Dan Akerson Remarks to Annual Stockholders' Meeting
DETROIT--June 6, 2013: Here are General Motors Chairman and CEO Dan Akerson’s prepared remarks to the annual meeting of stockholders on Thursday, June 6. As always, the speaker’s words are definitive.
Good morning, ladies and gentlemen.
I am Dan Akerson, the chairman and chief executive officer of General Motors, and it is my pleasure to welcome you to the fourth Annual Meeting of GM Stockholders.
As you entered the meeting today, you were given a folder with several documents, including the rules of the meeting as set forth in the Order of Business and Conduct of Meeting Guidelines, the Proxy Statement, an explanation of forward-looking statements, and our 2013 full line product brochure.
I hope you will take a few moments to read this material.
The first item on our agenda today is a report on GM’s state of the business. Then we’ll begin the business portion of the meeting, at which time we’ll address the matters set forth in the Proxy Statement.
After that, we’ll have some time for questions and comments from the audience.
Before we begin, I would like to take this opportunity to introduce our incumbent directors, and I would ask them to stand as I call their name.
David Bonderman, co-founding partner and managing general partner, TPG…
Erroll Davis, superintendent, Atlanta Public Schools…
Steve Girsky, vice chairman, General Motors Company…
Neville Isdell, retired chairman and CEO, Coca-Cola Company…
Rob Krebs, retired chairman and CEO, Burlington Northern Santa Fe Corporation…
Kathy Marinello, chairman and CEO, Stream Global Services, Inc. ...
Mike Mullen, former chairman, Joint Chiefs of Staff…
Jim Mulva, retired chairman and CEO, ConocoPhillips…
Pat Russo, retired CEO, Alcatel-Lucent…
Tom Schoewe, retired executive vice president and CFO, Wal-Mart, Inc. …
Tim Solso, retired chairman and CEO, Cummins, Inc. …
Carol Stephenson, dean, Richard Ivey School of Business, the University of Western Ontario…
And Cynthia Telles, director, UCLA Neuro-psychiatric Institute.
Thank you for your service to GM… and for all of the valuable counsel you have offered me and the leadership team.
Let’s begin with the state of General Motors.
I am very pleased to report that in 2012 we created significant long-term value for our customers and stockholders.
We did it by keeping a razor sharp focus on the four pillars of our operating strategy, which are now deeply embedded into our culture.
They are: design, build and sell the world’s best vehicles; build strong brands; grow profitably wherever we operate; and maintain a fortress balance sheet.
We continue to make good progress against these pillars.
In 2012, our global revenues were more than $152 billion, up $2 billion from a year ago.
Behind that figure is the fact that more Americans buy their cars and trucks from GM than any other automaker. For that matter, more Chinese customers do too.
Our joint ventures have now outsold all other automakers in China for eight consecutive years.
In fact, we outsold six of the top Japanese automakers combined in 2012. That’s the reward for investing early and staying on offense.
Turning to our profits, we earned $7.9 billion in EBIT-adjusted, which is earnings before interest expense and taxes, adjusted for special items.
All of our business units were profitable, except for GM Europe, but we have stabilized the business there despite the fact that sales have dropped to 20-year lows.
We’re even seeing green shoots from our restructuring activities and new product launches, which will help us reach our objective to deliver break-even EBIT-adjusted results by mid-decade.
When you add in our solid first quarter results, which included better-than-expected results in Europe, it brings our cumulative EBIT-adjusted earnings to $25 billion since the beginning of 2010.
Last year also saw GM’s fortress balance sheet become even stronger.
Our automotive business generated $9.6 billion in net cash from operating activities.
We reduced our U.S. pension liabilities by approximately $28 billion.
We secured an $11 billion investment grade credit facility.
And we ended the year with total liquidity of $37.2 billion.
At the same time, we increased our capital expenditures from $6.2 billion in 2011 to $8.1 billion in order to build a global competitive advantage.
Finally, we introduced some stunning, and phenomenally well-received vehicles, which I’ll talk more about in a few minutes.
Our steady progress has not gone unnoticed on Wall Street.
In fact, one investor recently told me how refreshing it is to talk product strategy with the GM team, instead of things like credit risk.
It’s refreshing to us too. And the change in the conversation about GM has helped drive our stock price, which was up 42 percent in 2012.
The stock has continued to perform well this year too, with a roughly 20 percent increase year-to-date.
Of course, the fact that the U.S. Treasury Department is selling its GM stock has been welcomed by other investors.
So has Standard & Poor’s decision to add General Motors to the S&P 500 index.
But without question, the most important factor is – and always will be – the quality and desirability of the vehicles we build.
I’m very proud to say that our newest vehicles are winning critical praise, awards, and most importantly, customers around the world.
These include the Cadillac XTS and ATS, which was the brand’s first North American Car of the Year....
The Chevrolet Onix, which now accounts for about one-quarter of our sales in Brazil...
