GM

When a massive quake struck Japan on Friday, March 11th, Bill Hurles was up north with his sons on a snowmobiling trip.  Hurles is head of supply chain for General Motors. 

After he saw the first footage of the tsunami slamming into the northern coast, Hurles cut his trip short and returned to Warren.   By early Sunday morning, he and his team were in the War Room, desperately trying to get information.

Both Ford and General Motors today predicted they will expand their global presence, despite rising energy and commodity prices. 

GM held its first public stockholders meeting in Detroit – and Ford held its annual Investors Meeting in New York. 

GM CEO Dan Akerson told stockholders to consider the company a long-term investment, not short-term.  GM stock has lost a fair bit of value since the IPO in November.    

General Motors will invest 130-million dollars in a new high-tech computer command center in Warren. 

The announcement follows a string of other investments by GM in North America. 

GM says the high performance computers at the new command center in Warren will help the company keep pace with the increasingly complex computer simulations required to build cars. 

It will also allow the company to keep its own data and customer data more securely.   

media.gm.com

President Obama will visit a Chrysler plant in Ohio today, a day after the U.S. Treasury reached a deal to sell its remaining 6.6% stake in Chrysler to Fiat. 

Meanwhile, the Treasury still owns 26% of General Motors.  But GM North American President Mark Reuss says it’s up to the U.S. Treasury to decide when to get out of the car business completely. 

Reuss says the government’s part-ownership of GM matters to American taxpayers and customers.   It also matters to GM executives and workers.

But it's not up to GM when the Treasury sells its stock.

Ford, GM and Chrysler are getting along with their suppliers better than they used to.  

But an annual study says the companies have a ways to go to catch up with their Japanese counterparts. 

John Henke is President of Planning Perspectives, which studies the working relationship between parts suppliers and their customers, the car companies. 

He says that relationship has long been adversarial for the Detroit Three, which means suppliers often don’t give them the best prices for parts, or the first crack at new technologies.

State tax breaks worth $10 million are leading to an investment in GM's Warren Tech Center.

Warren Mayor Jim Fouts indicated an announcement like this would be coming last month.

From the Detroit News:

General Motors Co. won $10 million in tax incentives from the state today to build a new information technology facility at its Warren Tech Center.

The $130 million project — expected to create about 25 permanent jobs — will add on to the Cadillac Building on the campus and occupy about 30-acres of land located along Van Dyke Avenue. The new jobs will pay an average of $44 an hour, according to the Michigan Economic Development Corporation.

The brownfield tax credits valued at $10 million were approved this morning by the Michigan Economic Growth Authority board.

The state brownfield tax credits involved in this deal won't be around for long. In Governor Snyder tax overhaul plan, approved by state legislators, the tax credits will be replaced with a system that will grant redevelopment money up front.

IFCAR / wikimedia commons

Sales numbers for April are coming in today, and there are more signs that the American public has pent up energy to buy new cars. As they did in 2008, higher gas prices are driving demand for smaller, fuel efficient cars. U.S. Automakers are more prepared for that demand this time around.

Update 3:50 p.m.

Chrysler announced the "best April sales since 2008" - a 22% increase compared with sales in April 2010. The company sold 95,703 cars in April.

Insurance Institute for Highway Safety

The Insurance Institute for Highway Safety gives the Chevy Volt and the Nissan Leaf top ratings for safety in crash tests.  The results could ease any lingering concerns people might have about the safety of electric cars.

Russ Rader, a spokesman for the Insurance Institute for Highway Safety, says the results show that customers don't have to trade safety for environmentally friendly electric cars.  And the heavy batteries in the cars actually make them safer.

"We can have environmentally friendly, green vehicles and not give up the safety advances that we've made in the bargain… Even though they are small cars in their dimensions, they are considerably heavier than other small cars weighing as much as some midsize or even large cars.  And that is a safety advantage."

Car companies say the huge batteries inside electric cars shut down in the event of a crash to greatly reduce the risk of an electrical fire.

Both the Leaf and the Volt cost more than most similar sized small cars. But Rader says as the price of gas goes up, and the cost of producing the cars goes down, electric cars will become more economical.

Manoli Katakis / creative commons

A final decision has not been made, but Warren Mayor Jim Fouts released a statement saying GM is considering two investments in its Technical Center and Powertrain Facility in Warren.

