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GM merging auto units?
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October 5, 1998: 8:16 p.m. ET
GM may merge N. American and International units to boost efficiency
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NEW YORK (CNNfn) - General Motors Corp. is expected to announce on Tuesday that it will merge its North American automotive operations with its International division, industry analysts said Monday.
The move, part of a long-term strategy to reduce the time and money GM spends on new models, could also result in a promotion for Richard Wagoner, the president of GM's North American Automotive Operations and one of the executives in line to replace Chief Executive Officer Jack Smith one day.
Burnham Securities analyst David Healy said GM (GM) may appoint Wagoner to the post of chief operating officer in charge of all GM automotive operations, giving him tremendous influence over the company's car and truck business around the world.
GM officials declined to comment on the move, but the company scheduled a news conference in Detroit on Tuesday in which it plans to brief employees and take questions from reporters.
GM, which has the highest production costs of Detroit's Big Three automakers has been eager to cut costs in the face of similar moves at Ford Motor Co. (F) and the recent merger between Chrysler Corp. (C) and Daimler-Benz (DAI).
However, analysts said it may not be easy for GM to slash costs by merging its automotive operations into one organization.
For example, while GM could probably save hundreds of millions of dollars by designing a single family of engines that could be used at home and abroad, other issues, such as styling, may be more efficient if they remain separate.
"On paper, it could make GM more efficient, but what may work in terms of a engine may not work in terms of styling," Healy said.
GM has about 14 global vehicle platforms which serve as the basic chassis for an automotive vehicle. Recently Smith said the company would like to cut that figure in half.
Earlier this year, GM shifted the International Operations' base to corporate headquarters in Detroit from Zurich, Switzerland, and announced plans to cut its European workforce of 86,000 employees by 20 to 30 percent over the next five years. 
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