Some of the fallout from yesterday's annual meeting...
Posted on Wed, Jun. 08, 2005
GM facing the wrath of investors
By Akweli Parker
Inquirer Staff Writer
WILMINGTON - Shareholders lashed out at General Motors Corp. chief executive officer Rick Wagoner at GM's annual meeting yesterday, venting over a stock price that has plunged since he took over.
GM was trading in the $70 range when Wagoner was promoted in June 2000; it closed yesterday at $30.73, up 31 cents.
"We're sick," said James M. Dollinger, a Buick salesman from Flint, Mich., and founder of Generalwatch.com, a Web site critical of GM management.
Wagoner laid out a broad outline for reversing financial miscues at GM, which lost $1.1 billion in the first quarter this year and saw sales drop by 13 percent last month. The company's U.S. market share has eroded to 25.4 percent, from 27.2 percent a year ago.
Among the problems, Wagoner said: high health-care costs that foreign automakers do not have to pay. Among the fixes he proposed: factory shutdowns, 25,000 job cuts, and a torrent of new vehicles in the next few years.
Robert Lutz, vice chairman of global product development, also acknowledged some inadequacy of previous company vehicles. GM's new tack, he said, is not to introduce vehicles that are merely competitive, "but that really target the best."
Cheap, plasticky interiors and imprecise panel fits are out; Lexuslike quality is in, even with lower-priced models, Lutz said.
"I think they've tuned into some trends" that could sell more vehicles, said shareholder Paul Jonik, a registered nurse who lives in Norristown.
Lutz told shareholders the company was exploiting the consumer appetite for "retro" vehicles that combine nostalgic styling with modern technology. Further, Lutz said, the company is trying to inject excitement into its vehicles by approaching them the way consumers do: as "art and entertainment," not just transportation.
By this fall, for example, GM will produce a stylish new two-seater sports car, the Pontiac Solstice, at its Wilmington assembly plant, not far from the site of yesterday's shareholder meeting at the Hotel du Pont.
"The 'art-and-entertainment' aspect was an interesting way of looking at things," Jonik said.
Many shareholders, though, disagreed on the root causes of GM's problems. Among the critics was corporate shareholder activist Evelyn Y. Davis, who complained that Lutz was out of touch with consumers.
John Lauve of Holly, Mich., faulted GM's leadership for failing to innovate ahead of competitors, among other things. Lauve, himself a retired GM manager, said GM's corporate culture was one of ignoring ideas from the outside, even good ones.
"When you have a sinking ship, I think you need to be more open," he said during a comment period for shareholder proposals.
Dollinger said he wanted GM to cease its cash-incentive campaigns to consumers, because, he said, it lowers GM cars' resale value and gives the product line a "distressed-merchandise" aura.
Better results for GM also depend on a more pleasurable experience for customers when they visit the dealership, said Stanley Magiera, an hourly worker at GM's Ypsilanti, Mich., plant and a member of United Auto Workers Local 735.
He said dealers often damaged the corporate reputation by unnecessarily aggravating customers.
Magiera said his father was recently overcharged for work done at a GM dealership that did not fix the problem; a local mechanic then charged $700 less to do the repair.
And Magiera himself was frustrated recently when he tried to buy Chevrolet's new Cobalt at a dealership, but it was not in stock. He was breezily told that one might be in the following Tuesday.
And so if a Cobalt is not available from a local Chevy dealer that day, Magiera said, perhaps the customer buys a different-brand compact elsewhere. "Many people, if they can finance it, they're going to buy it on impulse," he said. "We have to deal better with the customers."
Collegeville resident and GM shareholder Al DeBernardi said that he was upset when GM killed its Oldsmobile nameplate last year, but that he has nonetheless remained loyal.
DeBernardi said he had owned GM cars since 1956 - his first was a Chevy Bel Air convertible.
He said he liked Cadillacs and Buicks, but he cannot quite bring himself to buy one because they depreciate faster than other luxury-car brands. "I'm thinking of going to Lexus," he said.
DeBernardi said that, to GM's credit, a customer-service employee at the meeting offered to help him find a luxury GM car locally at a price he felt was fair.
He said he was optimistic that GM could extricate itself. But, he said, "they'd better do something, and do it soon."