GM Halts Non-Essential Spending, Travel, Globally
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 Journa l 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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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"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.
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.
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.
non story