GM executive says company must cut $1.3 billion in structural costs

By

Posted 11:54AM on Tuesday, March 19, 2002

DETROIT - General Motors Corp. is taking aim at manufacturing, engineering, health care and commercial costs in order to cut spending by $1.3 billion this year, a high ranking executive told automotive securities analysts Tuesday. GM has reduced the number of contract workers by 1,800 since the beginning of the year expects an equal number of salaried employees to opt for early retirement packages that are being offered until the end of the month, said Gary Cowger, GM group vice president and president of GM North America, during the meeting at the automaker's world headquarters. "Our staff will continue to be leaner and more productive," said Cowger. GM is evaluating health care providers and educating employees about the use of generic prescription drugs. Cowger said the company saved about $14 million last year as more employees chose the less expensive generic drugs. The company has set a goal of reducing vehicle operations costs by about $300 million this year, mainly through increases in productivity and reduction of nonscheduled overtime. Cowger said the company saved about $250 million last year by reducing nonscheduled overtime that's used for making repairs and other jobs not directly related to producing vehicles. The automaker's engineering staff and processes are under the microscope as well. "We're vigorously driving out waste. All engineering staffs are being evaluated for opportunities to improve efficiencies and to reduce non-value added work," said Cowger. An increasing amount of the engineering and design work will be accomplished using GM's "math-based" computer design system. During morning trading on the New York Stock Exchange, shares of GM stock were down 41 cents at $60.70. ------ On the Net: General Motors Corp. http://www.gm.com