At 100, General Motors works to maneuver through crisis

The Dallas Morning News (MCT) - As General Motors Corp. celebrated a bittersweet 100th anniversary this month, autoworkers at its plant in Arlington, Texas, were affixing Arabic labels to Chevy Tahoe SUVs. Odd as it may seem, the two are related.

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Since late summer, when soaring gas prices decimated full-size sport utility sales in the U.S., as many as half of the 850 SUVs built daily in Arlington are shipped to booming markets in the Middle East _ an irony even people outside GM can probably appreciate.

However, those markets exist today because GM established operations in Egypt and other major regions of the world 80 years ago.

Although GM has struggled this decade in North America, losing $70 billion and substantial market share (now barely above 20 percent) in just the last four years, the huge, beleaguered corporation can still maneuver through a crisis, some analysts say. And the Arlington plant, which opened in 1954, has benefited from that.

"Next year, we expect to still be a two-shift operation at the same line rate we are running today," said Alicia Boler Davis, manager of the GM Assembly Plant in Arlington. "But if you look at how GM has changed, we have had to be very flexible, too."

In the last 15 years, Arlington's fortunes have largely tracked those of GM's _ down some when the plant was building outdated full-size sedans in the early '90s and up when GM converted Arlington to trucks as it sought to increase pickup and SUV production.

When gas prices shot up this summer, GM moved quickly to close four truck and SUV plants by 2010, leaving Arlington as its sole producer of full-size SUVs _ one reason that the plant's export production has tripled.

"The market is very different today," Boler Davis said in a recent interview at the plant. "We can't afford to be complacent or take anything for granted these days."

An official of the union that represents most of the 2,500 workers at the plant agreed.

"The workers who have been here longer have never been in a situation like this," said Enrique "J.R." Flores Jr., president of United Auto Workers Local 276.

While many view GM as an Old World giant that often stumbles, analysts note that the company has made dramatic improvements in its vehicles over the last decade, is slashing costs and is nearing completion of a "segment-busting" electric car in the Chevrolet Volt.

"They're swimming across a river that is getting deeper and moving faster, trying to reach the pot of gold on the other side," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "But what people don't realize is that the pot of gold is getting bigger and brighter all the time."

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GM disasters like the Corvair, the Vega, the Citation and Cadillac Cimarron are painfully familiar to many consumers. But over the last 100 years, the company _ founded Sept. 16, 1908, by William C. "Billy" Durant _ can count far more successes than flops.

For example, GM developed the industry's first electric starter and car lights in the 1912 Cadillac; the first SUV in the 1935 Chevrolet Suburban Carryall; the first viable automatic transmission in the 1940 Oldsmobile Hydramatic; the first modern high-compression, overhead-valve V-8 engines in the 1948 Cadillac and Oldsmobile; as well as icons like the '57 Chevy, '63 Corvette and '64 Pontiac GTO.

Moreover, in the late '60s, scientists and engineers from GM's AC Electronics Division developed the inertial guidance and navigation systems for the entire Apollo moon program and were responsible for all of the mobility systems and components of the Lunar Roving Vehicle that astronauts took to the moon in 1971.

Even now, GM has much to celebrate. With sales of the new, highly regarded Chevrolet Malibu up 37 percent this year, GM finally has a serious competitor in the important midsize sedan segment. Its full-size SUVs and pickups are among the best in the industry. And the company's large crossovers _ the GMC Acadia, Saturn Outlook and Buick Enclave _ have earned solid reviews, as has its new, strong-selling midsize Cadillac CTS sedan.

In addition, GM offers hybrid versions of several of its SUVs, its full-size pickups and the Malibu. While continuing to develop fuel-cell vehicles _ a small fleet of which are already on the road _ GM expects to bring the Chevy Volt to market by 2010. The Volt's electric motor can go 40 miles before it needs a recharge from its small on-board auxiliary gas engine.

Despite the progress, GM faces formidable challenges. In the second quarter, with truck and SUV sales plummeting, the company's revenue fell a staggering 50 percent, by nearly $10 billion. Sales this year haven't helped, either. Through August, they were down 18 percent in one of the worst years for the industry since the early '90s.

And $4 gas and the panic it provoked among consumers this summer _ coupled with the deeply troubled economy _ all but halted GM's progress on the five-year business plan begun in 2005. Earlier this summer, it was forced to again return to big incentives on many of its vehicles.

"But we're moving again now," said Troy A. Clarke, president of GM North America. "One more product could do it for us."

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Over the next year, Clarke said, dealers will get the mainstream Chevy Traverse crossover, an all-new small car in the Chevy Cruze and the Volt, vehicles that could propel GM over the "threshold," he said.

Cole, who has been a close observer of GM for decades, thinks the company might be only a few years away from one of its most profitable periods. A new labor agreement with the UAW, which dramatically reduces GM's health care costs and gives it more production flexibility, should provide savings of $4,000 to $5,000 on every vehicle the company builds, he said.

"When you take that amount of cost out, it enables you to have profitability on everything," he said.

Influential Dallas car dealer Carl Sewell, who was instrumental in getting GM to build the Cadillac Escalade, believes that smooth water lies ahead for the company. Sewell is chairman of Sewell Automotive Cos., which includes Cadillac, GMC, Saab, Pontiac and Hummer dealerships.

"Give them two more years and things will look completely different," he predicted.

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© 2008, The Dallas Morning News.