General Motors to Announce Further Restructuring

[CatholicEdHead]

Source: WMTV/NBC 15

Monday, July 14, 2008 --- 4:35 p.m.

General Motors Corp. plans to announce a wide-ranging cost-cutting plan Tuesday, following a Monday meeting of its board of directors, sources familiar with the plan said.

The plan is expected to address some of the issues that have sent GM's stock to historic lows, including shifting more production to cars from trucks and responding to the sharp decline in U.S. auto sales this year amid a worsening economy.

The company's stock fell 5.4 percent Monday to close at $9.38 a share, its lowest close in more than 50 years. GM's sales are down 16.3 percent in the first half of the year, and analysts say the company could face a liquidity crunch as early as next year.

They say GM is burning cash at a monthly rate of between $1 billion and $5 billion. The company reported in April that it had $24 billion of cash on hand and a $7 billion line of credit at the end of the first quarter.

Read more: http://www.nbc15.com/home/headlines/25435554.html

---

This is not good news for the Janesville, WI plant. It appears that GM is circling the drain even with drastic measures.

[Frisbee]

1. I wonder....

if all the DUer's who thought it was so wonderful that InBev bought A-B, just because they don't like A-B products will feel the same way when Toyota (or some other foreign car maker) buys GM? I wonder just how much longer it will be until our manufacturing capabilities are pretty much either gone or foreign owned.

[Purveyor]

14. I too wonder who's job or business hasn't benefited from the decent wage those union employees

spent or invested in their employer or business.

As it goes around, it comes around...

[hatrack]

28. It kind of reminds me of a story about Walter Reuther

He was touring a plant in Detroit and one of the managers was going on and on about a new transfer machine, and how many units/hour it could finish, and how quickly it could work and so on. Reuther nodded, and paused, and then asked "How many Fords will it buy?"

Good question. Shame nobody else seems to have asked it since Reuther did.

[HughBeaumont]

44. Reuther also wanted GM to push Congress on universal health care.

But of course, GM didn't want no part of such "commie claptrap". Little did they know it'd be part of their undoing, as well as most of the American automotive and manufacturing industries.

Oh well. Shoulda Woulda Coulda, and all that . . . .

[daggahead]

37. Hey, they pretty much ARE foreign owned ...

economyincrisis.org

[Heywood J]

2. Dump the execs who are making the shitty decisions responsible for this

and maybe it won't continue. With the same people at the helm for all of this, I think we know what the result is going to be. GM shareholders need to force management out, by vote or by lawsuit.

[WriteDown]

5. So..

There are no quality cars currently in the GM fleet??? They are also bringing out the Volt soon. Seems like they are on the right track. They will never avoid the fact that union labor adds a premium to their cars. Seems like many DU posters want GM to go in this direction.

http://www.stltoday.com/stltoday/news/stories.nsf/washington/story/A6DB1073BDE29A818625746F00117D48?OpenDocument

[Heywood J]

6. Go in which direction?

GM was pushing large trucks and SUVs right up until six months ago. That's the direction it's gone in and it's punishing the workforce to make up for it. As for the Volt, I'll believe it when I see it. My new Pontiac is here and now.

[WriteDown]

12. Yeah...

And companies like Toyota and Nissan weren't??? Check out the 2008 Tundra or the Nissan Titan or how about the Honda Ridgeline(wtih the spare stored below the bed, what genius Japanese engineer came up with that one??). They dwarf their GM counterparts.

[AndyTiedye]

21. Nearly All Automakers Have Overestimated Our Appetite for Gas Guzzlers

But most of them have something else to offer. GM doesn't, and that is a huge problem for them.

[DainBramaged]

23. You are completely wrong and continue to spew shit about things you know nothing about.

[MaineDem]

24. Deleted - Replied to wrong post, sorry

[michreject]

38. Bullshit

you just haven't looked.

[Psephos]

17. SUVs are higher profit than small cars - and GM's labor & fixed costs are higher than foreign firms'

Bad decisions by both the executives and the union negotiators over the last 20 years led to GM paying double or more in total labor costs, and fifty percent or more in regulatory and tax costs, than its competitors. GM's legacy costs per vehicle (retiree benefits, family medical, etc.) alone exceed total labor cost per vehicle for some of its competitors.

