AND 
GM Makes Cuts to Raise Liquidity by $15 Billion: No Impact on Volt
Today GM’s CEO Rick Wagoner announced major new initiatives aimed at bolstering their liquidity to ride the tough times ahead.
Yes this site is about the Volt, but how can we have our Volts if GM cant survive?
I attended today’s conference call including Rick Wagoner, Bob Lutz, and Fritz Henderson.
Wagoner expressed concern about continued high oil and weak volumes of sales, especially trucks, that he calls “extremely adverse” and “unprecedentedly difficult” and notes these measures will help allow GM to get through these tough times and to “break through to brighter days”. He calls his plans proactive and aggressive but not an emergency.
To position the company for the future, the plans are to bolster liquidity by $15 billion by the end of 2009. These savings he said are based on very conservative projections of 14 million in continuing auto sales, and $130 -$150 per barrel oil through that timeframe, which is more conservative than their expert projections.
Wagoner stated “today’s actions, combined with those of the past several years, position us not only to survive this tough period in the U.S., but to come out of it as a lean, strong and successful company,”
The plans:
1. Operating changes and actions will lead to $10 billion in cash through end of 2009
-salaried headcount and other reductions of 20%
-reduction in trucks and truck components, and sales and marketing
-deferring union benefit payment
-suspend stock dividend immediately
2. Asset Sales will lead to $4-$7 billion in cash through end of 2009
-includes sale of global assets and other financing measures
There seems to be hope that 2010 will mark the turnaround, the same year the Volt will arrive. And as GM vice-chairman Bob Lutz said in his blog today, “no strategic programs are being impacted; it’s full speed ahead on E-Flex technology and the production program of the Chevrolet Volt.”
Source (GM)
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July 15th, 2008 at 8:43 am
The Volt budget won’t be slashed, because it’s their future. That would be a Fritz Henderson type move, and that’s why Wagoner is the boss.
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July 15th, 2008 at 8:54 am
Further news on the wire:
Elaborates from Chief Operating Officer Fritz Henderson:
-A large chunk of the reduction, he said, would come from cutting health care benefits for salaried retirees
-Several thousand jobs will be cut through normal attrition and retirements, and through early retirement and buyout offers, Henderson said. The company could resort to involuntary layoffs but does not want to, he said.
-Henderson said the company intends to reduce its truck production capacity by 300,000 units, 150,000 more than it announced at its annual meeting in June.
-The company will speed up closures of its truck and sport utility vehicle factories in Janesville, Wis.; Oshawa, Ontario; Silao, Mexico; and Moraine, Ohio, and it will make thousands of job cuts at other truck assembly and parts factories, Henderson said.
-The company also plans to raise $2 billion to $4 billion through the sale of assets, including its Hummer brand.
-It also plans to borrow $2 billion to $3 billion by pledging assets including stock of foreign subsidiaries, brands, stake in its finance arm and real estate.
Analysts had speculated GM would need to raise more cash to get it to 2010, when it will start seeing the savings from its landmark 2007 contract with the United Auto Workers that cut hourly workers’ wages and transferred billions in hourly retiree health care obligations to a union-led trust.
As part of its financing plan, GM will defer $1.7 billion in payments to that trust that had been scheduled for this year and next.
As I mentioned before. The accessible cash cow to saving/accessing virtually free money is VEBA. It starts with not funding…then it moves to raiding its cash pile. This is the main piece of interesting news in this release…the other things were expected.
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July 15th, 2008 at 8:55 am
I wonder what is included in the asset sales…
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July 15th, 2008 at 8:55 am
That is not a job I’d want.
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July 15th, 2008 at 9:12 am
All of this is necessary, but will allow GM to rebound stronger. It’s a shame some things didn’t start sooner, but it all happened as it only could.
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July 15th, 2008 at 9:18 am
Maybe the UAW should think about going on strike. lol Don’t see that happening.
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July 15th, 2008 at 9:19 am
The link to Lutz’s blog is incorrect. Here’s the correct one:
http://fastlane.gmblogs.com/archives/2008/07/working_hard_on.html
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July 15th, 2008 at 9:23 am
Honestly Jason,
I fear for alot more than GM right now. I used to just concern myself with individual companies and their internals, but this could go far beyond that. We could have a totally market breakdown (ala 87) even this week.
Merrill and Citigroup on thursday…could be scary as heck. Couple that with the gov’t getting out in front talking about about using taxpayers money to shore up potential liquidity issues at Freddy and Fanny. On top of that the US dollar is getting its hat fed to itself again.
Perfectly healthy, solid companies, with coherent business plans could be destroyed in the wake of what is happening right now.
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July 15th, 2008 at 9:31 am
Unfortunately, the current changes only account for a max oil price of $150. It’s over $145 right now! Anyone feel that it’s going to stay under $150 for the next 2 years? I’m betting no way. Heck, at $145 the biggest reaction so far by the government was for Bush to put an end to the drilling ban. What effect did it have on the oil price? Absolutely nothing. Why would it? They say the current fleet of drilling rigs has a 5 year waiting list. What about the 68 million acres that are ready for drilling but haven’t even been explored yet? I smell something fishy here. I guess the investors agree.
Anyway, let’s keep our fingers crossed for GM. My gut feeling is that this conference is not the last. When the price of oil goes over 160 for a few weeks there will be more drastic measures that need to be taken. Banks are already starting to buckle. Hold on to your hats folks. On the bright side, GM has a glimmer of hope with the Volt. If they make a radical transition to the electrification of the automobile then they can grab a large part of the market. They can then hold on and not let go. If anyone is listening, the truck and SUV market for personal transportation is dead. Don’t waste another day thinking about it.
Another thing that worries me is that GM and Ford have relied on the huge profits gained from the SUV and Truck markets. If those markets are indeed over, how are they going to compete on a global basis with companies that have been perfecting small car design and manufacturing for decades? If you include the weight of the unions on their shoulders It seems like an impossible task.
I feel for Mr. Wagoner and of course for the employees. To say his job is difficult would be a gross underestimation. I wonder what his real vision of the future is. You know, the one vision that he keeps mostly to himself. The one that keeps him coming into work everyday. I know Mr. Wagoner and the board have a plan. Otherwise they would not be tolerating the years of losses. I think he basically said to the board many years ago, “Look, we are completely screwed here. I’m your best hope to turn this ship around but it’s going to take at least a decade to do so. I know you all think it’s completely hopeless but here is my vision. We can’t make this public because the shareholders would run and the employees would hang us. However, this is what we need to do. If you don’t back me 100 percent I will walk away and you can find yourself someone else who will blow sunshine up your butts right up to the day they come and turn out the lights. So, what will it be?” The board room is silent. Mr. Wagoner slowly collects his papers turns and heads out toward the door. “Wait a minute.” The chairman of the board grumbles. “Why don’t you have a seat.”
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July 15th, 2008 at 9:35 am
Hold your horses! A lot of this is simply panic – not real danger. Remember what Phil Graham said. Indymac could have survived if its customers hadn’t paniced and all wanted their money at once. No bank can survive that. That is not how they operate. Patience is what is needed here. If we allkeep our heads, we can ride this thing through and come out stronger, but if we all panic, we can create serious problems where they don’t need to be.
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July 15th, 2008 at 9:39 am
#9 Texas
Funny ditty. Although I doubt Wagoner gave them a ultimatum to back him or he was out. He is a lifer at GM, and the right man for the job. (I know I don’t say much postive…so there you go).
Good post overall.
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July 15th, 2008 at 9:45 am
GM must jettison all non essentials and use that capital to fund their product, service and workforce reorganization and they must do it QUICKLY before the dollar slips even further.
GM has to compete against the international non-union manufacturers and the Fed’s debasing of the US fiat currency. If the unions bitch, GM should just move out of the US entirely.
