Report: GM Cutting Product Development Spending

DETROIT (AP) -- General Motors Corp. is postponing nearly all of its spending on product development in 2009 and 2010 as part of a cost-cutting effort, an automotive trade publication reported Wednesday.

Automotive News, citing sources familiar with GM's plans that it didn't name, reported on its Web site that the Detroit-based automaker is cutting spending on engineering, design and development.

The report said GM hopes to save as much as $1.5 billion and that the introduction of key vehicles such as the new compact Chevrolet Cruze, due to start production in 2010, could be delayed.

GM spokesman Tom Wilkinson said Wednesday that the company isn't commenting on specific product programs but continues to align resources behind highest-priority ones. He said GM evaluates its product programs monthly.

"We adjust them where the market programs are going," Wilkinson said.

GM announced in June that it would retool its factory in Lordstown, Ohio, to make the Cruze. It was considered a major victory for a region that still hasn't recovered from the demise of the U.S. steel industry.

"We don't know anything at this point," said Jim Graham, president of United Auto Workers Local 1112, which represents Lordstown workers. "Everything is rumor stage and we don't want to comment."

GM has been scrambling to ramp up production of smaller vehicles. It believes the keys to its success are the Cruze, which is expected to get about 40 miles per gallon on the highway, and the plug-in Chevrolet Volt, which can run up to 40 miles on battery power with a small gas engine extending its range.

The Volt, expected in 2010, and the Chevrolet Camaro sports car, due out in 2009, are protected from the cutbacks, the Automotive News report said.

GM is in talks about acquiring rival Chrysler LLC and both companies are having cash troubles. They have been hit by the auto industry sales meltdown due to the U.S. economic downturn and are seeking additional federal help.

Earlier this year, GM changed product plans involving its trucks and SUVs.

GM said in June it was indefinitely halting a major overhaul of its full-size pickup trucks and sport utility vehicles as it dealt with a drastic drop in sales of those products amid skyrocketing gas prices. That change was part of an effort by GM to shift resources toward smaller, more fuel-efficient vehicles.

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GM Cutting Product Development Spending 10/29/2008 12:33:00 PM Let's get this straight: GM is losing money because they do not produce the kind of automobiles the public wants. GM is cutting Product Development Spending and so will delay/not make new models Conclusion: the executives at GM just don't seem to be very smart! They should be putting MORE money into developing the kind of vehicles that will produce sales for GM in 2010 and beyond, not depend on old, unpopular, and unpurchased past designs!
GM Logic 10/29/2008 12:56:00 PM GM is postponing auto development, something that would save it from possibly going under, while at the same time asking Washington for more $$ to stay afloat. Therefore, instead of patching the hole in the boat, they are asking for another bucket. Sheer genius (as I roll my eyes).
GM cutting product development 10/29/2008 1:22:00 PM most companies I've seen fail because of poor leadership, and this one is no exception. Cutting this spending is exactly how they got to this position of being technicaaly bankrupt long before the market share eroded. Don't blame the Engineering, or manufacturing, but do blame the inbred nature, and arrogance at the top.
MBA lack of common sense 10/29/2008 1:33:00 PM Sounds like what a MBA would come up with, take away funding for future products to get your bonus this year. How about cut all exec pay for next two years and put the money in to research.
Morons 10/29/2008 1:34:00 PM This is just crazy!. They should be spending more on R&D instead of cutting costs. What a bunch of idiots! No wonder their going under.
Blowout Sail On Trucks and Other Gas Pigs. 10/29/2008 1:51:00 PM Well..hopefully they are cutting development on the gas pigs....and retaining and increasing R&D spending on fuel efficient and alternate fuel vehilces! Question: Where is that electric car technology that they introduced and then squashed in the 60's? Did they loose it? Friggin' go find it GM!
Legacy of the EV-1 10/29/2008 4:19:00 PM Don't ever forget, or let GM forget, its disastrous behavior over its EV-1 electric vehicle in California. That proves that it has no brains, leadership, business sense, ideas, or any concern for anything but management pay.
R&D or Bust! 10/29/2008 6:52:00 PM I work in an R&D industry for a company that looks at and test future technologies to sell to the customer. If you cut spending in this area you are asking to become obsolete. I have owned GM products for over 30 years and will continue to buy these products if they offer good quality, and utilize the latest developments. I hope Tom Wilkinson is considering cutting R&D on big gas guzzlers and not on the Hybrid market. GM needs to go after battery technology like never before and kick Japan out the door. What happen to this kind of attitude? Do we have too much diversity in the United States today that we just do enough to get by, and not go after our competition? This is only one part. GM needs to use programs like 6 Sigma to save, and conserve in every way it can. By cutting excessive waste “going lean” you may not need to cut any development programs at all. In closing, I wish them well and hope to see then around in 2020.
R&D is necessary 10/30/2008 10:35:00 AM As an engineer at a company that has almost no R&D, I would say it is the most important step. Designing something and building it with no background is just asking for trouble. That's probably a big reason this company won't be around much longer and I'm looking for a new ship to jump to. Building crap to save money is not the answer. If anything, more time and money need to go into R&D to develop good designs.

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