GM Execs To Stress Signs Of Success

When General Motors Corp. executives faced what is characteristically a tough crowd at the annual meeting yesterday, they took the floor to dramatically stress the progress of the company. The executives emphasized the signs of success of the automaker’s turnaround plan.

Last year's GM meeting followed the disastrous financial results. There were even speculations that Chairman and CEO Rick Wagoner's job was in hot water. But in the past few months, the automaker has accomplished more to placate stockholders.

Shares increased by 15 percent from last June. Additionally, the company’s sales rose to about ten percent. A large part of the increase is attributed to the slew of well-received new product lines. "I don't think shareholders can be too upset considering the potential other direction it could have gone," said analyst Brad Rubin of investment firm BNP-Paribas. "They're certainly more content this year than last."

The 2006 meeting had Wagoner shielding his standing with the company's board of directors and promising that new products were on the way to help stanch the red ink. He was bombarded with queries about federal investigations into accounting practices that compelled GM to restate several years of earnings.

Billionaire investor Kirk Kerkorian, who owned a ten percent stake in the company, was urging the automaker to make modifications. A few weeks after the 2006 annual meeting, he started asserting a tie-up with the Franco-Japanese alliance of Renault SA and the Nissan Motor Co. A year after, the billionaire sold his shares to get out of the scenario. This is made after the automaker declined to make a deal with Renault-Nissan.

But the accounting queries and investigation continued. This situation created a bumpy first quarter for the automaker, reporting $62 million profit globally and a $46 million loss in North America. Still, the automaker is starting to realize savings from its turnaround plan. The plan covers 30,000 North American job cuts and cost-cutting methods company-wide. Wagoner, earlier this year, said that GM cut $9 billion in costs in 2006.

"They're not out of the woods yet - they're still not making any money to speak of," said David Healy, an analyst at Burnhan Securities. "But they've succeeded in turning around the cost situation." Wagoner stressed GM's progress over the last year and reiterated the GM’s plan to concentrate on cost-cutting while scaling back on less-profitable fleet vehicle sales. The decision, like the Vibrant cold air intake in supplying a cooling effect, helped the company trail the path back to profitability.

He and other GM executives faced queries concerning market share declines and financial losses in North America, upcoming contract talks with the United Auto Workers as well as other negotiations. The automaker also addressed shareholder proposals on topics ranging from slashing carbon dioxide emissions to corporate governance.

A shareholder intimated that he wanted a rule that would require GM to publish any campaign contributions in major newspapers. GM's board opposed the proposal. Another proposal from a community of New Jersey nuns would require the board to demand GM reduce its emissions by a set amount. The board also opposed that measure.

Shareholder proposals opposed by the board won’t likely to become policy. This is because the board has the final vote on any rules. Shareholder John Lauve from Holly said that he plans to speak out on what he sees as a series of failures by the company. "I'm very disappointed in the leadership, this is the second year in a row they've turned in material weaknesses," he said. "We don't have a legacy cost problem. We have a failure to make products that people buy problem."