It’s “sink or swim” time for GM, all their LOYAL employees and all their LOYAL customers. GM should not let the fat mafia union boss rats sink the GM ship and take everyone down with them. ($20.00/hr. with full benefits to sweep the floor?)
Mr. Wagoner also said that his figures were accurate if oil remained in the $130-$150/bbl range through 2009. Did I hear that crude just passed $147/bbl? Any new offshore oil wells won’t even come online for 4-5 years and MANY predictions call for $200/bbl by 2010 and perhaps double or even triple that if the NeoCons and Democratic-Socialists attack Iran. They are already trying to blockade Iran as a prelude to war so I wouldn’t be surprised with war before the election and $400/bbl oil by 2010.
Mr. Wagoner must redouble his streamlining efforts and adjust GM’s product mix with even more super efficient (small and/or electric) vehicles if they are to survive.
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July 15th, 2008 at 9:46 am
Texas #9
“Another thing that worries me is that GM and Ford have relied on the huge profits gained from the SUV and Truck markets. If those markets are indeed over, how are they going to compete on a global basis with companies that have been perfecting small car design and manufacturing for decades?”
*** *** ***
I’m betting that E-flex will go many directions. Because of the efficiency of electric vehicles I wouldn’t be surprised to see a reemergence of the mid sized to full sized trucks, the difference will be that they’re electric. They won’t be the first out the door, but I wouldn’t bet against it. Again, this is where the margins are going to come for GM, and probably another reason only Hummer is being sold not 2 or 3 more divisions.
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July 15th, 2008 at 9:46 am
Statik #8,
I disagree with your gloomy tone and your downbeat assessment of these times. I believe that what we are seeing develop here is a new foundation upon which a whole new era of American innovation will be based. To borrow a line from NASA’s famous flight director, Gene Kranz…
“With all due respect, sir, I believe that this will be our finest hour.”
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July 15th, 2008 at 9:48 am
#10 ROBERT M SPERRY
“Hold your horses! A lot of this is simply panic – not real danger”
Your right, it is mostly panic…but that in of itself is the greatest danger of them all.
“Patience is what is needed here. If we allkeep our heads, we can ride this thing through and come out stronger, but if we all panic, we can create serious problems where they don’t need to be.”
This is true. However, patience is that hardest trait to illicite in the public and I’m not sure it can/will be done here.
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July 15th, 2008 at 9:57 am
I’d be inclined to spell it panik.
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July 15th, 2008 at 10:04 am
#10 Robert
Agreed, has anyone looked at the United States local economy. It is not reliant on globalization. Everyone is thinking globally. Local economies will not stop working, and if you think the rest of the world is going to just continue on without the U.S and it’s not going to slow down all these economies outside of the U.S, your crazy. It will be a global slowdown. That will effect demand with regards to oil as well. The markets want to curb oil demand. We will find out out how much they want that very soon.
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July 15th, 2008 at 10:05 am
#14 Hermant
“Statik #8, I disagree with your gloomy tone and your downbeat assessment of these times. I believe that what we are seeing develop here is a new foundation upon which a whole new era of American innovation will be based.”
As is your right.
However, I have already been proven right. To what extent is the question.
I freely admit I was/am one of the ‘panickers’ I sold off half my equities over 2 years ago. I went all cash/equivalents months ago…I hold no US paper.
I sympathize with the pain of good companies and good people.
However, every bit of bad news is good news for me now. My cash dollars that are earning 6% (more than double inflation) are gaining in purchasing power, both in real world things (for things like housing) and in market equities.
For example, if I held onto 10,000 shares of GM over the last 2 years ago…I’d still have 10,000 shares today. But selling out positions 2 years ago lets me bank that 360K, and make $42,000 in interest. Now if I wanted back in, I could now have over 40,000 shares…and still have the $42,000 in cash to buy a Volt. That is the difference. That is money banked.
The nice thing about cash is that when I see a turnaround happening, I can be in the market as much as I feel I need to be instantly.
Hopefully, we will be seeing a “a new foundation upon which a whole new era of American innovation will be based.” I truly pull for it. I look forward to that…and re-entering the market.
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July 15th, 2008 at 10:08 am
#16 Grizzle
“I’d be inclined to spell it panik. ”
Thats great, hehe.
+1
Side note: I stil think the changes made by GM today are good, and good for the company. The market seems to agree, GM is up today.
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July 15th, 2008 at 10:12 am
I still believe that the light at the end of the tunnel for GM is the Volt and not an oncoming train.
Be well,
Tag
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July 15th, 2008 at 10:15 am
Unions did not kill the EV-1 nor did they tell GM not to put the Volt into production last year. When GM builds good product it sells, such as Enclave,Malibu,CTS. If GM built 100,000 Volt they would sell every one of these Union made cars. If GM made trucks that had 40 mpg avg they would sell even with 5 dollar gas. E-flex must be put into other models for Saturn, Cadi and a BPG product. The Cadi E-flex at this years car show a small crossover would sell over 100.000 copies today, it was stunning.
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July 15th, 2008 at 10:17 am
Patience is needed – not all sectors of the economy are doing poorly! Johnson & Johnson just announced excellent earnings this morning.
The financials are in trouble and so are the automakers – but this is of their own doing. The mortgage mess of the finacials is of their own greed and some of these institutions will and should go out of business. The mortgages they were making were ridiculous. When a person gets a mortgage with no money – they have no vested interest.
The automakers just didn’t forcast the jump in oil prices this quickly! Although they did see it coming as the Volt development line shows.
I feel for the employees being laid off, but most of these people are hard working individuals and will find a way to take care of their families. They may find a way to start a new small business of their own.
The days of relying on large corporations to take care of you are over. GM is doing what it has to to survive and be strong for the future, and I hope they do as I am patiently waiting for my Volt.
I don’t expect to see any money from Social security either. You must plan on taking care of yourself.
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July 15th, 2008 at 10:20 am
#8, statik,
I agree with you that things are going to be tight all over for the next few years, which is why I am happy (as I’ve stated over and over) that:
- renewable energy plants and equipment factories have already been built in the US – solar, wind, bio-fuels, etc.
- auto industry has shifted its development efforts towards alternative fueled vehicles
- cfl’s are on the market, as well as other energy saving devices
- water replenishment systems are in place or under construction in southern CA and elsewhere
- universities have adapted their curriculums to meet the needs of these new industries
Again, I agree, it could get tough, as we’ve just seen dubya give a speech on the economy this morning.
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July 15th, 2008 at 10:25 am
dubya has mentioned battery vehicles twice so far this morning and the need to build new refineries.
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July 15th, 2008 at 10:27 am
In a country/continent that rules through fear of damn near everything, it’s going to be very hard to expect patience from anyone. North America has been inducing panic/fear in it’s people for the last 2 decades now, and has excelled at it over the last 8 years. I really don’t see patience as an option anymore. Moral of the story, keep your loyalties close but your money closer.
Bow down for the arrival of CANADA! HA! j/k
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July 15th, 2008 at 10:27 am
I’m glad to see that some people agree with me. Patience is what we need! This country is too important to the rest of the world for them to sit by and let us go down the drain – even if that were possible, which I seriously doubt. As someone pointed out, our internal strength is too great for this country to collapse. the headlines are all about big business and their problems. However, 98 percent of our gross national product comes from SMALL business and they are still going strong. They are having financial problems, like all of us, but they will manage to survive and they are the stockholders for big business and won’t let it all fail. GM is doing an excellent job of trimming down and looking to the future. When all of this quiets down – and it will – GM will come out on top and the Volt will be the reason why.
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July 15th, 2008 at 10:32 am
Cut the stock dividend immediately? It yields 10%, which frankly is the only thing going for it. This thing will be a dollar stock in a matter of days. I’m no naysayer, but I think I’ll hold off buying stock. GM may want to consider going private because shareholders will be screaming and that will place everything at risk.
