GM Execs Say Design Is Company's New Focus After Cutting Costs

STERLING HEIGHTS, Mich. December 7, 2006; Tom Krisher writing for the AP reported that General Motors Corp. is moving past the cost cuts of 2006 to transform itself into a company that puts car and truck design above everything, company officials said Thursday night.

At GM's Heritage Center in suburban Detroit, Chairman and Chief Executive Rick Wagoner said the world's largest automaker is focused on becoming the world leader in design.

"We want you to see first hand that we at GM are obsessed with, once again, making our cars and trucks leaders in design," he said.

Wagoner also touted the progress of the company's restructuring efforts, which he said have cut $9 billion in annual structural costs while raising quality.

GM Vice Chairman Bob Lutz said the automaker, for the first time in its history, is starting to build vehicles globally, sharing underpinnings and engineering with overseas operations.

The company Thursday night gave reporters a sneak peak at the Saturn Astra, which will replace the aging Saturn Ion in late 2007.

The Saturn Astra is nearly identical to the 2007 Opel Astra, which was designed in Germany and will be built in Belgium. The three- and five-door Astras will share underpinnings with the next generation of Chevrolet and Pontiac compacts.

GM, Lutz said, is "a gigantic corporation -- the biggest -- undergoing profound and radical cultural change like this industry has rarely seen."

He said the globalization will reduce capital and engineering costs, improving the company's bottom line.

GM has lost $3.03 billion in the first nine months of this year after losing $10.6 billion last year. Its losses have been narrowing, though. In the third quarter of this year, the red ink dropped to $91 million.

Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co. Inc. in Memphis, Tenn., said GM clearly is making progress, especially compared with its poor performance in 2005.

"I think they have done a nice job with the turnaround plan," he said. "They've moved aggressively on it this year. They have justification to make those kinds of claims."

But Hastings said it's too soon to say GM has recovered, with predictions of flat U.S. auto sales next year and looming contract talks with the United Auto Workers union.

"It's premature to claim victory at this point, but they've made some good strides," he said. "Let's see if the economy cooperates in 2007."

Hastings said GM may not have seen the end of its sales slide, and end-of-the-year numbers may be misleading.

"I'm not sure that they're entirely there," he said. "They're helped by some easy comparisons last year in November and December," when sales lagged after inventories had been cleaned out by summertime incentives.

General Motors Corp.: http://www.gm.com