General Motors Corp clipped the wings of its independently-minded European divisions on Friday by concentrating power at its regional headquarters, but did not announce any plans to close plants or cut jobs in its effort to return the European business to profit.
Unveiling the plan in a statement, the world's biggest car maker said it has promoted Fritz Henderson, who became head of European operations only at the start of this month, to the new position of chairman of General Motors Europe (GME).
It has made Carl-Peter Forster, now head of biggest division Adam Opel AG, his direct deputy as GME president.
Attempting to mould a unified GME identity and bind in the Opel, Vauxhall and Saab divisions, GM has removed key functions such as finance, engineering, purchasing, manufacturing, marketing and planning from the brands and move them to its headquarters in Zurich.
It has also created a single pan-European design team that will work for all three divisions.
"Today's announcements are not about cutting our way to prosperity or diminishing the importance of individual brands, but rather about being able to introduce products that are consistent with the individual brand character without having to start from a clean sheet of paper for each and every component, each and every time," said Bob Lutz, GM's global head of product development, a key architect of the revamp.
"We have a distinct advantage because of our size, if we use it properly," added GM Chairman and Chief Executive Rick Wagoner. "Today we are formalizing a single operating culture in Europe that will pull all the units of GM Europe in the same direction..."
Platform for growth
GM named Hans Demant, vice president of engineering for GME, as new managing director of Opel to succeed Forster, who also becomes chairman of Opel's supervisory board.
GM Europe had already said its latest revamp would not be a traditional reorganization because it would not shut any of its 11 European plants or reduce its 63,000 staff.
The goal instead is to save costs by building more cars on the same basic platform rather than have each division work on the same issues separately. This could help GME return to profit after five years of losses, including a further deficit expected in 2004.
GM Europe's loss widened in the first quarter to $116 million from $65 million a year earlier amid intense pricing pressure and the cost of launching its new Astra small car.
GM has reduced capacity in Europe by 28 percent from 1999 levels but acknowledges it has to take a tougher line on cutting costs and boosting revenue in a sluggish and competitive market.
Lutz said GM needed to boost its presence in new product niches like sports utility vehicles and so-called "crossover" vehicles that blend characteristics of different car classes.
That meant spending more wisely on developing products and letting the rest of the GM world benefit from Europe's skills.
In one of the first examples of GM's new thinking, engineers in Ruesselsheim, Germany, will lead development of the next generation of so-called Epsilon architecture that can be tweaked to satisfy the needs of individual brands and regions.