David Paterson

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Ensuring A Sustainable Auto Sector The
Transformation at General Motors
David Paterson Vice President Corporate and
Environmental Affairs GM Canada
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Why is Canadas Auto Sector

• Direct and indirect automotive employment amounts
  to 1 in 7 employees in Canada
• Contributed 25 billion to Canadian GDP in 2007
• (19 billion agriculture 10 billion mining 5
  billion forestry)
• 70 billion in auto exports in 2007 (second
  largest export category after oil and gas)

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Ontario Automotive Supplier Network - 2007
COLLINS AIKMAN PLASTICS INC.
THOMSON FASTENERS INC.
TECHFORM PRODUCTS LTD.
TEXTRON CANADA LTD.
VENTRA GROUP INC
RYDER TRUCK RENTAL CANADA
KERR INDUSTRIES LTD.
COSMA INTERNATIONAL INC
A G SIMPSON CO LTD.
PPG CANADA INC.
PPG CANADA INC.
HALLA CLIMATE CONTROAL CANADA
DELPHI CANADA
GLOBAL FASTENERS
WOODBRIDGE FOAM
ACIER NOVA LTEE
LEAR SEATING LTD.
THYSSENKRUP BUDD CANADA INC.
JOHNSON CONTROLS LTD.
TENNECO CANADA INC
LITENS AUTOMOTIVE
LINEX MANUFACTURING INC
VAN-ROB STAMPINGS INC.
FLEX-N-GATE CANADA COMPANY
TESMA INTERNATIONAL INC.
LEAR CORP CANADA LTD.
MAGNA INTERNATIONAL INC.
WET AUTOMOTIVE SYSTEMS LTD.
DECOMA INTERNATIONAL INC.
TITAN TOOL DIE LTD.
LEAR CORP CANADA LTD.
KAUTEX CORP.
OFFSITE INDUSTRIES
WINDSOR MACHINE STAMPING LTD.
ST.CATHARINES MACHINE PRODUCTS
PAPP PLASTICS DISTRIBUTING LTD.
GDX AUTOMOTIVE
RIVERVIEW STEEL CO LTD.
DOFASCO INC.
COOPER STANDARD AUTOMOTIVE CANADA
STELCO INC.
PROGRESSIVE MOULDED PRODUCTS LTD.
SANDCO AUTOMOTIVE LTD
LINAMAR CORP.
TIERCON INDUSTRIES INC.
COPPERWELD CANADA INC.
ARVINMERITOR CANADA
NOMA COMPANY
ALGOMA STEEL INC.
STACKPOLE LTD.
LONG MANUFACTURING LTD.
BRIDGESTONE/FIRESTONE
MERITOR SUSPENSION SYSTEMS CO INC.
GOODYEAR CANADA INC.
VANNATTER GROUP INC.
INTIER AUTOMOTIVE INC.
RIMA MANUFACTURING
COURT VALVE CO INC.
TDS AUTOMOTIVE CANADA INC.
3M CANADA CO.
THERM-O-DISC LTD.
ABC INTERIOR SYSTEMS INC.
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GM Business Model Transformation

• Best Products
• Green Advanced Technology
• Quality productivity
• Capacity and legacy costs
• Global business scale

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Followed By A Perfect Storm
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Immediate Key Challenges

• Consumer Confidence/Ability to Pay
• Financing Crisis
• US Housing Crisis
• Fuel Prices
• Global Trade
• Regulation

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U.S. Consumer Sentiment Index
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Where Are We Now?
U.S. Total Industry Vehicle Sales
Millions
Down 20 Since 2005
2005
2006
2008 Actual and Forecast
2007
Whole Industry Is Down Dramatically In 2008
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Market Mix - Shift Away From Trucks
U.S. Industry Vehicle Mix
Crossover
Truck
Car
Shift From Truck Market To Car Market
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What We Control What We Dont

• Product design
• Quality / warranty
• Productivity
• Technology
• Labour cost / benefits
• Align capacity to market
• Supply chain
• Global Scale

• Credit crunch
• US market sales
• Fuel commodity costs
• Currency exchange
• Trade agreements
• Relative number retirees
• Health care cost escalation
• Regulatory costs

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Whats Already Changed At GM? (What Are We
Transitioning To?)

• v Leading quality JD Power (Oshawa repeat
  leader)
• v Leading plant productivity Harbour (Oshawa
  repeat leader)
• v Labour costs - 2-Tier agreement UAW
• v US Health care legacy cost - VEBA 2010
• v NA capacity reduction 14 of 67 plants in NA
  closed by 2009
• v NA employment rightsizing reduced by 60,000
  from almost 180,000 in 2005
• v Repeat NA Car of the Year Winner
• v Advanced technology most hybrid models in
  market
• v Advanced technology Chevy Volt electric car
  approved
• v Global engineering and supplier management
• v Global scale for growth leader in China,
  Russia, Latin America

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Leading Quality and Productivity
GM warranty repairs down 40 2002 2006 Reduced
additional 14 in 2007
GM only company to consistently improve
yoy productivity over 15 years
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Labour and Health Care Costs

