7 percent to 55.8 percent over the past year alone.

GM, Ford and Chrysler are restructuring their businesses and, as a result, cutting the hourly work force that contributes to the funding for these programs.

"These are some of the tough decisions that the company has had to make in order to contribute to our turnaround effort," Evans said.

Gym hours cut back

Chrysler workers are also feeling the pinch. Previously, the gym at Warren Stamping was open five days a week until "the wee hours of the morning," said Mike Tremain, a skilled trades worker at the factory. "The hours were cut right in half."

Unions are forced to make tough choices with shrunken budgets. "The locals don't have money to do things they used to," said Chris Sherwood, president of Local 652 in Lansing that represents workers at GM's Cadillac plant.

Sherwood has watched the local membership fall from 14,000 people in 1980 to 3,300 today.

"All that money is lost," he said. "And it's hurting everybody. It's a sad situation."

GM spokesman Dan Flores declined to say which programs have been affected, but he said the company is working with the union to limit the impact. "We are jointly working together with the UAW to look for ways to be as efficient as possible with each and every joint training dollar."

The automaker's U.S. work force has been reduced dramatically, mainly through attrition and large-scale early-retirement programs. GM now has to do "more with less," Flores said.

Along with its unions, GM is "certainly looking for ways to use the joint funds properly," he said.

Detroit News Staff Writer Sharon Terlep contributed to this report. You can reach Josee Valcourt at (313) 222-2300 or jmvalcourt@detnews.com.

UAW-Ford cuts

Production cuts and shorter working schedules have impacted education and other programs for workers, retirees and families. Here is the status of some of those programs:

Family Service and Learning Centers: Child care centers closing on June 30.

Skills Enhancement Programs: In-plant education centers closed, effective April 16.

Fitness Centers: In-plant programs will be redesigned; membership programs at outlying locations will not be renewed.

Retiree Education and Training Assistance Plan: Moratorium on tuition assistance.

Automotive Industries Studies, Prior Learning Assessment and UAW-Ford University: Discontinued.
Source: UAW-Ford National Programs Center

© Copyright 2007 The Detroit News. All rights reserved.

UAW rethinks rigid job rules

2007-04-24T23:40:00.000-04:00

Saturday, April 21, 2007
Outsourcing dilemma
UAW rethinks rigid job rules
Louis Aguilar / The Detroit News

STERLING HEIGHTS -- The huge temporary walls went up in the heart of Ford Motor Co.'s Van Dyke Transmission plant last August. Depending on which side of them you're on, they represent the best way to save Michigan auto factories or stand as a depressing symbol of lost jobs.

Behind the divide made of plywood, plastic sheeting and chain-link fence, 700 contract workers represented by unions other than the United Auto Workers are installing a $320 million transmission line for the next-generation Ford Escape SUV.

"We save jobs," said Rick Koloszi, general manager of Stenco Construction Corp., the Livonia-based general contractor supervising the work. "We do the job on time, we pay our workers good union wages, and then we go away and let the regular employees run the lines. That's how we help save the company money and save union jobs."

But outside the walls, some UAW workers at Van Dyke Transmission are crying heresy.

"I have to look at that wall every day and it gets to me," said Lee Gotts, a veteran skilled trades worker at the plant. "It's demoralizing. That's our job. That's what we used to do in this plant and we never even got a chance to bid on the work."

A decade ago, a non-UAW worker would not have been allowed to change a light bulb in a Ford plant, and the union fought any move to outsource union jobs tooth and nail. But with all three Detroit automakers closing plants and cutting thousands of jobs, the union has been forced to make tough choices to save plants and jobs and secure new work.

"The use of contractors gives (Detroit's) Big Three much needed flexibility," said Greg Gardner, spokesman for Troy-based Harbour Consulting, which tracks auto manufacturing productivity.

Deals are a money-saver

At the recommendation of top union executives, UAW leaders at the Van Dyke plant agreed to adopt work rules last year under what's known as a "competitive operating agreement." The deal allowed Ford to outsource the installation of the assembly line.

Ford is negotiating such operating agreements at other plants as well. Thirty-eight of the 47 plants in the United States and Canada that are run by Ford and Automotive Components Holdings, the Ford holding company that manages former Visteon Corp. operations, have new competitive operating agreements.

The agreements are a key part of Ford's effort to drive down costs and become more competitive with foreign automakers, said Ford spokeswoman Anne Marie Gattari. Workers often OK the deals by large margins, she said.

The deals generally unwind costly work rules, reduce overtime and, crucially, allow the company to outsource certain jobs to lower-paid workers. UAW workers' wages -- which average $26 dollars an hour -- are not affected by the agreements.

General Motors Corp. and DaimlerChrysler AG's Chrysler Group are pushing through similar agreements at their plants.The deals are saving Ford -- which lost $12.7 billion last year -- hundreds of millions of dollars and helping it inch closer to Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. in manufacturing efficiency.

In 2005, the latest figures available, Ford had a $2,177-per-vehicle profit gap compared to Toyota in North America, according to Harbour Consulting. Ford's profit gap compared to Honda was $1,805 and $2,839 for Nissan.

Some workers chafe at deal

Ford plant workers cast their ballots knowing their jobs could be cut or moved to Mexico if they vote against the agreements. Some workers and union officials also said they feel an obligation to help Ford survive and become competitive again.

"It's something we fought for years," said Jim Stoufer, president of UAW Local 249, which represents workers at Ford's Kansas City Assembly Plant, which makes Ford F-150 pickups and Escape SUVs. "But the leaders aren't stupid. We understand it's not business as usual."

Stoufer said about 80 percent of Local 249's workers approved a competitive operating deal.

The outsourcing is made somewhat more palatable to some workers by the fact the most of the contractors are union workers.

"We welcome the chance to keep union talent here in Michigan," said James Tharrett, president of Millwrights Union Local 48091 in Detroit, which represents contract workers at Van Dyke Transmission.

Chuni Gala, owner of Stenco Corp., said he uses only union labor at Ford and Chrysler. "It's no secret the automakers need to cut their costs and we hope to be part of that solution," Gala said. "By far, most of our workers are Michigan-based workers."

The contractors building the new line at Van Dyke transmission are from various unions representing carpenters, iron workers, electricians, and pipe fitters.

But some workers will never accept outsourcing in UAW plants. Al Figlan, a skilled trades worker at Van Dyke Transmission, has filed 47 grievances against Ford, many relating to outsourcing, and has hired an attorney to challenge the automaker.

Figlan comes from a long line of Ford workers -- his grandfather worked for Henry Ford building parts for the Model T.

Before the contractors came in, he and the other skilled trades workers installed every major piece of machinery at the plant. Two weeks ago, Figlan received word from the UAW that Van Dyke workers will get a chance to vote on the competitive operating agreement in place there.

"What we want is that we get to do at least some of the work," said Figlan, who questions how much the outsourcing really saves Ford.

"They never tell us how much these contractors are making," he said. "Every job we've done it's been on time and under budget. We've won awards for our productivity. We know how to do our jobs.

"Why would they not utilize their own people and save the money? We are the ones who buy the Ford products. The majority of the contractors don't even drive Fords."

© Copyright 2007 The Detroit News. All rights reserved.

Latest Chevy Volt will be fueled by hydrogen

2007-04-24T23:38:00.000-04:00

Friday, April 20, 2007
The sequel
Latest Chevy Volt will be fueled by hydrogen
Sharon Terlep / The Detroit News

Although General Motors Corp.'s much anticipated plug-in hybrid Chevrolet Volt is still years away, the automaker is already planning a sequel -- a hydrogen-powered version.

At the Shanghai Auto Show today, GM will announce plans to produce a hydrogen-fueled version of the Volt concept vehicle introduced in January at the Detroit auto show. Like the original Volt, it would be a plug-in powered by a lithium ion battery, but the battery would be mated with a hydrogen fuel cell system rather than a small gasoline engine.

The Volt is GM's first application of E-Flex, which matches battery power with several different energy sources.

"The beauty of the strategy is that it allows us to package various propulsion systems into the same space depending on what energy is available locally," said Larry Burns, GM's vice president of Research and Development and Strategic Planning.

Plug-in hybrids are gasoline-electric vehicles that can recharge batteries with an extension cord and a wall outlet. The Volt can be fully recharged by plugging it into a 110-volt outlet for six hours.

The hydrogen variant of the Volt would be GM's fifth hydrogen-powered drivetrain, versions of which exist now in vehicles such as the GM Sequel, a hydrogen fuel-cell powered concept that was introduced in Detroit in 2005.

The plug-in hydrogen Volt would have a 300-mile range with combined battery and hydrogen power. No petroleum products would be consumed and the vehicle would be emissions-free.

That's because the power for fuel-cell vehicles is produced when oxygen in the air combines with hydrogen in a fuel tank. GM has said it ultimately sees hydrogen fuel cells as the likely solution to curbing the nation's reliance on imported oil.

The E-Flex system is GM's way of dealing with the uncertainty surrounding the future of alternative energies in the auto industry.

E-Flex's roots go back several years and are a result of conflicting schools of thought within GM -- those who felt fuel cells were the future and those who wanted to develop the internal combustion engine further, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

"There was an internal discussion over which fueling system would emerge as the dominant system," Cole said. "This system has that flexibility. It makes a great deal of sense."

Before either version of the Volt can be built, significant improvements are required in battery technology. GM has said a mass-market plug-in hybrid requires a battery with a range of at least 40 miles. The range on plug-in cars has typically been no more than 20-30 miles on battery alone.

