GM Creates a Single Global Automotive Unit

DETROIT —  General Motors Corp. said Tuesday it will combine its North American and international operations to make it more responsive to worldwide markets and compete on a firmer footing with the newly merged DaimlerChrysler and a trimmed-down Ford Motor Co.

In a briefing beamed to employees of the world’s largest auto maker, GM Chairman and Chief Executive Jack Smith named G. Richard Wagoner Jr. as head of the new global unit.

Smith, 60, also positioned the 45-year-old Wagoner as his heir apparent, naming him as GM president, the youngest in the 82-year corporate history of the auto maker. Wagoner also will serve as GM’s chief operating officer.

The consolidation splits the roles of chief executive and president for the first time since 1992, when Smith was elevated in a boardroom coup to bring the giant auto maker back from the brink of collapse.

GM executives said the decision to create one global unit, mirroring a move made four years ago by No. 2 Ford, will flatten the management structure and speed up vehicle development time by cutting final approval to as little as a week from a month or two. The global unit will be called GM Automotive Operations.

“It wasn’t a downsizing move,” Smith said in response to a question from an employee about whether layoffs would result. “What it really does is simplify the organization. It certainly allows us to move faster, so that’s the essence.”

Analysts said GM, which employs 608,000 people worldwide, most of whom will fall under the new organization, may cut some middle-management jobs through attrition or retirement packages. But Wagoner said the reorganization will not cut costs substantially.

“This theoretically should make GM much more fleet of foot on the product-development side,” said analyst Joseph Phillippi of Lehman Bros. “It just streamlines the organization.”

But Phillippi said the reorganization, while needed, will not address GM’s biggest problem: “At the end of the day, they still have too many divisions, too many brands and too many models.”

GM said in August that it plans to cut several models and introduce others to become more competitive. On Tuesday the auto maker said it will stop making the Oldsmobile Cutlass mid-size sedan at the end of the 1999 model year.

GM’s new organization will consist of four geographic regions--North America, Europe, Asia Pacific and Latin America/Middle East/Africa. A consolidated strategy board will take the place of several layers of bureaucracy, including the six-member President’s Council.

Smith said Vice Chairman Harry Pearce, considered a contender for the top spot until diagnosed with leukemia this summer, is recovering from a bone-marrow transplant and will remain as vice chairman.

GM shares fell $2.50 to close at $51.25 on the New York Stock Exchange.