Despite cuts, GM stuck in low gear

General Motors Corp. has broken sales records, turned out critically acclaimed vehicles and shaved tens of thousands of workers from its payroll.

But all that progress couldn't save the automaker from another money-losing quarter in North America — a stark reality that underscores GM's competitive disadvantages and why it desperately needs a money-saving labor deal this year with the United Auto Workers union.

GM on Thursday reported a $46 million net loss in its North American operations for the first quarter and a narrow $62 million profit on its global operations. The results fell 80 percent short of projections by investment analysts surveyed by Thomson First Call.

While the North American loss is a $246 million improvement from last year, it comes at a time when GM is benefiting from aggressive cost-cutting measures, a deal with the UAW to cut its health care tab and a dramatically smaller work force.

In addition, GM's re-energized product lineup is bringing in $1,000 more in revenue per vehicle sold in North America than it did just a year ago.

But those improvements continue to be overshadowed by GM's crushing labor and retiree costs.

"If you look at the cost burden we bear in this area versus international competitors, it's really massive," GM Chief Financial Officer Fritz Henderson said in an interview with The Detroit News. "Health care remains for us and for the industry a major source of competitive disadvantage. It diminishes margins, diminishes cash flow." More at Detroit News