GM to cut sales jobs in consolidation Goal is to pare costs, get more competitive

Auto industry

August 05, 1998|By BLOOMBERG NEWS

DETROIT -- General Motors Corp. said yesterday that it plans to consolidate its North American sales unit and cut several hundred jobs in an attempt to reduce costs and become more competitive.

The company expects to save as much as $300 million annually by cutting as much as 20 percent of the staff of about 5,000 by January. It also will reduce the role of executives at its Chevrolet, Pontiac-GMC, Buick and Oldsmobile divisions.

The move is the latest by marketing chief Ronald Zarrella to speed decision-making as the company's U.S. market share, which has fallen to 31 percent this year from 45 percent in the 1970s, continues to decline. The streamlining is expected to continue as GM seeks to catch more-efficient rivals Ford Motor Co. and Chrysler Corp.

"It's definitely better than the archaic system they have now," said Merrill Lynch & Co. analyst Nicholas Lobaccaro.

The company plans to establish offices for sales and service, marketing and customer service for five of its vehicle brands, including Chevrolet and Pontiac-GMC.

GM shares fell $1.50 to $69.625 on the New York Stock Exchange yesterday. Its shares have risen about 14 percent this year while Ford shares have climbed 66 percent and Chrysler's have risen 59 percent.

Chevrolet, Pontiac and the other divisions once were the center of power at GM. Through the 1970s, strong division executives ran their own plants and had wide authority to make product-planning decisions. The assembly plants were eventually consolidated into a single North American unit.

Zarrella, a former Bausch & Lomb Inc. president, was hired in 1994 and has begun to exert more control over GM marketing, including a shift toward a focus on boosting the company's brand recognition.

Under the new structure, which is modeled after those of Pepsico Inc. and other companies, GM representatives will be organized by region and will serve all of the company's brands. Chevrolet General Manager John Middlebrook will head the brand management and marketing group, and Pontiac-GMC General Manager Roy Roberts will oversee sales and service.

They will report to Zarrella, the vice president and group director for North American sales, service and marketing. Two of the divisions, Cadillac and Saturn, aren't part of the reorganization. Saturn is already undergone such a reorganization.

The job cuts will primarily affect vehicle sales and service to GM's 8,000 U.S. dealers, GM said. Dealers, who sell several GM brands, said they were called on by representatives for each division, all of whom performed the same tasks.

"We're too complicated and we're too slow," Zarrella said.

"It's the precursor to other changes," such as eliminating unprofitable car and truck models, said Lobaccaro. Those include the Pontiac Firebird, Chevrolet Camaro and Cadillac Eldorado.

Monday, the company said it will sell as much as 20 percent in its Delphi Automotive Systems parts unit to the public next year and distribute the rest to shareholders.

GM ended the costliest labor dispute in its history last month. That settlement lets the company trim fewer jobs than it wanted to and restricts its ability to shed money-losing plants while offering what analysts described as temporary labor peace at some plants.

Pub Date: 8/05/98

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