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GM Now Says It Plans to Build a Small Car in U.S.

Bowing to UAW pressure over planned Asian imports, the company will reopen an as yet unnamed plant.

by on May.29, 2009

Chevrolet announced production plans for a new vehicle - the Chevrolet Spark - a fuel-efficient mini-car based on the Beat concept that will arrive in dealer showrooms in 2011.

Chevrolet announced production plans in January for a new vehicle - the Chevrolet Spark - a fuel-efficient mini-car based on the Beat concept that will arrive in dealer showrooms in 2011.

General Motors Corporation announced today that it plans to build a future small car in the United States in an idled UAW-GM plant. The unnamed small car will be built in an unnamed facility. 

By making the announcement today, GM is clearly bowing to pressure from the United Auto Workers Union, and also trying to smooth the way in Congress for a bankruptcy filing that is expected to come this Monday.

U.S. taxpayers will own 72.5% of a New GM. Importing cars from Korea, China or Japan – all closed markets  to U.S. autos – with taxpayer dollars is politically controversial, to understate the issue facing the Obama Administration.

The United Autoworkers Union on May 18 sent a letter to members of the U.S. Congress objecting to the centerpiece of GM’s Viability plan – closing 16 plants in the U.S. and importing vehicles from low-wage, non-unionized countries.

The factory closings were not new, they have been in various versions of the plan since GM went to the U.S. government for bridge loans late, last year, but in bringing the argument over the closings public, the union was attempting to prevent some of them through political pressure after apparently being shut down at the bargaining table.

The strategy worked. About 1,200 UAW jobs will be saved,  although more than 20,000 UAW jobs are eliminated in the current version of GM’s viability plan.

“Small cars represent one of the fastest growing segments in both the U.S. and around the world,” said Fritz Henderson, General Motors President and CEO. “We believe this car will be a winner with our current and future customers in the U.S.”     (more…)

New General Motors CEO Expands Restructuring

Henderson implicitly accepts President Obama's harsh criticism, but what's next at the failing automaker?

by on Mar.30, 2009

tk

The party's over, now the real cutting, consolidation and closings begin at General Motors.

President and politician Obama went directly to the point during his auto industry announcement. The way the industry got to its latest crisis is because of management.

“The pain being felt in places that rely on our auto industry is not the fault of our workers, who labor tirelessly and desperately want to see their companies succeed. And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations. Rather, it is a failure of leadership – from Washington to Detroit – that led our auto companies to this point,” he said.

In a reaction to the President’s explicit criticism, newly appointed GM CEO Fritz Henderson said, “Over the next 60 days, we will work around the clock, with all parties, to meet the aggressive requirements that have been set by the Task Force, and to make the fundamental and lasting changes necessary to reinvent GM for the long-term.”

What this means is that there are more, many more cuts coming at GM. More brands will have to go. More operations will have to be eliminated in the U.S.

GM faces similar challenges and the same solutions in Canada and Europe, where skeptical national governments and the European Community central government have not committed to helping it. In fact, they have been  just as publicly critical of the ailing maker. Fritz Henderson was recently thrown out of a meeting with the patrician German economic minister Karl-Theodor zu Guttenberg and told not to come back until he had a better plan for Opel.

And within minutes of the of the President’s speech, Canada mirrored his position.

“The plans submitted by General Motors and Chrysler to the government of Canada, do not go far enough to ensure the long-term viability of these companies,” said Tony Clement, Canada’s industry minister. Like the U.S., Canada will provide some short-term financing until a better plan is arrived at.

The question is what can GM do to make its already heavily reworked plan better?

(more…)