GM » Topics » Structural Costs

This excerpt taken from the GM 8-K filed May 14, 2009.

Structural Costs

Structural costs decreased in the year ended 2008 by $2.3 billion (or 4.4%) due to: (1) manufacturing savings of $1.4 billion at GMNA from lower manufacturing costs and hourly headcount levels resulting from attrition programs and productivity improvements; (2) reductions in incentive compensation and profit sharing costs of $0.6 billion, primarily at GMNA; (3) and lower manufacturing costs at GME of $0.3 billion.

Structural costs increased in the year ended 2007 by $0.6 billion (or 1.2%). Global engineering and product development costs increased in 2007 due to increased global vehicle development and advanced technology spending. Total structural cost expenditures increased at GMAP and GMLAAM due to higher production costs and new product launches associated with volume growth. The effect of Foreign Currency Translation also increased structural costs. OPEB costs decreased in 2007 at GMNA primarily due to the 2005 UAW Health Care Settlement Agreement reached with the UAW to mitigate hourly retiree healthcare costs and manufacturing labor costs declined as production related headcount levels were reduced by the 2006 UAW Attrition Program.

This excerpt taken from the GM 10-Q filed May 8, 2009.

Structural Costs

Structural costs decreased in the three months ended March 31, 2009 by $3.1 billion (or 23.3%) due to: (1) manufacturing savings of $1.1 billion at GMNA from lower manufacturing costs and hourly headcount levels resulting from attrition programs and productivity improvements; (2) Foreign Currency Translation gains of $1.0 billion; (3) lower global engineering and product development costs of $0.7 billion; and (4) reductions in sales promotion and advertising costs of $0.3 billion.

This excerpt taken from the GM 10-K filed Mar 5, 2009.

Structural Costs

Structural costs decreased in the year ended 2008 by $2.3 billion (or 4.4%) due to: (1) manufacturing savings of $1.4 billion at GMNA from lower manufacturing costs and hourly headcount levels resulting from attrition programs and productivity improvements; (2) reductions in incentive compensation and profit sharing costs of $0.6 billion, primarily at GMNA; (3) and lower manufacturing costs at GME of $0.3 billion.

Structural costs increased in the year ended 2007 by $0.6 billion (or 1.2%). Global engineering and product development costs increased in 2007 due to increased global vehicle development and advanced technology spending. Total structural cost expenditures increased at GMAP and GMLAAM due to higher production costs and new product launches associated with volume growth. The effect of Foreign Currency Translation also increased structural costs. OPEB costs decreased in 2007 at GMNA primarily due to the 2005 UAW Health Care Settlement Agreement reached with the UAW to mitigate hourly retiree healthcare costs and manufacturing labor costs declined as production related headcount levels were reduced by the 2006 UAW Attrition Program.

This excerpt taken from the GM 10-Q filed Nov 8, 2007.
Structural Costs
 
Automotive structural costs were $13.2 billion in the third quarter of 2007, an increase of $.9 billion from $12.3 billion incurred in the third quarter of 2006. Global product engineering and development expense was $.5 billion higher in the third quarter of 2007, reflecting increased global vehicle development expenditures. The effect of the weak U.S. dollar increased structural costs by $.3 billion. Higher advertising expenditures related to new product launches and higher production costs associated with volume growth in GME, GMLAAM and GMAP increased expense by $.1 billion compared to the third quarter of 2006.
 
Automotive structural costs for the nine months ended September 30, 2007 were $38.4 billion, an increase of $.2 billion from $38.2 billion in the same period in 2006. The increase in costs related to the weak U.S. dollar offset a portion of the savings in GMNA. Global engineering costs increased consistent with our strategy to support global vehicle program development, and certain costs increased in line with volume expansion, particularly in GMLAAM and GMAP. These increases were offset by $2.8 billion of cost decreases in GMNA, resulting from reduced OPEB, pension and manufacturing costs relating to the 2005 UAW Health Care Settlement and an attrition program in the period (UAW Attrition Program).
 
