Chapter and Verse

They came to hear what Jerome B. York thinks about General Motors Corp., and he did not disappoint.

In a lengthy, highly structured, state-of-the-union-type speech to the Society of Automotive Analysts, York laid out chapter and verse on what is wrong and right with GM and what it needs to do to turn around its fortunes.

York, who serves as an advisor to Tracinda Corp. and stakeholder Kirk Kerkorian on his GM holdings, says the auto maker needs to cut salaries for its executives, directors and labor force; slash shareholder dividends; and spell out more concrete financial and performance targets.

He also says the company has to narrow its focus to the core elements that will drive a turnaround and do a better job communicating its direction and goals to its workforce and stockholders alike.

GM must take a “clean sheet approach” in restructuring its operations, he says, suggesting cross-functional, cross-geographic teams be formed to explore ways to reduce costs with “no sacred cows allowed.”

The auto maker also “needs to simplify the business,” he says. “There are only so many hours in a day. The focus needs to be on the important levers that can really move the needle.”

York says Kerkorian, who reduced his stake by 12 million shares at the end of 2005 for tax purposes, is prepared to re-purchase those shares plus another 12 million, if GM will detail more specific performance targets. The additional 12 million shares would require regulatory approval, he says.

Although York compliments GM on the designs of some of its upcoming products and says he liked the move to consolidate the GMC, Pontiac and Buick showrooms, he questions the viability of the Saab and Hummer brands, and whether GM should pull out of its equity relationship with Suzuki Motor Corp. and partnership with Isuzu Motors Ltd.