General Motors is attempting to speed up cost-cutting, according to the head of its North American operations.
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North America president Troy Clarke was quoted on Tuesday as saying he would work toward achieving aggressive cost-cut targets as soon as possible as part of plans to revive the automotive unit and “adapt to a global, very tough, very competitive” marketplace.
According to the Associated Press (AP), Clarke, answering questions after a speech to the US Automotive Press Association, said the company currently has a target to reduce structural costs to 25% of revenue by 2010, but insisted he is working to meet that goal as soon as possible.
He reportedly said costs currently represent nearly 30% of revenue, adding there are still “pockets” at GM where workers operate under “the legacy of having been big.”
Clarke said GM will continue to focus on cost cutting “as a new way of life”, AP said. He added the company will continue to focus on further trimming US healthcare costs and characterised the company’s drive to cut $US9bn in structural costs annually as a cost-reduction target that “may be unmatched in American business history.”
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By GlobalDataClarke reportedly said the company is looking to boost top-line results to complement the cost cutting, and pointed to a renewed focus on mid-sized cars, which is a huge US vehicle segment where GM has lagged Asian rivals [such as Honda with its Accord and Toyota with the Camry; both perennial best-sellers in the US].
“GM needs to have a presence” in the segment, Clarke said, according to the Associated Press.
He also said the company would unveil its redesigned 2008 Chevrolet Malibu sedan at the Detroit motor show in January and that car will give buyers the sense they receive “more than they paid for.”
According to AP, he noted that GM once held 50% of the US market but now holds less than 25%, and insisted the company must continue to “break up” bureaucracy to cope with reality.
The news agency noted that Clarke recently took over the role running GM’s North American auto operations from chief executive Rick Wagoner, who had been running the unit for more than a year. The unit has been a money loser and a key contributor to the company’s financial woes.
GM’s troubles in North America primarily stem from high labour costs, excessive manufacturing capacity and falling market share. The company began restructuring the operations in 2005 and has reached several goals it needed to to reduce costs and streamline operations, the Associated Press added.
“The turnaround is not yet finished,” Clarke reportedly said during his speech prior to a question-and-answer session. “We are only beginning the transformation.”
AP said Clarke, who previously ran GM’s Asia operations, pointed to Suzuki Motor, a GM joint-venture partner, as “an organisation that I truly admire.” He said the Japanese automaker, which primarily produces mini cars, runs the business with “a very healthy level of paranoia.”