In an effort to develop the batteries, GM has signed on at least four battery suppliers to help as well as expanding its in-house staff, officials have said.

"There's a tremendous will in the company to do this," GM Vice Chairman Bob Lutz told reporters at the Geneva car show last month when asked about the Volt. Lutz has said he believes there is a 90 percent chance GM will succeed in making the vehicle a reality.

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM challenges the eco-critics

2007-04-24T23:36:00.000-04:00

Wednesday, April 18, 2007
2007 SAE World Congress
GM challenges the eco-critics
Environmentalists make case to Bob Lutz; GM says plans not cut and dried as explained.
David Shepardson / Detroit News Washington Bureau

DETROIT -- General Motors Corp. Vice Chairman Bob Lutz met with one of the company's strongest environmental critics on Tuesday, following up on an earlier challenge.

Earlier this month, Lutz called on the Union of Concerned Scientists, a group that has lobbied for higher fuel economy standards, to visit GM, talk to his staff and show them the gasoline-saving technology the group says is readily available but ignored by automakers.

"This is a challenge I want to put out to people who think they have a solution, and are so much smarter than we are," Lutz told the Wall Street Journal. "Let them come and see us. If the technology were readily and easily available, what on earth would our motive be for withholding it?"

Meeting in Lutz's office at GM's headquarters, David Friedman, head of the Clean Vehicle Research program at the Union of Concerned Scientists, and Lutz discussed the group's contention that with off-the-shelf technology, the automaker could build a minivan that would reduce tailpipe emissions by 40 percent -- and cost just $300 per vehicle.

In March, the group's engineers unveiled a minivan design they said showed automakers can build affordable vehicles with existing technology that meet or exceed pollution standards adopted by California and other states.

Following the two-hour meeting Wednesday, Friedman said GM and the group remained at "loggerheads." Both sides agreed to keep details confidential.

But Friedman noted, "I think we will have to build a driveable vehicle" to convince GM the technology works. "We didn't change any minds."

Lutz declined comment. GM spokesman Chris Preuss said, "The challenge with the environmentalists is that there is a complete lack of business and technical experience from which they can draw conclusions.

"The fact is that we must balance dozens of complex regulatory and consumer issues in producing vehicles -- safety, performance, fuel economy and affordability, to name but a few The more we can inform and engage the misconceptions, the more robust the societal discussion will be. For that reason, we think the meeting was very worthwhile."

Lutz has been an ardent critic of fuel economy mandates. With Congress considering proposals to dramatically increase the fuel efficiency of the nation's cars and trucks, automakers face the prospect of spending billions of dollars to adapt their fleets.

"There is no technological bag of tricks that enables much better fuel economy than we have today," he wrote on a company blog in December. "Despite what alarmists may think, we don't have any magic 100-mpg carburetor that we're holding back because we're in bed with the oil companies."

Larry Nitz, executive director of GM's hybrid technology, said Tuesday at the Society of Automotive Engineers 2007 World Congress that incorporating existing technology could boost fuel efficiency by 18-20 percent.

"In the long run, we need to take the automobile out of the environmental debate" by moving to electrically-powered vehicles, Nitz said.

You can reach David Shepardson at (202) 662 - 8735 or dshepardson@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM puts brakes on new rear-wheel drive vehicles

2007-04-13T00:19:00.000-04:00

Thursday, April 12, 2007
GM puts brakes on new rear-wheel drive vehicles
Sharon Terlep / The Detroit News

DETROIT -- General Motors Corp. is holding off on plans for virtually all new rear-wheel drive cars in response to the threat of far stricter fuel economy standards from the federal government.

Concerned that heightened mileage requirements will penalize the automaker for producing new versions of high-performance rear-wheelers, GM is halting all but a few of the vehicles in its future lineup.

Word of GM's change in plans came this week from GM product czar Bob Lutz in an interview with the Chicago Tribune. A GM spokesman confirmed the information on Wednesday.

While GM wouldn't give specifics, the move could mean consumers will never see a rear-wheel replacement for the full-size Buick Lucerne and Chevrolet Impala sedans or a small rear-drive Cadillac compact.

Still in the works, however, are a Chevy Camaro sports coupe due out next year and the Pontiac G8 sedan, which is being developed with GM subsidiary Holden in Australia.

"It says they are making a commitment to maximizing fuel economy and maximizing fuel efficiency, and that makes sense," said Tom Libby, an analyst with J.D. Power and Associates' Power Information Network.

The Bush administration wants to reduce U.S. gasoline usage 20 percent by 2017, in part by raising fuel economy standards an average of 4 percent annually. That would bring cars to an average 34 mpg by 2017, up from 27.5 mpg today. Also, the Supreme Court ruled last week that the Environmental Protection Agency has the authority to regulate cars' carbon dioxide emissions.

Lutz has been a scathing critic of the Bush plan, arguing that such a mandate could add $5,000 to the average cost of vehicles. "It would bring the market to a standstill," he told The Detroit News in an interview last week during the New York Auto Show. "We've pushed the pause button. It's no longer full speed ahead."

Rear-drive uses more gas

Front-wheel drive vehicles became popular alternatives to rear-drive cars during the oil crisis in the 1970s. Rear-drive vehicles typically suck more gas because they are heavier and tend to be tuned for high-performance driving.

GM appears to be the first automaker to shift its product pipeline based on the growing possibility of strict fuel economy mandates, though its crosstown rivals say they're watching fuel economy regulations closely.

Ford Motor Co. spokesman Jim Cain said its plans already are heavy on vehicles that feature fuel-saving technologies. Cain said while the automaker has not announced plans for an all-new rear-drive car, Ford remains interested in the vehicles. Ford will continue producing new versions of its Mustang muscle car.

DaimlerChrysler AG's Chrysler Group, which has spawned several rear-drive vehicles from the Chrysler 300 architecture, on Wednesday said it has no plans to back away from that market. The Auburn Hills automaker has plans to revive the Dodge Challenger muscle car at the end of next year.

"We've had some great success with that architecture," Chrysler Group spokesman Rick Deneau said. Fuel economy regulations aren't "affecting plans for anything we're going forward with."

Instead, he said, Chrysler will focus on improving technology on rear-wheel drives to make them more fuel-efficient. It does, however, plan to ramp up investment in fuel-sipping small vehicles.

"You arrive at a balanced product plan and then you work on the technology to deliver the fuel economy that isn't just what the government requires, but what consumers expect," Chrysler spokeswoman Colleen O'Connor said.

Change of heart seen

GM's decision to put the brakes on rear-wheel drive models is the latest twist in GM's on-again, off-again attraction to the vehicles. Lutz first championed GM's new rear-wheel-drive platform, known as Zeta, in 2003 as the industry was turning its attention toward rear-wheel-drive vehicles. The Chrysler 300C and revamped Ford Mustang were smash hits.

Two years later, though, GM killed plans for a line of rear-wheel drive sedans set to come out in 2008, largely to free up resources to speed up production of new lines of large pickups and sport utility vehicles. But the automaker reversed that decision, laying the groundwork for rear-drive vehicles in several of its brands.

Now, it seems, most of those plans are off. "It's too late to stop Camaro, but anything after that is questionable or on the bubble," Lutz told the Tribune. "We'll decide on our rear-drive cars when the government decides on CO2 levels and CAFE regulations."

While the move is bound to upset some rear-drive loyalists, GM's approach makes sense, said Jesse Toprak, senior analyst with Edmunds.com, an automotive resource tailored for consumers.

"They are prioritizing their resources and putting those funds into next-generation trucks and sport utility vehicles," he said. "They're being forced to do it."

Contact Sharon Terlep at (313)223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Automakers battle states' jurisdiction

2007-04-12T23:09:00.000-04:00

Wednesday, April 11, 2007
Automakers battle states' jurisdiction
GM exec says state carbon reductions affect fuel economy, which is solely federal territory.
David Gram / Associated Press

BURLINGTON, Vt. -- A General Motors Corp. executive told a federal judge Tuesday that vehicle carbon emission reductions ordered by California and 10 other states would require average fuel economy standards for cars and the lightest category of trucks of 43.7 miles per gallon.

"The standards we've had to make changes to in the past are incremental," said Alan Weverstad, executive director of GM's environment and energy unit. Lowering carbon emissions as much as the states want will involve "fuel economy requirements that are just unbelievably extreme," he said.

The testimony came as a federal trial got under way in which automakers are trying to block states from adopting new standards aimed at lowering emissions of carbon dioxide, a greenhouse gas tied to climate change.

The companies argue that reducing carbon requires improving fuel economy, since carbon emissions are proportional to the amount of gasoline burned. And they say fuel economy, under a 1975 federal law, is solely under the jurisdiction of the U.S. Department of Transportation.

The states argue that they can regulate carbon emissions as a tailpipe pollutant under another federal law, the Clean Air Act.

The Vermont case is first in a series expected to be heard countrywide as the auto industry tries to knock down carbon limits. It is also the first since the Supreme Court ruled last week that carbon emissions can be regulated under the Clean Air Act.

Only the Vermont rules are at issue in the case before U.S. District Judge William Sessions III. But Charles Territo, spokesman for the Alliance of Automobile Manufacturers, said whatever its outcome, the case is seen as a bellwether for others around the country.

The trial is expected to last about three weeks.