Fouts says the investments add up to $450 million and would create 426 new jobs.

From Fouts' statement:

"These possible projects are the result of several meetings between city representatives, including me, and GM officials. I cannot stress too much how important these new investments would be to our city. They mean more jobs and ultimately more tax revenues for Warren. I am confident GM will choose these locations for new investments because the corporation realizes Warren is a business-friendly community that will go the extra mile to encourage businesses to expand or relocate here."

The mayor said Warren became a city in 1957 because of the construction of GM's Tech Center in the city. And he encouraged other business to move there.

Emilio Labrador / Flickr

Higher commodity prices are translating into higher prices for cars and trucks.

GM announced their prices will go up - joining Ford and Toyota.

From the Associated Press:

General Motors says it will raise car and truck prices by an average of $123 per vehicle to make up for its increased oil and metal costs.

Hundreds of auto workers will be assembling Chevy Sonics and Buick Veranos at GM's plant in Orion Township in just a few months. 

Every one of those workers will go through a simulated work environment training exercise before getting anywhere near a real car. The power tools and the bolts are real, but the cars and parts are made of wood. 

GM recently invited a group of auto journalists to take part in the exercise, to get a taste of what building a car is like.

The press is divided up into teams. Team 3's leader is Sabrina Wills, a member of UAW Local 602. She instructs us how to do the work, with each step meticulously standardized.

"Once the line starts moving, if the line moves at a normal pace, you’re gonna find yourself in the hole," she says.

Joanne Muller of Forbes asks, "So what do we do then?"

Wills:  "You’re gonna pull for help.  Pull your andon cord."

Team 3 will install the headlights, taillights, and bumpers. Wills says dropping a nut is par for the course when you’re new to the job. But the cardinal sin is dropping a part. In real life, that means it’s scrap. 

She drops a part on the cement floor to make a point. The sound reverberates through the big factory.

"You’re gonna hear the part hit the floor.  So don’t try to hide it under the line, because we don’t wanna put that broken headlight on a car."

As we wait for the line to start, Joanne Muller – who, by the way, has red hair – brings up that classic "I Love Lucy" episode. The one where Ethel and Lucy fall behind on the assembly line in a chocolate factory.

Lindsey Smith / Michigan Radio

A 2-million-square-foot former General Motors stamping plant in the Grand Rapids suburb of Wyoming will be demolished this year. Monday night Wyoming’s city council approved plans to destroy the 75-year-old building and redevelop the site.

Spacing Magazine / Flickr

Updated:  5:59 p.m.

Outgoing GM CFO Chris Liddell says he only began wrestling with whether to leave GM in the past few weeks, and he and boss Dan Ackerson have been discussing the subject only for the past week.

Liddell says he has no announcement to make as to his next job, but he thinks it will not be a chief financial officer position.

GM CEO Dan Akerson says the transition, from Liddell to his successor, current GM Treasurer Dan Ammanns, should be "seamless."

Akerson says he's committed to remain at the helm of GM for the next five years.  Dan Ammanns also stresses his plan to stay for the long term.

Investors in GM's initial public offering in November had been assured that GM's leadership would stabilize. 

Sheldon Stone is with Amherst Partners, a restructuring consultant firm.

Stone says some investors will likely be concerned about Liddell's departure.

"He (Liddell) was part of that road show, that went out pitching the IPO," says Stone.  "He had his fingerprints all over it. 

Stone says GM needs change.  But this may be too much change.

GM has had four CEOs in the past year.  Several senior executives have left GM in the past year.  And the deck of senior management has been shuffled and re-shuffled several times.

Ken Elias is an analyst with the consultant firm Maryann Keller & Associates. 

He says Liddell, formerly CFO of Microsoft, was brought to GM by former CEO Ed Whitaker, with the understanding that Liddell would be groomed as Whitaker's successor.

But months after Liddell began his new job at GM, Whitaker stepped down as CEO.  GM's Board chose Board member Dan Akerson to lead the company. 

Elias says that could account for Liddell's decision, after the IPO was completed, to leave GM.

 

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General Motors says its Chief Financial Officer will step down as of April 1st. Chris Liddell will be replaced by Treasurer Dan Ammann. The Associated Press reports:

Spokeswoman Noreen Pratscher said Thursday that Liddell accomplished his goals of finishing an initial public stock offering and returning the company to sound financial footing. She says Liddell did not say anything about his plans for the future.

