DETROIT - When it comes to unnecessary expenses at General Motors, CEO Rick Wagoner is putting his foot down. No more Generous Motors.
Since midsummer, GM has clamped down on hiring, overtime, travel expenses and use of outside consultants. Wagoner, in an interview with Automotive News, said the cost cutting is permanent.
'We're in a different kind of environment,' Wagoner told Automotive News. 'The days of pricing are gone. The competitive set is tough. We need to view these approaches on costs as fundamentally changing the way we think about the business,' he said.
He was interviewed for Automotive News' annual Talk from the Top series. A transcript of the interview will appear Monday, Nov. 6, in the paper and on automotivenews.com.
RECORD SALES, TIGHT BELTS
Despite record vehicle sales, growing competition from Korea and Europe and the incentive wars have kept U.S. vehicle prices flat in recent years. Without the ability to raise retail prices, companies such as GM are trying to cut costs to improve profits.
'The whole industry is really tightening their belts right now,' said David Cole, director of the Center for Automotive Research at the Environmental Research Institute of Michigan. 'I don't think there's anybody who is ahead of the game. They are all concerned.'
Wagoner cited hiring as one key area that needs improvement. 'We don't do very well in managing hiring in the industry, certainly in the company (GM). We tend to open the spout wide or close it completely,' he said.
Wagoner said he hasn't decreed a companywide hiring freeze. But he said his performance expectations have led to hiring freezes by at least two of his regional presidents: Ron Zarrella of GM North America and Mike Burns of GM Europe.
'I think Ron is putting a pretty tight squeeze on hiring in the U.S., except for new plants and new product program support. And Mike Burns has things screwed down pretty tight in Europe right now. So I basically leave it to them,' Wagoner said.
Customer expectations are so high today that automakers cannot cut corners on vehicle content, he said.
Instead, the industry must look elsewhere to save money. Wagoner said automotive companies are focusing on improving manufacturing, productivity, quality, product development times and advertising efficiency. Also, the industry must eliminate layers of bureaucracy so that decisions are made quickly, Wagoner said.
Tom Kowaleski, a GM spokes-man, said Zarrella has been preaching that GM ideally must have 'a small company mind, and a big company body.'
LITTLE THINGS COUNT
GM is even attacking the little things. For example, GM no longer will send an entourage of employees to events such as September's Paris auto show, as it did in the past. 'If we need to be there, we need the right person there. We probably don't need as many as we used to have,' Wagoner said.
The 47-year-old CEO is looking for changes throughout the company.
Said Wagoner: 'If we just want to do OK in the boom times and scrape along with breakeven in the bad times, I guess we can go back to doing what we used to do.'