And the Opel/Vauxhall Mokka, which currently has more than 100,000 dealer and customer orders.
Our two global brands are leading the way.
For example, Cadillac sales began to surge in the second half of 2012.
Through May, Cadillac has been the fastest-growing brand in the United States, based on year-over-year sales. In fact, Cadillac is growing faster than it has since 1976.
2012 also saw Cadillac begin its drive to triple its annual sales in China to 100,000 units within two years.
The first step involved local production of the XTS, which began a few months ago.
Turning to Chevrolet, we have now seen 10 consecutive quarters of record global sales versus the prior year, thanks to all-new vehicles like the Spark, Sonic and Onix.
To keep this momentum going and forge even stronger relationships, Chevrolet, Buick and GMC customers in the United States will now be covered by a new maintenance program that includes scheduled services for two years or 24,000 miles, whichever occurs first.
It makes sense to do this to kick the ownership experience off on the right foot.
It’s also strategic, because we know that customers who service their vehicles at our dealerships are much more likely to purchase another GM product down the road.
The products we launched in 2012 are just the tip of the spear.
As I speak, the first all-new full-size pickup trucks from GM in six years are arriving in dealer showrooms across North America.
Not only are the new Chevrolet Silverado and GMC Sierra more capable and luxury-car quiet, our new V-8 engines offer superior towing and fuel economy.
The trucks will be followed by the show-stopping, 455-horsepower Corvette Stingray.
One look under the hood of the new Corvette will tell you that it’s not old-fashioned Detroit iron.
The Stingray uses advanced lightweight materials like carbon fiber, sophisticated engine management technologies and incredible attention to detail to generate its performance.
Then there is the gorgeous Cadillac ELR extended-range electric vehicle... and the all-new Cadillac CTS, which is some 200 pounds lighter than a comparable BMW 5-Series.
These vehicles and many more from Buick, Opel and our other brands are the most visible signs of our progress. But there is even more work going on behind the scenes to help us reach our true potential.
For example, at last year’s meeting, I described how our product development teams are reducing the number of vehicle and powertrain architectures we use in order to improve our economies of scale.
Our objective is to derive 96 percent of our forecasted volume from 13 core global architectures and four regional architectures by 2018.
This work has been complemented by changes we made last year that flattened our structure and created accountability for product execution, profitability and customer satisfaction.
It’s also being managed using new analytical tools. Starting this year, we are tracking our profits by both model and country of sale.
It’s incredibly insightful. And over time, we’ll be able to narrow our analysis down to the vehicle identification number globally, which is detail we never had before.
When you step back and consider all of the sophisticated design, engineering and financial tools you need to compete in a dynamic global market, it’s clear that information technology must be a core competency for any 21st Century automaker.
That’s why we are moving quickly to in-source our IT.
When GM outsourced the majority of its IT in the mid-1980s, the tools of the trade were modeling clay, calculators and typing pools.
Now every single link in the automotive value chain is connected – from the design studio to the showroom floor – so it’s supremely important that we control our own destiny. That’s why we’re bringing IT back home to GM where it belongs.
We have already built one world-class GM data center and construction is underway on a second that will be fully redundant.
We’re also hiring more than 4,000 high technology workers to develop software exclusively for us.
When we’re finished, GM will have far more robust business applications, more accurate, timely and secure data, and much lower costs and complexity too.
Another part of GM that has been transformed is the research & development team: they have recaptured their entrepreneurial spirit.
There has never been any question that we have brilliant scientists working for us.
GM has been ranked No. 1 on The Patent Board’s list of innovators in the automotive and transportation industry for seven consecutive quarters.
We also rank second among all companies in U.S. clean-energy patents granted since 2002. But not enough of this work made it into our vehicles.
That has changed faster than I ever imagined possible. All it took was a common purpose and clear direction.
The charge was simple: focus on outcomes that matter to customers and create a competitive advantage for GM.
That same strategy also drives our investments in start-up and early stage companies through GM Ventures... and together it is going to move us to the forefront of safety, connectivity and clean technology.
We are already building vehicles using a new GM-invented and patent-protected aluminum spot welding technology.
This innovation saves weight, cuts material costs and reduces capital investment by eliminating the need to use rivets when building aluminum hoods and doors.
I chose these “behind the scenes” examples because each of them is helping us to address our biggest challenges, which I group into three categories: material costs, complexity and quality.
They’re all interconnected. They are all in our ability to control. And this leadership team will stay resolute in our determination to fix them.
The better job we do keeping our costs down… rooting out complexity… and pushing our quality ever higher... the more value we will create for customers... and for you, our stockholders.
In closing, let me assure you one thing: this relentless drive to transform GM will always continue… as it does for any organization that wants to get to the top and stay there.
New challenges will always arise… it is our responsibility to anticipate and meet them in order to build a GM that will be successful for generations to come.
That is our ultimate goal. Thank you.