Wagoner's own words on GM
In an interview GM chief shares his perspective on cost cutting and operating leverage.
By Alex Taylor III, Fortune magazine

DETROIT (FORTUNE) - As General Motors gets ready to launch the first of its new sport utility vehicles, embattled General Motors chairman and CEO Rick Wagoner said he expects to see GM results improve this year and get much better in 2007.

In an interview at the Detroit Auto Show, Wagoner said he's ignoring his critics and sticking with his deliberate game plan to turn GM around.:

"I feel like I'm certain I know exactly what we need to do to get this business turned, and I probably have a better sense than anyone about how fast we can do it.

"There are some things like how is the market going to react to the new Chevy Tahoe that obviously I don't know. The revenue side is not always something where my view is the right one."

On costs ...

"What we've tried to do on the cost side is address issues of significant uncompetitiveness. We're thinning out the organization, we're taking out structural costs this year, we're trimming back some of our total sales and marketing spend, we are getting some engineering efficiencies...

"We're trying to do it in ways that are consistent with the way we want to run the business. Back in '92, '93 we did significantly cut capital expenditures; I think we paid a price in '96, '97. We're trying to not do that."

On labor ...

"It has been a little frustrating., Everybody says you should get more concessions from the union. I can assure you these same people, the day that we push that too far and there's a whole bunch of strikes , will be back saying 'Hey you guys, what are you doing?'...

"So there is an art to managing it. I think I have as good a sense of that as anybody around. I've been in it for awhile, I've been through the mid-90s , worked very hard to develop a good relationship with [the UAW.]"

On momentum ...

"2006 is going to be a transition year in North America and we are going to have a restructuring charge and things of that sort. But I think from an operating perspective, we're going to have a very interesting set of moves this year where some of these cost initiatives that we've announced will start off slow but they are really going to ramp up as the year goes on.

"The magic in this business is that it is highly leveraged. If you get the costs down and the revenue up, you can get a faster, stronger move. Next year we are absolutely in the sweet spot of our product program: large SUVs out one year, ramping up full-size pickups. That's a good position to be in. I do think '07 could be a much better year, but '06 needs to be a better year too, and I have every reason to believe it will." Top of page

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