Leaner, fitter GM emerges in fighting form after bailout

Automaker trying to shed stigma of federal intervention

Jeff Roe, of Oregon, puts the valve guides into a six speed transmission. The line on which he works will be extended, allowing production of both six-and eight-speed transmissions on the same line. The GM Toledo Transmission plant in Toledo announced that the plant will receive $55.7 million "to support its existing six-speed transmission and a new eight-speed one."

Dan Ammann, a top executive with General Motors Co., believes the slimmed-down company is developing and building the best cars and trucks it has ever made.

But Mr. Ammann, GM’s chief financial officer, also admits that for some buyers, that isn't enough.

The bailout and government managed bankruptcy that saved GM in 2009 left a sour taste in the mouths of many taxpayers who believed the U.S. government had no business propping up a failing automaker.

And four years after the bankruptcy, some of that stigma still remains. Though fewer voices are smearing the company as Government Motors, some buyers still see GM as scarlet letters. Company data finds that 26 percent of current Ford pickup truck buyers say the U.S. government’s ownership stake in General Motors played a role in what they bought.

That has tasked GM with revamping both its vehicle lineup and its image. Mr. Ammann, who was not with the company at the time of its restructuring, said those two are not easily separated. If GM builds good cars that consumers value, it will succeed. If it doesn't, it won't. 

“I think it’s something that will continue to fade away with the passage of time, and more importantly with the success of the company,” Mr. Ammann said. “The more successful we are building great vehicles, winning in the marketplace with customers, the less people will continue to think about that.”

GM is investing considerable capital as part of its effort to build better cars that are more fuel efficient. Since 2009, GM has committed to investing $8.1 billion in the United States. 

That's had an impact locally. The Toledo Transmission plant has received three investments totaling about $342 million since 2011. The most recent, a $55.7 million investment announced Thursday, is the final chunk of money needed to prepare the plant to begin producing an all-new eight-speed automatic transmission for GM.

GM is in the midst of a major refresh of its lineup, having recently unveiled an all-new Chevrolet SS performance sedan, a completely redesigned seventh-generation Corvette, more fuel-efficient GMC and Chevrolet pickups, and several new Cadillac models as it attempts to bring truth to the brand’s “standard of the world” slogan.

At last month’s New York International Auto Show, GM debuted the new 2014 Cadillac CTS, and showed off updated versions of the 2014 Buick Regal, Regal GS, and Lacrosse.

“What you’re seeing launched here, a lot of that development has occurred on the new watch,” Mr. Ammann said. “We’ll be judged by how well these vehicles perform in the marketplace.”

The new eight-speed transmission built in Toledo is expected to be a very important component of GM's powertrain offerings as the automaker works toward stricter government regulations and increased consumer demand for higher fuel economy.

"When we looked at our product portfolio and the regulatory environment as it became firmer, you need to have eight-speeds for lots of reasons, including marketplace desirability,” said Mark Reuss, GM’s president of North America. “Eight-speeds are something people desire for either driving dynamics — they’re a lot of fun to drive — or fuel economy, or both.”

Toledo will be the first plant to build the new transmission, though officials haven't said when production will start.

The plant already builds more transmissions for GM than any other facility in North America, assembling 2,600 rear-wheel drive six-speeds and 2,300 front-wheel drive six-speeds every working day. Officials say the eight-speed will add to that capacity.

At its peak, the plant employed close to 5,000 people. Even as recently as 2005, nearly 3,500 people worked there. Today, employment hovers at a little less than 1,900 people. Part of that is because automation has reduced the number of workers needed to build the same number of transmissions. But a larger part is that the plant is still recovering from the depths of the recession and GM’s darkest days.

At one point in 2009, only a few hundred workers were in the plant. The plant ended 2009 with a workforce of about 900.

“We had a significant part of our membership laid off,” said Ray Wood, president of United Auto Workers Local 14. “We were able to call them back starting in May, 2010, and we got everybody back in a relatively short period of time. We had people absolutely concerned about whether they would ever have a job here at General Motors again. The addition of those products have allowed for continued job security.”

Officials said last week the latest investment won’t bring with it any new jobs, but if demand is high for the eight-speed, there’s potential to need more workers in the future.

