GM Dying in the US - GM ups job cuts to 30,000 jobs as it shuts plants, facilities

Helmut Jilling

Auditor / Consultant
GM volume up?

I heard an analyst on CNBC this afternoon make the statement that GM's global sales volume was at an alltime high. He acknowledged that it is declining in the uS, but increasing elsewhere. He said it just hasn't been recognized and built into the stock price yet. Unfortunately, I picked up the tail end of the conversation, and didn't get more details as to who he was, and what the data actually were. But an interesting anecdote, in any case.
 
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Jen Kirley

Quality and Auditing Expert
Staff member
Admin
I found Kevin Mader's story most illuminating.

Learning of the "inspectors" within the processes helps those businessmen believe the paternal business model is not only okay, but competetive. Since Americans tend to believe what we see and are often disinclined to deeply probe issues, the businessmen were satisfied and the status quo reaffirmed.

How sad that is.

I'm going to apply for a job managing an Enterprise Rent-a-Car outlet, as well as insurance agent trainee.

So sad also that there is little room for quality professionals like me in this area, since the paternal form of management is also well in place in services. It is firmly in place in public education...oh my. :( They just aren't aware there is a better way and my voice gets drowned out in the white noise of current economic churn.
 

Jen Kirley

Quality and Auditing Expert
Staff member
Admin
hjilling said:
I heard an analyst on CNBC this afternoon make the statement that GM's global sales volume was at an alltime high. He acknowledged that it is declining in the uS, but increasing elsewhere. He said it just hasn't been recognized and built into the stock price yet. Unfortunately, I picked up the tail end of the conversation, and didn't get more details as to who he was, and what the data actually were. But an interesting anecdote, in any case.
Seems to me GM is dragging its feet in including global performance in its overall published metrics. But that doesn't surprise me. Recognizing it publicly would make it difficult to sustain the argument that GM is in deep trouble and must shed its employee costs (contracted compensation and benefits). It would undermine the sales pitch for restructuring labor.
 

Wes Bucey

Quite Involved in Discussions
hjilling said:
I heard an analyst on CNBC this afternoon make the statement that GM's global sales volume was at an alltime high. He acknowledged that it is declining in the uS, but increasing elsewhere. He said it just hasn't been recognized and built into the stock price yet. Unfortunately, I picked up the tail end of the conversation, and didn't get more details as to who he was, and what the data actually were. But an interesting anecdote, in any case.
Of course, this is always a part of Rick W.'s pitch. Check this:
Wagoner tells analysts to expect better GM financial performance in 2006
16th January 2006
General Motors’ Chairman and Chief Executive Officer Rick Wagoner said on 13 January the top priority for his company is to return GM’s North American operations to profitability and positive cash flow as quickly as possible, but given uncertainties relating to Delphi restructuring, health care negotiations and the potential sale of GMAC, declined to give precise financial guidance.

In 2006, approximately 29 percent of GM’s North American sales volume is expected to come from recently launched cars and trucks, as well as forthcoming new models, from which by 2007 GM expects more than 30 percent of GM’s sales volume to come.

Wagoner said GM also is moving aggressively to implement the company’s previously announced plan to reduce ongoing structural costs by $6 billion a year by the end of 2006 and further reduce material costs by $1 billion.

The key elements of the structural cost reduction include the historic health-care agreement with the United Auto Workers union, the capacity utilization initiatives that GM announced late last year, and additional cost efficiencies in most other areas of the business including engineering, advertising, salaried employment levels and benefits and indirect material costs. Of the $6 billion already identified, GM expects to realize approximately $4 billion in savings in 2006 as the initiatives are implemented throughout this year.

Beyond the $6 billion in cost reductions planned for 2006, GM announced it is now trying to reduce structural costs as a percent of revenue to 25 percent in 2010 from the current level of about 34 percent, on a global basis. Initiatives to achieve this objective include the further globalization of product development and other key functions, achieving full capacity utilization, leveraging global vehicle architectures and powertrains, and achieving further progress in GM’s legacy cost disadvantage.

