AT&T receives $1 billion, 5-year networking contract from GM

Five years ago, General Motors Corp.'s worldwide telecommunications system was lagging the company's fledgling effort to globalize vehicle design, engineering and manufacturing.

It would take an hour or more for an engineer in Europe to send a large computerized design file to a manufacturing plant overseas, and another hour for the plant to send the file back with any changes.

Now, as the company moves toward building more models in more places off the same underpinnings to save billions of dollars, GM and AT&T Inc. have a network in place that allows engineers and plant officials worldwide to simultaneously view the same data and discuss it.

On Wednesday, GM gave San Antonio-based AT&T even more business, awarding it a five-year, $1 billion global networking contract that will prepare the world's largest automaker for whatever electronic breakthroughs lie ahead.

"It'll let us manage the increased data over the next five years," said Ralph Szygenda, GM's chief information officer. The pact will increase GM's productivity, he said.

GM employees eventually will have the same telecommunications tools no matter where they are in the world, including common voice mail and conferencing abilities. Because of the network, the quality will be the same in other countries as it is at GM's Detroit headquarters, the companies said.

The contract is just a small portion of AT&T's revenue, which amounted to $63.1 billion last year. But the company is hoping that the GM experience will help it generate more business as more companies realize the need to electronically link global operations, said Ron Spears, executive vice president of AT&T's global business sales.

"Many are starting to follow the path of recognizing the need to globalize business practices," he said.

Under the contract, AT&T also will manage all of GM's telecommunications suppliers around the world, making sure that communications are standardized.

The pact renews an existing contract with AT&T, but company officials would not disclose the value of that agreement.

Kent Custer, a telecommunications industry analyst with A.G. Edwards & Sons in St. Louis, said the deal is the biggest of its type that AT&T has ever done.

"It's not a significant portion of their overall business, but it's a nice win for them," Custer said.

For GM, he said such technology can achieve productivity gains. "There's a lot of opportunity for management to increase productivity and reduce costs by doing deals with this," Custer said.

GM officials have said the company will save $1 billion annually in design, engineering and manufacturing costs for every model built on the same global architecture. Other automakers have said such globalization is the key to their future profitability.

AT&T shares fell 15 cents, or 0.4 percent, to close Wednesday at $37.21 on the New York Stock Exchange. GM shares fell 58 cents, or 1.6 percent, to close at $35.37 on the NYSE.

source:www.chron.com