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July 15th, 2008 at 10:33 am
As GM goes so goes America, we are just entering the pile that the politicians republican and democrat have created. Not only is GM in deep trouble the whole country is. Just fanny and fredie are going to add another 10 trillion onto the burning cash. Talk about GM burning through cash just look at the U.S. cash flow out of the country for oil and those great imported cars, yes they are so proud to be Americans they have a US flag on their japnaneese car, I only hope they suffer more than the rest of us that have tried to support this once great country. GOODBYE TO THE UNITED STATES MAY SHE GO DOWN WITH A FIGHT AND TAKE A FEW CROOKED BANKERS AND POLITICIANS WITH HER.
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July 15th, 2008 at 10:36 am
#23 Jason M Hendler
This is a fine post. Everybody read his post, lol.
In the grand scheme of things. GM doesn’t matter. A US recession/depression doesn’t matter. Sure it would suck, thats undeniable.
But the product of this economic pain is a dramatic shift in the way America exists in this world and it’s affect on it. I would have preferred the change to come out of conscious, but I’ll take it by way of the financial slap on the wrist as well.
Switching to renewables, maximizing our resources will have a profound and lasting result on how our children and grandchild live in this world.
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July 15th, 2008 at 10:38 am
REMINDER: Bob Lutz on CNN in ~20 minutes (12Noon ET)
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July 15th, 2008 at 10:44 am
I know this is easier said than done. However GM should turn a couple of the truck factories into battery manufacturing facilities. Then turn the large SUV factories into Electric motor factories!
Red HHR!
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July 15th, 2008 at 10:49 am
I will agree our trade deficit is horrendous, but we will not collapse. After we move ourselves away from foreign oil (which will happen), and after Asia and China’s economies grow stronger and the Dollar weakens. Then employing Americans will look very good, and so will American exports. Our strengths will be Farming and technology. We will reduce our trade deficit and we will be very strong. You can’t be the big boy on the block all of the time. It is a cycle and we will come back strong. Our biggest weakness is our federal Govt. Our greatest strength is local and State Govt, with private property rights.
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July 15th, 2008 at 10:57 am
#29 Statik:
“But the product of this economic pain is a dramatic shift in the way America exists in this world and it’s affect on it. I would have preferred the change to come out of conscious, but I’ll take it by way of the financial slap on the wrist as well.”
Or a full on butt kicking with spured boots.
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July 15th, 2008 at 10:57 am
29 Statik:
You never know Statik…these troubles could force the existence of a more powerful NAFTA and closer knit cooperation as experienced managers, factory workers, and other skilled positions move to the more liquid and less strict capital markets of Canada and Mexico to get their starting funds.
to answer from the last thread. No, I am not Canadian. I took a very small % of my money and invested in some Canadian junior miners for Palladium, Silver, and Copper.
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July 15th, 2008 at 11:10 am
#29 Statik
Well I hate to blow your cover, but I take #29 as an extremely POSITIVE comment, and arguably the wisest thing you have said here.
Also on the wire this AM they noted that GM has a 45 mpg car coming in 2010. Is that the Cruze? Still behind the curve, but progress. 2010 seems like a long way off though.
Our local paper had a story this AM about the collapse of sales of “crossover utility vehicles”, particularly the Ford Edge. They quoted a Honda dealer in Texas as saying that people only want to talk about 40 mpg cars – they can’t even sell CRVs.
For many reasons I devoutly hope that GM survives and turns things around. I guess we just have to sweat it out, wait for them to come up with a car that says “you gotta buy it”, and hope that all of this stuff gives them enough breathing room to get it done.
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July 15th, 2008 at 11:20 am
I have thought more and more about the Saturn product lately. I am thinking now a Saturn VUE Greenline this fall and then 2012 going with the Saturn (Opel) Flextreme…that is assuming the volumes produced make them available to me in the area I live in.
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July 15th, 2008 at 11:22 am
#35 Noel Park
“#29 Statik Well I hate to blow your cover, but I take #29 as an extremely POSITIVE comment, and arguably the wisest thing you have said here”
Funny…actually I am a very ‘green’ person. Some might say I am a ‘greenie’
To me in the long run, the only thing that really matters at the end of it all, is the standard of living I enjoy, and more importantly the standard of living that I will leave to my son, both environmentally and fiscally.
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July 15th, 2008 at 11:24 am
Tag #24
I caught that, he also mentioned that the coming EVs would not look like “golf carts”. I wonder if he’s spoken with Wagoner?
BTW no sight of Lutz on CNN yet. I’m wondering if with all the market news they won’t have allotted time.
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July 15th, 2008 at 11:27 am
Busy day today Grizzly. They will probably do the interview and ‘put it in the can’ for later if the newsroom gets too busy.
CNN has always had too many talking political heads for my liking. I mean I’m Canadian, I have interest in your election…but geesh, enough already.
/ask knowledgeable third parties about the economy, not politicians
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July 15th, 2008 at 11:27 am
This is part of the economical collapse needed to create a North American Union. This has all been preplanned. With all our money will go our National Sovereignty as well.
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July 15th, 2008 at 11:36 am
GM has a nice bounce on the ‘thriftiness’ news.
Up 65 cents today, double digit stock again $10.03.
You know its the right move when you cut your 10% dividend and the stock goes up 6%, lol.
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July 15th, 2008 at 11:39 am
Statik #39
Correct, but it’s all the large news networks to some degree. Unfortunately it’s become more entertainment and less news. Thats why I’ve developed a liking for the Evening news with Jim Lehrer, as it’s much less sensationalistic.
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July 15th, 2008 at 11:39 am
40 Chris:
Might not be such a bad thing…depending on the shake out. In general the bigger the country and the more natural resources it has the more powerful.
Besides…we have been trying to take over Canada since before this Nation existed.
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July 15th, 2008 at 11:41 am
Grizzly,
I watch Jim from time to time. However, I always have CNBC on, I have a little LCD at my computer desk…it probably has ‘ticker burn’
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July 15th, 2008 at 11:48 am
Parts of Bob made it on CNN.
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July 15th, 2008 at 11:48 am
Actually, parts of what Bob SAID were on CNN
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July 15th, 2008 at 11:50 am
#45 Tagamet
“Parts of Bob made it on CNN.”
I missed it…did it show his elbow or somthing? I didn’t see him, must have been when I refilled my tasty beverage.
Anything interesting?
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July 15th, 2008 at 11:50 am
Tag–
All I’ve seen is McCain, are you talking straight CNN or CNN Headline?
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July 15th, 2008 at 11:51 am
#2 – 41 Statik – incisive comments; no disagreement here.
GM’s announcement is further vindication of what analysts have said for years: GM’s workforce is bloated, its cost-cutting efforts have been half-hearted and its corporate structure too bloated in light of its massive market share loss over the past 10 years.
Its move to unload the Hummer brand – if anyone is stupid enough to want it – should have been accompanied by shuttering Buick, Pontiac and Saturn. GM needs three divisions: Chevy (mass market), GMC (trucks and commercial vehicles) and Cadillac (so-called luxury, though its products are a poor substitute for Mercedes, BMW, etc).
The $15 billion that GM estimates it will raise buys them another year of viability at their current cash-burn rate of $3.3 billion/quarter. I’ve revised my estimate of their Chapter 11 filing to the end of 2009.
A final comment. Today’s announcement does nothing to alter the fact that GM is by any reasonable definition already bankrupt, as evidenced by its Balance Sheet http://finance.yahoo.com/q/bs?s=GM With NEGATIVE shareholder equity of $41 billion at 31 Mar 08, GM is neither viable nor is it solvent. Today’s announcement is way too little, way too late.
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July 15th, 2008 at 11:55 am
Just caught Lutz, very short segment indeed-might see more of it throughout the day. One thing about the maximum man is that you can always count on that glass of water being half full.
