GM reports net loss of $2.5 billion, more cuts and asks for help

[DanielXR8]

From Autoblog

http://www.autoblog.com/2008/11/07/g...asks-for-help/

GM reports net loss of $2.5 billion, more cuts and asks for help
Filed under: GM, Earnings/Financials

Ford Motor Company's third-quarter earnings report released earlier today basically said, "Times are bad, but we'll be aight." General Motors' just-released earnings report for the same time period says "Holy effin' hell, we're running out of things to cut, please help us!" We'll try and it keep it simple, but the main number is $2.5 billion, as in $2.5 billion lost during the Q3 '08. That compares with a $42.5 billion loss this time last year, but the bulk of that was attributable to a one-time charge against the books. Unfortunately, not only was GM North America revenue down, but the automaker claims the credit crisis has made its way around the world and contributed to losses in GM Europe and GM Asia Pacific, as well as its own financing arm, GMAC.

Here's the bigger story: General Motors burned through $6.9 billion of its cash reserves during Q3 '08, which reduces its bank account from $21 billion at the end of Q2 to $16.2 billion today. That's barely enough for such a big automaker to survive the coming winter, so In response, GM has announced to create an additional $5 billion of liquidity by the end of 2009. Below are the big changes we can expect.


Retiming select vehicle programs in North America and Europe by three to 12 months, i.e. lengthening product lifecycles
Deferring capacity expansion projects
Lower sales promotion spending, i.e. less advertising
Less support of dealer network activities and channel consolidations
Scaling back production
Curtailing discretionary spending (travel, consulting, over-time, etc.)
Increase reduction in force from 20 to 30%
Three other things deserve mention. The first is that rumors of the Volt being delayed are untrue. In fact, GM says that spending on the Volt and other fuel economy initiatives will be increased. The second is that GM acknowledged it was considering acquiring Chrysler LLC (though it wasn't named directly), but the merger talks have stopped for the time being. And finally, the main message GM wants to get out via its earnings report is that despite cutting spending even more, it considers government aid essential for its survival. So, ball in your court, Obama.

[manxman]

They mean: We've ripped off everyone and spent it all, now we want the taxpayer to keep us going...... What an insult to the hardworking taxpayers, who've struggled to pay their bills and save a bit, just to have these corporate thieves plunder them again. I call them thieves because they've spent $USM carefully avoiding taxes, underpaying workers, and generally being tight as ....., making huge profits, and yet not saving for hard times. That's just stupid! I object, because if they get it there, they'll demand it here, and our gutless politicians will give it to them.

We've seen Mitusishi go out of Oz manufacture, which was obvious years ago, and the lies they told were also very clear at the time, but no-one took them to task, and the workers wouldn't tell them they were making crap and how to improve it. I expect the others are the same.

The builders on the floor know whether what's being made is any good, and will have ideas on how to do it better, but they don't make or get any input, or it's done too late to make a better product.

[rodderz]

It's a shame to see these big companies slowly go belly up but at the same time, they get bailed out. Will they learn a lesson from it all for the future?

[StAndArdAU]

Lower sales promotion spending, i.e. less advertising

FINALLY!!!! less Holden ads on the tele?! YES PLEASE!

[The Mighty Red]

I think its wrong to bail these banks and companies out....we live in a society that demmands you are acountable for your actions.....there are plenty of small business out there that are hurting or going belly up , who is bailing them out?

[Sprint XR8]

GM News: General Motors Says Bankruptcy Is Near.
America's largest automaker says it may run out of cash during the current quarter.

CNN Money explains, "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." The company "reported it lost $4.2 billion, or $7.35 a share, excluding special items" during the third quarter. That's nearly double what most analysts had predicted. "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://usnews.rankingsandreviews.com...uptcy-is-Near/

[Hally]

In terms of GM & Ford, they have huge ongoing pension and health liabilites stretching back decades, that other more recent manufacturers in America do not have,

Why do you think that these companies had workers that did 30-40 year stints? It was because of the pension and health plans. If either GM or Ford (or both) collapse, the burden on the national welfare systems would be far greater than any short term bailout. There is no doubt both companies have made poor product choices over the years, but we need to look at the whole picture before thoughing stones.

