Blog: Slimming down
Dave Leggett | 8 June 2006
It was a useful day spent at that auto retailing conference yesterday and, as I suspected, the proceedings weren't tied exclusively to retail sector matters. One of the speakers, Max Warburton - an analyst from UBS - was asked about the chances of GM and Ford going into Chapter 11. He said that for GM it was a 'very likely' scenario adding that if it happened it would be in the next decade.
But he made a good point about GM management's current actions - which are all about forestalling Chapter 11 and doing everything possible to restructure outside of that process in the belief that bankruptcy protection would have major adverse effects - principally in damaged confidence, consumers and dealers - for a big car company like GM. He did say though that while Ford and GM will both be around in fifteen years time, they will - one way or another - be slimmed down entities.
A little later on GM Europe's Jonathan Browning gave a much more upbeat assessment of GM's progress and where GM is heading - as you might expect.
At the lunchtime press conference he was asked about the under-threat-of-closure plant of Ellesmere Port and dealt with the questions with a very straight bat. I tried to draw him on what Ellesmere Port closure would mean for the Vauxhall brand (it is a national brand after all - UK only - and Astra at EP is now the only GM car being made in UK). Not unreasonably given the political sensitivities, he stuck firmly to the company line that the focus is fully on negotiating productivity improvements at the plant so that it gets the next Astra. For the news item, click here.
While he was never going to say anything that could be interpreted as an indicator that shutting EP is being planned for, it is sometimes interesting to see how someone goes about answering such a question. He could, for example, have said that the Vauxhall brand is strong enough to withstand such an eventuality, as part of his answer.
I guess he could also have said: 'Does the Ford brand make cars here anymore?' but that would be a dangerous thing to say. Maybe he thought it. But these guys are good politicians.
One other thought. If EP does end up biting the dust, that might be a time to drop the British Vauxhall brand and go with Opel instead. As Chevrolet becomes GM's main value-driven brand, Opel can (needs to) be positioned further upscale and introducing the Opel name in UK might actually be a smart move.
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