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DETROIT – In his 43 years as a General Motors Corp. factory worker, Roger Ezell has seen recessions, gasoline price spikes, sales slumps and multibillion-dollar losses.
Each time, he says, the giant automaker has survived to make billions in later years.
But as GM celebrates its 100th anniversary today, the company that was once the nation’s largest employer faces a crisis like no other in its storied history.
GM, which has a truck assembly plant in southwest Allen County and a foundry in Defiance, Ohio, has lost $57.5 billion in the past 18 months, including $15.5 billion in the second quarter. It’s burning more than $1 billion a month in cash, has more than $32 billion in long-term debt, and a slumping U.S. market has forced it to close factories and shed workers.
In July, it suspended its dividend for the first time in 86 years, and the company has been in perpetual restructuring since at least 2002.
“We’ve seen them down further than what they are, and they got back up,” said Ezell, 63, who passed up several early retirement offers to keep working at a factory near Pontiac that makes the Chevrolet Malibu and Pontiac G6 midsize sedans. “I believe in GM. There’s no doubt in my mind.”
Yet industry analysts wonder whether GM can make it if the U.S. economy stays in a funk and consumers continue to shun trucks and sport utility vehicles for small, fuel-efficient cars.
“This is the worst crisis they ever have faced,” said David Lewis, professor emeritus at the University of Michigan who taught business history for 43 years until retiring earlier this year. “Because they’re really in danger of failing.”
For all its warts, GM can point to progress, especially on the expense side of the ledger. A historic contract reached last year with the United Auto Workers union will save the company about $3 billion a year, mainly by shifting $46.7 billion in retiree health care expenses from GM’s books to a UAW-administered trust in 2010. But the company has to sink more than $33 billion into the trust.
GM also has trimmed its U.S. workforce and closed factories. In 2006, it had 113,000 U.S. hourly employees, but that is now down to about 55,000. Its U.S. salaried workforce dropped from 44,000 in 2000 to about 32,000 last year.
While it’s shrinking in North America, GM’s global sales are up 19 percent in the past decade with large increases in China, Russia, India and Brazil. It’s also spending heavily to become a leader in new technologies, including the Chevrolet Volt electric car due out in 2010.
GM on Monday officially unveiled the Chevrolet Cruze, which is a big step up – inside, outside and in fuel economy – from its predecessor, the Chevrolet Cobalt.
GM is banking on a big step up in price, too, as it tries to make up for revenue lost when the U.S. market shifted rapidly from more profitable trucks and sport utility vehicles to more efficient smaller models.
