Posts Tagged ‘General Motors’

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Auto Industry: Something’s Smelly At GM

July 28, 2009

Something’s Smelly At GM

IBD: 24 July 2009

Bailouts: You’re a once-mighty auto company that’s been bailed out by taxpayers, taken over by government and just posted a 22% sales drop. What’s your next move? Why, unveil a new men’s fragrance, of course!

It got little attention, but GM’s decision to launch its new fragrance line in honor of Cadillac’s 100th anniversary may go down as one of the most absurd moves by a troubled corporation ever. No doubt they kept a team of highly paid MBAs busy for months with the project, while the car end of their business was imploding faster than a black hole.

Is this what we get for our money — the $51 billion we taxpayers have ponied up to bail GM out of its self-inflicted woes?

“Cadillac, the new fragrance for men,” doesn’t seem like much to start the “New” General Motors Corp. on. Likewise, it’s never good to see that, amid all the cutbacks, GM’s lobbying budget remains virtually untouched. We guess the new “Government Motors” needs the political clout.

Disappointing? You bet. The White House created a so-called “Car Czar” to oversee the auto industry. The Big Three, we were told, had been totally irresponsible and needed the government’s help and the taxpayers’ cash.

Well, so far, not so good. Just one month after the government took a 60% stake in GM, it reported its first half sales fell 22%.

Worse, its global market share fell to 12% — down from 12.3% a year ago and 14.1% in 2005. Last year, Toyota took over from GM as the world’s largest automaker, and this year GM will lose its Hummer, Saab, Saturn and Pontiac lines, becoming even smaller.

We didn’t expect an instant turnaround. But then again, we also didn’t expect to find out that men’s cologne would be part of their new product lineup.

And no, we’re not just picking on the auto industry here.

At least one major American automaker seems to be getting its act together. Ford rejected a big government bailout. How’s it doing? It posted a $2.3 billion quarterly profit in the second quarter, confounding analysts and critics alike.

“We strengthened our balance sheet, reduced cash outflows and improved our year-over-year financial results despite sharply-lower industry volumes,” said Ford Chief Financial Officer Lewis Booth.

And it’s not as if GM has nothing going for it. Quite the contrary.

For one, GM’s newly reissued Camaro is a big hit.

Orders are literally running faster than production right now, forcing those who want a Camaro right away to pay more than the sticker price to get one.

And sales are booming — overseas. GM recently announced that its sales rose 38% in China in the first half, while setting sales records in seven Latin American countries during the same time. GM in the first half sold almost as many cars in China (814,442) as it did in the U.S. ( 947,518). Its share of Europe’s market is growing.

This underscores why GM should have been allowed to undergo a normal bankruptcy — not the politically rigged one that the government forced down all of our throats.

Today, GM might not exist, it’s true, if forced into a regular bankruptcy court. Its assets would have been sliced and diced to pay off its creditors. But those assets would live on. What automaker wouldn’t want to have the Camaro in its stable right now?

A regular bankruptcy would have given GM bondholders first call on its assets. Instead, they literally had money stolen from them.

More importantly, GM could have dumped its most onerous labor contracts with the United Auto Workers, while focusing on truly profitable cars. As it is, the UAW ended up with a major ownership stake in GM at the expense of its creditors and taxpayers.

GM exited bankruptcy on July 10. Today, what’s left after that politicized union-friendly travesty is two GMs.

One is the sickly domestic GM, which still has enormously costly labor contracts that give it roughly a $2,000 per car disadvantage when competing against the 12 foreign companies that make cars here. This GM can’t make money — especially now that government bureaucrats and union leaders are, in part, calling the shots.

Then there’s the other GM, the viable one. It posted big sales gains in foreign markets in the second half, and is the one part of GM that could not only survive, but thrive.

If GM manages to make it, it won’t be because of the taxpayer bailout. It will be because people elsewhere still want to buy its cars.

We hope GM can survive in the U.S. But we rather doubt it can with a management that thinks that perfume will cover up the stink of political meddling and the lingering bad odor of its ruinous retirement and health care costs.

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Obama Motors

June 18, 2009

creators.com 3 June 09

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Sale of Hummer to China

June 10, 2009

Are there any real American patriots in Washington or General Motors?

What is the matter with America?  Are we crazy?

Read this and write your congressman!

Don

CommunistHumvee

Attached is a commentary by CFNS’s Program Director, Peter Leitner, that appeared last week in the Washington Times regarding the proposed sale of General Motors’ Hummer brand and assets to China. Given Dr. Leitner’s vast experience as senior strategic trade advisor in the Office of the Secretary of Defense, his perspective on this deal is unique – and most disturbing.

Clearly, Peter sees the transaction as a threat to our national security, as opposed to part of a financial workout for a bankrupt company. However, if the history that he cites of such sales to China is any indicator, our government would be well advised to heavily scrutinize this matter from his point of view.

Friday, June 5, 2009
LEITNER: Hummer sale to China
Peter Leitner – Washington Times

COMMENTARY:

Current plans to reorganize General Motors Corp. by, in part, selling off some of its specialty automotive brands may have gone off the deep end by announcing that the Hummer brand and all its manufacturing facilities and know-how will be sold to Communist China.

The Hummer is a civilian variant of the U.S. military’s Humvee – the world’s most advanced multipurpose and biggest-selling military vehicle of its class. Proponents of this sale will insist the Hummer is not as rugged as its dedicated military counterpart, so there is nothing to worry about in selling its factories and technology to China.