Weverstad said under questioning that GM had conducted an engineering study called a "maximum technology scenario," in which it hypothetically said 89 percent of the cars it sells in the next nine years and 81 percent of the trucks would be converted to gas-electric hybrids.

Even with such an approach, GM still could not meet the new carbon standards and would waste $25 billion or more on the effort, he said.

Matthew Pawa, a lawyer for the environmental groups, sought through questioning to point out that the industry predicted technological and economic calamity when the Clean Air Act was passed in 1970, when the law requiring fuel economy standards passed five years later and when other regulations were taking effect.

At a noontime news conference two environmental groups sought to expand on that point.

"This is the same old saw of pessimism that we've heard from the auto industry time and again," said Christopher Kilian, director of the Conservation Law Foundation's Vermont office.

© Copyright 2007 The Detroit News. All rights reserved.

GM pulls ads for Imus

2007-04-12T23:07:00.000-04:00

Thursday, April 12, 2007
GM pulls ads for Imus
Show's top '06 sponsor latest to exit over insult
Melissa Preddy / The Detroit News

General Motors Corp. on Wednesday joined the ranks of sponsors pulling ads from the "Imus in the Morning" program following shock jock Don Imus' controversial comments last week about female African-American college athletes.

GM said it will suspend advertising during the Imus show, which originates on WFAN in New York, a CBS Corp. station, and is syndicated nationally. It is also simulcast daily on the MSNBC cable television channel, which announced Wednesday that it will drop its broadcast of the show.

Last year, GM was the top advertising spender at MSNBC overall and during the Imus program, according to TNS Media Intelligence.

"General Motors obviously does not condone the comments Don Imus recently made in reference to the Rutgers University women's basketball team," the automaker said in a statement.

"Mr. Imus has publicly apologized, and admitted his comments were 'completely inappropriate and offensive.' He has also stated his intention to make changes to his show. We acknowledge and welcome these actions. We have decided, however, to suspend our advertising while we continue to monitor the situation."

GM spent an estimated $692,000 buying commercial time during the MSNBC simulcast of the Imus program in 2006, according to TNS. Overall, GM spent $7.95 million with MSNBC. Other top sponsors of Imus include Sprint Nextel Corp., PetMed Express Inc., Verizon Communications Inc. and drug maker GlaxoSmithKline PLC.

Karen Benezra, editor of Brandweek magazine, said GM was tardy in yanking its support of the show.

"Everybody else walked out" Tuesday, she said. "GM stood by an extra day and looks a bit foolish for doing so. As soon as something like this happens most marketers want to fold up their tents."

People speaking for Ford Motor Co. and DaimlerChrysler AG's Chrysler Group said their companies don't advertise during Imus' show, though some of their dealers may independently buy spots in their local markets.

The controversy began April 4, when Imus bantered on the air with producer and sidekick Bernard McGuirk about the Rutgers University women's basketball team, which had lost an NCAA Championship game the night before. McGuirk referred to the women as "hos" and Imus responded by calling the athletes "nappy-headed hos."

The following day, Imus issued a brief apology, but reaction continued throughout the weekend.

On Monday, a visibly shaken Imus offered a longer on-air mea culpa, describing himself as a "good person" who "said a bad thing." That failed to mollify many critics, who pointed to past similarly racist and misogynistic remarks from Imus and his staff.

CBS planned to punish Imus by suspending his program for two weeks starting Monday.

GM said it will continue to support Imus' charitable efforts, which include work with children with cancer or autism. GM spokeswoman Ryndee S. Carney said GM has donated vehicles for use at the Imus Ranch, a nearly 4,000-acre cattle station in New Mexico that offers children a "cowboy experience."

© Copyright 2007 The Detroit News. All rights reserved.

GMC Sierra 1500 is made with rural America in mind

2007-04-09T04:07:00.000-04:00

March 3, 2007
2007 GMC Sierra 1500
General Motors
Weekend Drive
GMC Sierra 1500 is made with rural America in mind
By Warren Brown / The Washington Post

LURAY, Va. -- The thermometer showed 24 degrees Fahrenheit. It felt like zero. Cold winds swept down from Hawksbill Mountain, the tallest peak in Shenandoah Valley National Park. With the winds came snow flurries, which seemed to last longer than flurries should.

It was beautiful in the way that nature is beautiful when you accept its power, when you realize that the idea of conquering it is man's folly. We climbed back into the 2007 GMC Sierra 1500 extended-cab pickup. We proceeded cautiously. It mattered not that the Sierra is among the most robust of pickups available, a body-on-frame leviathan equipped with a big V-8 engine and four-wheel drive.

All along Interstate 81 and adjoining roads was plenty of evidence of what happens when drivers of four-wheel-drive and all-wheel-drive vehicles assume that man's technological savvy is capable of trumping ice. The ice wins, canceling traction and throwing vehicles off the road, or tragically tumbling them and their occupants onto their heads and into oblivion.

I have a theory about big pickup trucks and why there are so many of them in places such as Luray and the swamp and bayou towns of my home state, Louisiana. Trucks are practical. They carry and pull lots of stuff, much of it heavy and unglamorous. Terrain and weather in those regions often are challenging. Two-wheel-drive wimpmobiles don't measure up to conditions. And most of the people in those areas are workers, people who turn wrenches, plant fields, lift bales and use hammers and saws as part of their daily regimen. They need vehicles that work as hard as they do.

But, in a way, those rural truck drivers and owners are as much victims of automotive illusion as their paper-pushing, word-processing cousins in the city, where sports cars, luxury sedans, and super-bling sport-utility vehicles reign.

Cars and trucks are more than the sums of their parts. They have a meaning far beyond themselves. The city slicker in the high-end sedan is telling the world that he or she has arrived, if only at an elevated place in his or her own mind. The owner of a pickup truck in small-town America is declaring his or her just-folks status -- a sort of down-to-earth ruggedness, an awareness that getting close to nature also means getting dirty, dented and scratched, a belief that only trucks are worthy of that bruising communion.

That is why there are so many pickup trucks in rural and small-town America.

Luray and similar towns constitute the America that General Motors is wooing with its big-muscled Sierra 1500. It is the America that Ford is going after with its F-Series pickups, and that Nissan is trying to claim with its Titan pickups, and that Toyota is pursuing with its broad-shouldered, giant-braked Tundra CrewMax.

That America is not going away anytime soon. As long as it remains, the War of the Pickups will rage. With its GMC Sierra 1500 and several other models, GM is hoping to win with a combination of power and common sense, finesse and brutality.

The GMC Sierra 1500, for example, uses a GM technology called "active fuel management.' It is a computer-assisted system that shuts off four of the engine's eight cylinders at moderate speeds, or when the truck is carrying nothing except the driver and a passenger or two. At higher speeds and with heavier loads, when more power is needed, all eight cylinders go to work. The upshot is a full-size, four-wheel-drive truck that can complete a 400-mile round-trip journey, including several side-road diversions, with 120 miles worth of regular unleaded gasoline left in its 26-gallon tank.

In the past, GM seemed to care little about the wide seams between panels in its pickup trucks, or about mundane materials and interior layouts of those vehicles. The seams in the new GMC Sierra 1500 are tight. Interior materials are high quality. And although the passenger cabin still bespeaks "work truck,' it is much more attractive and comfortable than the cabins of any of its predecessors.

It is a likable truck, which is why, I suppose, there are so many of them running around rural Virginia. It fits well with the landscape of the Shenandoah Valley.

Luray, Va., and similar towns constitute the America that General Motors is wooing with its big-muscled Sierra 1500.

2007 GMC Sierra 1500

Complaints: This is a high-rider, which is no problem for people long of leg. But ingress and egress can be challenging for short-legged types. Also, the four-speed automatic transmission should be replaced by a more fuel-efficient five-speed or six-speed model.

Ride, acceleration and handling: It is a full-size pickup truck that rides and handles like a pickup truck. People desiring something gentle and sedan-like should shop elsewhere. Acceleration is good, meaning that the GMC Sierra 1500 has no problems entering freeways or changing lanes.

Head-turning quotient: It's a pickup truck. Sexy doesn't get it in this league. Power does. It looks powerful.

Body style/layout: The GMC Sierra 1500 extended cab is a front-engine, body-on-box-frame pickup with two full side doors and two smaller rear access doors. It is available in rear-wheel drive or four-wheel drive, either with a short, intermediate or long cargo bed.

Engine/transmission: The tested model had a 5.3-liter V-8 that develops 315 horsepower at 5,200 revolutions per minute and 338 foot-pounds of torque at 4,400 rpm. The engine employs a computerized cylinder deactivation system to save fuel when running at moderate speeds and pulling light loads. The engine is linked to a four-speed automatic transmission.

Capacities: There is seating for six. Maximum payload is 1,564 pounds. It can be equipped to tow up to 8,600 pounds. Fuel capacity is 26 gallons of recommended regular unleaded gasoline.

Mileage: With driver and one passenger, and carrying no cargo, or pulling no trailer, we averaged 21 miles per gallon traveling at posted speed limits.
Safety: Head air bags are optional. Side air bags, electronic stability control and traction control were not available at this writing.

Price: Base price on the 2007 GMC Sierra 1500 extended cab pickup truck with four-wheel-drive and short bed is $31,795. Dealer's invoice price on that model is $29,092. Price as tested is $34,300, including $1,605 in options (remote vehicle starter system, heated power-adjustable mirrors, heated windshield-wiper fluid system, high-performance suspension) and a $900 destination charge. Dealer's price as tested is $31,324. Prices sourced from General Motors and www.edmunds.com.