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July 15th, 2008 at 11:57 am
Good commentary on why today’s GM announcement doesn’t cut it:
http://biz.yahoo.com/usnews/080715/15_why_gms_latest_moves_arent_enough.html
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July 15th, 2008 at 12:08 pm
And another:
http://www.marketwatch.com/news/story/phileas-fogg-takes-helm-gm/story.aspx?guid=%7B322CCCF9%2DA27F%2D4821%2DB8C1%2D4A86F7DF0C29%7D
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July 15th, 2008 at 12:08 pm
Statik,
Bob just pushed the idea that GM needed to focus on “other parts of their portfolio” like the small cars they already make in Europe, “so that shouldn’t be a problem” message.
HTH
Tag
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July 15th, 2008 at 12:12 pm
BOYCOTT THE JAPS!!!
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July 15th, 2008 at 12:14 pm
#49, #51Bernie Torbik
I think it is a given that under the present conditions GM cannot surivive. Today’s moves increase the duration of survivability.
The bigger story is the ’streamlining.’
I personally believe, and it is no secret around here that in no way can GM pull itself out of this mess. However, I do believe GM knows this and it governing itself accordingly.
Personal conjecture only, but I feel GM has backloaded everything to 2011-2013 and is consciously blowing all it’s cash now on future projects, money it would not have access to under bankruptcy protection. I feel the chances GM becomes insolvent, goes Chapter 11 and cease to exist are very slim, less than 15%.
Therefore under the scenario of Chaper 11, which would further restructure the company and reset debt…a ‘new’ GM should emerge. And not your father’s GM, smaller sure…but faster, leaner and more efficient.
As long as you don’t look at it from the aspect of GM’s debt holders, shareholders, employees or American/Canadian tax payers…thats a good thing.
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July 15th, 2008 at 12:20 pm
As Statik pointed out, the stock is getting a nice bounce today, up over 6% at the time I write this.
At a market cap under $6B, I still think under the right agreement, it will be a take over target before GM files for bankruptcy. I wonder if that’s part of the reason Wall Street is giving the stock a bounce today.
Look at Budwiser… it had a market cap of $48B and it was bought out.
I sure hope nobody shorted the stock or you are losing money today…
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July 15th, 2008 at 12:20 pm
#54 Toyodasucks, Why? If the rest of the world boycotted the yanks we’d be bankrupt by now. Protectionism isn’t the answer. GM has a limited amount of time to do the right things to make it competative again. Assuming they do the right things (and I think they are), they should end up better for it and take market share back on their own. It’s not Japan’s fault that they build reliable small cars that people just so happen to want right now at 4.10 gas.
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July 15th, 2008 at 12:25 pm
Gsned57
PDNFTT
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July 15th, 2008 at 12:26 pm
#56 Jeff M
“At a market cap under $6B, I still think under the right agreement, it will be a take over target before GM files for bankruptcy. I wonder if that’s part of the reason Wall Street is giving the stock a bounce today.”
It is possible. However, the’ who would’ is a small list and further to that, the ‘who would be allowed to’ and ‘with what conditions’ would even be smaller. I think those factors would be a larger obsticle to overcome than finding a company/investor with the desire to have it.
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July 15th, 2008 at 12:27 pm
oil is 138 now
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July 15th, 2008 at 12:29 pm
#58 Tag
seconded
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July 15th, 2008 at 12:29 pm
Perhaps it was in the last thread, can’t seem to find it here –
Someone suggested that all the US automakers; Ford Chrysler and GM, would need a government bailout.
For my money (so to speak), Chrysler already got their bailout (and if you look at their ownership history since, it doesn’t appear that there’s really that much left).
… they sold the Chrysler building, you know … to an Arab investor.
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July 15th, 2008 at 12:30 pm
Here is a Fortune Magazine article trashing GM for taking baby steps to fix their problems when they had research that predicted everthing that is now happening way back in July 2005:
http://money.cnn.com/2008/07/15/news/companies/taylor_gm.fortune
This reminds me of the famous document that landed on National Security Advisor Rice’s desk month’s before 9/11 that was titled something like “Terrorists are now training to use planes to attack skyscrapers…” . Her lame response: “There was NO actionable intelligence”. IMO, the only lack of intelligence was her !
Just remember, GM had the writing on the wall since 2005 !!
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July 15th, 2008 at 12:43 pm
63 Smoking Gun:
I wrote a paper trashing the Fed predicting what is currently happening…in 2002. They didn’t do anything about it.
I also wrote a paper about what you are likely going to eat for dinner tonight and the after effects…stay away from the stew. Trust me.
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July 15th, 2008 at 12:44 pm
Robert M Sperry # 26
The rot starts at the head. We’re in the pickle we’re in because we’ve had a complete failure of leadership on every issue of importance. If we get better leadership we’ll be fine. If not then we’ll have a very rough time indeed.
FWIW Phil Gramm was known as “Senator Stupid” when he was in DC. He dueled with Representative Markey from Massachusetts (Congressman Stupid) for the title of dumbest elected official. This lack of intelligence was the primary reason the faculty at Texas A&M rebelled and killed his appointment when he was considered for president of that University.
Gramm was, however, one of the more venial members of Congress. His famed “Enron loophole”, passed while his wife was being paid big bucks on the Enron board, should have gotten him tossed from the Senate, though even sex with children doesn’t seem to qualify for that. And I can’t say that participating in Democratic strategy meetings as a Democratic Senator from Texas and then sharing the information with the Republican caucus qualifies him to be an ethical guiding light. And his pioneering work in revolving door politics, sheparding dubious tax loopholes through Congress while negotiating with UBS to profit from those loopholes, set the ethical bar at a new low.
He and his wife are trips. Let’s quote someone else.
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July 15th, 2008 at 12:52 pm
A video of the complete press conference at GM (Tuesday July 15) presented by GM’s management team. To view the conference on WXYZ’s News site scroll the box located under the video viewing window and then click “GM press conference”.
http://www.wxyz.com/news/story.aspx?content_id=357a9335-61df-4c90-b28a-4e088e862d9a
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July 15th, 2008 at 12:52 pm
#55 Statik “… the chances GM becomes insolvent, goes Chapter 11 and cease to exist are very slim …”
I disagree. GM is already insolvent, but not illiquid. Its negative equity position, and excess of liabilities over assets, is proof of this. However, it still has access to debt markets because it is (for now) current on its interest/principal payments. How long this lasts depends upon its cash burn rate.
The situation is directly analogous to Fannie Mae and Freddie Mac: both are insolvent, but have now been given unlimited backing by the Fed and Treasury (read: US taxpayer). GM doesn’t have that, yet, but an Obama Administration and Democrat Congress, as well as the Province of Ontario, will probably be their recourse.
Chapter 11 filing for GM will be the conduit to the streamlining you referred to. It’s going to cost GM billions to buy out its dealers, and that may be their plan. It’s similar to the airlines: United, US Airways, Continental, Frontier and Air Canada have all played that game, and emerged leaner as a result. As for more competitive, it all depends upon whether GM develops cars the public wants and will buy.
I do agree that GM isn’t going away. It’s EU and Asian operations are viable and will in time be much more valuable than their NA operations. However, it’s future in NA will be as a much smaller entity. Its Holden operation in Australia is a good indication of what its future in NA will be: manufacturer of two or three vehicles, imports and assembles the rest.
As much as I’d like to think that the Volt will be successful, it won’t contribute meaningfully to GM’s bottom line for years. The projected volume is way too low – less than 100k units for the first two years, limited production thereafter. Hardly enough to impact its results.
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July 15th, 2008 at 12:55 pm
Morgan (#64)
The Fed CREATED what is currently happening by lowering interest rates and debasing the fiat US currency to create hyperinflation so ALL imported goods cost MUCH more. The politicians ignore this because it gives them unlimited spending and unlimited federal debt.
