Akerson says GM is tackling biggest problems: Europe, pension obligations
 | GM CEO Dan Akerson: "We have to fix Europe, or at least get it to where it doesn't drain the corporate coffers.” |
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DETROIT -- General Motors CEO Dan Akerson said today that the automaker is tackling its problems in Europe and its massive pension obligation as it seeks to revitalize its sagging share price.
Speaking to reporters before GM's annual shareholders meeting at the automaker's headquarters here, Akerson cited its European problems, pension obligation and the overall threat of the European debt crisis as the main drags on GM's stock.
"First and foremost, we have to fix Europe, or at least get it to where it doesn't drain the corporate coffers," Akerson said.
In the first quarter, GM lost $256 million in Europe. The automaker has lost more than $16 billion there since 1999.
Akerson said GM recently struck new labor agreements with its unions in Poland and England, which he said has "a significant impact on our potential future in Europe." He said GM is in "constructive" discussions with its unions in Germany and elsewhere in Europe.
In late June, GM officials are expected to outline plans to stem the losses in Europe.
'Would look at' hourly pension buyout
Akerson also said he would consider offering a pension buyout to GM's more than 400,000 hourly retirees and dependents as a way to reduce the $134 billion pension obligation on its books, which Akerson said is the largest of any U.S. company. This month, GM said it will offer a buyout to some of its salaried retirees.
"It's certainly something we would look at if the opportunity arose," Akerson said of a possible hourly pension buyout. Many analysts have speculated that GM could take that step as a way to mitigate one of the largest threats still hanging over the company three years after its 2009 bankruptcy.
Akerson defended the company's beaten-down stock price, saying that many automotive rivals also have seen their shares sink amid Europe's debt crisis. He said, "There are a lot of things to be pleased about" with GM's performance globally, including strong profits in the United States and a growing market share in China.
Photo credit: GM
Shares under pressure
For the year, GM shares were up 8 percent through Monday, to $21.92. But the shares fell 45 percent last year, despite record pretax profits of $7.6 billion, and have dropped 33 percent since the automaker's November 2010 IPO.
The shares have come under pressure amid investor concerns about GM's continued losses in Europe and its profit outlook in North America this year, where it's in the process of a costly changeover to its next-generation pickups and SUVs, which are among its most profitable vehicles.
Some analysts also have said that the U.S. Treasury's 32 percent stake in GM, a result of the automaker's government-led bankruptcy, continues to weigh on investor sentiment. GM executives have made clear that they would like the government to sell the shares but that the timing is up to the Treasury. The Treasury hasn't said whether it is likely to dispose of its stake in small increments or in one giant sell-off.
Akerson declined to comment when asked if GM has been in discussions with Treasury officials about its plans for the GM shares.
But earlier today, speaking on CNBC, Akerson called on the U.S. Treasury to articulate a plan for the GM shares it owns.
He said there are "two dimensions" to the options for the Treasury.
"Now, they have to say are they an investor in a traditional sense looking for a return, or do they get a return in the social benefits that came" with government ownership, Akerson said on the program. Those benefits include the preservation of thousands of jobs at GM and the automaker's suppliers.
Akerson also said the Treasury has been a "good partner" and that the Obama administration "is doing what they should be doing" regarding GM ownership.
Cutting costs
Akerson has been pressing GM management to cuts costs in marketing, engineering and other areas as he seeks to lift the automaker's pretax profit margins to 10 percent within the next few years, from 6 percent in 2011. That would put GM on par with the industry's most profitable players, including Hyundai Motor Co.
In the past year, GM has announced plans to cut in half the number of vehicle platforms it uses globally to 14, by 2018. It's part of a broader plan to reduce GM's vehicle-development expenses by $1 billion annually, in part by avoiding on-again, off-again programs.
Also, GM's marketing division hopes to save $2 billion over the next five years through a recent consolidation of its outside media-buying and creative advertising agencies.
"We're looking at every aspect of the business in the same way," Akerson said, adding that GM is about 25 percent of the way through its overall cost-cutting effort.
You can reach Mike Colias at mcolias@crain.com.