Purse-strings note: Compare with Ford F-150, Dodge Ram 1500, Nissan Titan and Toyota Tundra.

© Copyright 2007 The Detroit News. All rights reserved.

Chevrolet offers 40 styles of Silverado

2007-04-08T15:41:00.000-04:00

April 7, 2007
2007 Chevrolet Silverado
Weekend Drive
Chevrolet offers 40 styles of Silverado
By Richard Williamson / Scripps Howard News Service

If you don't like multiple choice questions, don't shop for a truck.

After you've narrowed the field to a brand of full-size pickup, the selection of dimensions, capacity, price and power can seem nearly endless.

Chevrolet offers 40 styles of Silverado in a huge price range of $17,860 to $34,895. Major variables include cab size, box proportions and rear-wheel or 4-wheel-drive. A light hybrid version is even available in some states.

And that's just for the half-ton Silverado 1500. Heavier duty 2500 and 3500 three-quarter ton and one-ton versions have their own permutations.

Options are also multitudinous. A Silverado 1500 Crew Cab LT2 that I drove for a week came with six major option packages and sundry incidentals, lifting the price from a $31,840 base to $37,370 after the $900 destination charge and a $675 discount.

For cargo, check the box you most prefer: the short one at 5-foot-8 inches; the standard 6-foot-6 incher; and the long 8 footer.

Built on a new full-size truck platform that includes the sibling GMC Sierra, the 2007 Silverado features a fully boxed frame, coil-over-shock front suspension and rack-and-pinion steering. The track is about 3 inches wider in front and 1 inch wider in the rear.

Chevrolet claims a top towing capacity of 10,500 pounds and a maximum payload of 2,160 pounds, depending on how the truck is configured.

If you don't feel you've been offered enough choices, Chevy provides five suspension systems for different needs: Z83 for general use;

Z85 for better trailer towing; Z71 for off-road demands; Z60 for best street performance; and NHT for maximum towing capacity.

Oh, yeah, engines. There are seven of them, starting with the 4.3 liter, 195-horsepower V6 and rising to the 6-liter, 367-horsepower V8.

Between them are versions of 4.8-liter and 5.3-liter V8s, some of which run on alternative E85 fuel.

With pump prices wreaking havoc on the full-size truck market, GM is pitching improved fuel economy in the new Silverados. The 5.3-liter V8 in the review truck got 16 miles per gallon in the city and 22 on the highway for an estimated annual fuel cost of $2,210. That's not the kind of fuel economy that will win kudos from Friends of the Earth, but for a 5,061-pound truck, it's not bad.

In terms of performance, the 5.3-liter V8 provided strong responses, operating through a four-speed automatic transmission. On one freeway entrance ramp, the Silverado was able to scoot briskly into the merge lane ahead of a semi that didn't seem to be slowing down.

While the 315 horsepower is healthy, the 338 foot-pounds of torque is where the Silverado earns its credibility as a cargo hauler.

Since trucks no longer serve as work vehicles exclusively, they often must qualify as family transporters and luxury vehicles for a night on the town. Certainly, the new Silverado qualifies, especially with its load of options.

Three interior trim levels, WT, LT and LTZ offer varying levels of luxury.

The instrument panel in the LTZ trim level is 5 inches lower and farther forward than the previous model's. The WT and LT trim feature an instrument panel that is 3.5 inches lower and farther forward.

WT and LT trim features larger controls and door handles that are easier to use with gloves. A large-capacity, double glove box is built into the instrument panel. Cloth seats are standard on WT and LT models, but leather seating is available on LT trim, along with a six-way, power-adjustable driver seat.

A lockable in-seat storage bin is built into a new 40/20/40-split bench and is large enough to store a laptop computer. The bin also comes with a 12-volt power outlet.

LTZ models have a larger center console and other special trim. A heated, 12-way, power-adjustable leather driver seat is standard, along with a six-disc CD/MP3-capable audio system, Bose speaker system and heated windshield washer system.

Crew cab LTZ models add rain-sensing automatic windshield wipers, a rear-seat audio system and large glove box. LTZ interior color schemes include Ebony, Dark Titanium/Light Titanium and Ebony/Light Cashmere combinations.

GM improved the rear seats for crew cab and extended cab models with more supportive cushion material, firmer support and better seat back angles.

Extended cabs offer more legroom.

Crew cabs come with stadium-style rear seats with a 60/40-split design and folding center armrest. The seats can be folded up to add cargo space individually or together.

Designers improved access to the rear seats and cargo area with doors that swing out to 170-degree angles. A power sliding rear window is available on extend cab and crew cab configurations with LT and LTZ trim levels.

While the Silverado and GMC Sierra are essentially fraternal twins, the Sierra is considered slightly more luxurious. So, you might want to take a look at that model.

Or is that one choice too many?

Richard Williamson writes about automobiles for Scripps Howard News Service.

Details: Chevrolet Silverado

What's new: All new platform for 2007 model, wider stance, improved access, improved fuel economy
Pluses: Range of sizes, capacities, power, prices; comfort; capacity
Minuses: Fuel economy, maneuverability
Bottom line: Benchmark for 2007, but Toyota Tundra is close behind

© Copyright 2007 The Detroit News. All rights reserved.

Can Jerry York Save GM?

2007-04-08T03:31:00.000-04:00

Friday, April 06, 2007
From the archives: Feb. 12, 2006
Can Jerry York Save GM?
Ace cost-cutter ratchets up pressure for major changes
Bill Vlasic / The Detroit News

DETROIT -- In the 1980s, it was a feisty Texan named Ross Perot who rattled the board of General Motors Corp. by calling his fellow directors "pet rocks" in the pocket of management.

A decade later, retired Procter & Gamble Co. Chairman John Smale led a board-room coup that toppled a GM chairman and set a new standard for corporate governance.

But no outsider ever joined the GM board with the expectations attached to Jerry York.

The appointment to the board last week of York, the ace cost-cutter employed by billionaire investor Kirk Kerkorian, is a pivotal event in one of the most tumultuous periods in GM history.

York is the wild card as GM prepares to undergo a restructuring that will slash tens of thousands of jobs, freeze pensions and benefits and possibly determine the survival of the world's largest automaker.

"One thing about Jerry -- you have got to pay attention to him," said David Cole, director of the Center for Automotive Research in Ann Arbor.

Already, York has influenced GM to slash its dividend in half and cut the salaries of its top executives and board members. But GM insiders know there's more to come from the 67-year-old former finance chief of Chrysler Corp. and IBM Corp.

Wagoner sees positives

The question was posed to Rick Wagoner by one of 200 GM executives attending a high-level internal briefing Thursday: What impact will York have on their company?

Wagoner, GM's embattled chairman, played it low-key, saying York will "add value" because he "knows the business."

But at least one GM exec said York's arrival has clearly ratcheted up the pressure inside GM headquarters. "Inside the company, things are very tense," said the executive, who spoke on condition of anonymity. "There is a contingent that says York is a good thing if he can accelerate change. (But) there is a healthy fear."

With speculation mounting on Wall Street and in the media that GM is headed toward bankruptcy, York comes aboard with a reputation as a hard-as-nails veteran of corporate turnarounds with no ties or loyalties to GM's past.

In a symbolic changing of the guard, he took a board seat vacated by Merrill Lynch Chairman Stanley O'Neal, who worked on a GM assembly line as a teenager, launched his career in GM's treasurer's office and is married to a former GM financial analyst.

"It's as big a shock that O'Neal is out as it is that York is in," said Gerald Meyers, a management consultant and former chairman of American Motors Corp. "Jerry is a change agent in a situation where change is necessary and appropriate."

O'Neal reportedly left because of possible conflicts of interest and a lack of time.

York has defused his own potential conflict by agreeing not to disclose confidential GM information to Kerkorian, GM's fourth-largest shareholder with a 9.9 percent stake in the company.

A call for sacrifice

Moreover, York has wasted no time in making his presence felt on GM's management and its board.

His speech to auto analysts in Detroit on Jan. 10 appealed directly to the United Auto Workers, who are deep in negotiations with GM about health care, downsizing and the fate of workers at bankrupt Delphi Corp.

York predicted little progress could be made with the UAW unless GM showed a spirit of shared sacrifice, namely a dividend cut for investors and lower salaries for Wagoner and his top deputies.

"Historically, GM has been the most tone-deaf of the auto companies when it comes to labor issues," said Harley Shaiken, a labor professor at the University of California-Berkeley. "But York is speaking plainly and directly about critical issues between GM and the UAW."

Pushing GM to cut the dividend and executive pay was important in the context of pivotal contract talks between GM and the UAW in 2007, Shaiken said.

"Doing that doesn't necessarily make the 2007 negotiations easier," he said. "But not doing it would have made them far more difficult."

Plain-spoken, direct, to the point -- that's York. A former West Point cadet, he's a throwback to "bean counters" of the past -- blue blazers and white shirts, wire-rimmed glasses and a tattered briefcase, an unrepentant smoker who drives an aged Jeep bought with his Chrysler employee discount.

His intensity was legendary at Chrysler, where as a young analyst York once passed out in a meeting after working around the clock, fueled by cigarettes and coffee. At IBM, he rigged a snowplow to his Ram pickup during a blizzard to make sure he was at his desk before 8 a.m.