Compare the value of the currency to the value of Gold and the value of oil or ANY other imported commodity.
Watch and learn: http://www.youtube.com/watch?v=z6NfXk7Bvc8
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July 15th, 2008 at 12:57 pm
Tag and Statik, Sorry Rookie mistake
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July 15th, 2008 at 1:01 pm
I would like to know why GM isn’t selling cars like the Opel Corsa OPC over in America. This is pretty nice looking small car like the Honda Civic … which is selling like crazy. I bet GM could sell plenty of Corsa OPCs in America if they brought them here … especially if they put in an affordable hybrid system (2 mode?) that gets mileage close to the Prius.
http://jalopnik.com/cars/news/hot-hatch-report-opel-corsa-opc-225629.php
I also like the looks of the cars that GM’s subsidiary Holden is making too … particularly the Coupe 60:
http://photocarsonline.com/blog/2008/03/02/holden-coupe-60-shocks-showgoers/
It sure looks to me like “the good GM cars” are being sold OVERSEAS instead of in the U.S. Why? If GM wants to rack up some sales, bring the cool looking design cars here!
I think that’s been one of GMs problems over the years. They just aren’t creating cool exterior designs for the U.S. market as well as their competitors. That and ALL their vehicles need to start doing better on those reliability and quality ratings by JD Power, Consumer Reports, the car magazines, etc.
Gotta have good gas mileage these days too of course. Gotta build cars that make sense for the times. I KNOW the Chevy Volt should be a huge success if they get the exterior and interior design just right. By 2012, I want to see the Chevy Volt be THE car that people all over the world eagerly anticipate getting … even if they have to be on a waiting list for a few months.
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July 15th, 2008 at 1:12 pm
All of this happenings only points out that no company can operate successfully under the conditions GM has allowed itself to be negotiated into through the past decades of bad management, bad labor relations and bad labor deals. GM is making some very hard decisions and more may very likely come in the next few months. It would be great if this announcement was the beginning of GM pulling itself out of the hole it has dug for itself. Let’s hope and pray this is the case. I wish them and their employees much success. We all have a lot riding on their success.
Go GM and Go, Go, Go Volt.
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July 15th, 2008 at 1:20 pm
No direct impact on the Volt, but there were some hits against white collar workers (taking away health benefits after retirement, no raises for at least 2 years, etc.)
One has to wonder if this will affect the Volt because important people (managers, engineers) start leaving for greener pastures, so to speak.
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July 15th, 2008 at 1:21 pm
The Lutz interview video is on CNNBusiness
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July 15th, 2008 at 1:25 pm
68 Tim:
I know all that. Read the post of the person I was responding to and you will see it was EXTREMELY tongue in cheek.
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July 15th, 2008 at 1:29 pm
#57 Gsned57
$4.28.9/gal here.
The one little bright side to higher gas prices, is once they exceed 9.99.9, they will most likely leave that .1 cents off the price (hey, I said little)
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July 15th, 2008 at 1:43 pm
You guy are on fire today !!! Great posts
Bernie , I think your right , I am on hold until GM hits below $5 a share . holding for until 2015 to 2017 . Good luck All !!
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July 15th, 2008 at 2:19 pm
Elaborates from Chief Operating Officer Fritz Henderson:
-A large chunk of the reduction, he said, would come from cutting health care benefits for salaried retirees
This is really underhanded. My Dad worked as a salaried employee for GM from 1948 to 1990 uninterupted except when he went off to fight the Korean War.
When he started with GM in 1948 he was given a statement of the benifits he would recieve when he retired. Paid health care after he retired was one of the most important to him.
The amount that GM pays for health care has already been frozen for a couple of years so GM’s cost is not increasing.
My dad would travel for GM every week. Every night he stayed up late every night trying to get the mounds of paperwork done they would mail him at home. He usually had to spend a good chunk of every weekend working on the paper work.
This is a real stab in the back for somebody that dedicated his life to GM. The top management never pays for thier mistakes but takes it out on the dedicated former employees retirement. The employees spent thier lives making good on thier commitment to GM. GM must find a way to make good on their side of the bargain. Maybe they could hire thier own doctors and have thier own medical facilities. Inovate!
I am sure that same upper management that made the mistake of producing gas guzzlers, taking millions of dollars of taxpayer money to develop electric cars and then crushing the EV 1, conspiring with the current administration to limit the authority of CARB, selling the battery technology to Texico leaving the world at the mercy of the oil companies and terorrist oil producing countries will get a big bonus for this latest bit of inovative thinking.
Par for the course!
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July 15th, 2008 at 2:28 pm
77 JJ:
Sorry for your dad, my dad owned a business that shut down due to GM, no retirement, no benefits. We couldn’t survive in business selling GM product so now we aren’t in business.
If your dad’s retirement package was anything like the lifers I know who retired from GM if he was the least bit frugal and held some back I think he will be fine.
My dad on the other hand will be going back to work at 67 here soon, but its okay he couldn’t stay retired if he tried and if he did try to stay retired it would likely end in divorce at 67
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July 15th, 2008 at 2:33 pm
77 JJ – sorry about your dad’s lost benefit. It’s Exhibit # 1 in support of NOT giving any taxpayer assistance to GM or any other auto company, for that matter.
I’ll be curious to read GM’s next 10K filing with the SEC to see whether or not Wagoner’s salary has been cut. He earns as much as several Toyota executives, combined. Personally, I’ll take the Toyota executives – they know how to make a profit. despite gas prices in Japan of $9.00+ per gallon.
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July 15th, 2008 at 2:36 pm
#77 JJ
I am sorry for your dad. But, we are all to blame for the troubles facing our auto industry and ourselves.
Placing blame on others is always the easy way to sidestep the issues. I was in full agreement with you until the last paragraph. I am not at all sure you are right or even wrong about that. I agree the automakers lobby both congress and the President for a “fairer shake” (in their view) than what they see coming down the pike. I can’t say I blame them. Everyone, including large and small companies, have the right to “petition” the government. I think the style of lobbying we presently see in all levels of government in this country leaves a lot to be desired. But, what recourse do we or they have?
It is a terrible way to cut cost, I agree. I wish your dad much health and a long and happy retirement. I hoe this does not place too much of a burden on him and others like him. But, in my opinion, no matter how undesirable, GM had to do something like this. I am just sorry for the human impact the decision may have.
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July 15th, 2008 at 2:37 pm
JJ #77
I am probably the last person who normally defends GM management but on the health care issue I’m somewhat sympathetic. It’s not reasonable to expect anyone to have predicted the outsized rise in health care costs we’ve seen. They’ve been crazy.
Also cutting health benefits is more about shifting the burden to taxpayers than anything else. it’s also becoming par for the course as more and more companies find they can’t continue to shoulder the health care burden and continue to exist. I do, however, sympathize with your father. Same thing happened to my father who worked for a steel company. He not only lost his health benefits, he also lost a big chunk of his pension when the company went Chapter 7.
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July 15th, 2008 at 2:42 pm
#70
Tail pipe emmisions…GM has a bunch of cars that get 40-60+MPG in Europe,
one of the other threads here has a list posted by someone else. Post #61 http://gm-volt.com/2008/07/10/gm-ceo-rick-wagoner-dispels-bankruptcy-rumors-and-talks-volt/
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July 15th, 2008 at 2:46 pm
#79 Bernie Torbik
I am not usually one to interfere with the “free” market place, but limiting executive salaries is one subject I could support. Of course, when we are limiting executive salaries, we must also limit salaries paid to baseball, football, basketball players and others that are paid a very large salary and/or bonus. But, who decides how much to pay these people? Congress? Just who? Where do you stop limiting salaries? I think public outcry through stockholders would work much better. Sport fans could stop coming to games and instead march in protest to show their opposition to large sign-up bonuses and salaries. But, who among us will head up all these efforts? The opportunity is there for someone to step forward. We are waiting.
