3rd UPDATE: M. Stanley Analyst Named Advisor To GM Executives

16:32 EST Monday, Jul 18, 2005

(Adds information from Morgan Stanley on Girsky's replacement in the final paragraph.)

By Ann Keeton

Of DOW JONES NEWSWIRES

CHICAGO -(Dow Jones)- Long-time auto industry analyst Stephen Girsky will bring an outside perspective to top executives at General Motors Corp. (GM) as they engineer the critical turnaround of the auto maker's North American business.

The world's largest auto maker on Monday said Girsky will serve as a special advisor to Rick Wagoner, chairman and chief executive, and John Devine, vice- chairman and chief financial officer.

"He will work at the strategy level and the implementation level, especially focusing on our North American turnaround, but doing whatever they ask him to do," said Toni Simonetti, a GM spokeswoman in New York.

After the company reported a surprising first-quarter loss of $1.1 billion, including a $1.3 billion loss in North America, Wagoner said he would take personal responsibility for overhauling the U.S. automotive business.

In an unusual step, GM said it wouldn't give a financial outlook for the full- year 2005 because it faces too many financial uncertainties.

Analysts expect the world's largest auto maker to lose money this year. GM is scheduled to report second-quarter earnings on Wednesday.

At the company's annual meeting in June, Wagoner said GM is taking a hard look at its business strategy and the structure of the company, but he didn't offer a specific turnaround plan.

Girsky has followed the auto industry for 14 years, most recently with Morgan Stanley (MWD), as a managing director and senior analyst for the global automotive and auto-parts research team. Early in his career, Girsky worked as an analyst in the treasurer's office at GM.

In the past 10 years, GM has seen a significant decline in its U.S. market share. Detroit auto makers have faced stiff competition from Asian competitors, which not only have made popular vehicles, but aren't burdened by high labor costs.

GM's sales and market share rose sharply in June as the company promoted the sale of 2005 model vehicles with an "employee discount for everyone" promotion. But, once the older models have been sold, GM must find a way to make a profit on new cars and trucks. "The longer these programs last, the less successful they will be," Girsky wrote in a report earlier this month.

GM's biggest challenge this year is to cut health-care costs for union employees and retirees, Wagoner told shareholders at the annual meeting. This year, the auto maker will spend $5.6 billion on health care.

GM's current contract with the United Auto Workers union doesn't expire until 2007.

Longer-term, Wagoner said, "there are some structural issues - difficult, longstanding issues that we have to step up to and address. In doing so, it will be challenging and discomforting, but it is clear that not addressing them will cause significant risk to the long-term viability of our business."

Girsky, who will join GM on Aug. 1, couldn't be reached for comment Monday. In a report earlier this year, Girsky pointed to problems with GM's manufacturing capacity. Nearly one-half of GM's US production capacity is idled or used to make low-profit cars sold to rental companies, government fleets or employees and their friends and families.

Girsky said he liked GM's strategy, announced in May, to streamline the number of different models it sells in six of its eight brands. The auto maker, he said, doesn't have to be all things to all people.

Considered the top analyst in the auto industry, Girsky has been ranked in first place by Institutional Investor magazine for 13 years.

"Girsky has been at the top of his field for so long, there's nowhere else for him to go. He's as good as they come," said an auto industry source who asked that his name not be used. "I think he might be bored, and ready for a new challenge."

As well, management turmoil at Morgan Stanley has taken a toll on employee morale, the source said. "I'm sure he wasn't pushed out," he added, "but the working atmosphere there hasn't been good."

Morgan Stanley said Monday that Jonathan Steinmetz, an automotive analyst who has worked with Girsky since 2001, will take over Girsky's post.

-By Ann Keeton, Dow Jones Newswires; 312-750-4120; ann.keeton@dowjones.com

(END) Dow Jones Newswires

07-18-05 1631ET


Copyright (c) 2005 Dow Jones & Company, Inc.

Longer-term, Wagoner said, "there are some structural issues - difficult, longstanding issues that we have to step up to and address. In doing so, it will be challenging and discomforting, but it is clear that not addressing them will cause significant risk to the long-term viability of our business."