GM Restructures Engineering, Design Operations to Speed Up Product Development, Lower Expenses

DETROIT March 1, 2005; John Porretto writing for the AP reported that General Motors Corp., the world's largest automaker, said Tuesday it is restructuring its engineering and design operations to better leverage global resources, accelerate product development and, ultimately, reduce expenses.

The most significant changes place three top North American executives in new positions with global responsibility. John Smith assumes the position of group vice president for global product planning, Jim Queen becomes vice president of global engineering and Ed Welburn takes over as vice president for global design, responsible for all product design initiatives.

The company said the moves involve no job cuts.

"GM's future success in the global automotive marketplace will depend heavily on our ability to fully leverage our broad and deep resources, especially in the critical area of product development," GM chairman and chief executive Rick Wagoner said in a statement.

He said the changes would help get more cars and trucks to market faster, provide more value to customers and increase global sales.

Smith, 54, has been group vice president of North American sales, service and marketing, and Queen, 56, has overseen engineering for GM North America. Welburn, 54, will retain responsibility for North America design.

All three will report to Bob Lutz, GM's vice chairman of global product development and chairman of GM North America. One of Lutz's tasks in recent years has been evaluating GM's global resources and devising ways to use them more effectively and efficiently.

Rising health care costs and lingering struggles in its European operations helped drive down GM's profit by 37 percent in the fourth quarter, and the automaker has said it expects a rough start this year.

GM's U.S. sales rose only slightly in January, and results for February were off 12.7 percent from a year ago, the company reported Tuesday.

GM officials have said the company expects break-even or better results in the current quarter, reflecting lower vehicle production and sales of less profitable cars and trucks. They expect U.S. vehicle sales to be down slightly in 2005 from robust volume last year.

GM's European operations are expected to get off to a slow start too, but an ongoing restructuring should result in cost savings later in the year, the company said.

Banc of America Securities on Monday downgraded GM to "sell" from "neutral," predicting continued market share losses for the automaker.

Also Tuesday, GM said it plans to build a new mid-size Cadillac at its plant in Trollhaettan, Sweden, a sedan designed to compete with BMW's 3 Series and Mercedes-Benz's C-Class line.

The decision to build it in Sweden comes after GM Europe said late last year it would cut as many as 12,000 jobs in Europe, where GM is struggling to end years of losses amid fierce competition and weak demand.