"I've known Jerry a long time, and he isn't a guy who sits back, or tries to 'get along' with everybody," said Meyers. "He's a pleasant enough fellow, but if he's unhappy about something he's going to blurt it out."

Wherever he has been, whether it be Chrysler, IBM or Apple Computer Inc. -- where he has been a director since 1997 -- York has helped deliver shareholder value.

The prescription he laid out for GM's turnaround on Jan. 10 was characteristically blunt.

"Time is of the essence," York said. "A 'sense of purpose' needs to be generated to galvanize the organization."

York has declined interview requests since joining the GM board last week. According to people familiar with his plans, York will spend the next four to six weeks combing through GM's operations for ways to cut costs and improve the business.

York plans deep dive

York will serve on the GM board's Public Policy Committee and Investment Funds Committee and should have wide access to internal company information.

In private comments to one acquaintance, York said he plans to "root around and find out what's not being exposed" in GM's vast North American business units.

People who know York expect him to move fast.

"We're in a time where the clock is moving much more quickly on GM," Cole said. "I think they're fortunate to have Jerry because this thing is going to be played out in the next six months, not the next five years."

York joins a GM board led by former Eastman Kodak Co. Chairman George Fisher as the "lead director" and composed of corporate executives with minimal experience in the automotive industry.

Historically insular and nonconfrontational, the GM board was shaken up in 1984 when Perot became a director after selling his company, Electronic Data Systems, to GM for $2.5 billion in stock.

A classically opinionated entrepreneur, Perot clashed early and often with GM Chairman Roger Smith. His biting assessments of GM's culture were considered heresy at the time. "If you see a snake, kill it," Perot once quipped. "Don't appoint a committee on snakes."

But after two years of verbal warfare, Smith had had enough. He bought out Perot's GM stock, and the diminutive Texan left the board.

In 1992, Smale became the next outsider to put his stamp on the board. Smale was the polar opposite of Perot -- a dyed-in-the-wool corporate executive from tradition-bound Procter & Gamble. But when GM teetered near bankruptcy, Smale marshaled other directors to oust Chairman Robert Stempel and install a new management team.

York brings a bit of both men's qualities to the GM of 2006. He combines the candor and independence of a Perot, with the Fortune 500 credentials and experience of Smale. Unlike them, York spent 30 years in the auto industry, having worked for Chrysler, GM and Ford Motor Co. at various times in his career.

"He's different than Perot and Smale because he does know the business and he's been close to it for a long, long time," Cole said. "Jerry is a disciplined guy. His intent is not to blow the place up."

Nose under the tent

But patience is hardly a quality associated with York.

He first advised Kirk Kerkorian in the mid-1990s when the casino mogul was the largest shareholder in Chrysler. In 1996, York used the threat of a proxy fight to get Chrysler management to approve a stock repurchase plan favored by Kerkorian.

When Kerkorian asked him last March to look into GM, York dug deep and produced a detailed report on the automaker's strengths and weaknesses. Last fall, with GM reeling from huge third-quarter losses, York began pressing for a board seat.

Talks broke down late last year, but York didn't back off. He went public in mid-January with his speech at the Detroit auto show, and waited for GM to respond.

It didn't take long. At their next meeting on Feb. 6, GM's directors voted to appoint York to the board. Now, the question on the minds of everyone at GM is what York does next -- and when he does it.

"York is on the inside now," said Ralph Ward, publisher of the newsletter Boardroom Insider. "Now that the camel has his nose under the tent, it's a whole new ballgame."

You can reach Bill Vlasic at (313) 222-2152 or bvlasic@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Key autos fail whiplash test

2007-04-07T22:50:00.000-04:00

Thursday, April 05, 2007
Key autos fail whiplash test
Restraints didn't prevent neck injuries in rear crashes
Ken Thomas / Associated Press

NEW YORK -- Head restraints in several passenger vehicles provided marginal or poor protection against neck injuries and whiplash, the insurance industry reported Thursday in new crash test results.

Only 22 of 75 vehicles tested in a simulated rear crash at 20 miles per hour received the top score of good from the Virginia-based Insurance Institute for Highway Safety.

The best

Among the top vehicles for head protection, according to the Institute's testing, were the Audi A4, A6 and S4; Chevrolet Cobalt; Ford Five Hundred and Mercury Montego; Hyundai Sonata; Jaguar S-Type; Kia Optima; Mercedes E-Class; Nissan Sentra and Versa; Saab 9-3; Subaru Impreza, Outback and Legacy; Volvo S40, S60 and S80; Honda Civic 2-door and 4-door versions; and some versions of the Volkswagen New Beetle.

"People think of head restraints as head rests, but they're not. They're important safety features," said Adrian Lund, the institute's president. "You're more likely to need the protection of a good head restraint than the other safety devices in your vehicle because rear-end crashes are so common."

The institute estimates that neck injuries account for 2 million insurance claims annually costing at least $8.5 billion.

The worst

Several 2007 vehicles got the lowest score of poor in the tests. The vehicles include: Acura TSX; some versions of the BMW 5 Series; Buick Lacrosse and Lucerne; Cadillac CTS, STS and DTS; Chevrolet Aveo; Pontiac Grand Prix; Honda Accord and Fit; Hyundai Accent; Infiniti M35; Jaguar X-Type; Kia Rio; Mitsubishi Galant; Toyota Avalon and Corolla; and the Suzuki Forenza and Reno.

Bill Kwong, a Toyota spokesman, said the test does not take into account other aspects of a vehicle's response to a crash under normal driving conditions, such as the vehicle's structure, rear crumple zones and bumpers.

"We feel our in-house procedures are good predictors of how it will perform in the real world," Kwong said.

General Motors said it designs head restraints "to meet a variety of driver sizes rather than focusing on a single set of metrics. Head restraints are part of the integrated approach to occupant protection in all GM vehicles."

The cars were tested on a crash simulation sled, replicating forces in a stationary vehicle struck by a similar vehicle at 20 mph.

© Copyright 2007 The Detroit News. All rights reserved.

UAW President Talks Tough

2007-04-07T02:58:00.000-04:00

UAW President Talks Tough
March 28, 2007 08:14 AM EST

DETROIT (AP-WANE) -- UAW President Ron Gettelfinger warns companies not to misinterpret the union's past cooperation as a sign of weakness in contract talks.

Gettelfinger says the union would fight at the bargaining table, in court, politically and on the picket line.

Gettelfinger also says he's tired of "playing games" with Delphi Corporation.

He's vowing that the union will strike the struggling auto-parts maker if it goes ahead with plans to void its labor contracts in court.

His comments came Tuesday in Detroit as 1,500 union members, including Jime Zent of Fort Wayne's Local 2209, kicked off a two-day meeting to set the bargaining agenda in upcoming talks. Meanwhile, about 20 union members and retirees picketed outside the convention center in protest of UAW concessions made to domestic automakers.

GM, Chrysler and Ford are expected to demand major concessions from the UAW in upcoming talks. Health care costs, wages, work rules and the jobs bank are at issue.

(Copyright 2007 by The Associated Press. All Rights Reserved.)

All content © Copyright 2000 - 2007 WorldNow and WANE. All Rights Reserved.

Auto emissions ruling could cost Big Three

2007-04-05T23:02:00.000-04:00

Tuesday, April 03, 2007
Auto emissions ruling could cost Big Three
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The U.S. Supreme Court dealt a serious blow to automakers Monday when it ruled that the Bush administration must reconsider whether to regulate auto tailpipe emissions.

The decision comes as pressure is building on automakers and Congress to reduce global warming by cutting carbon dioxide emissions from vehicles through higher fuel economy standards, a move that could cost the auto companies billions of dollars.

The 5-4 decision requires the U.S. Environmental Protection Agency to revisit its 2003 decision to reject requests by several states to limit carbon dioxide emissions. The EPA said it had no authority to regulate emissions under the Clean Air Act.

While Monday's ruling does not require the EPA to regulate emissions "as a pollutant," it makes it clear that the agency must come up with a better reason for not doing so than it has thus far.

The decision is likely to boost efforts by California and other states to require significant reductions in carbon dioxide emissions, which have been linked to global warming.

Automakers took some comfort from a section of the high court's decision that suggested states might not be successful in pre-empting federal rules. But even Republicans said the landmark decision meant new auto emissions rules are almost certain.

Ann Klee, a former EPA general counsel in the Bush administration, said the decision "will dramatically change the regulatory landscape for decades to come, laying the groundwork for far-reaching new air standards based on potential global climate change."

Climate change and automakers' contribution to it through fuel use has quickly become one of the greatest and potentially most expensive regulatory issues to confront the auto industry.

Automakers are already facing the prospect of tougher fuel economy regulations proposed by President Bush as part of his plan to cut gasoline consumption 20 percent by 2017. The goal amounts to a 4 percent annual increase in fuel economy that could cost automakers as much as $114 billion, with Detroit's Big Three accounting for about $85 billion. The companies have argued tailpipe emissions requirements could add $3,000 to the price of a car.

There is increasing concern in Congress and among the public over the rising level of carbon dioxide in the Earth's atmosphere -- which is up from around 316 parts per million in 1959, the highest in the last 420,000 years.

By 2006, it was 382 parts per million "a level thought to exceed the concentration of carbon dioxide in the atmosphere at any point over the past 20 million years," the court wrote Monday.

Even U.S. Rep. John Dingell, D-Dearborn, who chairs the powerful House Energy and Commerce committee and is an auto industry ally, conceded the court's decision was shifting the debate.

