The Case For GM – It’s Not What You Think

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The global credit crisis has now placed the auto economy front and centre in economic discussions in the United States, Canada and indeed worldwide. There are two important questions we have been receiving more than any other: What can struggling auto companies do to change and become sustainable? And how did we get to this? The largely under-reported (or ignored) answer is that a profound, massively expensive transformation has taken place over the past 2 years at GM that now sees us offering more new hybrid models in the 2009 model year than any other auto manufacturer, leading on R&D and the introduction of electric cars, winning many prestigious new car and green technology awards and, most important, placing GM’s cost structure (including our labour and legacy costs) on track to be among the lowest of any global auto manufacturer. That transformation continues with enormous investment and not a small amount of pain. At GM we are focusing our resources on our new fuel efficient vehicles and advanced environmental technologies – and a new sustainable, profitable global business model for the future.

So then, how did we get to today’s discussions about the sector needing loans to keep operating? How is it that we suddenly appear to have literally hundreds of thousands of jobs at stake? Put simply, while we have invested in massive change, the sudden credit crisis (that has now left over 3.5 million homes in the US without owners) leaves many auto companies without access to the cash or credit needed to ride out what has become the worst US new vehicle market decline in 25 years. Having made massive investments in new technologies and in our own transformation, GM now faces a US market decline that in just one year is larger than the entire Canadian auto sector. Put another way, you could now close down Canada’s entire auto production and there would still be oversupply in today’s US market.

The US economy and auto market will eventually recover. Until it does, auto companies need to keep employing, purchasing, researching, developing and building the cars of the future. Public and pundit perceptions of GM have understandably not caught up with changes that have and are being made in GM’s business model. Consider that:

In the 2009 model year, GM offers more hybrid vehicle models than any other auto company•

GM Canada was the first auto company in Canada to build hybrid and fuel cell vehicles•

GM does more R&D in Canada than the rest of the auto industry combined•

GM Canada sells the most small cars of any automaker in Canada (more than Toyota, Honda, Mazda or Nissan n 2007)

GM won North American Car of the Year in each of the past 2 years (Chevy Malibu 2008, Saturn Aura 2007)•

GM won the best new small car in Canada in each of the past 2 years (Pontiac Vibe 2009, Saturn Astra 2008)

GM is on track to sell the Chevy Volt extended range electric vehicle starting in 2010

GM will close 4 large truck plants in North America and increase production of new small fuel efficient cars

And GM has made (and continues to make) cuts and changes that put us on track to reduce our global cost structure to among the most competitive in the industry by 2010. And we will continue to do so beyond that date.

GM and others in the industry need to complete the job in this credit crisis. We need to keep employing, supporting suppliers and dealers and developing the cars of the future. Canada needs us to do that too. That’s what the public expects from car companies. And that’s exactly where we are driving at GM.

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