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July 15th, 2008 at 2:56 pm
#82 mitch
It does seem like GM could get several of these cars ready for the U.S. market. Two things have to be overcome. One is the vehicle crash test worthiness and secondly the clean air laws that keeps some diesel engines out of the U.S. Both of these problems should be overcome to get more efficient cars on the market here. Some of the cars listed on the previous posting (#61) are really nice.
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July 15th, 2008 at 2:58 pm
OK, Statik, time for you to predict the next posting’s topic. You did pretty good the other day. This time predict a better subject that is not so frustratingly sad.
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July 15th, 2008 at 3:05 pm
A little recent history for everyone…the idea of the hybrids sound good in this almost 3 year old press release. However as you may know, the product availabilty of these hybrids were to be VERY low for a volume carmaker. This turnaround plan was really sell more BIG vehicles…it seemed strange to me at the time.
http://www.mindfully.org/Industry/2005/GM-Cut-30000-Jobs21nov05.htm
GM North America’s Four Point Turnaround Plan
GM Press Release 21nov2005
To help drive additional sales in the future, the product plan includes a heavy emphasis on high-growth segments, such as “crossovers,” compact and luxury SUVs, large pickups and entry luxury cars.
Starting in January, GM will begin rolling out more than a dozen all-new versions of its full-size SUVs for Chevrolet, GMC and Cadillac, to be followed in late 2007 with the availability of GM’s advanced two-mode hybrid powertrain. In the same year, GM will begin rolling out an entire new lineup of full-size pickups, another segment in which GM is the industry leader.
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July 15th, 2008 at 3:05 pm
Wow, I am not so easily comforted by Wagoner’s comments. I truly fear for the future of our beloved Volt.
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July 15th, 2008 at 3:10 pm
This is good news from GM to have the company shored up for the next 18 to 24 months. And just in time with shutting down truck and suv lines to a minimuim and cutting losses.
With Toyota announcing plans in the last week to change new Mississippi plant from Tundra’s to next generation Prius (which may or may not be a plug-in)
http://www.treehugger.com/files/2008/07/toyota-next-generation-prius-mississippi-trucks-v8.php
With new Prius to be in full production by 2010 I see this as an attempt to steal some of the VOLTS thunder and beat GM into full production.. Now this is the time to pull out all the stops. If the Volt is really the future of GM all of the Volt teams need to be going 24/7 no matter what the cost is. If the volt should fail (i do not believe it will) I can not see where it would make more then 60 days difference to the drop out point on the bottom line.!!!
GOOOO GM
GOOOOOOOOOO VOLT!!!!!
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July 15th, 2008 at 3:11 pm
The problem with GM is not that there are too many brands, but too many models. Its not cash problem either. I think they can raise another $30 or $50B easy.
The biggest problem is that their cars are ugly. Solution: Copy a few models after BMW’s style and another few after Mercedes’ style.
My projection:
GM starts to take Volt’s pre-production order in 1/2009. That is $35000 for a 20 miles model and $40000 for a 40 miles model. The 1st production of 60000 is sold out by 2/2009. GM increases the 2nd production run to 200000 and it sold out by 6/2009. If you have to have one, you can find a 2nd production run 20 miles model on ebay.com for $50000.
All of a sudden, economy is in a recovering mode. Housing start increased by 20%. $150B Fed’s infrastructure fund starts to kicking in. Crude drops to $60 because of the demand of the Volt and gas drops to $2. Volts are flying off the shelf, as well as trucks and SUVs.
By 7/2011, Volt’s 6th production run is 500000. GM’s 2Q/2011 earning is $10B and projecting zero debt by 2014. GM stock is at about $100/share, after a 4:1. And the market cap is about $200B. They also announce Volt II is 200 miles with battery and 600 more miles with ICE extender @ $35000 a copy.
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July 15th, 2008 at 3:17 pm
#88 Go GM
And then you woke up! If it could really be so, that would be OK with me. But, I think you are dreaming. Or is it wistful thinking.
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July 15th, 2008 at 3:19 pm
Time for a little fish (Tesla) to purchase a big fish(GM).
It has happened before. It’s called a leveraged buyout.
Word to GM:
Be Afraid. Very Afraid.
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July 15th, 2008 at 3:22 pm
Was there an earthquake in Michigan today, or was that just the rumbling of GM’s foundation collapsing.
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July 15th, 2008 at 3:26 pm
Those who think that the major obstacles to selling efficient midsize cars and small cars that don’t suck are emissions laws and safety requirements must be closing their eyes every time a Fit, Civic, Corolla, or Prius drives by. Hope you pulled over first.
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July 15th, 2008 at 3:34 pm
GM needs to restructure and streamline their products as follows:
Breakup into three(3) divisions: GMC, Cadillac and Chevrolet.
GMC – all Trucks, Vans and SUVs (includes minivans,pickups and crossovers)
Cadillac – all Luxury Cars and Sports Cars (sorry Corvette your a Caddy now)
Chevrolet – all high-mileage regular cars (dump all low mileage cars)
This would greatly reduce company overhead and save billion$
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July 15th, 2008 at 3:47 pm
And the GMC division would officially stand for
Grotesque Mileage Company
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July 15th, 2008 at 3:48 pm
from what ive heard from obama today qoutes and sound bites.. it soundls ike .. hes more interestedin national security tho energy independnace i guess hes redoubling his efforts on this issue good news i hope
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July 15th, 2008 at 3:54 pm
#83 N Riley – I didn’t, and don’t, advocate limiting executive compensation. However, I do advocate pay for performance. As a shareholder (not of GM) I would expect the Board of Directors to limit compensation and any bonuses to an amount reflective of the firm’s overall performance.
GM, and for that matter, most US automakers, haven’t done so. Wagoner earned $15.7 million in 2007 http://www.mlive.com/business/index.ssf/2008/04/gm_ceo_rick_wagners_2007_compe.html , an amount which is clearly excessive based on GM’s performance. He should have been fired after the Renault-Nissan negotiations fell apart.
Bob Lutz’ CNN interview is on http://money.cnn.com/
In it, he claims that “the current market conditions in the US couldn’t have been foreseen”. Really? He acknowledges that European gas prices are in the $9/gallon range, and that GM’s business there and in Asia has been built around that model for many years. Why were the US conditions unforeseen? Haven’t oil prices been increasing steadily since 2002? Was the spike after Katrina a warning to everyone that the US was living on borrowed time insofar as energy prices AND AVAILABILITY were concerned?
Lutz may be a savvy car guy – maybe – but his excuses are the same tired story GM, Ford and Chrysler have been spinning for years as they foist mediocre products and designs on the US public. Clearly, as Toyota, Honda, Nissan and other “foreign” automakers market share reflects, there is a market for reasonably sized vehicles that have better fuel economy than 10 gallons/mile.
Here’s a thought: how about having GM, Ford and Chrysler’s Board and senior management spend several months outside of the US, see the world and understand the GLOBAL marketplace. Then, when they return, leave Detroit and its parochial thought process (big cars, big trucks, cheap petrol) behind, and apply some of what they learned in the real world!
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July 15th, 2008 at 3:57 pm
GM needs more engineers that think outside the box.
Similar to the Jupiter team at NASA, that have come up with a far superior design than the Ares crap rocket NASA insiders are using.
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July 15th, 2008 at 4:01 pm
alot of gm talk tonight and something about solar cars running around the nation in a few minutes on cnn
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July 15th, 2008 at 4:01 pm
Shoulda bought that stock at $9.00 now its over $10.00 and I woulda made 10% not bad for a few days. GM will recover and the stock will return from a 52 year low. Now, enough blowing my skirt up and make me my VOLT. TED
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July 15th, 2008 at 4:03 pm
The Nightly Business Report on PBS is supposed to air a segment tonight on hybrids and electric vehicles, too.
