November 7, 200816 yr Very bad news. News coming from Ford was very bad; GM is set to report soon. Trading at GM has been halted to prevent a mass pull-out. Ford: Massive loss, job cuts Detroit under siege: Ford auto unit burns through $6.3 billion and cuts 2,600 hourly workers. GM to announce its results soon. By Chris Isidore, CNNMoney.com, November 7, 2008 NEW YORK (CNNMoney.com) -- Ford Motor reported a $3 billion quarterly operating loss on Friday and said it would reduce staff and capital spending in order to preserve its dwindling cash. Ford said it would cut salaried employment costs by 10% - reducing compensation of its white collar workers by eliminating merit pay, bonuses and the company's matching contributions to their retirement accounts. But even with those savings, the company said it's likely to lay off more salaried staffers. It also said hourly staff - mostly factory workers covered by union contracts - would be reduced by an additional 2,600 through a voluntary buyout package. The company, which earlier this year sold brands such as Jaguar and Land Rover, said it would continue to look to sell assets... http://money.cnn.com/2008/11/07/news/companies/automakers_3q_results/index.htm
November 7, 200816 yr A share of Ford and a Share of GM combined is cheaper than a burrito and a soda at Chipotle
November 7, 200816 yr If they're dead, we're dead. Bush did a good thing a few years back by helping steel hold on. It may be incumbent on him to work something out here, because it doesn't sound like we have until January.
November 7, 200816 yr ^No, but GM will declare bankrupcy in a matter of a few months when it burns through all of its cash reserves. GM: Almost out of cash No. 1 automaker posts huge loss - says it has made case to Washington for rescue. By Chris Isidore, CNNMoney.com, November 7, 2008 NEW YORK (CNNMoney.com) -- General Motors shook an already embattled auto industry Friday as it reported a huge loss that was much worse than expected and warned it is in danger of running out of cash in the coming months. GM, the nation's largest automaker, reported it lost $4.2 billion, or $7.35 a share, excluding special items. That's up from the loss $1.6 billion or $2.86 a share it reported a year earlier and was far worse than the forecast of analysts surveyed by earnings tracker Thomson Reuters, which had forecast a loss of $3.70 a share. But the most shocking news came in its statements about its cash position. GM said it had burned through $6.9 billion during the quarter and warned that it "will approach the minimum amount necessary to operate its business" during the current quarter... http://money.cnn.com/2008/11/07/news/companies/gm/index.htm?postversion=2008110711
November 7, 200816 yr The government can't do ANYTHING to help GM improve sales. And i don't see sales improving for a long long time.
November 7, 200816 yr I heard a stat once, and maybe someone on here and substantiate it, that 1 out of every 4 jobs in the Great Lakes region is in some way tied back to the auto industry.
November 7, 200816 yr If an automaker goes into bankruptcy, I would expect that everybody except a scant maintenence crew and security would be laid off immediately in every manufacturing plant. That would end the supply of automobiles and drive the customers to the remaining competition.
November 7, 200816 yr How Bankruptcy Would Wreck GM and Chrysler August 22, 2008 11:06 AM ET | Rick Newman | Permanent Link | Print The economy is so bad in parts of Detroit that a home there recently sold for $1. For the automakers based nearby, it's not looking much better. Car sales are in a tailspin on account of $4 gas and a swooning economy, and as usual, the Detroit automakers are suffering more than their competitors. Overall, sales are down about 11 percent so far this year, according to J.D. Power & Associates. But at the Detroit 3, sales are down an outsized 18 percent. The biggest reason is an overreliance on big trucks and SUVs and a dearth of small cars that consumers actually like. Post edited 9-4-09 to comply with terms of use http://www.usnews.com/blogs/flowchart/2008/8/22/how-bankruptcy-would-wreck-gm-and-chrysler.html
November 7, 200816 yr Don't forget all the people around the country that get a GM pension. These people could very likely lose their pensions and i'm sure the PBGC wouldn't be able to handle the numbers. If you all think the Youngstown area is dead now i would be scared to see what it would look like w/out all those pension checks. I bet a minimum of of 50% of our pop. is retired from GM or Packard Electric (formerly a division of GM, currently Delphi).
November 7, 200816 yr I wish there was a good way to handle this, beyond tossing more money down the hole. I just don't see it. My guess is we nationalize them (like AIG and the Brits did in the late 60s with British Leyland) and basically manage their dissolution over a decade instead of next Tuesday. They just drive entirely too much of the nation's economy to let them go. The problem is more troubling than the steel industry a generation ago, since the automobile uses every other industry to make its cars rather than being a primary product.