GM expects another record year for global auto industry sales in 2006, driven by growth in the Asia-Pacific region.

General Motors Acceptance Corp. (GMAC) is expected to post ‘solid’ results in both 2005 and 2006 despite ‘a challenging credit rating environment’. GMAC had approximately $20 billion in cash at the end of 2005 and continued access to alternative funding sources such as automotive whole loan sales. GM continues to explore the possible sale of a controlling interest in GMAC to a strategic partner with the goal of restoring GMAC’s investment-grade credit rating while retaining GMAC’s strategic financial services support to GM’s global vehicle sales operations.

GM also announced that its US hourly and salaried pension plans were approximately $6 billion over-funded at the end of 2005 on a FAS-87 accounting basis largely as a result of preliminary asset returns of 13 percent in 2005. For 2006, GM’s assumed rate of return on assets in its U.S. hourly and salaried pension plans remains unchanged at 9 percent from the previous year.

- General Motors sold 9.17 million cars and trucks around the world in 2005, up 2 percent from the 8.99 million vehicles sold in 2004, according to final sales figures released today. It marked only the second time the world’s largest automaker has sold more than 9 million units in a calendar year. Vauxhall increased to a 13.1 percent share of the United Kingdom market, up from 12.6 percent in 2004.
 
T

TedCambron

I hear you.

Jennifer Kirley said:
I found Kevin Mader's story most illuminating.

Learning of the "inspectors" within the processes helps those businessmen believe the paternal business model is not only okay, but competetive. Since Americans tend to believe what we see and are often disinclined to deeply probe issues, the businessmen were satisfied and the status quo reaffirmed.

How sad that is.

I'm going to apply for a job managing an Enterprise Rent-a-Car outlet, as well as insurance agent trainee.

So sad also that there is little room for quality professionals like me in this area, since the paternal form of management is also well in place in services. It is firmly in place in public education...oh my. :( They just aren't aware there is a better way and my voice gets drowned out in the white noise of current economic churn.
What?... I can't hear you with that churning noise going on.
No, just kidding. I hear you load and clear.
 

Wes Bucey

Quite Involved in Discussions
Kerk Kerkorian buys GM stock and pays too much?

So the story today is that GM is declaring an even bigger dollar loss than predicted. Poor Kerkorian - he sold GM stock in December, claiming it was for tax purposes (to declare a capital loss), but he has since rebought (after the "wash rule" expired) back to put his holdings at nearly 10%. Even this savvy bottom feeder may have been surprised at the magnitude of the actual losses at GM (most of these are "paper losses" folks, not real money) and probably wishes he would have waited to buy back at a better price.

Mr. K. will probably urge breaking up and selling off profitable segments that are free of the pension and health care burdens, leaving a shell of a company which will be transferred into private ownership where the employee liabilities will be shed, then spun back out as a new public company.

The big losers, of course, will be the suppliers and employees who will get burned in the intervening bankruptcy.

FWIW, the article:
GM net loss $4.8 billion, much worse than expected Thu Jan 26, 10:10 AM ET

DETROIT (Reuters) - General Motors Corp. (NYSE:GM - news) posted a fourth-quarter net loss of $4.8 billion on Thursday, much worse than Wall Street had expected, amid high costs, shrinking market share and sluggish sales of sport utility vehicles.

It was the fifth straight quarterly loss for the world's largest automaker and brought its losses for all of 2005 to $8.6 billion.

"The numbers are much worse than I thought they would be, especially given how Ford beat the estimates earlier this week," Argus Research analyst Kevin Tynan said.

On Monday, Ford Motor Co. reported a surprising 19 percent rise in fourth-quarter earnings.

GM shares dropped 80 cents, or 3.35 percent, to $23.05 in early trading on the New York Stock Exchange. The company's 8.375 percent bonds due in 2033 were quoted at 72.5 cents on the dollar, down 0.5 cent, according to MarketAxess.