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July 15th, 2008 at 4:05 pm
N Riley,
I don’t do predictions any more, I have suggestions though:
Chevybeat is not coming to US.
ChevyCruze is delayed becauce Cobalt is ‘coming into it’s own’
09 Equinox gets direct inject 4 banger.
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July 15th, 2008 at 4:10 pm
Gsned57
No problem. It happens.
Be well,
Tag
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July 15th, 2008 at 4:12 pm
#83
Executive salaries…nice topic. The real subject is called “distribution of wealth”. I agree that so few are given so much…but the American public encourages it though. The Iraqi government knows the issues of improper wealth distribution, but I disagree with their methods in the long term.
http://www.cnn.com/2008/WORLD/meast/07/13/iraq.money.ap/index.html
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July 15th, 2008 at 4:18 pm
#100 – Ted: Be happy you didn’t buy GM. It’s a good time to SHORT the stock or buy puts. You’ll be very happy you waited, as it’s probably going to $5 or less. Remember, the trend is your friend.
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July 15th, 2008 at 4:21 pm
Statik
I too took all of my money out of the market a year ago but where are you getting 6% without tieing up the money long term. I’m getting 3%.
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July 15th, 2008 at 4:27 pm
#85 N Riley
“OK, Statik, time for you to predict the next posting’s topic. You did pretty good the other day. This time predict a better subject that is not so frustratingly sad.”
I’m out of that business now. Drives Lyle crazy when you do that, hehe.
#106 ED
Mostly munis, coupled with guaranteed 3.5% from large balance, short term vehicles…I actaully have a small, small portion in corporate paper (5%ish)
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July 15th, 2008 at 4:28 pm
105 Ed – The yield on many municipal bonds exceeds 4.5%, compared to 3.8% or so on Treasuries. If you’re in the 25% tax bracket federally (a given for most people), the pre-tax yield on munis is 6.0% or better.
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July 15th, 2008 at 4:42 pm
The Detroit Free Press story has this interesting paragraph;
“The eagerly anticipated Chevrolet Volt, an extended-range electric vehicle due to go on sale late in 2010, could also contribute far higher volumes than previously announced, Lutz suggested. GM has said it plans to build about 10,000 Volts in 2011, the car’s first full year of production.”
Link:
http://freep.com/apps/pbcs.dll/article?AID=/20080715/BUSINESS01/80715077
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July 15th, 2008 at 4:46 pm
It’s funny, I got the following email from a friend. You could replace the word FORD with GM and you’ll have the same outcome. What a crazy country we live in…
A Canoe Race
A Japanese company (Toyota) and an American company (Ford Motors) decided to have a canoe race on the Missouri River
Both teams practiced long and hard to reach their peak performance before the race.
On the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat.
A management team made up of senior management was formed to investigate and recommend appropriate action.
Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 7 people steering and 2 people rowing.
Feeling a deeper study was in order; American management hired a consulting company and paid them a large amount of money for a second opinion.
They advised, of course, that too many people were steering the boat,while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 2 area steering superintendents and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 2 people rowing the boat greater incentive to work harder.
It was called the ‘Rowing Team Quality First Program, with meetings, dinners and free pens for the rowers.
There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices and bonuses.
The pension program was trimmed to ‘equal the competition’ and some of the resultant savings were channeled into morale boosting programs and teamwork posters.
The next year the Japanese won by two miles.
Humiliated, the American management laid-off one rower, halted development of a new canoe, sold all the paddles, and canceled all capital investments for new equipment.
The money saved was distributed to the Senior Executives as bonuses.
The next year, try as he might, the lone designated rower was unable to even finish the race (having no paddles,) so he was laid off for unacceptable performance, all canoe equipment was sold and the next year’s racing team was out-sourced to India .
Sadly, the End.
Here’s something else to think about:
Ford has spent the last thirty years moving all its factories out of the US, claiming they can’t make money paying American wages.
TOYOTA has spent the last thirty years building more than a dozen plants inside the US.
The last quarter’s results:
TOYOTA makes 4 billion in profits
While Ford racked up 9 billion in losses.
Ford folks are still scratching their heads, and collecting bonuses…
IF THIS WEREN’T SO TRUE IT MIGHT BE FUNNY
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July 15th, 2008 at 5:26 pm
This is my first post, after lurking for quite a while. I have owned quite a few GM cars, including my current Silverado and the wife’s Aura XR. I have a 66 Corvette Ragtop on my Backyard Buddy and was the car I lusted for as a kid, but could only afford to buy a few years ago. Anyhow I have the same feelings for the Volt. I just hope Chevy doesn’t just sell it in California or major cities. We folks in flyover country (York PA) need it too.
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July 15th, 2008 at 5:35 pm
109 John:
I am getting kinda tired of arguing the
“Japanese build plants in the US!>!> but not Ford or GM!”
line so I will just suggest to you investigate what benefits and wages those Foreign Domestics are paying their workers vs. Detroit.
You can then extrapolate for yourself why GM and Ford have difficulty competing in the low margin small to medium car business.
Now, factor in the Japanese government subsidies direct and indirect, splash in a little currency differential, and baste with a light bad PR and Voila!
No matter how good a manager is you can’t make cheeseburger out of a turd sandwich.
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July 15th, 2008 at 5:40 pm
#66 Updated: Video of complete GM Press Conference in Detroit
http://www.wxyz.com/mediacenter/local.aspx
The complete video of the “GM press conference” of Tuesday July 18, 2008 can now be viewed by clicking the “Videos” selection of WXYZ’s web site and scrolling down to “GM Press Conference”.
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July 15th, 2008 at 6:32 pm
112 – Morgan:
I beg to differ with you. It’s the Unions killing this country. They are raping the corporations and holding them hostage for payment or they will strike and put the company out of business. I do not belong to a union however my brother-in-law is a pipe fitter and best friend a phone tech and the b in law depends the unions as being good simply because they make sure workers are paid fairly. This coming from a guy that makes $40 an hour (what a joke) to run pipe. I told him if he didn’t like his job he could do what millions Americans do, LOOK FOR ANOTHER JOB! instead they hold companies hostage. My friend on the other hand, he can’t stand them. They take “Union dues” and when they go on strike they get paid a fraction of their pay which won’t even pay bills. So lets just keep it as you have your opinion and my (and my best friend) have ours.
Go VOLT!
11 GM car owner and counting.
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July 15th, 2008 at 6:45 pm
114 John:
I thought what I posted was an indirect jab at the UAW among other things.
*shrug*
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July 15th, 2008 at 7:00 pm
114 – John:
Yep, sorry I had to add to it
)
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July 15th, 2008 at 7:02 pm
Well I’m of an even disposition. I don’t like unions and I don’t like american style management. The joke above rings all too true. The only time I interacted with a union was in Chicago after a show, I had to bribe the union with $100 so I could unplug my equipment and pack it and beat feet to the airport. Management, as I have observed, makes questionable short sited decisions, claim savings, gets bonuses, and are in another position when the chickens come home to roost. No true acountability. No long range planning. No loyality to employees. No wonder we got problems.
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July 15th, 2008 at 7:05 pm
89. Go GM
You know who I think has some hit cars coming down the pike? Mazda. I really like the looks of the new Mazda6 … especially the 2009 Mazda6 MPS.
I like how they did the headlights and front end. The whole car looks good actually. It looks stylish, refined and sleek … a 21st century car. A car that James Bond might like.
http://www.webwombat.com.au/motoring/news_reports/mazda6-mps-atenza.htm
http://wikicars.org/en/Mazda6
I think GM ought to try to emulate some of the designs that Mazda is doing. Why not? The Japanese car companies have some good exterior design people. Try to hire them away or something. Japanese companies have been “me too” type companies copying American products for a LONG time. 50 years probably.