This uncompetitive cost structure left the bean counters relentlessly calling for higher-profit vehicles in the product mix to support these costs. SUVs became a fashion trend among the middle and upper-middle classes, and demand for these high-profit vehicles allowed union and executives alike to pretend a reckoning would not come. But they both kicked that can down the road a few too many times. Union pretended it deserved more than equivalent workers anywhere else in the world (although productivity didn't show it) and executives thought what the hell, we'll keep labor happy and get our fat bonuses for near-term profits, then let someone else worry about the longer term.

Now times have changed.

Unless cost structures are reverted closer to the global mean, there will be a lot more Flints and Saginaws in the future. GM will go away. Ford will vacate. Chrysler is already a dead man walking.

I have yet to hear a trash-talking pseudo-progressive on this board explain to me how dancing on US automakers' graves is a net good for the workers, or for the governments who depend upon tax revenue from the plants. Yet the trash talk continues unabated, as pseudo-progressive dollars somehow never find their way into the pockets of the people who build the cars.

So in the future, we'll send our automotive cash to overseas companies, and on into their government's treasuries, just like we do now with oil. But we'll all bitch like hell when there isn't enough cash to pay for Social Security, Medicare, Universal Health, interest on the debt, and all those glowing programs we think can happen by a stroke of a Congressional pen.

[Heywood J]

36. "I have yet to hear a trash-talking pseudo-progressive on this board explain to me how dancing on US

automakers' graves is a net good for the workers"

Point out where I did that, seriously. I called for GM to expunge the chaff who couldn't seem to plan their way out of a wet paper bag. GM could do those nice things like lobby for universal healthcare so as to reduce its share of benefit obligations, for instance. GM could lobby for vehicles sold in the US to be made in the US - which would prevent cheap Chinese, Indian, and Korean imports from flooding the market. Doesn't stop other companies from building plants to make them here and compete, but at least that would pay people a wage regardless.

[DainBramaged]

31. Toyota concentrated on trucks and SUV's for it's profit like everyone else

In fact they had bet on an increase in truck and SUV sales this year (use that Google tool, you'll find the article) and now their stuck with a huge 6 months + surplus of trucks and gas guzzling SUV's.

You think the only vehicle they sell is the Prius?

www.toyota.com


the front pages shows their huge trucks, not their gas efficient cars. The make seven cars and NINE trucks/suvs.


get an education.

[Dr.Phool]

9. "Union labor adds a premium".

Scab labor drags down everybody else. Every, and I mean every benefit enjoyed by working people, hourly and management alike was won because unions fought and died for it.

Want to start cutting costs for auto makers? Don't fuck the unions. A good place to start would be fighting for single payer health care. It would save the auto companies billions.

[awoke_in_2003]

10. "was won because unions fought and died for it"

I am a non-union worker, and I agree 100%. Had it not been for organized labor, we would still be working 60-70 hours a week, 6 days a week, in unsafe and sweatshop conditions.

[WriteDown]

11. Just to be clear

I was supporting your argument, but arguing against it. I think people should be proud to pay a small premium for union labor.

[Psephos]

20. Well said

I don't know anyone left of center who thinks paying a little more on taxes to fund good programs is a bad idea.

Paying a little more to keep UAW workers employed and to keep carmaker tax dollars within our country seems like an equally reasonable notion.

One thing that *has* to stop is wholesale trashing of US makes. How did that ever become fashionable among so many left-oriented people???? Progs should buy what they want but remember and apply Aesop's fable about the dog in the manger.

[DainBramaged]

26. The Reich wing has been trying to decimate 'Union Labor' for decades

blaming it as the sole reason cars cost America so much, when in reality, it has not only guaranteed millions of people a living wage so that they and their families can prosper, OUR cars are competitive in price across the board with the Japanese transplants.


Why is that? Or is the fallacy of Japanese superiority only mind games, since NO ONE ever mentions price in the debate, just their bad experience from 20 or 30 years ago about their terrible GM product.

GM never had a 5million + recall for engines that developed sludge problems, Toyota did, but kicking and screaming all the way to NHTSA. They blamed their customers for the problems for years.

It comes down to prejudice, prejudice against the Unions, and it is prevalent here not just in Freeperville.

