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GM CEO is starting to look cold-blooded
IN person, General Motors Co chief executive officer Mary Barra is smiling and congenial. As a manager, she is looking downright cold-blooded. Her move this week to close five plants and slash 14,000 jobs in North America - where GM earns most of its profits - is the most recent example of her willingness to cut any staff, any vehicle and stop doing business any place that does not make fat returns.
She is taking much of the savings and ploughing it into new technologies, such as electric and autonomous vehicles, betting that GM's future growth will come from selling rides in self-driving electric models, not building cars and lorries for emerging markets and finding new buyers in the US.
GM's Cruise LLC unit is developing the company's self-driving technology, and plans to have a model ready to operate as a ride-hailing business starting late next year. GM bought the unit for US$1.5 billion and is investing about US$1 billion a year in it.
Ms Barra's gamble to cut the core business and bet on self-driving taxis "is a huge risk", said Maryann Keller, a longtime industry analyst with a self-titled consulting firm in Stamford, Connecticut. "There is no proof that the technology will be ready in 24 months or that it will be a profitable business."
Ms Keller added that boosting electric car output will be important for the Chinese market. Starting in January, all major manufacturers there must meet minimum requirements for producing new-energy vehicles. Here are some of the changes that Ms Barra has made since becoming CEO in January 2014.
Her first big move was cutting back in Russia, idling a St Petersburg plant in 2015 and halting sales of GM's Opel brand and most Chevrolet models.
The company still sells a few high-priced models that it exports into the country.
GM closed a plant in Indonesia in 2015 and fired 500 workers after reportedly losing about US$200 million on the Chevrolet Spin.
Ms Barra sold GM's Opel business in Europe to PSA Group in 2017 for US$2.2 billion and assumed more than that in pension liabilities to exit the market. The Detroit carmaker acquired 80 per cent of the German company in 1929 and purchased the remaining 20 per cent in 1931.
Ms Barra decided to scrap a US$1 billion investment in India in 2017 and stop selling Chevrolet models there. The company's market share was just one per cent, and its cars made very little profit.
- South Africa
GM sold its South African commercial-vehicle manufacturing plant and other operations to Isuzu Motors in 2017 and phased out its Chevrolet brand there. GM began vehicle production in the country in 1926.
GM closed its Holden factory in South Australia in October 2017, ending more than a century of car manufacturing on the continent.
- South Korea
GM announced in February that it planned to close one plant and threatened to leave South Korea entirely if it did not get concessions from workers to stem losses. After several rounds of negotiations, the company said in April that it had reached a deal to ward off a potential bankruptcy.
General Motors' attempt to rejuvenate its business once again is made more difficult by a dramatic slowdown in the world's largest vehicle market: China.
During previous shakeups, including its bankruptcy and recovery almost a decade ago, the US carmaker could rely on steadily growing demand in China that helped it weather cooling sales at home.
Not this time around - the car industry's sales in China have dropped for five months and are facing their first annual drop in at least two decades. "GM is in a very difficult situation," said Cui Dongshu, the secretary general of the China Passenger Car Association.
"They have to shift more resources on new technology development to prevent what happened in 2008 from happening again. But it is more difficult as the sliding China market cannot offer them a cushion as it did a decade ago."
The largest US carmaker posted a 15 per cent drop in deliveries in China for the three months ended Sept 30, its first quarterly report since a trade dispute between the world's two biggest economies began escalating in July.
GM's sales in China fell 2.5 per cent in the first nine months of this year, performing worse than the overall passenger-car market. The company is mainly losing market share to Japanese carmakers, especially in compact sedans and sport utility vehicles, said Yale Zhang, an analyst with Automotive Foresight Co in Shanghai.
GM said on Monday that it will cut more than 14,000 jobs as part of a sweeping realignment to prepare for a future of electric and self-driving vehicles. It plans to close five plants in North America. It also said that two plants in other regions will face the axe, without identifying them. BLOOMBERG