It "provides another compelling reason why Congress must enact, and the president must sign, comprehensive climate change legislation," Dingell said.

Dingell is attempting to write a bill the auto industry can live with, in part, by spreading the pain across industries, amid intense pressure from liberals in Congress.

"This decision is a major turning point in our nation's fight to protect future generations from global warming," said Abby Rubley, field director for Environment Michigan. "For six years, the Bush administration has toed the oil, coal and auto industry line on global warming, but this is their day of reckoning."

Justice John Paul Stevens, writing for the majority, said the harms from climate change "are serious and well recognized. Reducing domestic automobile emissions is hardly a tentative step."

"EPA has offered no reasoned explanation for its refusal to decide whether greenhouse gases cause or contribute to climate change," Stevens wrote. The agency "can avoid taking further action only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion."

Justice Antonin Scalia ridiculed the majority decision. By the majority's reasoning, "it follows that everything airborne, from Frisbees to flatulence, qualifies as an 'air pollutant,' " he wrote in his dissent.

Chief Justice John Roberts filed a dissent noting that U.S. automakers' emissions could be swamped by increases in other countries and that there is simply too little connection between autos and what might happen a century from now.

He characterized vehicle emissions as playing a "bit part" in what the petitioners who brought the case "describe as a 150-year global phenomenon."

U.S. automobiles account for 6 percent of global man-made carbon dioxide emissions -- and 4 percent of greenhouse gas emissions.

Vehicles emit 315 million metric tons of carbon dioxide in the United States each year -- about 20 percent of U.S. carbon dioxide emissions.

The Alliance of Automotive Manufacturers, a trade group that represents General Motors Corp., Ford Motor Co., DaimlerChrysler AG and Toyota Motor Corp., among others, said Congress should adopt economy-wide greenhouse gas regulations.

The automakers "believe that there needs to be a national, federal, economy-wide approach to addressing greenhouse gases," said Dave McCurdy, president of the trade association.

Mike Stanton, president of the Association of International Automobile Manufacturers, acknowledged how fast the debate is moving. "There's growing momentum to regulate greenhouse gases," he said. "Whether Congress can agree on a proper course of action is something else."

At issue in the case decided Monday was Massachusetts' claim that its coast is at risk of falling into the sea over the next century because of global warming.

The court ruled that the EPA had failed to properly exercise its regulatory authority over emissions or to adequately explain why it should not regulate them.

Massachusetts isn't alone. California also wants to regulate vehicle emissions. In 2004, the state mandated a 25 percent reduction in carbon dioxide emissions by 2016, saying it would hike the cost of vehicles by $1,000 per car. The European Union is considering a similar regulation that it says could add nearly $5,000 to the price of a new car.

Under the Clean Air Act, states may adopt the California tailpipe emissions standards in lieu of the weaker federal standards. Maryland is expected to become the 11th state to do so this week.

The first such challenge, lodged by carmakers to Vermont's adoption of California's tailpipe rules, is set for trial April 10 in Burlington.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Spring Hill Saturn plant will produce new vehicle

2007-04-05T22:13:00.000-04:00

Friday, March 30, 2007
Auto briefs
Spring Hill Saturn plant will produce new vehicle

General Motors Corp . told employees at a Spring Hill, Tenn., plant that the factory will get a new product to replace two Saturn models whose production ends today. The employees were informed of the change in a routine meeting Thursday, GM spokesman Dan Flores said in an interview.

Dana Corp. will sell hose, tubing business

TOLEDO, Ohio -- Dana Corp . agreed to sell its fluid-products hose and tubing business, including a facility in Rochester Hills, for $70 million to a Turkish firm as it sheds operations while under bankruptcy protection.

Shanghai Auto doubles its 4th-quarter profits

SHANGHAI, China -- Shanghai Automotive Co . more than doubled its fourth-quarter profit after it bought stakes in General Motors Corp . and Volkswagen AG ventures. Net income rose to 595 million yuan ($80 million) in the three months ended Dec. 31 Shanghai bought 19.1 billion yuan of assets from its parent including stakes in ventures with GM and Volkswagen.

Detroit News wire reports.

© Copyright 2007 The Detroit News. All rights reserved.

UAW ranks fall to post-WWII low

2007-04-05T22:11:00.000-04:00

Saturday, March 31, 2007
UAW ranks fall to post-WWII low
By end of '06, 19 locals closed, membership fell to 538K mostly due to plant closings, but Gettelfinger says there are now 500K after '07 buyouts.
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The United Auto Workers lost nearly 19,000 members in 2006, dropping the union's ranks to a new post-World War II low.

Membership through the end of December fell 3.4 percent to 538,448, a loss of 18,651 members compared with 2005, according to the union's annual report filed Friday with the U.S. Department of Labor.

While that's a smaller decline than the 11 percent membership drop in 2005, it may not reflect the union's true losses because so many workers who took buyouts and early retirement offers from struggling Detroit automakers left the companies early this year.

UAW President Ron Gettelfinger told Congress this month that the union now has about 500,000 members. Since the end of 2004, the UAW has lost 116,000 from its ranks, according to the union.

UAW membership is dropping as U.S. automakers downsize to better compete with Asian manufacturers claiming an ever-bigger share of the U.S. car and truck market. The ripple effects are being felt throughout the supplier community as well.

"The news is going to get worse before it gets better," said Gerald Meyers, former chairman of American Motors Corp. and a University of Michigan business professor. "The bleeding has not stopped and it's not going to stop anytime soon. The downsizing of GM, Ford and Chrysler. It's not over. Their shrinking is not done."

A UAW spokeswoman declined to comment on the figures in the annual report. She said the union believes a more accurate measure is its average monthly membership total, which was 576,131 in 2006, down about 22,000 compared with 2005.

As the union shrinks, it is closing some of its 800 locals around the country.

Reports filed in recent weeks show that at least 19 UAW locals closed in 2006 -- many in small towns where the union hall is a hub of community life -- as manufacturing plants closed across the country.

The losses are not limited to the auto industry. A UAW plant that made ladders in Kentucky closed as did a farm and construction equipment plant in Illinois and a Texas plant that made refrigerated cabinets.

When the union locals for these plants closed, auditors from UAW headquarters were often required to sign the termination documents, since the local officers were no longer around.

UAW Local 358 with 150 members in North Manchester, Ind., shut its doors in February after the "plant closed and the work moved to Mexico," its termination report said. Last year, Invensys Plc. closed its plant there that made motors for dishwashers and washing machines.

At least three locals closed in Michigan, including Local 247 in Sterling Heights after TRW Automotive Holdings Corp., closed a 50-year-old factory last summer, displacing more than 100 UAW workers.

Local 425 with 700 workers closed in Lorain, Ohio, when Ford Motor Co. shut its assembly plant there in December 2005.

After supplier Lear Corp. shut its Covington, Va., plant that made injection-molded door panels and trim for automobile interiors and its Winchester, Va., plant, Local 2389 shut its doors. Lear's closing of a western Michigan plant prompted the closing of UAW 1231 in Comstock Park.

The membership decline follows auto and auto parts plant closings in 2006, as well as more than 70,000 buyouts and early retirements accepted by UAW members at Ford, General Motors Corp. and its former parts unit, Delphi Corp.

Delphi wants to close 21 of its 29 U.S. plants. Ford and GM want to close a combined 26 plants by 2012. And DaimlerChrysler AG's Chrysler Group plans to close an SUV plant in Newark, Del., in 2009, and cut shifts at other factories in a restructuring that will slash 9,000 U.S. union jobs.

UAW membership peaked in the late 1970s at 1.5 million and has largely declined since.

To reverse membership losses, the union has made organizing a priority and has picked up a few hundred members in various industries. It has had success in organizing casino employees, for example, and won the right to represent dealers at Caesers Atlantic City casino this week. Dealers will vote today whether to join the UAW at Trump Plaza in Atlantic City, N.J. And Friday, Trump Marina Hotel Casino workers sought UAW certification.

The UAW will also hold a meeting in Lexington, Ky., today, where some Toyota Motor Corp. workers will speak about working conditions in Toyota's Georgetown, Ky., plant. The UAW has unsuccessfully sought to organize auto plants opened by foreign auto companies.

"The UAW did not drive the Detroit Three into the ditch, but they are paying the price," said Harley Shaiken, a labor relations professor at the University of California, Berkeley. "Until the industry halts its slide, the UAW is going to be in for some rough sledding."

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

GM execs won't get cash bonuses this year

2007-04-02T00:42:00.000-04:00

Thursday, March 29, 2007
Auto briefs
GM execs won't get cash bonuses this year

General Motors Corp . Chief Executive Officer Rick Wagoner and other top executives won't get cash bonuses for the second straight year after the world's largest automaker failed to stem losses. The decision, following more than $12 billion in losses in 2005 and 2006, affects about 20 executives, spokeswoman Renee Rashid-Merem said Wednesday. She didn't say why GM isn't making the payments.

Ford division donates $100K for cancer fight

Ford Motor Co.'s customer service division will donate $100,000 to the Susan G. Komen Breast Cancer Foundation's Race for the Cure on behalf of its Ford and Lincoln Mercury dealerships' service customers during April's National Car Care Month. Ford is a major sponsor of the foundation's work through its Warriors in Pink initiative, which raises funds through the sale of specially designed apparel. Ford has dedicated more than $87 million in cash and in-kind donations to the foundation over the past 12 years.