Under Liddell, GM posted four straight profitable quarters.

Spokeswoman Noreen Pratscher said Liddell accomplished his goals of finishing an initial public stock offering and returning the company to sound financial footing. She says Liddell did not say anything about his plans for the future.

The 52-year-old Liddell joined GM in January of 2010, about six months after it emerged from bankruptcy protection.

Chairman and Chief Executive Dan Akerson said Liddell was a major contributor to GM during a pivotal time in the company's history.

"He guided the company's IPO process and established a good financial foundation for the future," Akerson said in a statement.

GM reported net income of $4.7 billion last year, fueled by strong sales in China and the U.S. as the global auto market began to recover. It earned $2.89 per share on revenue of $135.6 billion.

It was the company's best performance since earning $6 billion in 1999 during the height of the pickup truck and sport utility vehicle sales boom.

Spacing Magazine / Flickr

Snowstorms in February didn’t seem to dampen car sales.  Sales were up 32-percent at Nissan, 42-percent at Toyota, and 46-percent at GM.

GM’s gain is for several reasons. Last February GM’s sales were weak, so this February looks much better in comparison. The company increased incentives in February. And it’s easier for GM customers to get financing now that GM has its own finance arm, GM Financial.

Don Johnson is head of GM’s U.S. sales.

"With their entry into the market, our penetration of the sub-prime business is above the industry average," says Johnson.  "We’ve also got GM Financial growing their prime lease business."

February sales were up 13-percent at Chrysler and 14-percent at Ford.

user mariodo / creative commons

In its April auto issue, the magazine Consumer Reports calls the Chevy Volt is a "tough sell."

It's not the kind of review GM has been accustomed to after the car was released with much fanfare.

The Volt was named "Car of the Year" at the Detroit Auto Show.

The Detroit News says that harsh review from Consumer Reports questions whether the car makes "economic sense."

David Champion, the senior director of Consumer Report auto testing center said:

"When you are looking at purely dollars and cents, it doesn't really make a lot of sense. The Volt isn't particularly efficient as an electric vehicle and it's not particularly good as a gas vehicle either in terms of fuel economy. This is going to be a tough sell to the average consumer."

The car costs around $40,000, but with a government tax credit (a credit some lawmakers want to turn into a rebate) the cost comes down to around $33,500.

The criticism came from the car's range in cold weather. The Volt's electric motor range is 40 miles under normal driving conditions, but that range dropped significantly when Consumer Reports tested the car in Connecticut this winter - the range dropped to 25 to 27 miles on electric power alone.

A GM spokesman said his range was better in cold weather. Again, from the Detroit News article:

GM spokesman Greg Martin noted that it's been an extremely harsh winter — and as a Volt driver he said he's getting 29-33 miles on electric range. But he noted that in more moderate recent weather, the range jumped to 40 miles on electric range or higher.

Other criticisms of the Volt were its 5-hour charging time, and a heating system that leaves your hands and feet cold.

The magazine gave the Volt praise for its acceleration and for its "taut yet supple ride."

USA Today reports that in the April auto issue, Consumer Reports gives foreign automakers Honda and Subaru top honors with Ford positing the "largest gain" in rankings overall.

user paul (dex) / Flickr

General Motors says it earned $510 million in the fourth quarter and $4.7 billion last year as it continued an impressive comeback from bankruptcy.

It was the company's first profitable year since 2004 and GM's best performance since making $6 billion in 1999 during the pickup truck and SUV boom.

GM says fourth-quarter net income was fueled by strong sales in China and the U.S. as the global auto market began to recover. GM says net income per share was 31 cents, including $400 million in charges mainly for preferred stock dividends and for buying preferred stock from the U.S. government.

The quarterly profit was less than the two previous quarters. GM says expenses were higher because it launched two new vehicles. Revenue for the quarter was $36.9 billion.

user santoshkrishnan / creative commons

General Motors is expected to formally announce its first ‘full-year profit’ since 2004 on Thursday. It was just two years ago General Motors had to seek bankruptcy protection.    Now, the automaker is expected to announce a 5 billion dollar profit for 2010.

Aaron Bragman is an automotive analyst with IHS Global Insight.  He gives a big part of the credit to the federal government for helping GM through bankruptcy. 