[ForrestGump]

42. I don't think it's prejudice against the unions

I think it's prejudice against American-marque cars, based (soundly, in great part) on Detroit dropping the ball so often since the '70s and producing way too many substandard cars. Even if that's changed in many cases and is changing across the board now, many people are liable to remain a tad wary of buying an American-designed car for a while yet. It's got nothing to do with being anti-union and everything to do with being careful with the substantial investment that any car represents. Buying American is all fine and well, but not if the goods are inferior...that's the perception US auto makers need to continue to change.

But it wouldn't really be a DU car thread if your bitter and xenophobic presence was missing...

[AndyTiedye]

16. Do They Make Their Small Cars Suck on Purpose?

There are no quality cars currently in the GM fleet???

I am not aware of any. What would you suggest?

Most get pretty dismal reviews. They all get lousy mileage, which is a bit of a problem with gas closing in on $5.00 per gallon.
GM used to make some Saturns that got decent mileage, but they stopped making those and replaced them all with rebadged Chevys.

They are also bringing out the Volt soon.

I am looking forward to a test-drive. I might very well end up owning one if it can cope with our mountain roads.

Seems like they are on the right track.

I hope so. They have been on the wrong track for so long.

They will never avoid the fact that union labor adds a premium to their cars. Seems like many DU posters want GM to go in this direction.

I have not seen ONE complaint on here about the PRICE of GM cars. The biggest problem they have at the moment is fuel economy — lack thereof.

In an earlier post someone was going on about the great mileage their Saturn gets, but that turns out to be a model they don't make anymore.
Now Saturns are rebadged Chevys and get the same lousy mileage.

Lest you think I'm hating on American cars, I own, and highly recommend, the Ford Escape Hybrid.

Still the most fuel-efficient SUV on the US market (beating Toyota).

The Escape Hybrid is also the most fuel-efficient American car overall, according to the EPA.
It gets better mileage than the American econoboxes. Despite having approximately the aerodynamics of a brick.

So America CAN DO IT. The UAW CAN DO IT. So why don't they do more of it?

Is it possible that they made their small cars suck on purpose to get us to buy SUVs?
Not really a sound business strategy since other companies make small cars that don't suck.

[DainBramaged]

22. GM has more models in the fleet that achieve 30MPG or better than ANYONE else

and the only reason people think they suck is because they bought into the Japanese marketing propaganda.


The bashing of the American car/American auto worker continues unabated at DU.

[michreject]

40. Here's the list

2008 VEHICLES BUILT BY UNION MEMBERS
IN THE UNITED STATES & CANADA



UAW CARS
Buick Lucerne
Cadillac CTS
Cadillac DTS
Cadillac STS
Cadillac XLR
Chevrolet Cobalt
Chevrolet Corvette
Chevrolet Malibu/Malibu Hybrid
Chrysler Sebring
Dodge Avenger
Dodge Caliber
Dodge Viper
Ford Focus
Ford Mustang Ford Taurus
Lincoln MKS
Mazda 6
Mercury Sable
Mitsubishi Eclipse
Mitsubishi Galant
Pontiac G5
Pontiac G6
Pontiac Solstice
Pontiac Vibe
Saturn Aura/Aura Hybrid
Saturn Sky
Toyota Corolla*

UAW PICKUPS
Chevrolet Colorado
Dodge Dakota
Dodge Ram Pickup*
Ford Explorer Sport Trac
Ford F-Series*
Ford Ranger GMC Canyon
Isuzu i-Series
Lincoln Mark LT
Mazda B-series
Mitsubishi Raider
Toyota Tacoma*

UAW SUVs/CUVs
Buick Enclave
Cadillac Escalade
Cadillac Escalade ESV
Cadillac SRX
Chevrolet Suburban*
Chevrolet Tahoe/
Tahoe Hybrid
Chrysler Aspen
Dodge Durango
Dodge Nitro
Ford Escape/Escape Hybrid
Ford Expedition
Ford Explorer
Ford Taurus X
GMC Acadia
GMC Yukon/Yukon Hybrid GMC Yukon Denali
Hummer H1
Hummer H2
Hummer H3
Jeep Commander
Jeep Compass
Jeep Grand Cherokee
Jeep Liberty
Jeep Patriot
Jeep Wrangler
Lincoln Navigator
Mazda Tribute/Tribute Hybrid
Mercury Mariner/Mariner Hybrid
Mercury Mountaineer
Mitsubishi Endeavor
Saturn Outlook