Jim Lanzon, vice president of Global Powertrain Engineering for GM, said Toledo was a natural choice for the new product.

“Toledo has always been absolutely a world-class plant,” he said in a recent interview with The Blade at his office in Pontiac, Mich. “We’ve introduced a lot of new products over the years in Toledo, and they’ve always stepped up. It has a terrific workforce, it’s a terrific leadership team down there, and we’ve never, ever had any kind of issues with the Toledo facility ... We know that they’ll produce a good product.”

High-tech 8-speed

Having more gear ratios in the transmission allows the engine to run more efficiently. 

“The customer won’t see a difference, but at highway speeds and some of the mid-level shifting speeds, the engine is operating at a more optimum fuel economy point," Mr. Lanzon said.

The transmission shifts very fast, and having extra ratios available reduces the time a transmission spends searching for the right gear.   GM can tailor the transmission to optimize either economy or performance. The complex software backing the transmission also can understand and adapt to a specific driver's habits.  

“Toledo is going to build the most technologically advanced transmission we've ever made," Mr. Lanzon said.

Several other automakers already offer vehicles equipped with eight-speed transmissions. Chrysler Group LLC uses eight-speed transmissions in many of its cars and trucks, including the Chrysler 300 and Ram pickup. Hyundai uses an eight-speed in its upmarket Genesis, and BMW has eight-speeds across much of its line.

Alec Gutierrez, senior analyst at automotive valuation company Kelley Blue Book, said the industry is moving toward those eight-speed and even nine-speed transmissions, so it's important that GM have a successful one. Predominately that's because automakers are chasing economy, but he said they're also versatile. 

"You can get a lot of out of it," Mr. Guiterrez said. "You'll get the fuel efficiency gains you're looking for, but for something a little more sporty, you're looking for something that's going to shift quick, have short gears, and give you an exhilarating driving experience."

Past is History

The 2014 CTS will be GM's first vehicle to use an eight-speed transmission, but it won’t initially get a GM-built gearbox. Though development of the eight-speed started before GM's restructuring, it was delayed significantly by the process, and the gearbox wasn't ready.

“We wanted to have an eight-speed in [the CTS], but we couldn't get there quite fast enough with our own, so it’ll be a bridge strategy,” Mr. Reuss said of the CTS. 

It’s likely CTS will eventually get GM’s own eight-speed, though the company hasn't said publicly what its plans for the transmission are. In a news release announcing last week’s investment, the company said its eight-speed “will be used in numerous GM vehicles by the end of 2016.”

Corvette eventually figures to be a recipient of the eight-speed, as do the Chevy Silverado and GMC Sierra pickups. 

Like Mr. Ammann, Mr. Reuss said that GM is not free of the black mark it received from its struggles that culminated with its bankruptcy filing. And he admits GM may have lost some buyers because of it.

"That’s history though," he said. "So what we focus on is the future. I live in the future, don’t live in the past. I focus on sales and earnings and a product portfolio that makes people forget about that.”

He said they're making progress.

For one, the company is profitable again, earning a pre-tax profit of $7 billion in North America last year. Overall, GM reported a $4.9 million profit in 2012.

Another thing executives believe GM is doing right? Differentiating its brands. Before the restructuring, GM sold eight different brands in the United States. After dumping Hummer, Saturn, Pontiac, and Saab, they're down to four: Buick, Cadillac, Chevrolet, and GMC. And Mr. Ammann said it's much clearer what each of those brands stands for today.

And buyers are reporting they're more pleased with their overall experience with GM. 

J.D. Power and Associates' 2013 Customer Service Index Study found GMC ranked No. 1 in satisfaction with dealer service. Buick was No. 3, and Chevrolet was No. 5. Among luxury brands, Cadillac was No. 2, trailing only Lexus. 

"We’re beginning to retain people again, and we’re doing it because we have superior products and service," Mr. Reuss said. "There’s no magic, you have to change that culture. You have to change the dealerships, the appearance of the dealerships, you have to get the right people selling and servicing the products inside of those dealerships, and you have to have people highly motivated to sell great products again.”

Contact Tyrel Linkhorn at:tlinkhorn@theblade.com or 419-724-6134.