By on March 19, 2011

General Motors Co. has halted all nonessential spending and travel companywide while it gets a better handle on the potential impact of Japan’s crisis on the company, the Wall Street Journal reports.

When the CEO of a large multinational sends out a companywide memo to hold off on any expenses that aren’t critical, things are dire. GM CEO Dan Akerson did just that, the Wall Street Journal says.

Supposedly, GM wants to get a handle on the parts situation. We have been following this unfolding story for a while. This morning, GM did not seem to be in a great hurry, and wanted to wait two weeks.

Now suddenly, all nonessential spending and travel are stopped companywide? Even during the darkest hours of GM, it did not skimp on T&E. Remember jetgate?

According to AP, (via the Minneapolis Star-Tribune), “the move will help the automaker preserve cash as it deals with the financial implications from shortages of parts made in Japan.”  The cost-cutting effort will stay in place for an undetermined period.

If this story is true and did not get mixed-up in the fog of war, then something bigger than Japan could be afoot.

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24 Comments on “GM Halts Non-Essential Spending, Travel, Globally...”


  • avatar

    perhaps this is only a misinterpretation and what Akerson really meant is to stop the “flight” of top level executives who have been evacuating employment at General Motors faster than newly notified nuclear neighbors.

  • avatar
    mikey

    I’m glad to hear it. That is exactly the sort of decisive action thats was needed back in the dark days.

  • avatar
    L'avventura

    Define “non-essential”.  What is considered non-”critical”?  Realistically, all travel payed for by the company should be ‘essential’.   Obviously, GM employees will still be making all essential business trips.  AP is too vague.

    • 0 avatar
      CJinSD

      Conversely, was SOP to fly about willy-nilly on the taxpayers’ and shareholders’ dime?

    • 0 avatar
      gslippy

      “Non-essential” would be things like R&D trips, testing, training, and gladhanding – anything not related to making the next payroll.

      If the true cause of this directive is the Japan disaster, then we can expect a similar impact on other industries and other car companies worldwide.  It’s gonna get bad….

  • avatar
    segfault

    GM Second Bankruptcy Watch.  Come on, you know you want to…

  • avatar
    Robert Schwartz

    I will believe it is a an emergency when they cut executive salaries, and withhold bonuses.

    • 0 avatar
      JustPassinThru

      Then you have “essential” flight – of talent from the foundering ship.  It generally takes MORE money, not less, to attract managerial talent to what seems like a lost cause.  And if you lose top-notch talent (not saying the current GM team is that), then who’s going to have the insight, the diplomacy with shareholders, the marketing savvy, to design new product on a reduced budget and sell it to a wary public?  Someone making $15 an hour, whose last job was mopping the Executive Washroom at Ford?
      Lido did what he did, for reasons his own.  And in the end he was paid a lot more than a dollar a year, also…and to Chrysler shareholders and warranty-holders, worth every penny.  AND he was financially secure; able to retire.  Not all managers and execs are in that position; and taking a job with a failing company can be a long-term career killer.

  • avatar
    NormSV650

    GM is acting like Honda now. Cutting where ever they are fit and quickly too. Good for them!

  • avatar
    Zackman

    Do I smell trouble? Or Trouble with a capital “T”?

  • avatar
    MarcKyle64

    It just goes to show you how exporting jobs and production outside the country in the name of profits can have unforeseen consequences.

  • avatar
    seanx37

    Well, again, not sure it is time to panic just yet. Nice to see a common-sense decision by someone at GM. Monday, when oil prices surge to around $125 is the time to panic.

  • avatar
    Adub

    Cutting expenses can be smart in the face of uncertainty, but it is also generally a prelude to cutting people.

  • avatar

    This actually strikes me as fairly routine. I think GM sent this sort of memo many times in the past. The situation might not be as bad as previous cases, but this suggests they’re more proactive than in the past and not waiting until the last minute to take corrective actions.

  • avatar
    william442

    Better gve some thought to shorting the stock tomorrow.

  • avatar
    geozinger

    Another non story like the “Germans retreating from Japan”.

  • avatar
    John Horner

    “Dire”. Nah. A memo from the boss asking people to be extra careful about spending money is not a sign of impending doom. This is a fairly routine and smart response to a period of additional concern and uncertainty.
     

  • avatar
    Vetteman

    The smart money started to dump the stock the last week of January.  They must have carefully read the year end report and came up with the conclusion I did that here is a company that is still in decline , still has a declineing market share  that has been doing so for over twenty years.  Europe is a huge mess and their one so called bright spot  China despite the large unit numbers does not generate that much profit.  They are a minority partner with  Shanghai automotive and that could change pretty much whenever the chinese feel they have gotten all they want from the so called partnership.  With gas prices thru the roof the normal response from the car buying consumer is to stay away from showrooms  and that can be devastating for GM   Their leadership weakness will really hurt them badly in a new time of crisis.   

  • avatar
    Steven02

    I work in a company that is doing very well, but travel restrictions were put in place in 2008 that haven’t been lifted since, we are making a few billion a quarter.  This makes sense for GM to do because they aren’t sure how bad this is going to hurt right now.  No one is.  I am guessing Ford, Chrysler, VW, and others will be doing the same thing shortly.

    • 0 avatar
      mikey

      @ Steven02…..I can’t help but agree with your comment. I don’t think we are looking to repeat 2007-2009,but it’s going to be tough sledding in the car buisness.

  • avatar
    geozinger

    non story
     


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