• From Community Services: Thanks to everyone who donated their money or time to the March of Dimes/March for Babies gate drive. A grand total of $4611 was collected! • As you heard, GM announced financial results for the 1st quarter yesterday. What was essentially a very good quarter was undermined by the charges related to the recalls. Those charges totalled $1.3 billion and reduced North American earnings to $557 million, which equates to $500 in profit sharing. Looking at global operations, China produced a little over $600 million in profits and Europe lost around $100 million not counting a $200 million restructuring charge. South America is a money loser and currency devaluations in Venezuala cost GM over $400 million. GM Chief Financial Officer Chuck Stevens was optimistic that we would not see any more charges related to the recalls but could not rule any more out. On a positive note, GM increased average transaction prices by $2000 over the 1st quarter last year, and pickup transaction prices were up $5000. GM did, however, sacrifice market share by holding the line on incentives as US share dropped to 17% from 17.7% last year.
• General Motors Co. today filed the proxy statement for its 2014 annual meeting of stockholders with the U.S. Securities and Exchange Commission and announced the nomination of UAW Vice President Joe Ashton to its board of directors. Ashton, designated for nomination to the GM board by the UAW Retiree Medical Benefits Trust, or VEBA, plans to retire from his current position in June following the UAW constitutional convention. If elected, he will begin his board term in August. Steve Girsky, formerly GM vice chairman, was previously designated for nomination to the GM board by the VEBA Trust and has served as a director since the new company began operations in July 2009. GM’s board nominated him to remain a director. Ashton, who joined the UAW in 1969, has been a member of the UAW International staff since 1986, serving in a variety of leadership roles. Active in labor and civic affairs, he is executive vice president of the Pennsylvania AFL-CIO Executive Council, executive vice president of the New Jersey AFL-CIO and a former director of the Western New York Federal Reserve Bank. “Joe brings a wealth of knowledge from his work across many industries, especially his deep understanding how labor strategy can contribute to a company’s success,” said GM Chairman Tim Solso.
• For the second year in a row, General Motors dominates the “Made in America” Automotive Index produced by American University’s Kogod School of Business. GM’s Chevrolet Corvette Stingray tied for No. 1 and 17 other GM vehicles tied for places in the Top 10. In addition to the Stingray, seven other Chevrolets made the Top Ten including: Traverse, Equinox, Express, Malibu, Impala, Suburban and Tahoe. Other GM vehicles that ranked in the Top 10 were the GMC Acadia, Acadia Denali, Terrain, Savana and Yukon; Cadillac CTS, Escalade and ATS and Buick Enclave and LaCrosse (Express and Savana tied for 4th place). You would have to go down 29 spots before you found a foreign branded vehicle (Honda Odyssey minivan).
The index is authored by Frank DuBois, a global supply chain management expert and professor at American University. DuBois developed the list based on data from the National Highway Traffic Safety Administration along with the location of headquarters, design, research and development, and where the profits go. More comprehensive than other studies of its kind, the Kogod index ranks 318 car models based on seven weighted data points. These criteria include several factors, unaddressed by the American Automotive Labeling Act, which is the basis for “made in America” automotive studies:
- Profit Margin: Location of the automaker’s global headquarters
- Labor: Location of assembly
- Research & Development: Location of R&D activities
- Transmission: Location of production
- Inventory, Capital and Other Expenses: Location of assembly
- Engine: Location of production
- The Labeling Act “Domestic Content” Score
Based on the Labeling Act, if 75 percent of a vehicle’s value or more of a car’s parts come from the U.S. or Canada, it’s considered a domestic product. Nearly 80 percent of Americans would rather buy an American-made product, according to a Consumer Reports National Research Center survey. Furthermore, a recent 2013 Consumer Reports article pointed to the 2013 AU/Kogod study as the study to use when trying to decipher which vehicles are American made. “This index undoubtedly provides Americans with a more defined explanation of the actual origin of a vehicle and its purchasing impact on the U.S. economy,” said Gerald Johnson, GM North America Manufacturing vice president.
• From Automotive News: Ford Motor Co. today said its first-quarter net income fell 39 percent from the same period a year ago to $989 million, on weaker pricing in the United States and higher warranty expenses. It was Ford’s 19th consecutive profitable quarter. Profit margins in North America declined 35 percent, due to higher incentives and a $400 million increase in warranty reserves related to previously announced recalls and other service campaigns involving vehicles from past model years. Ford also said “weather-related costs” cut North American earnings by about $100 million. Ford’s pretax operating profit dropped 36 percent to $1.38 billion. In North America, Ford earned $1.5 billion before taxes, down 37 percent from a year earlier. Revenue in North America declined 5 percent to $20.4 billion on lower sales, an unfavorable mix lower net pricing and the adverse effect of a weaker Canadian dollar. Margins for the region were 7.3 percent, compared to 11.1 percent in the same period of 2013.
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