Why GM May Not Be Dead

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GM is only now truly embracing the globalization strategy that Toyota has used for decades: sharing parts and platforms around the world and harmonizing production. Global product development is being centralized under Lutz. Result: expect to see more Asian- and European-designed cars in the U.S., including the next Saturn Ion, widely expected to be a rebadged Opel Astra from GM's European subsidiary. "We won't trim brands," Lutz says, referring to Wall Street calls to euthanize the Pontiac and Buick nameplates, which even Lutz has described as "damaged." Instead GM will pare some of its more than 70 models, many that trail the competition in quality scores and critics' reviews. "We're doing radical surgery," he says.

That includes the workforce, as GM eliminates 30,000 of 125,000 hourly jobs and shuts 12 plants in North America. Wagoner acknowledges the terrible toll on morale. "I'm not saying people haven't sacrificed," he says. He's not saying it's over either, which is why many plant workers are getting out. "The pressure they're putting on people is ungodly," says John Weizman, 45, who is taking a package. Weizman has been shuffled among plants in West Virginia, Ohio and Michigan and figures that, even with his seniority, he will be asked to move again. "It's not worth it for me to stay," he says.

In Saginaw, Mich., where 11 Delphi parts plants spun off by GM in 1999 are for sale, the mood is just as grim. "I worked for GM and Delphi for 34 years, and now they tell me my time is up," says Tom Basner, 52, chairman of United Auto Workers (U.A.W.) Local 699. Delphi filed for bankruptcy last fall, and the way Basner sees it, the company is using Chapter 11 to hire younger, cheaper workers. Delphi plants are hiring, even as they shed veteran employees. Basner has referred one of his sons to Delphi for a job, which is still better than working at the bagel shop. But he knows that such jobs are no longer a ticket to middle-class prosperity. "I'm an optimist," he says of his own chances of finding work. "But I feel betrayed."

Wagoner's job is on the line too. In February GM added a board member, Jerry York, who represents a large and restive shareholder: the Las Vegas real estate mogul Kirk Kerkorian. Since then, Detroit has buzzed that Wagoner demanded a statement of support from the board as rumors swirled that York had asked for his scalp. In a January speech, York complained that GM was not in "crisis mode" and prodded Wagoner to raise cash by selling assets such as Saab and Hummer. Ultimately, the board declared its "great confidence" in Wagoner, and Lutz says the sale of Saab and Hummer is off the table. Wagoner and other top execs nevertheless had to eat pay cuts, and the taste lingers. "I'm not going to characterize the impact of any single board member," he says tersely when asked about York's influence.