It is a hectic time for Michael Burns (right), president of General Motors Europe. He is working with Fiat Auto Managing Director Roberto Testore to develop synergies between GM and Fiat under the new alliance between the companies.
Burns is also getting set for the critical launch of the next-generation Corsa supermini. And he is exploring the possibility of further niche models following the Speedster sports car.
Burns was interviewed by Automotive News Europe's Diana T. Kurylko at GM Europe headquarters in Zurich.
How much time are you spending on the alliance with Fiat?
(Fiat Auto Managing Director) Roberto Testore and I spend a good part of each week working on it. It is important that Roberto and I see that it is done correctly.
Study groups are reporting to you. How many different merger groups are there?
We have groups studying purchasing, powertrain and other areas of synergy.
Their preliminary reports were due on April 1?
Some will be trickling through here in the next few weeks. It's a pretty exciting situation. Times are tough for a full-line producer that is in the 10 percent market share range, especially when you start competing against people that have more scale. We are focused on synergies from the cost side where there is a lot of potential. You will see more as time goes on - more than we originally envisioned.
In what areas will you also try to cut costs?
In all areas. There are a lot of things. When you have the kind of assets that we do, you can look to drive cost savings through.
The perception is that Fiat is talking more about the potential of the GM alliance - especially in the area of joint platforms and engines. Fiat dissolved its joint venture to make a sport-utility with Mitsubishi and announced its intention to make an SUV with GM. Why has GM been so reluctant to discuss the alliance?
Roberto and I are letting results speak for themselves. There was some early speculation and some of the data Fiat released gave examples of possibilities. It was seized upon as, 'This is going to happen.' That isn't the case. When you do something like this you put some people together and say, 'What could it be?' Once you get the deal you have to see if that's possible. We have satisfied ourselves that there is plenty of potential here. Now the issue is, what are we doing? How are we going to do it? I can honestly say those decisions have not been made yet.
I understand GM was upset about Fiat releasing news of its intent to share platforms - of GM using Fiat platforms for new cars.
No decision has been made. It's like everything else - someone has an idea. There has been no decision on what kind of platforms will be used.
Could there be platform sharing?
Sure. Those decisions will be made with the full understanding of what is possible. You can bet when we're done we'll have distinctive brands on both sides of the wall. Fiat is not going to settle for anything less and neither are we.
Isn't purchasing where GM and Fiat can combine the quickest?
There is a lot of potential there. That is a big area. Powertrain is another. Back office operations and financing also makes sense. Think about logistics, information technology, research and development. In many cases both companies are pursuing the same kind of research and development. Between their company and ours we have to say, 'Why not combine these?'
In Europe, GM and Fiat's product ranges compete more than in any other market. Is that going to be a problem or advantage?
Our products are very similar. But if you look at where we sell, it is different. The alliance will not combine the marketing or distribution side of the business. We are going to fight tooth and nail in that side of the business - against each other and against the competition individually. The alliance is focusing more on the cost side.
What has the most priority - platform sharing or purchasing?
They are all priorities but they come at different times. When you talk about platforms, you don't stop the world. We are both introducing new vehicles and you have to find the appropriate time to look at platforms.
Does it make sense for GM Europe to remain based in Zurich following the Fiat alliance?
Zurich is not a big office. We are down to 150 employees. They are people in human resources, finance, legal and some planning people. It's a good location in terms of logistics - it's easy to travel to and from every place. We have no manufacturing facilities here so it tends to be somewhat of a neutral point. In the cost of doing business, it's not out of line.
GM has a number of brands - Saab, North America, Opel and Vauxhall. The question would be, where do you go? The distinctiveness of the various brands and their character means you would probably want to stay in a neutral location.
How do GM's other tie-ups with Isuzu, Suzuki and Subaru fit into the new alliance?
We will take a look at them and look for any synergies that make sense for all parties. There will be appropriate involvement.
It's been more than a year-and-a-half since you took over as GM Europe president. What did you find when you came to GM Europe and what changes have you made?
We had a lot to do when I got here. People were not working together as well as they should. We were in the midst of the Astra start-up, which was very large and very difficult. There were about six things that were very important to do and needed to be done very quickly. I started with gaining the motivation and the trust of employees. We had to set a new standard for launches. We had to have flawless launches. We had to develop innovative products. We had to restore financial integrity. There was a big job in quality in terms of improving that situation. The point was, 'Let's get at it and try to make as much improvement as quickly as possible.'
There must have been cheers at GM Europe when Ford decided not to launch the five-seat Ford Focus compact minivan against the seven-seat Zafira.
The Zafira established a benchmark that people looked at and said, 'If we're going to introduce a me-too product, we're better off taking a step back and getting it right.' You see that Ford, VW and Chrysler are all taking a different look from what their published reports said they were originally going to launch. Rejoice? We need to be a little modest about it. The Zafira is a great product and we have a lead right now.
You have released pictures of the new Corsa. That's the volume car people will be watching. Other makers say the supermini segment is where the buyer is most fickle and, above all, looking for value.
We have spent a lot of time making sure this car is right and is launched correctly and it will have great value. There is a lot in this car. It is a step above the car it replaces.
Do you think the new car's styling is enough of a change from today's Corsa?
It is evolutionary. There is always the question of how far you can go. From the clinic standpoint it stacks up pretty well. It will do well.
You have a new Astra and Corsa, but sales of your larger cars, the Vectra and the Omega, are lagging.
It's a tough end of the market. It's not a growing market and there is a lot of competition. The luxury premium makes went downstream, so the market is cluttered. We have ways to address that. But we have product that has to live between now and then.
There is still enormous pressure from Detroit on the European organization to get earnings up. They are not where you want them to be.
There isn't any more pressure from Detroit than there is from us. From a historical sense we are not where we want to be. But the results in 1999 were pretty good, given the extremely competitive market from the price point of view. The first quarter, I have to say, was pretty good. Volume was strong. We have some products nearing the end of their life cycles and given that, we had pretty good results. The business should be able to earn more and that is something that has to be worked at.
GM Europe is returning to niche models. The Speedster sports car (to be called the VX220 in the UK) was approved in record time. Will we more niche models?
Niche models are important terms of defining a brand. As much as possible, where we find niches and spots that make sense, we will do it.