GM's top official wants diversity in energy supply
The GM CEO called for more government support for alternative fuels.
DEARBORN, Mich. (AP) -- With oil prices at a 19-month low, you'd think General Motors Corp. Chief Executive Rick Wagoner would be giddy.
After all, it's high gasoline prices during the past two years that led to hard times for his company and the rest of the traditional domestic automakers.
He's happy that the price of oil has dropped below 52 a barrel, a 19-month low. But he also doesn't think it will last.
At an auto industry conference in the Detroit suburb of Dearborn, Wagoner called on the U.S. government to support diversifying America's energy supply by using tax credits or fuel subsidies to promote development of ethanol, hydrogen fuel cells and advanced battery technology.
"We run the risk of reverting back to our traditional energy policy," he told the Automotive News World Congress on Tuesday night. "That is, relying on the lowest-cost energy available on world markets [including imported oil] without providing adequate support for developing alternative sources."
Wagoner said automakers need to lead the way, but government and other industries such as oil, electric utilities, battery companies and research laboratories also must play a role.
He said marketplace reality is going to require the government to step in and promote U.S. energy security and diversity "regardless of what happens to the price of oil in the short term."
Also in his speech, Wagoner said GM's financial performance improved dramatically in 2006. He touted a 4.2 billion improvement in adjusted net income through the third quarter, saying the company made an adjusted profit of 1.9 billion.
But adjusted net income doesn't include special items such as restructuring costs. With those, GM lost more than 3 billion for the first nine months of the year, down from a loss of 3.9 billion in the same period of 2005.
Wagoner said GM cut structural costs by 9 billion on an annual basis, and it became a stronger global company with more global product development that saves money and gets new products to market faster.
Wagoner also said the company successfully reduced sales incentives, lowered its prices and focused marketing efforts on brands and products rather than sales deals. GM also is positioned to take advantage of growth in emerging markets such as China, India, Korea and Russia, he said.
"Our 2006 performance was validation that our strategy is working. Now, we need to take it a lot further and as fast as we can. And that's our plan for 2007 and beyond," he said.
While answering questions submitted by the audience after the speech, Wagoner said that to his knowledge, billionaire investor Kirk Kerkorian no longer has any stake in GM. He said his company would still consider alliances, although he sees most of them on a project-by-project basis, such as a deal with Ford Motor Co. to jointly produce a six-speed automatic transmission.
Future alliances likely will be "relatively more of the bite-size version than megadeals," he said.
Wagoner didn't directly answer a question about whether he gets more support from the South Korean government than from Washington. But he expressed frustration about the Bush administration's free-trade policies when compared with other governments, mainly Japan's, that support their auto industries.