[Mongoose]

Not that i really want it to, but if GM went under would'nt it be safe to say Ford > GM ?

[4Vman]

Originally Posted by Hally

In terms of GM & Ford, they have huge ongoing pension and health liabilites stretching back decades, that other more recent manufacturers in America do not have,

Why do you think that these companies had workers that did 30-40 year stints? It was because of the pension and health plans. If either GM or Ford (or both) collapse, the burden on the national welfare systems would be far greater than any short term bailout. There is no doubt both companies have made poor product choices over the years, but we need to look at the whole picture before thoughing stones.

Exactly.. its cheaper to help them get through this than deal with the welfare concequences..

[djst]

This is defintely not good news for GM and this has been coming for some time.
Their cash reserves are almost gone.
Hopefully a Knight in shining armour comes to the rescue soon,otherwise the reprocussions will have shock waves that will have an effect on everybody in someway or the other.

[Bossxr8]

Originally Posted by Hally

In terms of GM & Ford, they have huge ongoing pension and health liabilites stretching back decades, that other more recent manufacturers in America do not have,

Why do you think that these companies had workers that did 30-40 year stints? It was because of the pension and health plans. If either GM or Ford (or both) collapse, the burden on the national welfare systems would be far greater than any short term bailout. There is no doubt both companies have made poor product choices over the years, but we need to look at the whole picture before thoughing stones.

Didn't they work out a deal with the unions to stop this last year, as it was bringing them down so much. I think they basically told the unions that either we end this now, or in a few years time when the company goes bankrupt?

I know Ford have done a deal but the cost savings won't come into effect until next year, whereas GM and Chrysler are already getting the savings.

[GTP290]

better GM than Ford in my opinion, hopefully postive things will come Fords way for once in terms of negative press being swayed towards GM, Holden and Commodore instead of Ford Geelong-Broadmeadows and Falcon! Hopefully Ford will pull through and Falcon sales will increase, im optimistic I know, but its the first time since the early-mid 80s where Holden are starting to hurt, hopefully Ford will capatilise on this situation in one way or another, after all we do have a better product!

[4Vman]

People are quick to critisise Ford for their conservative approach to model development and marketing, but its that very conservatism that may put them in a position to weather the storm better than GM/Holden and save their butt.

[Sprint XR8]

Whatever way this goes down bankruptcy or bailout Holden are screwed.
If GM file C11 the current mess of 12 different brands would be streamlined down to one mainstream car brand (chev), and one luxury brand (cadillac).
If GM are bailed out that money will have strings attatched, bailout money will only go to saving american jobs, not propping up loss making overseas operations.

[Sprint XR8]

delete

[GK]

Originally Posted by 4Vman

People are quick to critisise Ford for their conservative approach to model development and marketing, but its that very conservatism that may put them in a position to weather the storm better than GM/Holden and save their butt.

Hope you're right on that score!

GK

[gcg2503]

Originally Posted by The Mighty Red

I think its wrong to bail these banks and companies out....we live in a society that demmands you are acountable for your actions.....there are plenty of small business out there that are hurting or going belly up , who is bailing them out?

The consequences of not bailing the banks out are for more dire than your mum and dad businesses mate.....

PS: Nothing against small business either

[GT0132]

Originally Posted by The Mighty Red

I think its wrong to bail these banks and companies out....we live in a society that demmands you are acountable for your actions.....there are plenty of small business out there that are hurting or going belly up , who is bailing them out?

Well can you imagine the commotion if banks weren't bailed out?...The anarchy we'd be faced with would be akin to WW3.....The impact on all citizens (not just the Mr & Mrs average small business owner) would be monumentally huge.

The whole population relies on the survival of the banks whereas starting up a small business is something done by those who weigh up the risks and benefits of the venture. If a small business folds, while unfortunate, it's not the end of the world except maybe for those that own it and a handful of stakeholders that have a financial interest in its survival ....If the major banks go bust then you have meltdown.

Even major companies should be supported if our economic well being depends on their survival. Gotta think big picture here

[Wally]

http://www.autocar.co.uk/News/NewsAr...llCars/235929/

[MethodX]

Hopefully they get bailed out, and they get rid of a few divisions.
If the banks can ask for help why not the car makers.