November 7, 200816 yr Toyota sees auto downturn as long, severe By Martin Fackler, New York Times News Service, November 7, 2008 TOKYO — Toyota Motor slashed its annual profit forecast by more than half Thursday, warning of a long and severe downturn in global auto markets. Japan's largest automaker also reported that net profit in the three months ending Sept. 30 dropped by more than two-thirds, hurt by falling demand, a tightening of car loans amid the global credit crunch, and a stronger Japanese currency. The cut in the annual profit forecast, which was larger than expected by most analysts, would end eight straight years of annual profit growth at Toyota. The company's largest plant in North America is at Georgetown, Ky... http://www.kentucky.com/2008/11/07/583690/toyota-sees-auto-downturn-as-long.html
November 7, 200816 yr ... The problem is more troubling than the steel industry a generation ago, since the automobile uses every other industry to make its cars rather than being a primary product. This would harm Sherwin-Williams, who supplies paint to the domestic automakers. SW is regarded as one of Cleveland's best employers.
November 7, 200816 yr Those graphs in the NYT article linked above are pretty amazing. Its like the industry is literally collapsing. Im trying to get my head around this...Its like "Youngstown '77" at a regional scale!
November 7, 200816 yr Suppliers would not have to close. The other companies will be ordering more parts with more consumers going to them, If one or all the tops go down. All will not be lost.
November 7, 200816 yr The foreign makes are happy with the suppliers they already have. They would sooner encourage those suppliers to expand (near their plants) than bring on any additional partners. Whichever suppliers primarily serve the big 3 would go down with them.
November 8, 200816 yr GM to lay off 1,000 in Lordstown; Ford trimming production Posted by rroguski November 07, 2008 19:38PM About 1,000 workers at General Motors Corp.'s plant in Lordstown will be laid off in January without the generous union benefits autoworkers typically get, labor leaders say. "Hopefully, it doesn't last long," Jim Graham, president of United Auto Workers Local 1112 in Lordstown, said late Friday. GM is putting 3,600 workers at 10 plants on indefinitely long layoffs next year, company spokesman Tony Sapienza said. He said he did not know how many would lose jobs in Lordstown... http://blog.cleveland.com/business/2008/11/ap_fileunion_leaders_say_about.html
November 8, 200816 yr General Motors loses $2.5 billion, is running out of cash Cleveland Plain Dealer Posted by rschoenb November 07, 2008 10:33AM GM lost $2.5 billion during its third fiscal quarter, the company announced Friday. But more importantly, it burned through $6.9 billion in cash. The company said it has $16.2 billion left in its coffers, enough to last about seven months at its current spending rate. In its release, Detroit's largest automaker said its cash levels during the remainder of 2008 "will approach the minimum amount necessary to operate" its business. "Looking into the first two quarters of 2009 ... the company's estimated liquidity will fall significantly short of that." With its credit rating in junk territory, GM would have to either find a buyer or file for bankruptcy protection if it ran out of cash. GM has long said bankruptcy would kill its ability to sell cars... http://blog.cleveland.com/business/2008/11/general_motors_loses_25_billio.html
November 8, 200816 yr One of the things that Hoover and to a lesser extent FDR did that exacerbated the Great Depression was to encourage wage stability. If one way to keep these companies operating is to slice the salaries by 30 or 40 percent across the board (and management/white collar has to be included) then the UAW needs learn to get over it. This may have to happen across the industry. A functioning industry with lower wages is better than no industry at all. It sucks but it may be the only answer. It can't be temporary either. There has to be a permanent reduction of benefits across the entire industry. I'd look at the renascent steel industry for a model.
November 9, 200816 yr AP WASHINGTON – Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is bleeding cash and jobs as sales have dropped to their lowest level in a quarter-century. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout to include car companies... http://news.yahoo.com/s/ap/20081108/ap_on_bi_ge/bush_automakers[/url]
November 9, 200816 yr It's time for businesses to be businesses. I know when my business has lost $1 I would change things that same day. For businesses to wait until they lose billions to try to change, that inexcusable.
November 9, 200816 yr I think there is a bit too much blame laid at the foot of the Detroit three. They have screwed up many times, but they have also had constrained choices that have prevented them from maximizes profit. It worth noting also that this was a perfect storm in which their profit centers were crushed in the summer only then to have the credit crisis prevent them from selling much of anything else. If we were dealing with one or the other they wouldn't be begging for money. Ford was doing okay with the Focus/Fusion/Escape and GM was doing okay with the stuff coming out of Lordstown, but instead all demand has dried up.
November 9, 200816 yr If we give them money, there need to be strings attached, like speeding up the pace that CAFE (fuel efficiency) standards will increase. Currently they will be increased to 35 MPG by 2020... let's make them achieve that goal by 2015. That way they actually take that money and invest it in jobs and technology here in America. Also, make it a requirement that they can't turn around, shut down US factories and open them overseas once they get the money. Not sure exactly how you'd put that into the terms, but something like that needs to be done.
