GM Faces a Summer of Chaotic Change : Cars: Stempel will sound an optimistic theme at the annual meeting. But experts say the auto giant faces major challenges.
Armed with $2 billion in cash, General Motors Corp. Chairman Robert Stempel will arrive at the company’s annual meeting Friday with renewed confidence, but experts say the auto giant still faces many challenges ahead.
Stempel is expected to lean heavily on the company’s successful stock sale and GM’s modest first-quarter profit to support the view that the auto maker is finally revving its mighty engines.
But some industry experts say GM’s recovery could easily stall if the company fails to manage its massive restructuring.
“The dimensions of what needs to be done are almost inestimable,” said Bernard Campbell, director of automotive consulting for DRI/McGraw Hill Inc. “They reflect decisions associated with engineering the cars, producing the cars and marketing the cars.
“Virtually every aspect of one of the largest industrial companies in the world needs to be changed, and that is clearly a tall order,” he said.
GM’s sale of 55 million shares of common stock at $39 a share should provide the resources to complete the restructuring. Excluding commission fees, GM will net $2.09 billion from the $2.15-billion offering, but that could rise to $2.41 billion if underwriters buy 8.25 million additional shares.
In one aspect of the massive reorganization, thousands of GM’s white-collar workers will soon clear out their desks under a corporate retirement plan taking effect June 1.
GM spokesman John Maciarz said the company hopes to reduce the number of North American automotive jobs by 9,000 this year through early retirement and attrition. GM has about 91,000 white-collar employees in North America.
Many changes Stempel is expected to lay out for shareholders at the annual meeting in Ft. Wayne, Ind., will deal with GM’s vision for simplifying the way it builds cars and trucks.
During meetings with investors last week, Stempel said GM will use fewer basic platforms or chassis in the future in an effort to reduce costs.
GM also is expected to continue trimming the number of models it sells to the public.
GM’s Oldsmobile division has already announced that it will scrap its luxury Toronado coupe and Custom Cruiser station wagon at the end of the year because of weak sales.
Analysts said the Pontiac Le-Mans, which GM imports from Daewoo Motor Co. Ltd., may not be far behind as GM seeks to sever ties with the Korean company.
The upheaval could spell a summer of chaotic change at GM, and experts said it will be up to the new management team of Stempel, President John Smith and Chief Financial Officer William Hoglund to make sure the gears shift smoothly.