The earnings report came a day after news that billionaire investor Kirk Kerkorian had raised his stake in GM to 9.9 percent. Kerkorian has called for sweeping changes at the auto giant, and a key adviser has suggested he might be prepared to organize a fight for control of the GM board.
GM's fourth-quarter loss amounted to $8.45 a share, compared with a year-earlier loss of $99 million, or 18 cents a share.

Excluding one-time items, the company posted a loss of $1.2 billion, or $2.09 a share. On that basis, analysts' average forecast was a loss of 12 cents a share, according to Reuters Estimates.

One-time items reduced earnings by $3.6 billion, or $6.36 a share. They included a restructuring charge of $1.3 billion at GM's North American operations, and a preliminary after-tax charge of $2.3 billion related to a benefit guarantee with the United Auto Workers union and bankrupt auto parts supplier Delphi Corp.

Analysts were expecting charges after GM in October announced plans to slash 30,000 jobs and shutter 12 facilities, but no one knew how large the charges would be.

Fourth-quarter revenue fell to $51.2 billion from $51.4 billion a year earlier.
"It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed -- our huge legacy cost burden and our inability to adjust structural costs in line with falling revenue," Chief Executive Rick Wagoner said in a statement.

GM earlier this month said it expects to cut North American structural costs by $6 billion by the end of 2006.

GM said its automotive operations lost $1.5 billion in the fourth quarter, driven by large losses in North America, where it has been losing market share to foreign rivals such as Toyota Motor Corp.

General Motors Acceptance Corp., the company's finance unit, posted net income of $614 million, down from $683 million a year earlier.

The automaker plans to sell a controlling stake in its finance arm in order to restore the unit's investment-grade ratings. Both GM and GMAC have said talks with potential partners are "ongoing."
Just so we are all on the same page:
our huge legacy cost burden
refers to employee pension and healthcare liability, which hasn't yet been paid and looks less and less likely to be EVER PAID!

Poor employees! They are used as the bogey man and yet they never get a chance to come out from under the bed. They are just used to scare gullible fools and children into doing what the so-called "adults" want them to do.
 
B

bmccabe - 2006

Wes Bucey said:
Poor employees! They are used as the bogey man and yet they never get a chance to come out from under the bed. They are just used to scare gullible fools and children into doing what the so-called "adults" want them to do.
What an incredibly profound and insightful analogy – I plan to use it the next time the soap box is vacant.

Economic terrorism.
Corporations use their own profit margin as a tool of extortion and intimidation.
Creating a mobius loop, subjugating acceptance of oppression.
 
Last edited by a moderator:
B

bmccabe - 2006

Wes Bucey said:
Poor employees! They are used as the bogey man and yet they never get a chance to come out from under the bed. They are just used to scare gullible fools and children into doing what the so-called "adults" want them to do.
As a company makes more money, the “bed” should get bigger.
Ironically, we in who work in quality try to make the foot print smaller – The “bed” we’re cowering under get’s thicker – At some point, it topples or collapses under it’s own weight. (Enron, Worldcom, Tyco, GM, Ford, etc.) This, you’ll find, is the essence of Dr J. Nash’s Nobel prize willing dissertation. We should do something about it before our nation is in chaos.
 
J

Jconlake

"Poor Employees"

There are no "Poor" employees at GM. The UAW contract rate is $65+ /hr for unskilled uneducated labor. The "poorest" UAW employee makes $130,000 per year straight time or $3.9MM ($3,900,000) in a 30 year career. If they only work 3 years they make as much as their skills and education warrant elsewhere in a 30 year career. How much sympathy is due someone who is in the top 1% of all wage earners?
 

Marc

Hunkered Down for the Duration with a Mask on...
Staff member
Admin
I'd have to see where your figures came from. I know a lot of automotive people at places like Delphi, Ford, GM, etc and none of the line folks make near that much. I seriously doubt line folks are making anywhere near $130,000 per year straight time. None of the engineers I know make anywhere near that, either.
 
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