General Motors Corp. will eliminate up to 1,000 jobs and make other changes expected to save up to $300 million a year in a major reorganization of its North American sales, its service and its marketing operation.
The reorganization will change the way GM's field staff works with its 8,100 dealers by creating regional sales, service and marketing teams to replace duplicate teams at each of five GM vehicle divisions.
It is part of the No. 1 automaker's continuing effort to cut costs by streamlining its corporate bureaucracy. The announcement comes one day after GM said it plans to sell off its Delphi Automotive Systems parts subsidiary by late next year.
"This is a big step," said Ron Zarrella, GM vice president and marketing chief. "Is it the last step? Probably not."
He said GM hopes to continue reducing the number of models it sells. In the next three or four years, GM plans to offer about 70 models, down from about 80 today. As recently as 1992, GM had 109 models.
"There will be a shift from cars to trucks or crossover vehicles," Zarrella said. Crossover vehicles typically are compact sport utility-type vehicles based on a car rather than truck chassis.
GM today sells a higher percentage of less profitable cars than either Ford Motor Co. or Chrysler Corp. Light trucks are the fastest growing and most profitable segment of the new-vehicle market.
The jobs cut will come largely through retirements, including some spurred by a new early retirement program, Zarrella told a news conference. He said between 15 percent and 20 percent of the 5,000 jobs affected by the reorganization will be cut.
Additional cuts will come from GM's more than 60 customer call centers, where consumers call when they have problems or questions about their cars and trucks. GM plans to consolidate about 40 of those operations, which are mostly in the Detroit area, into four locations yet to be determined, Zarrella said.
The call center employees are contract workers. Zarrella declined to say how many of their jobs may be eliminated.
The anticipated cost savings of $200 million to $300 million a year are out of GM's annual structural marketing costs of about $1.8 billion, Zarrella said.
Consumers should not notice any changes as a result of the reorganization, which is to be completed by Jan. 1.
About 65 percent of GM's sales volume comes from dealers with two or more GM franchises. Under the current system, those dealers have to work with multiple sales, service and marketing representatives from each division whose products they sell.
Under the new system, they will deal with only one GM representative for each of those three areas. By reducing the number of contacts, GM hopes to cut costs, make contacts with dealers easier and gain better control over marketing its vehicles at the dealer level.
The reorganization means GM's vehicle divisions, Chevrolet Pontiac-GMC, Oldsmobile, Buick and Cadillac, will focus on broader marketing issues.
Saturn, GM's small-car unit that operates as a largely autonomous division, is not involved in the reorganization.
Written by Brian S. Akre