© Copyright 2007 The Detroit News. All rights reserved.

UAW says Delphi's offer falls 'far short'

2007-04-02T00:38:00.000-04:00

Thursday, March 29, 2007
UAW says Delphi's offer falls 'far short'
Sources say talks will continue among union, supplier, investors to reach labor deal.
Louis Aguilar and David Shepardson / The Detroit News

DETROIT -- Although the United Auto Workers rejected the latest wage-cutting proposal from Delphi Corp. and a group of investors that wants to buy a majority stake in the bankrupt supplier, sources close to the situation said Wednesday that negotiations will continue.

UAW Vice President Cal Rapson, the union's chief bargainer for Delphi and former parent General Motors Corp., confirmed that the union had rejected the deal Monday.

"It was far short of anything we can take to our membership," Rapson said Wednesday in an interview on the sidelines of the UAW's bargaining convention at Cobo Center.

A group of private equity investors led by Cerberus Capital Management LP and Appaloosa Management LP want to invest up to $3.4 billion in Delphi, which would allow the supplier to emerge from bankruptcy as a new company with a new owner. But the deal hinges on hammering out a labor deal.

Rapson declined to specify the union's objections to the rejected proposal.

"It was wages, benefits, the amount of jobs, the job security, everything," he said. "We took that agreement, we took it to our actuaries, thoroughly reviewed it, sat down with (UAW President Ron Gettelfinger) Monday and we rejected it."

Without a new labor deal to complete the investor deal, Delphi could ask the bankruptcy court to void its labor contracts.

Gettelfinger, who said Tuesday he is willing to strike if Delphi convinces the court to do that, told reporters Wednesday he "has no idea" whether Delphi will come back with an offer the union can accept. "They had a 29-page proposal -- that's stupid," he said. "They are out of their minds."

Delphi spokeswoman Claudia Piccinin said Tuesday Delphi remains "committed to reaching consensual agreements."

Two people close to the negotiations say Delphi and its equity partners made a first proposal to the UAW around March 10, and then offered a more detailed and more generous 29-page proposal on March 21.

The second proposal includes "escalation clauses" that would raise wages every six months if certain benchmarks are met, but it's not clear what wage was offered or how much the concessions would cost UAW members. The UAW has not made a formal counterproposal to either offer.

All sides have agreed to extend the talks beyond April 1, according to sources familiar with the situation. "This is really complex -- essentially a three-ring circus," one of the sources said.

That person also said Delphi's decision to seek recently granted court approval of $37 million in bonuses to help retain as many as 440 high-level employees made little sense at a time when Delphi is seeking dramatic concessions from the UAW.

Rapson also criticized the bonuses. "Same guys who put them in Chapter 11 and they say they got to be retained," he said. "And they are dividing up that kind of money while they are asking workers to take big cuts or lose jobs completely."

The sources suggested the UAW was taking a more aggressive public stance to ease the concerns of members who will have to ratify any agreement. The UAW also has an eye on its talks this summer with the automakers.

If the UAW doesn't agree to play ball, Delphi will have to liquidate, said Patrick Anderson, a Lansing economist who has studied Delphi's bankruptcy.

"Almost all those Delphi jobs are going to go down," Anderson said. "And there is no way around serious damage to General Motors."

David Healy, an analyst for Burnham Securities, described Gettelfinger's tough talk on Delphi as the "usual labor-talk rhetoric that always heats up before negotiations."

There remains much room for compromise and he expects GM will wind up supplementing Delphi wages. "Gettelfinger is a realist," Healy said.

Wednesday marked the second day of hard line comments from UAW leaders as the union wrapped up its two-day bargaining convention, where 1,500 delegates approved bargaining guidelines for upcoming labor talks, including key negotiations this summer with Detroit's Big Three automakers.

Gettelfinger also took a tough stance on whether the union will grant further health care concessions, a key goal for each of the auto companies. The four-year contract expires Sept. 14.

"We addressed health care in '05," Gettelfinger said, referring to landmark concessions the union gave to GM and Ford Motor Co. "You don't get two bites at the apple, do you?" he said.

GM spokesman Dan Flores didn't comment directly on Gettelfinger's statements, saying it's not the company's policy to negotiate through the media.

"Based on the magnitude of the cost, health care will continue to be a discussion issue for GM and the UAW," Flores said. "We are looking at a variety of alternatives to address the health care burden. We aren't going to speculate on those options."

DaimlerChrysler AG's Chrysler Corp. and Ford declined comment.

The 103-page resolution passed by the UAW Wednesday shows the union plans to take a realistic and creative approach to future bargaining that takes into account the turbulent economic environment, but will resist givebacks on bedrock issues such as health care, pensions and job protections.

The resolution acknowledges the union has had to make tough decisions in recent years, agreeing to modify wages, health care, pensions and other compensation to preserve jobs. "The coming years will be just as tough -- if not tougher," the resolution states.

You can reach Louis Aguilar at (313) 222-2760 or laguilar@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

UAW members battle low morale

2007-04-01T23:54:00.000-04:00

Wednesday, March 28, 2007
UAW members battle low morale
As Gettelfinger vows to defend wages and benefits, workers fear what Big 3 will do during negotiations.
Louis Aguilar / The Detroit News

DETROIT -- Weariness appears to have set in among even the most faithful members of the United Auto Workers, who say aggressive cost-cutting by their employers is sapping morale and making it tougher to carry out the union's mission.

"We've been fighting for the same issues throughout my 22-year career as a UAW member," said Larry Bates of UAW Local 111, which represents workers at a former Visteon Corp. factory in Indianapolis that is now part of a holding company run by Ford Motor Co., Visteon's former parent.

"But the companies have changed the way they do business," he said. "I'm grateful for the UAW because it's getting more difficult to trust companies."

Bates was among several hundred members of his UAW local who took a cash buyout or early retirement, an increasingly common scenario as Detroit automakers and suppliers cut jobs, decreasing the ranks of active UAW members.

Bates is among 1,500 delegates meeting this week at Cobo Center for a two-day UAW bargaining convention that ends today. Delegates are expected to approve a 103-page proposed resolution that will serve as the union's guiding principles during future contract talks, including negotiations this summer with Detroit's struggling Big Three automakers.

UAW President Ron Gettelfinger, who has been criticized for being too willing to grant concessions as the automakers restructure, set a fiery tone during his opening speech Tuesday, vowing to defend wages, health care benefits and pensions. The union will fight at the bargaining table, in the courts and, "if need be, on the picket line," he said.

"We will do what we have to do Collective bargaining is not collective begging."

While many delegates say they were encouraged by Gettelfinger's speech -- and few turned out to support a pre-convention protest by the UAW dissident group Soldiers of Solidarity -- many also openly expressed anxiety.

"People are scared, and the companies know they have that power over workers," said Chuck Roose, 49, a UAW Local 412 delegate who represents 600 designers and other skilled professionals at DaimlerChrysler AG's Chrysler Group in Auburn Hills.

"Companies are creating a disposable work force by pushing us out and giving the work to non-union contractors or workers," he said.

Roose was among a group of delegates representing a number of companies and UAW locals across the country who are worried that the use of often lower-paid temporary and contract workers will only increase at their facilities.

"It's a different world, it's a different union," said Zane Payne, a General Motors Corp. retiree with UAW Local 10 in Doraville, Ga., where GM is closing a factory as part of its restructuring.

Payne said this year's convention feels different from previous ones because all three Detroit carmakers are entrenched in turnarounds and hoping to wrest concessions from the union. Suppliers are struggling as well.

Delphi Corp. retiree Michael Balls said the UAW should have fought harder to protect jobs after the supplier filed for bankruptcy in October 2005. The union subsequently agreed to a deal to offer Delphi workers cash buyouts or early retirement to help trim thousands of jobs. Balls, a skilled trades worker, retired earlier than would have been ideal because he felt his job wasn't secure. "They should have stuck it out and fought harder," he said.

Some delegates feel sections of the proposed bargaining resolution are too soft.

"We need to have a much stronger stance," said Daniel G. Bennett of UAW Local 122, which represents Chrysler workers at a stamping plant in Twinsburg, Ohio.

He doesn't want to see two-tier wages, which the UAW has agreed to for new hires at some auto suppliers, become standard practice at auto assembly plants.

"If we are equal," he said, "then we are equal across the board."

Separately, Canadian Auto Workers President Buzz Hargrove said he will meet with Gettelfinger Thursday at UAW headquarters in Detroit. Hargrove said he initiated the meeting to discuss challenges facing domestic automakers in the intensely competitive North American market.

Hargrove expects Chrysler's future to be discussed. Hargrove and Gettelfinger have said they oppose a sale, which has been a possibility since DaimlerChrysler CEO Dieter Zetsche said that all options are on the table for the automaker's money-losing U.S. unit.

"I don't anticipate a common strategy, but who knows what will happen?" Hargrove said of the pending meeting.

Hargrove also said his assistant, Bob Chernecki, will meet with DaimlerChrysler's German union representatives next week in Stuttgart for a similar session.

Detroit News staff writers Sharon Terlep and Josee Valcourt contributed. You can reach Louis Aguilar at (313) 222-2760 or laguilar@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Chevy preps three minicars

2007-04-01T23:50:00.000-04:00

Thursday, March 29, 2007
Chevy preps three minicars
Public response will determine if concept vehicles go into production
Scott Burgess / The Detroit News

Chevrolet will let America decide whether it should hang its iconic bow tie on a U.S. minicar.