November 10, 200816 yr Deutsche Bank sees GM shares as likely worthless By Simon Kennedy & Christopher Hinton, MarketWatch Nov. 10, 2008, 4:37 p.m. EST Automotive giant may have trouble funding past December, broker warns "NEW YORK (MarketWatch) -- A Deutsche Bank analyst on Monday downgraded shares of General Motors Corp. to sell from hold, saying the automaker was on the path to bankruptcy before the end of the year unless the U.S. government agrees to a bailout. In a note to investors, Deutsche Bank said Detroit-based GM's cash position will likely fall below $5 billion by late December, leaving its operations underfunded for payables due in early January. To keep operations going and assist in restructuring, the U.S. would have to provide as much as $25 billion and at least $10 billion in loans to keep the company afloat through next year." http://www.marketwatch.com/news/story/Deutsche-Bank-cuts-GM-sell/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5}
November 11, 200816 yr I hate companies that say they need such and such money to survive. If the US GOVERNMENT never stepped in to bail out anyone. We would be in much better shape today. Some of the airliens would have been long gone though. They might as well scrap bankruptcy. It's not working like it's suppose too. We might as well go back to bartering.
November 11, 200816 yr GM and Ford both have a long way to go to become the lean global competitors they need to be. There is way too much duplication of product - GM has four 7 or 8 passenger crossovers on one platform - Saturn Outlook, Buick Enclave, GMC Acadia, and Chevy Traverse, and a Cadillac version is rumored -why is there a need for four or five versions of the same product? What other global manufacturer does this - Toyota has three global marques (Scion [uS only], Toyota, Lexus) and GM has 11 (Chevy, Pontiac, Buick, GMC, Saturn, Cadillac, Hummer, Saab, Holden, Vauxhall, Opel). For GM, I can make a case for Chevy as a base brand and Cadillac for luxury, but they need to just kill the Hummer line entirely (probably Buick too), and figure out how to salvage Saturn/Pontiac/GMC into a single line of midrange vehicles. I have no idea why the Mercury brand even exists anymore, either, since it's just a bunch of rebadged Fords for the Lincoln dealers to sell. At least Chrysler killed off Plymouth when it no longer served a purpose.
November 11, 200816 yr Mercury is supposed to be repurposed for a bunch of Euro-Fords (essentially a new Merkur). Hummer can be sold off and Buick is HUGE in China, so there might be a market for that there. I'm not sure you really get rid of the Euro and Aussie brands. Saturn is waste since they failed to effectively to make it the American seller of Opels. I'd kill Pontiac, GMC, and Saturn in a second. Saab might get some money.
November 11, 200816 yr Buick is huge in China because supposedly the front ends look like god's face. Not kidding.
November 11, 200816 yr Andretti Dealership Latest Casualty In Financial Crisis On Thursday the Andretti Dodge Chrysler Jeep signs were removed as another local business falls victim to an afflicted economy. Owned by racing legends Mario and Michael Andretti, Andretti Dodge Chrysler Jeep was Northeast Ohio's fastest growing Chrysler Group dealer until an unstable economy became increasingly unstable. The business had been struggling for some time, according to Mike Clapham, general manager. Clapham stated Chrystler had stopped its lease program, there were fewer car sales and just too many dealers. The Andretti's, who own many businesses around the country including other car dealerships, car washes, a petroleum company and a winery, purchased the former Liberty Vermilion Chrysler-Dodge-Jeep dealership in 2005. 20 employees lost their jobs. Clapham said the Vermilion location will continue to sell used cars. www.vermilionohionews.com
November 11, 200816 yr Buick is huge in China because supposedly the front ends look like god's face. Not kidding. I've always read that it was because the emperor used to drive one back in the day and they view it as luxury.
November 12, 200816 yr I started to develop a little sympathy for American car makers, but no more. Op-Ed Columnist How to Fix a Flat By THOMAS L. FRIEDMAN Published: November 11, 2008 How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers. To read more: http://www.nytimes.com/2008/11/12/opinion/12friedman.html?hp
November 12, 200816 yr Hello! It's Bob Nardelli! He ran Home Depot in the Ground. Chrysler should have never hired him! Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. This line alone is why they should not get financing and should go under!
November 12, 200816 yr The very fact that they know they can get bailed out is what allowed this to get to this point. It's like a spoiled kid knowing he can mess up and grandma will always send him another check.
November 12, 200816 yr Chrysler should be allowed to go. They can sell Jeep on their way out of business and perhaps VW will pick up the minivan business. The rest of Chrysler isn't worth much. GM is a whole different game.
November 12, 200816 yr They should all go and create a new American brand. They can reuse plants that have been shut down like the plant in batavia.
