GM facing costly solution to 2000 worries

Does a company with an estimated two billion to three billion lines of software code and thousands of date-sensitive assembly machines in 50 countries have a prayer of meeting its year 2000 deadline?

That's the question facing the world's biggest company, General Motors.

Ten days ago, GM notified the US Securities & Exchange Commission that it expected to spend between $US360 million and $US500 million to fix its year 2000 problem. In January, the SEC issued guidelines for public companies to tell shareholders of year 2000 costs and risks.

Sources close to GM said Deloitte & Touche did a technology assessment last year to determine the scope of the problem. The findings, released last fourth quarter, sent shockwaves through GM's senior management, according to one of the sources.

A spokesman for GM denied that the Deloitte & Touche report startled management.

"Everybody has been aware of how much we need to get done here" for several years, the spokesman said.

Then there is the issue of how much GM is spending on its year 2000 problem. A $US500 million year 2000 budget for a $US177.7 billion (1997 revenue) company "just doesn't add up," said Lee Freeman, a consultant at Management Support Technology.

Not when the Chase Manhattan Bank, with $US366 billion in assets, and Wall Street brokerages are spending $US250 million to $US500 million each on millennium projects "without shop floors that need fixing", he said.

Executives at the Detroit-based car maker said the company can get the job done. GM's year 2000 project "is where we want it to be, but the task is extremely large", said Ralph Szygenda, GM's chief information officer, in a recent interview.

Consultants close to the company aren't so sure. "I don't think there's enough time" for the Big Three to get all of their respective year 2000 work finished, said Joe Bione, a consultant at Deloitte & Touche in Detroit, which is doing millennium consulting for GM and Chrysler.

The automotive industry's supply chain "is like a big spiderweb", with automakers such as GM counting on thousands of interdependent relationships, Bione said. GM has relationships with 30,000 suppliers and conducts business in 190 countries.

Still, Bione said all three US car makers, including Ford, "are doing everything possible to lick the problem".

Daron Gifford, the top GM consultant at Deloitte & Touche, said the automaker has a "huge effort under way" but declined to comment on the technology assessment.

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