I think it is time that American car companies took the gloves off and got DEAD SERIOUS about competing against Japan, Inc. with all their government support and keiretsu system with other corporations, etc. American companies need to pull together … America, Inc. against the world. We can compete against anyone if we get focused and disciplined enough.
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July 15th, 2008 at 7:12 pm
GM, I’d like to introduce you to Peak Oil. Peak OIl, GM.
—————————-
Peak Oil: How’s the Volt project coming?
GM: Still couple more years.
Peak Oil: And how many will be coming out in 2010?
GM: Only a token amount. We probably won’t scale out until 2015 or so. You know, we have to be cautious. We don’t know if the public will warm up to plugins.
Peak Oil: MM yeah. Right. I get it. $5 gas is not nearly enough of an incentive. Sorry to break it to you, GM, but oil will probably be $500 a barrel and you’ll probably be on life support in 2010. Too bad you killed the EV1 and blew your wad on SUVs.
GM: And what about Volvo and Mitsubishi? They have plans too.
Peak Oil: I already spoke to them. They won’t have anything out in time either. Mitsubishi will be pussyfooting around with the Miev over in Asia. The auto industry is over, my friend. You all missed the boat. Only small fry like Aptera will be picking up the scraps, in very low quantities.
GM: But we’re almost there with the Volt, almost there!
Peak Oil: Almost there isn’t cutting it. A few years from now people will be rioting at your dealerships for the scant few Volts you produce, assuming they have the money for one. The rest will be riding bikes. You missed the boat, guys. Enjoy riding the slide.
GM: But we’re almost there!! Almost there!! Almost there!!
Peak Oil: Next time a come, I’m bringing my sickle. Make your final arrangement.
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July 15th, 2008 at 7:23 pm
Statik,
“GM has a nice bounce on the ‘thriftiness’ news.
Up 65 cents today, double digit stock again $10.03.
You know its the right move when you cut your 10% dividend and the stock goes up 6%, lol.”
You know the old adage “buy on the rumor, sell on the news”. Well it works in reverse for bad news. Smart money (arggg…like you) saw it coming and sold in advance. Other money (not necessarily smart) was waiting for this news to invest. One day doesn’t make a trend though. So, what is GM’s revised sales estimate for ‘08.
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July 15th, 2008 at 7:24 pm
The other day when I said it would take more than five years to see any oil from offshore drilling I was off by quite a bit:
A report last year by the Energy Department’s Energy Information Administration said that “access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017.” It added, “Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”
Also there has been some folks touting the safety of the new drilling methods:
Although the overwhelming majority of safety valves did in fact work during the hurricanes, the Minerals Management Service of the Interior Department reported that there were five spills, each between 1,000 and 2,000 barrels. Altogether, 125 small spills totaled 16,302 barrels, almost a quarter as big as the Santa Barbara spill.
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July 15th, 2008 at 7:42 pm
Len #121
Still not there. As I mentioned yesterday, the time schedule didn’t account for the fact that the ships used for exploration are booked out for seven years and there is a shortage of oil rig workes. So 2040 on the whole is probably a more reasonable date.
What you’re not mentioning is that the production from the offshore development would produce fewer barrels of oil than the number of barrels of ethanol we produced this year. (I’ll spare everyone the math).
So yes it’s a complete non-solution.
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July 15th, 2008 at 10:20 pm
Len and DonC,
You make a great case for getting that legislation for more drilling started ASAP.
Be well,
Tag
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July 15th, 2008 at 10:24 pm
Koz@120
I thought it was “buy on bad news, sell on good news”.
Tag
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July 16th, 2008 at 3:06 am
I think the case being made is that offshore drilling is not a solution at all. If we want to do something about the price of oil we need to reduce our consumption. That will be done quickest by making transportation more fuel efficient. Using no oil would be best. Electric cars are a big piece of the answer.
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July 16th, 2008 at 4:05 am
Re: oil drilling
Government entities are pretty good at collecting “real” data, worse at making estimates of past data, and worse yet for predicting future data. Not only that, but predictions are often taken out of context and anachronized (?) intentionally or unintentionally. A preditction of time to develop oil fields loses relevance as market conditions move away from what they were when the study was done. So, even a good study can have little meaning at a different time. I doubt any studies or metrics for oil production development timetables were based on $140/barrel since government predictions were no near this. The more money to be made the more the timetable will shrink. Sure, there are certain events in the process that don’t have time elasticity but not many and not much of 20+ year prediction.
That said, I think “panicked” development of additional oil supplies is a side show. I do not believe an “all out” effort to on the part of our government to bring oil prices down is a prudent course of action. We will only lose more in the long run. Whatever private enterprise wants to fund WITHOUT government assistance (direct or indirect) is fine with me. Time and money are limited and even though many people want everything to be done in all areas, that is not practical. The oil people know this as well as anybody and is why they have done little with the offshore areas that were opened up a couple of years ago. I’ve been apposed to opening up the areas off Floridas coast but if the folks that drill there want to assume ALL of the risks and completely their expense. I can live with it, but those risks need to be defined properly. Florida’s economy is dependent on tourism. Once those risks are properly defined, I doubt anyone can afford to insure against the potential costs of drilling in areas that can affect Florida’s shores. If they can’t properly insure it, then drilling should not be permited to them.
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July 16th, 2008 at 4:17 am
#124 Tagamet,
I assume you were kidding, but only halfway.
http://www.wallstreetgreek.blogspot.com/2008/03/buy-rumor-sell-news.html
Not that I read this beforehand but you got me questioning….
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July 16th, 2008 at 9:01 am
KOZ,
No, I wasn’t kidding. I know I’m old and addled, but I really do remember that saying. Please, someone else remember it too??? Statik, maybe?
Not a big deal, but I did hear it somewhere.
Be well,
Tag
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July 16th, 2008 at 9:10 am
I wish one of the reporters would have stood up and said, “Does that mean you are giving up your bonus this year as well?”
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July 16th, 2008 at 10:11 am
jman,
Actually, they are giving up their bonuses.
Be well,
Tag
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July 16th, 2008 at 11:44 am
Statik #18 – OK…. I for one am getting a little weary of being lectured to. Yep, we’ve gathered from your past postings that you apparently are savvy in the business world and if to be believed, have made some astute business decisions that you’ve benefited from. However, my money is on the fact that the majority of the visitors and contributors to this site don’t have the financial resources you have and are tired of having it rubbed into their faces.
I’m all for giving credt and you are due yours; you do provide a fair and balanced perspective to this site on any number of issues and I’ve personally seen benefit from your insight however you seem to revel in being “right” about your prognostications and ensuring you project the negative side of most issues with your particular style and flair.
I for one would like to see you tone down the bluster, just a bit. Please don’t take this wrong (you will) but there is just no other way to say it. I don’t care how much money you’ve made or will make. It matters not a hill of beans to me as It’s not going to affect me one iota unless of course you are offering to put some money into my accounts or buy me a car:)
Well I’m sure you’ll have a response and you’ll “put me in my place” but I’ve said it and I stand by it.
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July 16th, 2008 at 3:07 pm
Updated video link (since posts #66 & #113) to the complete 50+ minute GM Press Conference of July 18, 2008 provided courtesy of WXYZ-TV, ABC News Detroit.
http://www.wxyz.com/search/videosearch.aspx?search=gm+press+conference
Click “GM Press Conference” on WXYZ’s video page.
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July 16th, 2008 at 3:25 pm
tagamet
I know, I just thoght it would be funny to see it on live tv.
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July 16th, 2008 at 8:42 pm
This is way late on an old thread, but I finally got to talk to my GM retiree uncle tonight.
They are currently being told that health coverage will end in Jan 2009, but that there will be a $300 increase in the retirement benefit. Since he was paying over $100 a month on top of what GM was paying, this likely won’t help, much.
So, it’s not quite as shocking and awful as all that. Just surprising and bad.
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