November 12, 200816 yr How to Fix a Flat By THOMAS L. FRIEDMAN I would add other conditions: Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol. ... http://www.nytimes.com/2008/11/12/opinion/12friedman.html?hp The more likely efficiency improvement would come from active fuel management. Billionaire Tom Friedman is given to filling his column with idle speculation. We should be glad that Tom did not tie in his recurrent "hate the Arabs" theme he uses when discussing oil and gasoline. Chrysler should be allowed to go. They can sell Jeep on their way out of business and perhaps VW will pick up the minivan business. The rest of Chrysler isn't worth much. ... Dodge minivans would fit well into GM or Ford, because those companies are getting out of FWD minivans (because the market shrank). I have to think that a minivan that gets 25mpg is a product that would have a lot of customers. I recall that the Dodge full-sized truck business has a lot of sales and should be worth something. I don't know which domestic company could use Dodge trucks, though. GM and Ford already have those truck products.
November 12, 200816 yr The very fact that they know they can get bailed out is what allowed this to get to this point. ... Really? On what do you base that conclusion? We had one "bailout" in the last century and that was almost 30 years ago.
November 12, 200816 yr Is Detroit worth saving? The U.S. is gung-ho on rescuing the automakers. But the bailout better have major strings attached. By Joseph Romm, Salon, November 12, 2008 Why bail out the car companies when they bailed out on us? General Motors and Ford burned through a stunning $14.6 billion in cash last quarter. G.M.'s stock has sunk so low that you could buy the entire company for $2 billion. Bankruptcy seems all but inevitable. In September, Congress authorized $25 billion to U.S. automakers to retool their factories to build fuel-efficient cars. But that money is slow in coming and Detroit wants more, including some of the bucks from the $800 billion Wall Street bailout. Last week, Barack Obama said he'd like to speed up the $25 billion and pursue additional policy options to help the car companies "weather the financial crisis and succeed in producing fuel-efficient cars here in the United States." read more at: http://www.salon.com/env/feature/2008/11/12/barack_obama_detroit/index.html
November 13, 200816 yr >Really? On what do you base that conclusion? ...the very culture that continues to espouse the ill logic of union labor, an idea that is very much alive in Michigan and northern Ohio, and one that will likely receive a boost under Obama. The time for unions is long gone and a cursory comparison of Cincinnati's economic health versus northern Ohio should be proof enough as to which business model is more successful.
November 13, 200816 yr >Really? On what do you base that conclusion? ...the very culture that continues to espouse the ill logic of union labor, an idea that is very much alive in Michigan and northern Ohio, and one that will likely receive a boost under Obama. The time for unions is long gone and a cursory comparison of Cincinnati's economic health versus northern Ohio should be proof enough as to which business model is more successful.
November 13, 200816 yr The problem is not unions per se, rather it is unionism and its close friend corporatism. The growth of these -isms stifle competition and exacerbate the tendency of capitalism toward monopolies. When monopolies (oligopolies count) fall, it is most often with a hard fall. The 80s and 90s saw the once great communications and business machine monopolies thrash around and nearly fail, before getting substantially re-invented this decade (ATT and IBM). If we can allow that to happen to GM, Ford (and I guess Chrysler) then we will be all the better. The best thing for unions would be the disaggregation of the AFL-CIO and to a lesser extent the UAW. We should also restore the ban on gov't unionism including teachers, but that's another argument for another day.
November 13, 200816 yr So when the majority of Toyota's workers are 17k per year temp workers, how is GM at any advantage by giving excessively high wages and benefits? You could argue that it gives them more spending power to buy GM vehicles but they're not the majority of people buying vehicles and they're not necessarily buying American.
November 13, 200816 yr The "majority" are not "17k per year temp workers." Toyota can only hire temporary workers for a six month stretch, which is what they consider their "orientation" period that consists of on-the-job training. They are paid around $15 to $20 an hour, depending on what task you are assigned to, and at the end of six months, you have a review and you are either dismissed or hired full time. Approximately 10% of the workers at the Georgetown, Kentucky assembly plant are temporary workers, and most are in the basic assembly line.
November 13, 200816 yr The very fact that they know they can get bailed out is what allowed this to get to this point. ... Really? On what do you base that conclusion? We had one "bailout" in the last century and that was almost 30 years ago. ...the very culture that continues to espouse the ill logic of union labor, an idea that is very much alive in Michigan and northern Ohio, and one that will likely receive a boost under Obama. The time for unions is long gone and a cursory comparison of Cincinnati's economic health versus northern Ohio should be proof enough as to which business model is more successful. Weak, really weak, and you did not answer my question. BTW, one of the first things the 20th century fascists did was to ban the labor unions.
November 13, 200816 yr Supply/demand Their products suck so their demand is low. If we bail them out not they will just need to be bailed out again later. Let'em die. I usually buy toyota products "still have an 82 Cressida" I think GM/ford people are producing their commercials now. Gawd this is awful!!!
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