Chevy will use its introduction of three concept minicars -- vehicles smaller than subcompacts such as the Chevrolet Aveo or Honda Fit -- to gauge consumer reaction to the urban racers.

Designers at GM's studio in Inchon, South Korea, created the Chevy Trax, as well as two other minicars that will be showcased next Wednesday at the New York International Auto Show.

The four-door Trax is powered by a 1-liter engine. The flat-faced, burnt-orange concept includes a roof rack, sweeping headlights and small engine vents on its flared fenders.

The Trax resembles a muscular and boxy Mini, the BMW small car that's found a cult-like following.

Additional details on the three vehicles will be revealed the day of the New York event.

Also that day, Chevrolet will open voting on the Web site www.vote4chevrolet.com, asking people to pick their favorite of the three concepts.

Chevy will use the results to gauge whether to bring a production version to America.

Industry analysts see potential for carmakers to expand into the extra-small car market, especially if gasoline prices continue to rise.

"Pretty much everyone is looking at entry-level cars nowadays," said Stephanie Brinley of Southfield-based AutoPacific Group, an automotive consulting firm.

The subcompact market has only a handful of choices for consumers, said Jesse Toprak, a senior analyst with Edmunds.com, an automotive resource tailored for consumers.

"It's a small market, but one of the fastest-growing markets," Toprak said.

Minicars are "becoming fashionable," she said. "There is a potential, especially in the big cities on the East and West coasts, to sell minis."

Minicars offer excellent gas mileage and are easy to maneuver and park in cities, Toprak said. They will attract more customers if the price point can remain under $10,000, she added.

"People will be surprised with all of the options and amenities that can come with a minicar," Toprak said. "There's a lot of car you can get for not a whole lot."

All three concept vehicles are built on GM's global mini architecture.

Scott Burgess is the auto critic for The Detroit News. He can be reached at (313) 223-3217 or sburgess@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.

Daniel Howes: Gettelfinger can't tell it like it really is

2007-03-31T00:17:00.000-04:00

Wednesday, March 28, 2007
Daniel Howes
Daniel Howes: Gettelfinger can't tell it like it really is

Tuesday being Day One of the UAW's bargaining convention, you'd expect President Ron Gettelfinger to talk tough to 1,500 delegates facing the biggest threat matrix since the union's rocky inception 70 years ago.

You'd expect him to say "collective bargaining is not collective begging and where we have demonstrated cooperation it would be a grave mistake to equate our actions to capitulation."

You'd expect him to say the union doesn't want to strike, but is prepared to do just that if General Motors, Ford Motor and the Chrysler Group -- which he didn't name in this context, but didn't have to -- treat collective bargaining as "a one-way street."

You'd expect mild-mannered Gettelfinger to again come unhinged over Delphi Corp.'s allegedly "mechanical bankruptcy" and Chairman Robert S. "Steve" Miller's "intention" to file before bankruptcy law changed and "disturbed" a $388 million executive bonus plan.

That Miller, alone among Detroit auto CEOs who have cut tens of thousands of union jobs, warrants so much attention in a union speech is either evidence that a) Delphi's bankruptcy is the watershed fundamentally changing the industry or b) this has become personal for the UAW chief or c) both.

I'll take "c," and add that Gettelfinger's veiled disgust for private-equity vultures "circling overhead" is union recognition that economic forces have fundamentally shifted for the UAW -- and that ain't good for the health of an institution those same sharpies have zero interest in perpetuating.

Belligerence begets demise?

Truth is, it wouldn't have come to this sorry pass, where Detroit's automakers and their largest union are in varying stages of fighting for their lives, if all sides had heeded clear signals from Wall Street and Main Street.

They didn't. The UAW is going into national bargaining talking tough and rallying the troops, as it must. But its leaders and, I'd guess, a big chunk if its members know that belligerence, entitlement and strikes would only hasten their demise in these very uncertain times.

How could they not know it? The refusal of UAW leaders to deliver retiree health care concessions to Chrysler that were delivered to GM and Ford accelerated the move by Chrysler's German parent to dump the Auburn Hills automaker.

Ford CEO Alan Mulally, his back to an operational wall, compiled a record during his years at Boeing Co. of facing down union members, even if doing so promised a strike -- as it did in 2005. And GM has made too much progress to be sand-bagged into preserving the past.

Go big or go home

Union politics being what they are, Gettelfinger couldn't stand before his delegates at Cobo Center and tell them where things really stand. If he could, it might go something like this:

"Brothers and sisters, this international union -- you, me, our predecessors who delivered the gains we enjoy today -- faces a fundamental test forged from the choices of those before us and the expectations of those who would follow us.

"We can either take this opportunity to be bold, to ensure that our pay, benefits and work rules make our employers as competitive as they can be. Or we can cling to the creeping incrementalism and denial that brought us to this point, that hastened bankruptcies, plant closings and record buyouts.

"This is our time to help save a Detroit industry that made us, our parents and grandparents the bedrock of the American middle class and, for a time, the envy of all industrial workers. When this time passes, as it will, we must be able to tell our children and ourselves that we did everything to save the companies that made us what we are.

"That's real solidarity."

Daniel Howes' column runs Mondays, Wednesdays and Fridays. Reach him at (313) 222-2106, dchowes@detnews.com or http://info.detnews.com/danielhowesblog.

© Copyright 2007 The Detroit News. All rights reserved.

GM pumps up sedans, SUVs

2007-03-31T00:09:00.000-04:00

Wednesday, March 28, 2007
New York International Auto Show
GM pumps up sedans, SUVs
LaCrosse front redone; H2 upgraded; new H3 in works
Sharon Terlep and Scott Burgess / The Detroit News

DETROIT -- General Motors Corp., on a mission to pump some life into the often-dreary world of sedans, will highlight its latest efforts next week at the New York auto show.

GM will show a made-over Buick LaCrosse, as well as performance versions of the LaCrosse and Buick Lucerne and a refreshed Cadillac STS.

The new LaCrosse will feature a redesigned front end and a beefed-up package of premium equipment. All versions of the car will come standard with a chrome exterior appearance package, remote start, XM Satellite Radio and dual-zone climate control, among other features.

It'll be the latest addition to GM's sedan lineup, for years in the shadow of more popular trucks and SUVs. But as jitters over volatile gas prices send more consumers back to cars, GM is giving family cars more attention.

"We're putting a much stronger face on the vehicle," GM engineer Ed Zellner said, showing off the made-over LaCrosse.

The midsize sedan market grew 2 percent last year, with about 3.6 million sales.

Also on display in New York will be the new Super high-performance versions of the LaCrosse and Lucerne. The LaCrosse Super will include a 5.3-liter small block V-8 that will push 300 horsepower. The Lucerne Super will come with a 4.6-liter Northstar V-6 and produce 292 horsepower. Both will come with special badging, which Buick first used on cars more than 60 years ago.

Zellner says much work went into making sure the larger, more powerful engine didn't compromise the ride and handling of the vehicles. Larger brakes, advanced steering gear and 18-inch wheels are part of the Super packages.

"In the old days, when you started making engines big, it would make it hard for the cars to drive," Zellner said of the Super models. "This isn't the case."

Buick's models have been strong, but are hurt by the brand's less-than-stellar reputation, said Tom Libby, senior director of industry analysis at J.D. Power and Associates.

To be successful, Libby said, Buick needs to have a clearly identifiable lineup and make sure vehicles stand apart from Cadillac.

"They need to create a clear and distinct brand entity," he said.

GM also will use the New York show to display the latest offerings from its Hummer brand.

Upgrading the H2 and offering a new model in the H3 lineup are in the works at Hummer.

The larger H2 gets a completely refashioned interior and new powertrain, Hummer's executive director, Ross Hendrix, said Tuesday. "I'd call this a major midcycle enhancement."

The 2008 H2's new engine, a 6.2-liter V-8, will boost the H2's horsepower to 393, 28 horsepower more than the 2007 model H2. It will add 90 pound-feet of torque, from 325 to 415.

While the new engine will provide more power, Ross said other changes, such as adding a six-speed transmission and cutting several hundred pounds from the vehicle's weight, will make the engine 10 percent more fuel-efficient than the current one.

While nothing changes on the H2's exterior, its interior will be overhauled. The H2 will feature a new instrument panel, a two-person third row, which is removable, and a lot more brushed aluminum accents, Ross said.

"We're making the interior closer to the Cadillac Escalade," he said. "When people get into the new H2, they're going to say, 'Wow, this is a really high-end truck.' "

The all-new 2008 H3 Alpha may also impress Hummer drivers looking for enhanced performance on the smallest Hummer to hit trails.

It will come with a 5.7-liter V-8, much more powerful than the H3's standard 3.7-liter inline five-cylinder engine. It also features a much more luxurious interior, as well as the Alpha badging throughout the vehicle.

The H3 is the second Hummer to receive the Alpha designation.

"This is a rocket," Ross said. "People have been asking for this model and now it's coming."

Other GM vehicles that will debut in New York include:

2008 Cadillac STS equipped with a more powerful direct injection V-6 and retouched styling.

Saab BioPower 100 concept car: Powered by 100 percent ethanol, the BioPower makes its North American debut. It features a 300-horsepower turbo-charged engine.

You can reach Sharon Terlep at (313) 223-4686 or sterlep@detnews.com.

© Copyright 2007 The Detroit News. All rights reserved.