• More competitive wages and benefits through
• Frozen wages
• Reduced paid time off
• 1 year suspension of COLA and Pension COLA
• Significant co-pay and cap on prescription
  drugs
• New or lowered other healthcare caps
• Reduced legacy costs by 2010 US VEBA

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GM Canada Transformation
Almost 4 Billion Investment
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GM 2008 Liquidity / Cash Saving Actions

• Cash Savings Actions July 15, 2008
• GMNA Structural Cost 2.5B v
• Salaried Employment savings 1.5B v
• Capital Expenditure reduction 1.5B v
• Working capital improvement 2.0B v
• UAW VEBA deferral 1.7B v
• Dividend suspended 0.8B v
• Asset sales 2-4B In process
• Capital markets 2-3 B Behind
• Further Announced Actions Nov 7, 2008
• Capital Expenditure reductions 2.5B
• Structural Cost reductions 1.5B
• Working capital reduction 0.5B
• Salaried worker cost reductions 0.5B

10 Billion
5 Billion
5 Billion
GM Reduced Cost by 9 Billion 2005 - 2007
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Product Excellence
Pontiac Vibe
Saturn Astra
Chevrolet Malibu Hybrid
Cadillac CTS
2008 Motor Trend Car of the Year
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Chevrolet Tahoe Hybrid
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And more small cars!
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New Award-Winning Small Cars
Saturn Astra
2008 Best New Small Car
Pontiac Vibe
2009 Best New Small Car (over 18k)
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Import Competitors Filling Out Their Portfolios
Toyota Tundra
Nissan Armada
Toyota Sequoia
Nissan Titan
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GM Sales in Key Emerging Markets

• Units in thousands 2000 2007

2007 Market Share GM 12.1 VW 10.2 Toyota
8.5 Ford 5.9
China 75 1,032 Russia 1 259 Brazil 319 499
India 7 60 Mexico 217 230 Other
Reporting 469 852 Total 1,088 2,932

• In 2007, 31 of GM global sales were in the
  Reporting Emerging Markets, up from 13 in 2000
• GM market share within the Reporting Emerging
  Markets has increased from 10.2 in 2000 to 12.1
  in 2007, leading all manufacturers

Source GMIA Data as of Feb 2008
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Forecast World Automobile Ownership

• Today
• 890 million vehicles
• 6.6 billion people
• Projections by 2020 24
• 1.1 billion vehicles
• 7.5 billion people

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Fuel Efficiency Leadership and Small Cars
15 MY08 models obtaining 7.0 L / 100 km
or better, more than any other automaker
Pontiac G6
Chevrolet Malibu Malibu Hybrid
Pontiac Wave
Chevrolet Cobalt
Pontiac G5
Chevrolet Impala
Saturn Vue Vue Hybrid
Pontiac Solstice
Chevrolet Aveo
Chevrolet HHR HHR Panel
Saturn Aura Aura Hybrid
Pontiac Vibe
Saab 9-3 Sedan Sport Combi
Saturn Sky
Saturn Astra
Hwy -- The fuel data was determined using
approved Transport Canada testing methods
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Powertrain Advances

• Direct fuel injection
• Variable valve timing
• Cylinder deactivation
• Turbocharging
• 6-speed transmissions
• Cleaner, more powerful diesel engines

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Active Fuel Management
AFM and switches back from 4 to 8 cylinders in
high demand conditions(e.g., hill climbing)
AFM Seamlessly switches from 8 to 4 cylinders
in low demand situations(e.g., highway cruising)
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GM Hybrid and Electric Vehicles
The Hybrids are Here!
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GM Hybrid System
36-volt, 0.6 kW-HrNiMH Battery
170 Hp 2.4L L4 Engine

• 10-25 fuel economy gain
• Global benchmark for low-cost, hybrid system

PowerElectronics
Saturn AURAGreen Line
5 kW electricmotor/generator
Saturn VUE Green Line
Chevrolet Malibu Hybrid
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2-Mode RWD Hybrid System
GMC Sierra 2-Mode Hybrid

• 50 city fuel economyimprovement
• City fuel economyequal to 4-cyl Camry
• Tow up to 6,200 pounds

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Plug-In HybridsSaturn VUE Green Line
Potential to achieve double the fuel efficiency
of any current SUV on short trips
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GM 2008 Ethanol Vehicles
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Benefits of E85 Ethanol
Ethanol from Corn Dry Mill Processing
Ethanol from Corn Wet Mill Processing
Cellulosic Ethanol
Ethanol from Sugarcane
CO2 Savings from Different Ethanol Processes
Inputs
(21)
(29)
(56)
(70-86)
Argonne National Labs UCAR 2006
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Next Generation Ethanol

• Able to use multiple non-food based products
  around the globe. For example
• Will produce ethanol for less than 0.26 per
  liter.
• Return up to 7.7 times as much energy as what is
  used to produce the fuel
• Uses less than one liter of fresh water per liter
  of ethanol

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Extended-Range Electric Vehicles
Chevrolet Volt
Cadillac Provoq
Opel Flextreme
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GM Fuel Cell Vehicles
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Summary

• Canadas key value-added sector
• Drives innovation, huge supply chain
• Massive GM transformation self help
• Green by Design future higher costs
• Threatened by US export market decline