[JAZSXY]

Maybe Toyota will buy a large chunk in GM? They have taken over from them as the #1 manufactorer. And why?...Simplicity.

Dont be fancy just give the people a nice looking, economical car that is going to be reliable. I would also have to say that some unions can play a part in bringing down companies from within as well.

[FPV+fteT3]

If GM finish up really struggling,even closing just maybe.......
commies could become collectable who would have thought?

[Falc'man]

Originally Posted by The Mighty Red

I think its wrong to bail these banks and companies out....we live in a society that demmands you are acountable for your actions.....there are plenty of small business out there that are hurting or going belly up , who is bailing them out?

I agree. They show no mercy so how did they deserve the bail out? I wouldn't Pl55 on them if they were burning in Hell.

GM, Ford, and whoever else it may be, if they can't run a business they should shut shop. Who's to say, even after a bail out, they won't go broke again?

[GT0132]

Originally Posted by Falc'man

I agree. They show no mercy so how did they deserve the bail out? I wouldn't Pl55 on them if they were burning in Hell.

GM, Ford, and whoever else it may be, if they can't run a business they should shut shop. Who's to say, even after a bail out, they won't go broke again?

So, in the absence of government protection you're happy to see 18 Million Australians lose their entire savings? Cmon think about it.....This ranges from infants losing whatever they have in their Dollarmite savings accounts to Jo Blo the Brickies Labourer losing the pay that was just deposited to his bank account yesterday....Get real !

I have no sympathy for banks either but if anyone should get a bail out it's them

[rodderz]

For the sake of 1000's of jobs and the industry they should be helped, but those at management level should be made accountable and get told to pull their finger out if they are to stay with the company. They made the decisions (or lack of) yet the guys on the end of the line are 1st to go. Maybe management should get the boot and get replaced with people with foresight

[JAZSXY]

Originally Posted by Falc'man

If they can't run a business they should shut shop. Who's to say, even after a bail out, they won't go broke again?

Here's another problem...high rolling executives paying themselves massive bonus's and taking lavish holidays at company expense. Have a look at AIG. Just weeks after a bailout, they cancelled their Richmond Tigers $800,000 a year sponorship and the executives were caught out at a luxury Californian resort that cost AIG $440,000 for the week!

[Gobes32]

Although it has brought on a massive war of words but maybe Ford are heading in the right direction with the staff cutbacks, etc? As they become more streamlined, and the costs come down, maybe, just maybe, we may turn the corner and become profitable once more. Toyota, Honda and Mazda have all shown that you do not have to make cars out of China to be profitable. All it takes is smart manufacturing and a small, lean workforce that is quite adept and multi-skilled. Ford can no longer afford to hire people to perform basic tasks and leave them there. You now have to have a brain on your shoulders and be able to learn many jobs and be able to be moved around. 200 trained, skilled and well paid employees are still better than 500 idiots working for minimum wage.

[FTE217]

I just got back from the Aapex/Sema show....word around the place that 2 GM dealerships are closing a day !
After going there 6 + times over the years you could really feel the difference especially in Vegas, cabbies were saying their down 30% in takings, getting the shuttle from the airport to the hotel we were the only ones in it,never had that before.
Another industry organisation had published after their fuel cost highs of $US4 a gallon Americans had travelled over 1billion miles less than same time last year.
I had a chuckle that fuel locking cap sales were at an all time high !
Oh Obama have you got a mountain to climb !

[Falc'man]

Originally Posted by ozmale42

So, in the absence of government protection you're happy to see 18 Million Australians lose their entire savings? Cmon think about it.....This ranges from infants losing whatever they have in their Dollarmite savings accounts to Jo Blo the Brickies Labourer losing the pay that was just deposited to his bank account yesterday....Get real !

I have no sympathy for banks either but if anyone should get a bail out it's them

That's where the "bail-out" money should go, towards people who've actually worked for and earned there cash. Five trillion dollars should cover it.

[atec77]

Originally Posted by Mongoose

Not that i really want it to, but if GM went under would'nt it be safe to say Ford > GM ?

Quite possibly , the problem is cars like the Hyundai I30 is so much better value than anything in the gm ford range ( I just bought one ofr a family member) at 23k auto on road with heaps of extras))
the time required to level with such a good but may not be available in which case ford/gm will die...