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Dragon

GM expecting to save $4 billion in 2006

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Dragon    0

http://www.yahoo.com/s/268025

DETROIT - General Motors Corp. expects to save about $4 billion this year as it implements its North American turnaround plan, Chairman and CEO Rick Wagoner said Friday. But he declined to give earnings guidance, saying there are too many outstanding issues facing the struggling automaker.

Wagoner also refused to speculate on whether the board of the world's biggest automaker will consider cutting dividends to shareholders. Earlier this week, Jerome York, an aide to billionaire investor Kirk Kerkorian, said GM should consider halving its annual $2 per share dividend, which he estimated would save $566 million a year.

"We have a lot of topics under our corporate governance structure that require board approval," Wagoner told a gathering of automotive analysts in Dearborn. GM stopped providing earnings guidance last April after it lost $1.1 billion in the first quarter.

Wagoner said GM's financial picture will be affected by the outcome of negotiations with Delphi Corp., its former parts division, which has filed for bankruptcy protection and could seek billions from GM. GM also is trying to sell a controlling stake in its finance division, GMAC.

Wagoner also said it's unclear when the automaker will see the full benefit of a new health care agreement that requires retired autoworkers to pay more for their health care. The agreement has received preliminary approval in federal court, and GM hopes it will go into effect April 1, Wagoner said.

Wagoner said the company is working to implement its previously announced plan to reduce structural costs — which include health care and pensions — by $6 billion a year by the end of 2006 and reduce material costs by $1 billion. Wagoner said GM's structural costs as a percentage of revenue are now at 34 percent, and he would like that to fall to 25 percent by 2010. GM expects to realize $4 billion in savings this year as the initiatives are implemented.

GM plans to achieve some savings by reducing its salaried staff by 6 to 7 percent this year, Wagoner said. The company has cut its salaried work force by a third since 2000, he said. In November, the company announced a plan to cut 30,000 hourly jobs and close 12 facilities by 2008.

"Executing these numbers is critical to our success, and we are focused 100 percent on getting that done," Wagoner said.

The company's U.S. sales fell 4 percent in 2005, and GM lost $4.8 billion in its North American operations in the first nine months of 2005. The company is scheduled to report fourth-quarter earnings Jan. 26.

"I think it's safe to say that just about everyone at General Motors is happy to see 2005 behind us," Wagoner said.

Wagoner also said the company is optimistic about its decision to lower prices on virtually all its vehicles in the U.S. market. The price cuts went into effect this week. Wagoner said the company is determined not to pile on huge incentives right if the strategy doesn't show immediate results.

"We certainly do have some flexibility to give the program some time to take hold," Wagoner said. "We absolutely plan to stick with the strategy. We think it's a good strategy."

GM shares fell 40 cents, or 1.9 percent, to $20.56 in morning trading on the New York Stock Exchange

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razoredge    0

"by $6 billion a year by the end of 2006 and reduce material costs by $1 billion." = 4 billion :unsure: modern math :unsure:

Will anyone ever speculate on whether this years losses included the money paid to Fiat or not ?

Im also wondering why we are not hearing about retirements leading to elimination of job bank rather than "health care and pension cuts" first?

Id also like to know how they are reducing material costs ? that could be a scary thought.

Edited by razoredge

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daves87rs    352

As long as GM doesn't panic if sales stay low for a little while, they should be ok there...

Other than that, there are a lot of "if's".

I can only hope things go their way....

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Matt276    0

Id also like to know how they are reducing material costs ? that could be a scary thought.

That's what I was thinking, I hope they won't start cutting in quality, some interiors are cheap enough. No, no, no, cut salaries, benefits, close factories but do not cut the material quality. :angry::angry: Will GM ever understand?

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Northstar    11

If they're going to save $4 billion in costs vs. 2005, then I think the GMT900s may be able to make up rest of the difference and at least have GM pull close to even.

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MyerShift    7

Indeed. GM needs to cut salaries and pay period.

Didn't Iacocca convince Chrysler employees to forgo pay at one point in the 1980's during Chrysler's turnaround? Even though he didn't go without pay, I believe he took a cut.

GM definitely can't afford (oh, the irony) to cut back on material quality. It's acceptable, but not outstanding right now. If it stays where it's at, designs improve, and profits come, then maybe go for more spongy, silky stuff. Nothing worse, but better soon, I hope.

How on God's green earth did FIAT convince GM to agree to that put option? Was saving development costs on diesel engines really worth that outcome?

Oh GM, haven't you learnt what happens when you try to cut corners and cheap out?

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Newbiewar    1

That's what I was thinking, I hope they won't start cutting in quality, some interiors are cheap enough. No, no, no, cut salaries, benefits, close factories but do not cut the material quality. :angry:  :angry: Will GM ever understand?

Lutz said they are buying in larger quantities... thus reducing costs...

GM is just going into a phase of become a global opperations instead of an american exporter...

I wonder if GM can have other countrys manipulate their currency like Japan does?

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Guest gmrebirth   
Guest gmrebirth

If they're going to save $4 billion in costs vs. 2005, then I think the GMT900s may be able to make up rest of the difference and at least have GM pull close to even.

Here's hoping, but realistically chances are foggy of that happening.

Considering GM lost over 4 Billion in US operations in the first nine months of 2005, I'd say they have their work cut out for them.

Pulling close to even would be a big improvement over 2005, but I honestly don't expect to see profits anytime soon.

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