GM a more flexible, agile company, but still has problems to overcome
Publiée le vendredi 26 mars 2010
General Motors' announcement Friday that it will expand production at two Canadian plants points to the company's new agility, but whether this will be enough to overcome years of bad decision-making remains to be seen.
TORONTO - "They have the optics of success but my suspicion is they have the cash flow of failure and that's what worries me," said Roger More, a professor of marketing at the University of Western Ontario in London.
On the surface, GM appears to have dramatically reversed course in the last six months, making a string of positive announcements at its Canadian operations that culminated Friday with news that the company will recall more than 700 laid off workers - and actually begin hiring again for the first time since 2002.
The recalled workers will go to GM Canada's assembly plants in the southern Ontario towns of Oshawa and Ingersoll to meet strong demand for the Chevrolet Equinox and the GMC Terrain, both crossover utility vehicles that have proven to be extremely popular, particularly in the U.S.
GM plans to ramp up its CAMI plant in Ingersoll to full production by the fall to meet high demand for the Equinox and the Terrain, then use its excess capacity in Oshawa to finish some of the vehicles that are built at CAMI. To do this, a third shift will be added at one of GM's two car plants in Oshawa, the company said Friday.
CUVs are different from SUVs in that they sit on a car platform as opposed to a truck platform, and are lighter in weight and more fuel efficient as a result.
GM Canada spokesman Tony LaRocca said combined sales of the two vehicles are up 100 per cent in Canada and 128 per cent in the U.S. so far this year.
The speed with which the Equinox and Terrain are selling compare "very favourably" to their competitor vehicles, said Darren Slind, country manager for Canada with consumer survey firm J.D. Power and Associates.
Both GM CUVs sit on dealers' lots for an average of 13 days before they're sold. By comparison, Toyota's RAV4 also takes an average of 13 days to sell, while Ford's Edge takes 20 days and Honda's CRV takes 25 days.
The GM vehicles' popularity can be attributed to their favourable ratings in terms of fuel economy, quality and dependability, Slind said.
"There is lots of evidence over the last number of years, not just in 2009 but over the last several years, that General Motors has been making continuous gains in both initial quality and long-term dependability," Slind said.
This goes against the popular perception that GM was struggling with the quality of its vehicles right up until it filed for bankruptcy protection in the U.S. last year and dramatically restructured its operations with the help of billions of dollars in government aid.
But analysts say many of GM's problems stemmed from a combination of high labour costs, too many models and consumer perception of poor quality, which Slind said always tends to lag reality.
While the automaker overcame many of these problems during its reckoning in 2009 - which saw it emerge from bankruptcy as a leaner, more efficient company with reduced labour costs - it still has a long way to go, said More.
"These two vehicles are doing well because they're in a hot segment and they're quite goods cars... but if you look at the entire portfolio it's still way too big and there's a lot of their cars that aren't doing well," he said.
"The overall picture is still one with great risk."
Whatever the problems GM still has to overcome, Friday's announcement still points to a more flexible, agile company, according to Bill Pochiluk, president of industry adviser AutomotiveCompass.
"I think there's clearly a new sense of urgency at General Motors, and here's a situation where they can optimize investment in the two locations," Pochiluk said.
"If it's successful, we would expect General Motors to do more of this across their whole system," he added.
Friday's announcement follows several pieces of good news from GM Canada since last fall. In October, the company said it would add a third shift at CAMI, re-hiring about 350 workers. Then, late last year, GM said it would invest another $90 million to increase capacity at CAMI, resulting in the recall of another 280 workers.
And in November, the company said it would add a second shift in Oshawa in 2011 to support production of the new Buick Regal and Camaro convertible, bringing back 700 workers.
Source : Kristine Owram, The Canadian Press