Printer Friendly

GM TAKING MAJOR STEPS TO RETURN TO PROFITABILITY IN NORTH AMERICA

 GM TAKING MAJOR STEPS TO RETURN TO PROFITABILITY IN NORTH AMERICA
 FT. WAYNE, Ind., May 22 /PRNewswire/ -- General Motors (NYSE: GM) Chairman Robert C. Stempel today assured stockholders that major steps are being taken to quickly return GM's North American Operations (NAO) to profitability.
 "Profitable North American results, added to the excellent results from subsidiaries and international operations, will enable us to return to the level of corporate earnings that stockholders justifiably expect," Mr. Stempel said at GM's 84th annual meeting here.
 He said GM is "aggressively pursuing" five key business strategies to accelerate its profitability goals.
 "Individually, any of the five would mark a major change," Mr. Stempel said. "Taken together, they are helping us create a new GM."
 Mr. Stempel said the five strategies include:
 -- Instituting global sourcing.
 -- Accelerating the implementation of lean production.
 -- Undertaking a significant consolidation in vehicle platforms, and moving to commonize component sets among vehicle lines.
 -- Undertaking a significant reduction in straight-time North American manufacturing capacity.
 -- Continuing to implement GM's aggressive new product program.
 Mr. Stempel said 1991 had been an "extraordinarily difficult year" for GM in North America due to the war in the Middle East, a significant drop in consumer confidence, a national recession and a slow economic recovery, all of which took a toll on sales and profits. He thanked employes, dealers, and suppliers for their efforts that resulted in significant improvement during the year, though still short of GM's goals.
 "These difficult circumstances also made it clear that major changes recently announced for the organization and operation of GM in North America were very timely," Mr. Stempel said, pointing out that GM's North American Operations are being restructured with a new chief operating officer (President John F. Smith Jr.) and a new chief financial officer (Executive Vice President William E. Hoglund), appointed by the GM Board of Directors on April 6, 1992.
 "With these top management changes," Mr. Stempel told the stockholders, "your corporation's North American focus has moved from 'market share with profitability' to 'profit first' with less emphasis on market share.
 "And we are -- of course -- maintaining our primary emphasis on quality in everything we do."
 Expanding on the five key strategies, Mr. Stempel said the corporation "will use the global purchasing power of GM to reduce material costs and accelerate the return of our North American operations to profitability."
 "We need to leverage the worldwide volume of GM to buy our material and components at the best prices," he said, noting that long-term contracts -- some for the life of a new model -- will provide suppliers with the necessary volume to support their capital investments to reduce costs and improve quality.
 "We're going to concentrate on suppliers who meet our cost and quality standards," he added.
 Regarding the second strategy, Mr. Stempel said, "Simply put, lean production means eliminating waste and non-value-added activities in order to reduce operating expenses, inventories, lead times, and floor- space requirements, while increasing quality and throughput. In other words, it boils down to doing more with less.
 "Our goal is to improve overall productivity by 7 to 8 percent per year, and we've had some operations where we've seen productivity improvements of up to 30 percent by applying lean production concepts."
 Mr. Stempel said other strategies, such as design for manufacturing (DFM), "are necessary in order to fully implement the lean production system, and we are well along with their introduction."
 As part of its strategy to reduce passenger car platforms and the number of sets of components, Mr. Stempel said, GM is looking at fewer passenger-car platforms and component sets by the mid-1990s to support its North American product line.
 He said this will be accomplished by pursuing a commonization strategy through which GM will use the same basic components -- floor pans, electric systems, steering columns, anti-lock brakes, and many others -- across various car lines but, at the same time, maintain a notable difference in items that customers can see, feel and touch, such as body panels, interior materials, engines, transmissions and other parts to provide the desired, independent brand character and image.
 Mr. Stempel said GM anticipates operating at 100-percent capacity utilization in 1994, a year before the completion of GM plans announced last December, to "resize our operations, reduce our fixed costs, and maximize profitability at all foreseeable sales levels, whether economic conditions are good or bad."
 "These high levels of capacity utilization will drive down our fixed costs and future investment," Mr. Stempel said. "And they will focus sales on retail business, where your company can earn the greatest return," adding that "these results have already been demonstrated (by GM) in Europe."
 As part of its aggressive new-product plans, Mr. Stempel said, GM introduced nine new cars and six new trucks in the 1992 model year alone -- more than any other manufacturer has ever introduced in a 12-month period.
 "They were developed in an average of 34 months -- at least 14 months faster than products introduced in the late 1980s," he said. "And the best news is that retail sales of these new products are up an impressive 30 percent in an essentially flat market."
 In concluding his remarks, Mr. Stempel noted that while the performance of GM's North American Operations had improved steadily during 1991 and the first quarter of 1992, the GM Board of Directors "has made it clear that the only acceptable result is to quickly return to profitability in North America."
 -0- 5/22/92
 /CONTACT: John F. Mueller, 313-556-2028, or Terrence P. Sullivan, 219-427-5115, both of GM News Relations/
 (GM) CO: General Motors Corporation ST: Indiana, Michigan IN: AUT SU:


KK -- DE004 -- 3211 05/22/92 10:09 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:May 22, 1992
Words:945
Previous Article:LILCO $363 MILLION 7.95 PERCENT PREFERRED STOCK RATED 'BBB-' BY FITCH -- FITCH FINANCIAL WIRE --
Next Article:BELL ATLANTIC INTEGRATES DIGITIZED FULL-MOTION VIDEO WITH ITS ELECTRONIC DOCUMENT MANAGEMENT SYSTEM
Topics:


Related Articles
GM REPORTS YEAR-END FINANCIAL RESULTS
GM REPORTS YEAR-END FINANCIAL RESULTS
GM REPORTS SECOND-QUARTER EARNINGS
GM REPORTS SECOND-QUARTER EARNINGS
GM $1 BILLION PREFERENCE STOCK RATED 'A'; ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
GM ANNOUNCES ACCOUNTING CHANGE
GM REPORTS FIRST-QUARTER EARNINGS
GENERAL MOTORS REPORTS SECOND-QUARTER EARNINGS
GENERAL MOTORS' 1994 ANNUAL SHAREHOLDERS MEETING
US car workers face axe.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters