SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported) December 12, 2000
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GENERAL MOTORS CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-143 38-0572515
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
300 Renaissance Center, Detroit, Michigan 48265-3000
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313) 556-5000
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On December 12, 2000, General Motors Corporation's (GM) issued the following
press releases on actions to improve competitiveness, profitability; revises
fourth quarter outlook, special charges; Oldsmobile Division will be phased out
over the next few years; GM Europe initiates major restructuring plan; Adam Opel
AG to accelerate restructuring, and Vauxhall announces major manufacturing
restructuring. The releases are as follows:
ITEM 5. OTHER ITEMS
GM ANNOUNCES ACTIONS TO IMPROVE COMPETITIVENESS, PROFITABILITY;
ALSO REVISES FOURTH QUARTER OUTLOOK, WILL TAKE SPECIAL CHARGES
DETROIT -- General Motors today announced a series of actions intended to
strengthen the company's competitiveness in a rapidly changing business
landscape and better focus its resources on key growth activities.
In making the announcement, GM President and Chief Executive Officer Rick
Wagoner said GM will phase out its Oldsmobile marketing division and brand over
the next several years - a measure that will accelerate GM's effort to focus
resources on strengthening its market position and growth opportunities. The
company also intends to phase out passenger car production at its Luton,
England, site as part of plans to restore profitability at GM Europe (GME). In
addition, GM will reduce salaried employment levels by 10 percent in North
America and Europe during the next year.
Phase-out of Oldsmobile
The phase-out of the Oldsmobile division further streamlines GM's product
portfolio, focusing engineering and marketing resources more sharply on the
company's most successful products and brands. It will also facilitate the
development of more innovative products with shorter lifecycles.
"This is a very difficult decision for us," said Wagoner. In recent years, major
investments have been made in new Oldsmobile products expending significant
capital and engineering resources to reposition the brand. Even with the
introduction of highly regarded new products, and with the great efforts of the
Oldsmobile dealer and marketing team, the brand's sales and profit performance
have remained under pressure.
"Our teams worked hard to find profitable ways to further strengthen the
Oldsmobile product line, including consideration of products developed with our
global alliance partners," Wagoner added. "But in the current environment, we
simply couldn't find an approach that would ensure Oldsmobile's future success."
Oldsmobile's current model lineup will continue to be produced and sold until
the end of their current product lifecycles or as long as they remain
economically viable. GM will work proactively with its dealers to ensure a
smooth and orderly transition of existing franchises, and to ensure that
Oldsmobile customers continue to receive quality service and parts. (See
separate Oldsmobile press release).
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GM Europe's capacity reduction and cost improvements
GM Europe's plan to reduce production capacity and salaried employment are
expected to generate significant cost savings to aid in returning the region to
profitability. This includes a restructuring of Vauxhall Motors' manufacturing
operations in the UK. One of Vauxhall's two plants in Luton, England, will cease
passenger car production in 2002, and the remaining Luton facilities will
concentrate exclusively on commercial and off-road vehicles. Combined with the
previously announced leanfield conversion of Opel's Russelsheim plant, GM
Europe's total installed capacity will be reduced by more than 400,000 units by
2004. In addition, lean manufacturing implementation will be accelerated across
all European plants.
Other initiatives include implementing efficiency measures at the national sales
offices throughout Europe, and accelerating the consolidation of certain
back-office and support functions so that projected savings will be achieved
sooner. Overall, GME will achieve a salaried employment reduction of 10 percent
during 2001. When combined with production employment reductions, GME's total
employment level will be reduced by 5,000 within the next 12-18 months.
Another area of planned savings is further material cost reductions, driven in
part by synergies derived from GM's recent alliance with Fiat. In addition,
improvements in current product material cost will be accelerated by the
establishment of a dedicated joint purchasing/engineering project team that will
work with GM Europe's supplier community.
Finally, GM Europe plans to maintain the same significant investment levels of
the past few years in order to support its aggressive future product lineup.
Financial outlook and special charges
General Motors is revising its outlook for financial results in the fourth
quarter. GM North America and GMAC remain on track. However, lower than expected
sales volume coupled with increasing price pressure in key European markets such
as Germany, will result in GM Europe experiencing significantly greater losses
than in the third quarter of this year. Additionally, GM Asia Pacific results
will be affected by losses at Isuzu and other factors.
GM now expects to post fourth quarter consolidated net income of between
$550-$600 million, or $1.10 - $1.20 per share of GM $1-2/3 common stock. For the
calendar year 2000, GM expects to post consolidated net income of approximately
$4.9 - $5.0 billion, or between $8.47 - $8.57 per share. GM also noted that its
overall tax rate for the calendar year will be approximately 31 percent,
slightly lower than previously expected due to a shift in regional earnings.
These foregoing estimates exclude the effect of special items, which include
charges totaling $1.5 - $2.5 billion before tax ($900 million to $1.5 billion
after tax, or about $1.60- $2.75 per share of GM $1-2/3 common stock) to account
for the following:
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- Costs associated with the phase-out of the Oldsmobile division and brand;
- Employment costs and the write-down of production equipment associated with
the reductions in production capacity in North America and Europe. These
actions affect approximately 4,000 U.S. employees at four plants in the
U.S. as detailed below. The actions primarily at the Luton assembly plant
in England will affect approximately 2,000 employees.
- Reserves for certain legal matters related to prior business
restructurings.
Also, in the fourth quarter GM will report a $1.2 billion after-tax gain ($0.65
per share of GM $1-2/3 common and $0.90 per share of GMH) on the previously
announced sale of its Hughes satellite manufacturing business to the Boeing
Company.
Employment and production reductions in GM North America
In North America, GM continues to implement previously announced actions to
convert and reduce production. GMNA will also reduce salaried employment,
including contract staff, by 10 percent over the next year. The ongoing
convergence of GMNA car and truck groups into streamlined engineering and
manufacturing organizations, which will be completed as of year-end 2000, has
provided opportunities to allocate engineering and design resources more
efficiently, and reduce redundant staff and support operations. Further
employment reductions will be achieved by accelerating attrition in GMNA through
a voluntary separation and early retirement program.
The previously announced production plant actions in the United States are
necessary as GM prepares to align production with market demand and convert
capacity to produce more trucks. The assembly operation in Oklahoma City, Ok.,
will be converted for truck production, and production of its current product,
the Chevrolet Malibu, will transfer to the Lansing, Mich., assembly plant in
June 2001. The Delta Engine plant in Lansing, Mich., will be idled in September
2001. At the assembly plants in Wilmington, Del., and Spring Hill, Tenn.,
production volume will continue at reduced levels.
GM anticipates that many of the affected U.S. hourly workers will have an
opportunity to move into other openings at GM facilities or take advantage of
retirement provisions in the UAW-GM national agreement. Those who remain on
layoff will receive comprehensive wage and benefit protection under the contract
or, in Spring Hill's case, under the Memorandum of Agreement.
In this press release and related comments by General Motors management, our use
of the words "expect," "anticipate," "estimate," forecast," "objective," "plan,"
"goal" and similar expressions is intended to identify forward looking
statements. While these statements represent our current judgment on what the
future may hold, and we believe these judgments are reasonable, actual results
may differ materially due to numerous important factors that are described in
GM's most recent report on SEC Form 10-K (at page II-20) which may be revised or
supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors
include, among others, the following: changes in economic conditions, currency
exchange rates or political stability; shortages of fuel, labor strikes or work
stoppages; market acceptance of the corporation's new products; significant
changes in the competitive environment; changes in laws, regulations and tax
rates; and, the ability of the corporation to achieve reductions in cost and
employment levels to realize production efficiencies and implement capital
expenditures at levels and times planned by management.
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General Motors Announces Phase-Out of Oldsmobile
Detroit, Mich. - GM announced today that the Oldsmobile Division will be phased
out over the next few years.
In making the announcement, GM President and Chief Executive Officer Rick
Wagoner and Executive Vice President and President North America Ron Zarrella
said that despite major investments over the past few years that resulted in
critically acclaimed new Oldsmobile products, the division was still
unprofitable and its sales volume continued to erode.
"We stretched to find profitable ways to further strengthen the Oldsmobile
product line, including developing products with our global alliance partners,
but in the current environment, there was no workable solution," said Wagoner.
Wagoner added this has been a very difficult and painful decision because of the
history of the Oldsmobile division. "It is the oldest automotive brand in
America with a history that is rich with innovation and success stories,
including dozens of legendary cars, and over the years it was one of the jewels
in the General Motors' crown," he said.
"In recent years, we have made major investments in new products for Oldsmobile
- significant capital and engineering resources - in an effort to re-position
Oldsmobile in the market," Zarrella said. "Even with the introduction of several
great new products, the brand's sales and profit performance remain under
pressure."
A dramatically changing North American automotive landscape is driving GM to
focus its resources even more sharply on growth opportunities and on making the
entire brand portfolio more effective in the marketplace. That means a portfolio
dominated by innovative products with shorter lifecycles.
"I want to assure you that we are very sensitive to the concerns and needs of
the Oldsmobile customer," Zarrella said. "We will work together with our
Oldsmobile dealers to provide for a smooth and orderly business transition."
A call center has been established in Detroit to address dealer questions and
capture dealer concerns for resolution. In addition, a transition team will be
located in each of the company's five regions to address dealer concerns and
inquiries. A dedicated team will work on an individual basis with all dealers
involved to facilitate a smooth and orderly transition.
The company will also work with Oldsmobile dealers so those customers continue
to receive quality service and parts. If there is any change in Oldsmobile
representation in a customer's area, service and parts will be made available
through another GM dealer.
There will be several customer care initiatives beginning with a special 1-800
number for Oldsmobile owners. As valued members of the General Motors family,
they will have the benefit of the largest and one of the most responsive
customer care networks in the industry to address their concerns.
In addition, recent Oldsmobile customers will be provided a certificate of at
least $1,000 toward the purchase or lease of a new Oldsmobile or other GM
vehicles.
Regarding Oldsmobile employees, Zarrella said that the dedication exhibited by
the Oldsmobile has been exemplary. "This is why we will work hard to provide
opportunities for these valued employees to stay in the GM family," said
Zarrella.
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"While this is a difficult decision, we believe that in the long run, it is the
right thing to do to increase GM's competitiveness, profitability and growth,
Zarrella said."
# # #
GM Europe Initiates Major Restructuring Plan
Zurich - General Motors Europe today announced a major restructuring plan to
improve its market position and return its business to profitability. This
year's downturn of the Western European vehicle market and GM's market share
performance in many of the individual countries, combined with shifting
consumers' preference to smaller vehicles, and intensified downward pressure on
vehicle prices, led to a 3rd quarter loss of $181 million. With industry
conditions continuing to deteriorate, a much larger loss is expected for the 4th
quarter.
This restructuring plan, combined with continued investment in an aggressive
future product program has the objective of generating savings sufficient to
return GM Europe to profitability.
In the manufacturing area, Vauxhall intends to undertake a major restructuring
of its manufacturing operations. It is proposed that in Luton, production of the
Vectra would move to one shift early in 2001, and would cease at the end of the
life of the current Vectra model, which will be by the end of the first quarter
of 2002. From this point forward, the remaining Luton facilities would
concentrate on commercial and offroad vehicles, while passenger car production
would be concentrated at Ellesmere Port. This means that the new medium-duty
van, the Vivaro, and the Frontera would be produced at Luton. Ellesmere Port
will continue to produce the Astra and a study is being made to possibly
incorporate the next-generation Vectra and turn the facility into a two-model
flex plant.
In total, these specific actions in the UK, and those previously announced,
including the "leanfield" conversion of Opel's Russelsheim manufacturing site,
will reduce GM Europe's installed capacity by more than 400,000 units between
now and 2004. Going forward, capacity utilization across GM's European
operations will continue to be evaluated. In addition, lean manufacturing
implementation will be accelerated across all European plants, to obtain the
productivity levels currently demonstrated at Opel's benchmark Eisenach
facility.
In the sales, marketing and administration areas, GM Europe intends to drive
efficiency measures and to achieve significant savings at the national sales
offices in the various European countries and regions. The migration of certain
financial and administrative functions to the company's European Financial
Shared Services Center in Spain announced in May of this year will be
accelerated, so that projected savings will be achieved earlier.
Taken together, these various restructuring activities, as well as a number of
other actions, are expected to reduce overall employment levels in Europe by
more than 5,000 people within the next 18 months, consistent with the objective
of reducing salaried headcount by 10 percent by the end of 2001.
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Another portion of the planned savings will come from further material cost
reductions, driven in part by synergies derived from GM's recent alliance with
Fiat. In addition, improvements in current product material cost will be
accelerated by the establishment of a dedicated joint purchasing/engineering
project team that will work with GM Europe's supplier communities.
With regard to product development, it is planned to maintain investment levels
that have increased in the past few years to support an aggressive future
product line-up for GM Europe's brands. Opel/Vauxhall are currently reevaluating
their future vehicle portfolio, in order to focus on delivering more innovative,
segment-defining product entries. As an initial consequence, Opel decided to
discontinue plans for the introduction of an Omega V8 version. Saab, over the
next five years, will considerably enlarge its product offer in line with its
growth strategy for Europe and the U.S.
Michael J. Burns, President of General Motors Europe, said: "The restructuring
plan announced today is far-reaching, but essential for bringing the company
back to profitable growth. The reduced cost base, combined with our aggressive
new vehicle portfolio focus, will ultimately provide the best guarantee for our
future success."
# # #
Adam Opel AG to Accelerate Restructuring
Acceleration of cost cutting plans, combined with aggressive investment program
is to return company to profitability.
Ruesselsheim. Adam Opel AG, together with GM Europe and Vauxhall Motors, Ltd.,
announced today an acceleration of restructuring actions, which are being
implemented to return the company to profitability and to promote future growth.
This restructuring plan, combined with continued investment in an aggressive
future product program and the modernization of its facilities, has the
objective of generating savings sufficient to return the company to
profitability. Opel Chairman and Managing Director Robert W. Hendry said : "We
are quite encouraged by the reception of recent new Opel products by industry
experts and by our customers, as witnessed by the success of Zafira, Astra Eco 4
and Coupe, Speedster and Corsa. This shows that our renewed product and brand
focus and quality efforts are starting to have an impact. However, with industry
conditions deteriorating, we now have to prioritize cost efficiency in order to
become profitable again and grow, supported by Opel's aggressive investment plan
to further improve our competitiveness in the market."
This year's downturn of the German and overall Western European vehicle markets,
combined with shifting consumers' preference to smaller vehicles, and
intensified downward pressure on vehicle prices, is leading to significant
losses at Adam Opel AG and GM Europe.
With industry conditions continuing to deteriorate, immediate action is
necessary to adjust production capacity and volumes to the changing market
environment and to return GM's European operations to profitability. Adam Opel
AG fully supports these initiatives, by reevaluating production schedules for
the Opel Vectra and Omega in Germany, for example. Adam Opel AG's efficient
Eisenach plant will be used as a benchmark in an effort to accelerate lean
manufacturing implementation across all of GM's European facilities.
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In the U.K., Opel's sister company Vauxhall has announced a major restructuring
of its manufacturing operations. It is proposed that in Luton, production of the
Vectra would move to one shift early in 2001, and would cease at the end of the
life of the current Vectra model, which will be by the end of the first quarter
of 2002. From this point forward, the remaining Luton facilities would
concentrate on commercial and offroad vehicles, while passenger car production
would be concentrated at Ellesmere Port. This means that the new medium-duty
van, the Vivaro, and the Frontera would be produced at Luton. Ellesmere Port
will continue to produce the Astra and a study is being made to possibly
incorporate the next-generation Vectra and turn the facility into a two-model
flex plant.
In total, these specific actions in the UK, and those previously announced,
including the "leanfield" conversion of Opel's Russelsheim manufacturing site,
will reduce GM Europe's installed capacity by more than 400,000 units between
now and 2004. Going forward, capacity utilization across GM's European
operations will continue to be evaluated.
Taken together, these various restructuring activities, as well as a number of
other actions, are expected to reduce GM's overall employment levels in Europe
by more than 5,000 people within the next 18 months. Adam Opel AG will make a
significant contribution to this reduction, in part through the already
announced Ruesselsheim "leanfield" conversion, as well as through other
initiatives.
Another portion of the planned savings will come from further material cost
reductions, driven in part by synergies derived from GM's recent alliance with
Fiat. In addition, improvements in current product material cost will be
accelerated by the establishment of a dedicated joint purchasing/engineering
project team at Opel's Technical Development Center in Ruesselsheim that will
work with the company's engineering and supplier communities.
With regard to product development, it is planned to maintain investment levels
that have increased in the past few years to support an aggressive future Opel
product line-up. Adam Opel AG, together with GM Europe and Vauxhall, are
currently reevaluating their future vehicle portfolio, in order to focus on
delivering more innovative, segment-defining product entries. As an initial
consequence, Opel decided to discontinue plans for the introduction of an Omega
V8 version. The decision taken will free up development capacity at the
International Technical Development Center in support of a more
innovation-oriented and energy-efficient product focus.
# # #
Vauxhall Announces Major Manufacturing Restructuring.
In response to rapidly changing European market conditions and over capacity in
the car market, Vauxhall Motors today, Tuesday 12th December, announced an
intended restructuring of its manufacturing facilities as part of a major review
of General Motors European operations.
It is proposed that the Luton facilities will concentrate on commercial vehicles
and off-road vehicles while passenger car production will be concentrated at
Ellesmere Port. This means that the new medium duty van, the Vivaro, and the
Frontera will be produced at Luton but production of the Vectra will move to one
shift in early 2001; then cease in Luton at the end of the life of the current
model which will be by the end of the first quarter 2002.
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Ellesmere Port will continue to produce the Astra and a study is being made to
possibly incorporate the next generation Vectra and turn the plant into a two
model `flex' plant.
"While Vauxhall continues its successful sales and market share growth of the
past 2 years in the domestic market, these moves on the manufacturing side of
our business are necessary to retain competitive manufacturing resource in the
UK and allow us to optimize the utilisation of our assets. We will work closely
with the Unions to minimise the impact of these changes, and look at ways of
supporting our employees directly affected by this announcement", said Nick
Reilly Chairman and Managing Director.
Note to Editors: A history of Vauxhall in the UK, and recent manufacturing and
export data, can be found on www.vauxhall.co.uk, in the About Us/News and
Corporate sections.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS CORPORATION
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(Registrant)
Date December 12, 2000
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By
/s/Peter R. Bible
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(Peter R. Bible,
Chief Accounting Officer)
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