General Motors isn’t happy that it’s five-percent operating margin is less than the predicted seven-percent at Ford or the 10 percent at Hyundai. To boost its number, Bloomberg reports that GM has hired consulting firm Hackett Group to identify areas in which it can save on white-collar costs, either through job cuts or efficiencies. Unlike in 2009, however, buyouts and tranches of layoffs aren’t on the table.
An outside analyst considers Hyundai’s returns out of reach, since the Korean firm benefits from exchange rates and more efficient platform sharing. The analyst also considers that GM will only find “a rounding error” in its pursuit of leaner white collar operations, but that might be enough to start. When considering closer GM competitors, through the first nine months of this year, Volkswagen could boast an operating margin of 7.7 percent, Ford’s is 6.7 and Toyota is aiming to reach five percent (down from almost nine percent before its recall crisis and the recently steroidal yen). In that case, even a rounding error will make a statement.
Even though we’re dealing with a “new” GM, talk of reassigned engineers can easily remind one of the dark days when fat-trimming exercises turned into amputations and handicapped product on the showroom floor. Yet the company is on the up with the continued momentum of anticipated products, and this is what every world class company is required to do. Still, we’ll be watching closely.
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