GM considers making more Europe cuts

General Motors could announce more plant closures in Europe this fall, CFO John Devine said Wednesday.

2001 Management Briefing Seminars index
"In Europe, we're taking a hard look at the business, and we'll have something to say in a few months," Devine said at the Management Briefing Seminars.

No plant shutdowns are planned for North America, though Devine didn't rule out such actions.

"I mean, we always look at things, but there's no announcement we're making today," he said.

GM, like much of the industry, is burdened with excess capacity, though Devine wouldn't say how much.

He stressed that automakers and suppliers must fix the capacity glut to strengthen the industry's financial health.

"That's been an issue for us for some time, and we're working very hard on it," he said. "The best way to do it is to create great new products that absorb that capacity, and we're doing just that."

New cuts in Europe would be on top of a planned reduction of 400,000 units announced last December. That plan included the elimination of car production in Luton, England, in 2002; the closure of the Torbali, Turkey, plant this year; and reduced production at other plants.

Prior to those moves, GM had the ability to build 2.5 million units annually in Europe. But 2000 sales fell to less than 1.9 million from 2 million in 1999, and the company's market share in Western Europe fell from 11 percent to 10.1 percent.

During Wednesday's program, Devine also said:

  • GM would evaluate EchoStar Communications Corp.'s $29 billion bid for Hughes Electronics Corp. "If it's a serious proposal, and we think it is, we're going to consider it," Devine said.

    GM has been negotiating with Rupert Murdoch's News Corp. for several months on a Hughes deal.

  • CEO Rick Wagoner's 5 percent net profit-margin goal won't be achieved in 2001.

    "We're not doing as well as we'd like," Devine said.

    "You saw the first quarter and the second quarter, so we have more work to do there. It's not an easy one to be done in this environment, but it's still the right goal."

  • You can reach Amy Wilson at awilson@crain.com

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