UAW VANS
Ford E-series
Chevrolet Express Chevrolet Uplander
GMC Savana

CAW CARS
Buick Lacrosse
Chevrolet Impala
Chrysler 300
Dodge Challenger
Dodge Charger Ford Crown Victoria
Lincoln Town Car
Mercury Grand Marquis
Pontiac Grand Prix

CAW SUVs/CUVs
Chevrolet Equinox
Chrysler Pacifica
Dodge Magnum
Ford Edge Lincoln MKX
Pontiac Torrent
Suzuki XL7

UAW/CAW PICKUPS
Chevrolet Silverado* GMC Sierra*

UAW/CAW Vans
Chrysler Town & Country Dodge Caravan

IUE SUVs/CUVs
Chevrolet TrailBlazer
GMC Envoy
GMC Envoy Denali Isuzu Ascender
Saab 9-7X


Where's all these Japanese union made vehicles at on the list?

[AndyTiedye]

41. I Saw Some GM Subcompacts at 29, But None Over 30 (Combined EPA)

Which ones did I miss? I am using the current, more realistic EPA figures.

The Chevy Aveo and Cobalt and the Pontiac G5 seem to be GM's mileage leaders.
According to wikipedia, the Aveo is made by the former Daewoo (now a GM subsidiary) in South Korea.
It won't help American autoworkers much buying that one.
It's hard to "buy American" when even the American car companies don't always.

I see in another post that at least the Cobalt and G5 are American-made.
Still, only 29 MPG. Is that the best GM can do?

FORD builds an SUV that gets better mileage than any of them. In Kansas City, USA.
By United Auto Workers. They did a fine job on the Escape Hybrid.
We own one, and I highly recommend it. Bought it in '04 when it first came out.
What was GM doing back then? Sending EV1s to the crusher.

None of my criticism is directed at members of the United Auto Workers.
It is at the Kool-Aid-drinking idiots you work for!

(Just like we're not Bashing "America" when we criticize Bush here on DU)

[WriteDown]

32. Go to GM.com

plenty to choose from with excellent MPG. Not hard to do.

[NewJeffCT]

33. The real reason behind the increase in "labor" and "health" costs

in almost every corporation - not just GM and Ford - is that executive pay, executive pensions and executive health benefits have skyrocketed, while the worker bees have generally stayed stable.
The data is not broken out in financial statements about healthcare, pension and other compensation costs.

The research on the data about executive pensions and other perks was done by that bastion of the liberal media, the Wall Street Journal.

[WriteDown]

34. That is simply not true...

If you divide those executive wages over the "worker bees," it is a drop in the bucket. The real reason is that Japanese and Korean companies do not pay any legacy benefits.

[NewJeffCT]

35. No, it is not a drop in the bucket - here is the data:

• Boosted by surging pay and rich formulas, executive pension obligations exceed $1 billion at some companies. Pfizer Inc. (about $1.1 billion ...).

• Benefits for executives now account for a significant share of pension obligations in the U.S., an average of 8% at the companies above. Sometimes a company's obligation for a single executive's pension approaches $100 million.

• These liabilities are largely hidden, because corporations don't distinguish them from overall pension obligations in their federal financial filings.

• As a result, the savings that companies make by curtailing pensions for regular retirees -- which have totaled billions of dollars in recent years -- can mask a rising cost of benefits for executives.

• Executive pensions, even when they won't be paid till years from now, drag down earnings today. And they do so in a way that's disproportionate to their size, because they aren't funded with dedicated assets.


http://hcrenewal.blogspot.com/2006/06/ballooning-pension-obligations-for.html


And more data:

Lee Raymond of Exxon Mobil has an annual pension of $8.2 million.
Henry McKinnell of Pfizer has an annual pension of $6.5 million.
Edward Whitacre of AT&T has an annual pension of $5.5 million.

Exxon Mobil, with the nation’s largest pension for a CEO, also has a record underfunded pension plan for its regular employees—to the tune of $1.2 billion.<10> At BellSouth, pension obligations for ordinary employees have shrunk 3% since 2000, while executive pension obligations are up 89% over the same period.<11> Executive pensions are accounted for separately and are increasingly consuming larger portions of the overall pension obligation of companies:<12>

At Aflac, executive pension obligations account for 58% of total pension liability.

At Exxon Mobil, executive obligations account for 12% of total liability.

At Federated Dept. Stores, executive obligations account for 19% of total liability.

