Automakers Bracing for Downturn
20 November 2000
Idle Plants, Videoconferencing Instead of Trips, E-Mail Instead of Long Distance Phone CallsNEW YORK - Automobile industry insiders are seeing a downturn that may send auto sales and profits plunging in 2001, Newsweek reports in the current issue. "People are definitely more nervous than they were six months ago," GM CEO Richard Wagoner tells Newsweek. Detroit Bureau Chief Keith Naughton reports that some of the classic signs of a serious auto industry downturn are already emerging -- such as inventories rising as unsold cars pile up on dealer lots. Last week, Chrysler President Jim Holden was fired by his German bosses at DaimlerChrysler after the U.S. unit lost a half-billion dollars in the third quarter. This week, Chrysler and GM idled five factories to reduce bloated inventories, Naughton reports in the November 27 issue. Throughout the automotive industry, everyone is preparing for the worst. Naughton reports: * Executives at GM are ordering employees to send e-mail instead of making long-distance phone calls and to videoconference rather than fly cross-country for meetings. * Big parts makers, squeezed by auto companies to cut prices, are canceling plans to show their wares at Detroit's premier auto-engineering convention in March. * Chrysler is considering white-collar layoffs and slashed its annual product-development budget by 25 percent. * For January's black-tie "auto-prom," which celebrates the opening of the Detroit auto show, companies aren't paying the $350-per-ticket cost for the executives who are attending. "We said, 'Hey executives, we pay you good money, we think you can afford to pay your own way'," says General Motors vice president Bill Lovejoy, who will spend more than $1,000 to take his wife and a few friends to the event. "We want to show our work force that we're tightening out belts. It's that monkey-see, monkey-do effect."