“I don’t think we’d be in the place where we’re at right now if the government had not intervened and actually funded their bankruptcy.  We’d be in a very different place.”

 Bragman says 2011 might be another good year for GM, because of rising gasoline prices. 

 “Chevy is bringing several small vehicles to market.  The new Spark is on the horizon.  The new (Sonic) is coming this year.   So we’re actually seeing a lot of these small cars coming…and now we’re seeing a market force that may actually drive people to go an buy them.”

Bragman says high gasoline prices may hurt Chrysler, because it doesn’t have as many high- mileage vehicles to offer car buyers.

Report: "Fireworks" over part of Snyder's Budget Plan

Chris Christoff, the Lansing Bureau Chief for the Detroit Free Press, says Governor Snyder plans to "eliminate Michigan's generous income tax exemptions for retiree pensions and IRA withdrawals as part of his budget plan" to be released tomorrow. Christoff wrote "a source familiar with the plan" says doing away with the tax exemption could generate more than $1 billion in revenue. From the Free Press:

Many expect Gov. Rick Snyder to set off political fireworks Thursday when he unveils a budget and tax revision plan he says will be simple, fair and efficient...Perhaps nothing will boom louder than a plan to tax pensions and other retirement income the same as all other income -- at 4.35%.

A Snyder spokesperson would not comment on the "speculation." Doug Pratt, a spokesman for the Michigan Education Association, told the Freep that Snyder will "will hear from a lot of retired employees in this state that are not going to be happy with that one." And an aide to republican State Senator Jack Brandenburg said the plan is "a nonstarter."

The Associated Press writes that Michigan's benefits for retirees are one of the most generous in the country:

The Washington-based Center for Budget and Policy Priorities says Michigan's benefits are twice as generous as those of second-place Kentucky. A retired couple in Michigan can have more than $100,000 of income without having to pay any state income tax...

Political pressure in the past has made it hard to reduce senior tax breaks to help the state's bottom line, even as Michigan steadily loses more to the tax breaks as the number of older taxpayers grows.

Governor Snyder will release his budget plan tomorrow.

Prison staff fear privatization is coming

Almost everything in the state is on the chopping block. There has been talk of privatizing parts of the prison system as a way to save money. The Associated Press says the Governor's budget plan will look at cutting around 10 to 20% out of the state's corrections budget.

State workers in prisons fear that will mean privitization. The Associated Press spoke with United Auto Workers Local 6000 spokesman Ray Holman:

The Prison support staff fear the governor may outsource their jobs to private companies to save money.

"If you're cutting $400 million ... you're going to have to go after something," said Holman, whose union represents tens of thousands of state workers, including prison support staff. "We stand to take a substantial hit." 

Former GM exec may return as advisor

The Detroit News says former GM executive Bob Lutz may return to the company as an advisor. From the Detroit News:

General Motors Co. has been in talks with former product chief Robert Lutz about bringing him back as a paid consultant, The Detroit News has learned.

The details were unclear Tuesday, but the 79-year-old Lutz continues to have a close relationship with GM, and the two have been in discussions about formalizing an advisory role, according to sources familiar with the discussions.

Lutz was known as a plain speaking executive at GM who was skeptical of the commercial appeal of electric cars and hybrids. As the Guardian reported when he retired in 2010, Lutz once described global warming "as a total crock of shit."

The Guardian writes that Lutz "predicted the internal combustion engine would reign supreme for at least a further decade, and that it would be "years and years" before alternatives make up even a tenth of the market."

collection.chrysler.com

For $29.95 you can continue the buzz that started with the "Imported from Detroit" Super Bowl ad.

Chrysler is selling t-shirts with the "Imported from Detroit" logo on its Chrysler Collection website ('imported' from the USA, according to the website).

The Detroit Free Press asked a Chrysler spokesperson if the design will be on other items:

Chrysler spokeswoman Dianna Gutierrez said, “It’s too early to discuss. I don’t have any formal details to share at this time.”

The epic two-minute ad is still running on television in edited down one-minute and 30 second versions.

General Motors factory workers will get a record amount in profit-sharing checks this year.  The automaker's 48,000 UAW hourly workers will get at least $4,000.  That's more than twice the company's previous record for hourly worker profit-sharing  - $1,775 in 1999.

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