At Pfizer, executive obligations account for 12% of total liability.

http://www.accountability-central.com/single-view-default/article/executive-compensation-vs-workers-an-overview-of-wages-pensions-and-health-benefits-of-rank-and-f/?tx_ttnews%5BbackPid%5D=1582&cHash=c1354282e9

Last I checked, 12-19% is not a drop in the bucket when you're talking billions of dollars.

[daggahead]

39. I work for a subcontractor for GM ...

... and I've been watching all of this with great anticipation. GM is about 15 years late on this, but at least their crisis is going to help drive the American car market away from the gas-guzzling behemoths.

Yes, the Chevy Volt is a small step in the right direction. Now let's see if GM can get it on the market without too many warranty issues.

[madrchsod]

3. janesville will be finished in about a year

my son`s brother in law moved to a gm plant in ohio. janesville does`t have enough jobs at the present time to absorbed the gm workers.

[Auggie]

4. Just don't restructure my Dad's retirement

[cliffordu]

7. Sorry - I give your dad's retirement another year at best.

My brother in law retired from one of the big three and he's so scared he's going to go to computer school.

[Auggie]

15. My dad is 80 -- you tell him to go to computer school

Stupid fucking response to my post, by the way.

[cliffordu]

18. That's not what I was implying....just that the whole structure of the

retirement schemes in this country is about to go tits up. Much of it was invested in........real estate....

And I'm sorry if you are too dense to get that.

Maybe your dad should have pulled out.

[matt007]

8. Nix Hummer and GMC

[lithiumbomb]

13. i suspect they will survive

They are a _huge_ company with relatively extensive worldwide operations. Hummer is surely going away one way or another and surely they will sell Saab, and perhaps kill GMC branded vehicles. I bet everything except Cadillac and Chevrolet is a candidate for consolidation or outright retirement. They have a fairly extensive car portfolio today that they can expand upon, they just need to drop all the duplicate models so they can focus engineering and advertising dollars on specific vehicles.

Part of GM's problem is that all these brands they have are still totally separate divisions, with their own budgets, development, advertising, staff, dealer networks, etc. This worked when they owned 50% of the US auto market but except for Cadillac and Chevrolet, none of the other divisions really produce anything that could only exist under a unique brand. Cadillac does very well in its current state, they could consolidate everything else under a 'GM' dealership and jettison about half their models.

[scarface2004]

19. i own a cobalt and it s great

gm should build more like this. it is a great commuter car, pretty good gas mileage, cost less than $14,000 with air, auto, stereo. i will run this into the ground and buy another one.

[MaineDem]

25. GM to suspend dividends

Wagoner on Bloomberg now.

[DainBramaged]

27. And eliminate health care for retirees over 65

while the Reich wing tries to fuck with Medicaid/Medicare.

You can't get old in this country any more, the only reward for years of servitude is death.

[MaineDem]

29. Oh I missed that! That really sucks big time. n/t

[JustABozoOnThisBus]

43. It sucks short-term

If enough retirees lose health benefits and workers see it in their future, it can only help the effort to get true universal coverage.

But I think it's only retired salaried workers who are losing the benefit, not the retired union folks. So no good may come of it. Divide and conquer.

[DainBramaged]

30. Excerpts from the article in Automotive News last night

GM ended the first quarter with $31 billion in cash and undrawn credit. Wagoner has said that is enough for GM to make it through any downturn this year, although he has also encouraged GM managers to focus on preserving cash.

The cost-cutting will include widespread job cuts for white-collar workers, including engineers assigned to now-frozen efforts to develop GM's next generation of full-size SUVs and pickup trucks, people familiar with the plans said.

Last month, GM said it had suspended work on next-generation versions of its full-size trucks, which had been scheduled to launch in 2012.

Other automakers including Ford Motor Co. and Toyota Motor Corp. have taken similar steps in recent weeks in reaction to the sharp decline in U.S. truck sales.

http://www.autonews.com/article/20080714/ANA02/839122396/1078

[HughBeaumont]

45. The people who I feel the sorriest for is the retirees.

They, like the Steel retirees (my dad), get screwn in the end. Cutting off health care in their late ages is unconsionable.

This is why we need universal health care and get out of the insurance rackets, which are doing nothing but bankrupting America, enhancing executive pocketbooks and screwing workers in so many ways.