Co. Chairman and CEO Ed Whitacre tells Wall Street analysts and investors the reorganized auto maker has made tremendous progress since its bankruptcy one year ago and positioned itself for growth both at home and abroad.
“We’ve improved our focus,” he tells the group gathered at the auto maker’s Warren, MI, technical center Tuesday for the briefing and product drive. “Today, we have a clear and simple vision at GM.
“Ask any employee at GM and they’ll tell you our vision is to design, build and sell the world’s best vehicles,” adds Whitacre. “We talk about that a lot here. If we once did things that didn’t support this vision, and believe me we did plenty of those, it’s dead now or it’s on its way out. It’s breathing its last breath.”
Whitacre tells the group, which the auto maker gathers ahead of an anticipated initial public offering later this year, such a focus allows the company to run its business more efficiently and effectively than ever before.
GM also has changed the way it conducts business, he notes, placing an emphasis on speed, simplicity and accountability.
“And that’s helping us deliver real-world, real-time results,” says Whitacre, who took over as GM chairman after President Obama’s automotive task force pushed then-Chairman and CEO Rick Wagoner aside as the auto maker exited its 39-day bankruptcy.
Whitacre later added the title of CEO after Wagoner’s replacement in that role, longtime GM executive Fritz Henderson, was asked to resign in November. A whirlwind spin-off attempt of the auto maker’s struggling European operations, which GM now is reorganizing itself, reportedly hastening Henderson’s ouster.
However, Whitacre is not the only change atop the auto maker. GM has reorganized its management team with a combination of fresh faces and veterans, such as hiring Chris Liddell from Microsoft Corp. as its new chief financial officer and moving veteran Nick Reilly from its international operations to head the European restructuring.
Rising-star Mark Reuss was appointed head of GM North America and has shuffled numerous U.S.-based executives, including the hiring of Joel Ewanick fromMotor Co. Ltd. to lead his marketing team.
“This has allowed us to bring a lot of fresh, new thinking to the management of the company, and the company runs faster and smarter,” Whitacre says.
He also boasts of GM’s work in the last year to grow market share in key emerging nations, such as China, India and Brazil.
“All-in-all, we are the best-positioned U.S. auto maker in the critical emerging markets,” Whitacre says. “Nobody can top our position in the world.”
Restructuring in Europe continues, he adds, driven by a new labor agreement, a multi-year product offensive, and a 2-tier brand strategy designed for growth in Central and Eastern Europe. However, GM does not expect profitability in the region this year and timing for getting back in the black remains uncertain.
Whitacre says rapid progress is being made in fixing GM’s North Americas operations, its most important market and one under some form of restructuring for most of the previous decade.
“We sell more vehicles today with four brands than we did a year ago with eight brands,” he says. “We’ve lowered our break-even point to the bottom of the cycle. We’ve invested billions in new products and technologies. We have reduced our inventories. We’ve improved our average transaction price, and we’ve improved our capacity utilization.”
According to Ward’s data, GM sold 882,385 light vehicles through May, a 14.8% gain on year-ago’s 768,353. In the same period, inventories shrunk to 406,963 units at the close of May, down 38.6% against 662,949 in like-2009.
But last year ranked as the industry’s worst performance in decades.
The auto maker also has closed several production facilities and shed thousands of jobs and dealers. Additionally, the company has changed its approach to production by allowing demand to pull product from assembly plants instead of pushing vehicles into the market to cover one-time massive structural costs.
As such, GM believes it now can earn a profit in the U.S. on 10.5 million-11.0 million vehicle sales annually.
Whitacre further touts GM’s ability “to design and build great vehicles that can compete with the best in the business and we’re serious about using technology as a competitive advantage.”
But most importantly, he says, “we’re making money,” referring to GM’s $865 million profit in the year’s first quarter.
“Personally, I feel good about how far we have come in one year, and I’m confident we’re going to go a lot further in months and years ahead of us,” he says.
Whitacre opened the meeting this morning, and the leaders of GM’s various units around the world are scheduled to follow throughout the day with deeper dives into the new company’s global restructuring.
Although today’s function is designed to familiarize investors with its business, GM is not planning to discuss plans for an IPO, designed to begin winding down the U.S. government’s 60.8% stake and make the auto maker a publically traded company again.