This excerpt taken from the GM 10-Q filed Aug 7, 2007.
Structural Costs
 
Automotive structural costs were $12.6 billion in the second quarter of 2007, a reduction of $.2 billion from the second quarter of 2006. Contributing to this reduction were savings on retiree pension/OPEB of $.8 billion, primarily due to GM’s UAW Health Care Settlement Agreement, as well as manufacturing savings of approximately $.3 billion from lower hourly headcount levels driven by the UAW Attrition Program. Global product engineering and development expense was higher by $.4 billion in the second quarter of 2007, reflecting increased global vehicle development spending. Structural costs were higher by $.5 billion in the second quarter of 2007 compared to 2006 due to the impact of the weak U.S. dollar and higher spending related to production and sales volume increases at GMLAAM and GMAP.
 
Automotive structural costs for the six months ending June 30, 2007 were $25.1 billion, a reduction of $.7 billion from same period in 2006. Expenses in the six months ended June 30, 2007 were lower by $2.6 billion in GMNA, resulting from reduced OPEB, pension, and manufacturing costs relating to the UAW health care settlement and UAW attrition program. The increase in costs related to the weak U.S. dollar offset a portion of the savings in GMNA. Global engineering costs increased consistent with the strategy to support global vehicle program development, and certain costs increased in line with volume expansion, particularly in GMLAAM and GMAP.
 
This excerpt taken from the GM 10-Q filed May 8, 2007.
Structural Costs
 
Automotive structural costs were $12.6 billion in the first quarter of 2007, a reduction of $0.7 billion from the first quarter of 2006. Structural costs were reduced by $1.2 billion as a result of the UAW attrition program and healthcare settlements. These programs lowered pension and OPEB cost by reducing healthcare costs for certain hourly retirees and those employees who left GM through buy-out and early retirement programs. Hourly labor costs were also reduced by $0.4 billion due to a decrease in the number of hourly employees. Offsetting these reductions in wage and benefit costs were higher global product engineering and development expenses of $0.3 billion consistent with GM’s strategy to increase support for global vehicle program development. Mark-to-market adjustments on commodity derivative contracts to hedge forecasted purchases of metals and energy were lower in the first quarter of 2007 compared to 2006 by $0.4 billion. Additionally, structural costs at GME were higher due to the impact of a stronger Euro, British Pound, and Swedish Krona, and at GMLAAM and GMAP as a result of higher vehicle sales, by $0.2 billion.


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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Operations Financial Review — (continued)
 
This excerpt taken from the GM 10-K filed Mar 15, 2007.
Structural Costs
 
Automotive structural cost were $52 billion in 2006, a decrease of approximately $3 billion from 2005. Cost reductions in GMNA of over $6 billion were the primary reason for this reduction, partially offset by structural cost increases in GMLAAM and GMAP as GM continued to invest in infrastructure to support the higher unit production and sales volumes in those regions. Consolidation of GM Daewoo also increased 2006 structural cost in GMAP by over $1 billion as compared to 2005 since GM Daewoo was consolidated on June 30, 2005.
 
The majority of structural cost reductions in North America were driven by turnaround actions implemented throughout 2006, largely related to changes to pension, OPEB, and the hourly workforce level:
 
  •  GMNA pension and OPEB costs were reduced by $2.8 billion largely as a result of the UAW Health Care Settlement Agreement, the hourly accelerated attrition program, and changes to salaried pension and health care benefit plans.
 
  •  GMNA manufacturing costs were reduced by $1.0 billion as total labor costs were lowered as employees retired or left GM under the accelerated attrition program offered to hourly employees represented by the


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GENERAL MOTORS CORPORATION AND SUBSIDIARIES

  Structural Costs — (concluded)
 
  UAW and IUE/CWA. Approximately 34,400 GM hourly employees agreed to participate in the program and have retired or left the company as of January 1, 2007.
 
  •  Other Automotive costs were lower due to reduction in various administrative costs and in global engineering, where costs were lower as GM increasingly leveraged global vehicle development and architectures.
 
Automotive structural costs were $52 billion in 2004 and increased by $3 billion in 2005. Health-care expense increased primarily due to escalating health-care cost trends and falling discount rates in the United States. Global consumer influence expense increased due to efforts to increase product awareness. Other costs increased outside of North America as GM invested in emerging markets.
 
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