General Motors Corp. will spend $9 billion this year on high-technology research and development, GM Chairman Roger B. Smith said today.
Most of the money will go into automotive plants and products, including GM's new Saturn Corp. But a substantial sum will be dedicated to non-automotive applications, such as telecommunications, Smith told stockholders attending GM's 77th annual meeting here.
"GM could become the foremost developer of technology in the land," Smith said. "This would be a natural extension of our current business, which emphasizes very complex product and manufacturing technologies.
"In fact, it would help us serve our customers and our current business even while cultivating new business opportunities and income from new sources," Smith said.
Smith said in remarks after the five-hour meeting that none of the $9 billion -- money from operating profits and tax write-offs -- will be used to acquire other companies, such as Hughes Aircraft Co., which is being sold by its owner, the Howard Hughes Medical Institute.
Hughes is one of the nation's leading aerospace and defense contractors. Both GM and Ford Motor Co., which are seeking more defense-aerospace business, reportedly have entered bids to buy Hughes.
Smith refused today to comment on whether GM is involved in the bidding. However, he said that Hughes would make an attractive addition to the GM empire, which now includes 152 automotive facilities operating in 26 states and 93 cities in the United States.
"Hughes is one of the foremost electronic companies in the world," Smith said. He said that GM in particular, and the automotive industry in general, could benefit from products developed by Hughes.
GM has a separate financial source for acquisitions -- $8.45 billion in cash and marketable securities. GM had a cash cushion of nearly $10 billion at this time last year. Since then it spent $2.5 billion to buy Dallas-based Electronic Data Systems Corp., a major computer services company.
Some stockholders at today's meeting asked Smith if GM was diversifying too quickly, without paying attention to whether or not its newly acquired companies meshed with the auto maker's mainstream business.
Smith said that all of GM's acquisitions made sense. "Let me assure you, the principal focus of GM's business will always be automotive transportation and closely related activities," Smith said.
"I don't know any place else where we can generate $84 billion in sales and $4.5 billion profits as we did last year," Smith said. But he said that GM already has shown that it can generate new products and processes -- either through buying companies or through traditional automotive operations -- "that have potential new business growth rates many times more than we can achieve in the automobile industry at this stage of its development."
For example, EDS' computer services expertise has given GM the opportunity to move into the mortgage services industry and to expand its existing financial services operations, GM officials said later.
"We owe it to our stockholders to recognize those opportunities and to pursue them to a profitable conclusion," Smith said.