USA: CEO sees GM's North American turnaround plans on track
General Motors chairman and CEO Rick Wagoner has said that the automaker's turnaround plan for its struggling North American division is on track but, according to an Associated Press (AP) report, he wouldn't update the company's earnings forecast or discuss ongoing union negotiations.
AP noted that GM withdrew its earnings guidance in April after it lost $US1.1 billion in the first quarter - Wagoner reportedly said that the company had previously estimated earnings of $4 to $5 a share for the year.
"We will not meet that," Wagoner told Wall Street analysts gathered in Detroit, according to AP, adding: "North America is missing, and missing badly."
According to the report, Wagoner said GM is making good progress in improving quality and giving each of its brands a more distinct image. The company also will save significant resources by streamlining its design process, he said.
Wagoner reportedly said the company has had some recent successes. The 2005 Buick LaCrosse outsold the popular Chrysler 300 sedan last month and GM's Hummer H3 is selling well in Los Angeles and San Francisco, markets that have eluded GM in the past. Wagoner added that GM's 2006 and 2007 models are targeted at fast-growing and profitable segments, such as crossovers like the Saturn Vue, the AP report said.
As for the company's health care costs, which will approach $6 billion this year, Wagoner reportedly described them as "simply not sustainable." The company is seeking help from the United Auto Workers union before its contract expires in 2007, but AP said neither Wagoner nor GM vice chairman and chief financial officer John Devine would update analysts on the status of those talks.
"I am not in a position to update you more than to say that we continue to focus on it," Wagoner reportedly said. "It's very difficult to carry that kind of burden and continue."
According to AP, Devine also wouldn't comment on the possibility of Delphi Corp. declaring bankruptcy this autumn. Delphi, GM's former parts division and a major supplier, has said it is considering bankruptcy if it doesn't reach a restructuring agreement with the UAW and GM that would lower its health care and labor costs, the report noted.
"This is Delphi's business and it's their call. We respect that," Devine said, according to the Associated Press, adding: "Delphi is very important to us. We obviously want to be as constructive as we can. That said, we're obviously going to do what's right for GM."