General Motors' strategic priorities for financial restructuring

General Motors

GM's number one priority must be to cut costs. The company spends $2,500 more than its Japanese rivals to build each car and truck in the U.S. (Robison).

Health care benefits account for a huge chunk of this amount, about $1,400 for each vehicle (Porretto). Unfortunately, according to Porretto, GM's contract with the UAW isn't set to expire until 2007 and the union isn't open to opening up contract negotiations until this time. Better relations between the union and management will be necessary to avoid confrontation and win concessions.

However, all the cost cutting measures in the world won't do any good if GM doesn't become more proficient at delivering the products that customers want. Even though the company rolled out an industry-leading 29 new vehicles in 2004, its U.S. sales so far this year are off nearly 5% (Porretto). Most notably, the company has faltered in developing smaller, fuel efficient cars and is late in the move toward hybrids (Robison). Therefore, GM must downsize its portfolio and begin rebuilding it with cars that reflect current market dynamics.