The civilian Hummer still has enough off-road agility, maneuverability, ruggedness and hauling capacity to qualify as a military vehicle virtually anywhere on Earth. Selling the production lines to China will, no doubt, quickly result in mass production of less luxurious versions and their sale throughout the world to the most repugnant and repressive regimes, rogue militias, terrorist entities and governments hostile to U.S. interests.

Since most of these entities now rely upon Toyota 4X4 pickup trucks for their military mobility and raiding parties, they will quickly upgrade to the Hummer, which can readily be equipped with pedestal or ring mounts for machine guns, cannons, mortars or rockets.

The Chinese have a long track record of securing manufacturing licenses for civilian versions of military systems and upgrading those “civilian versions” back up to military capability. They did this with the French-designed Dauphin (PRC Z-9) helicopters by morphing them into ground attack and anti-submarine warfare missions.

We should not expect that the Hummer production lines will remain in the United States very long either. In the case of another GM/Delco spinoff sold to Chinese interests through an American frontman, the Anderson, Ind., Magnequench saw the Chinese clone its manufacturing processes and move all production to China – forever hijacking scores of U.S. jobs as well as a critical military technology – rare-earth magnets.

Not too long ago, the People’s Liberation Army was prevented from purchasing the production line for the TFE-731-2A-2A gas turbine engine from the Garret engine company. The company, as well as the Chinese importer, insisted the engines would be produced in China for civilian aerospace applications. That myth was exploded after analyses revealed the engine would more likely be used to power a new generation of long-range Chinese cruise missiles.

Desperate, financially strapped, companies often engage in shortsighted and dishonest transactions that place our nation at risk while executives lie through their teeth in an attempt to brush off national security concerns.

A classic case was the so-called MD-17, a C-17 strategic military airlifter painted white with an easily replaceable electrical panel removed that otherwise allowed the rear cargo ramp to be opened in flight for tactical insertions. China and the U.S. manufacturer said it was to be used for rural mail delivery – a statement so ludicrous that the concept was eventually dropped.

At a minimum, the proposed sale of Hummer to China should be carefully reviewed by the interagency Committee on Foreign Investment in the United States, the intelligence community, the State and Defense departments and the Congress.

We simply cannot trust the judgment of a desperate company as it seeks refuge in bankruptcy proceedings.

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GM Goes Bankrupt; U.S. Injects $30 Bil And Will Own 60%

June 9, 2009

By: Sean Higgins

IBD 4 June 09

General Motors (GM) ended 100 years of free enterprise Monday by filing for bankruptcy protection. The deal effectively nationalizes GM with the government taking a 60% ownership stake.

After decades of decline due to a lackluster product line and uncompetitive labor costs, GM was unable to weather a severe global recession that sent sales plunging.

The U.S. government will inject $30 billion into GM, on top of the $20 billion it already lent. The Canadian government will pitch in $9.5 billion and get a 12.5% stake.

The United Auto Workers will get 17.5% with an option for another 2.5% in exchange for pension obligations. Unsecured bondholders will get 10% for giving up claims to some $27 billion in debt.

The deal will close 11 factories and idle three more, though one previously idled facility will be used to build a new small car. GM’s U.S. work force will shrink from 54,000 to 33,000. A total of 2,600 dealerships will be closed.

Even as it sought — and got — billions in federal aid, GM long dismissed bankruptcy as unthinkable. But that quickly became inevitable, with the automaker and government preparing for Chapter 11 for several weeks.

President Obama called it a “credible plan” to revive the carmaker and protect taxpayers.

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Michigan: Another Economic Blow

June 5, 2009

Another economic blow

Willow Run plant’s imminent closure rocks Ypsilanti Township
Tuesday, June 02, 2009

BY DAVE GERSHMAN
The Ann Arbor News

Ypsilanti Township officials burned up the phone lines Monday, trying to find to find out why General Motors Corp. decided to close the Willow Run Powertrain transmission plant by the end of next year under the automaker’s bankruptcy reorganization plans.

The massive plant, which employed generations of families and has its roots as a storied factory of the B-24 bomber during World War II, is the township’s largest taxpayer.

GM announced Monday it would close Willow Run – along with 10 other assembly, Powertrain and stamping plants, and idle three others – as part of its effort to trim labor and production costs.

Although the future of the Willow Run plant has been uncertain for some time, township officials say they were shocked by GM’s decision. They say the plant produces six-speed transmissions more cheaply and efficiently than other GM plants.

Township officials appealed to Rep. John Dingell, D-Dearborn, and Gov. Jennifer Granholm to intervene. Dingell sent a letter to GM CEO Fritz Henderson, urging the plant be kept open and citing an internal company scorecard that gave it top marks for quality.

“Our initial goal is to try to get (GM) to reverse the terrible financial decision they’ve made to close the transmission plant,” township Supervisor Brenda Stumbo said.

Sprawling more than 5 million square feet on more than 300 acres of property, the Willow Run plant still employs about 1,364 hourly and salaried workers. That’s down from 14,000 during the late 1970s. As late as 2005, the plant employed 4,000 workers.

About 28 percent of the plant’s workers live in Washtenaw County, according to a Southeastern Michigan Council of Governments survey in 2000.

GM pays $5 million in taxes annually on the plant. Of that, the township receives $1.5 million.

Employees, who were gathered on the factory floor at 8:15 a.m. Monday to hear the company’s announcement, were also shocked the entire plant will be closing – although reports surfaced last week that it was a possibility. More than half of the employees aren’t working right now under a previously announced temporary idling of some transmission lines.

“You could hear a pin drop in a room with 400 people,” said Don Skidmore, president of the United Auto Workers Local 735, which represents workers at the plant.

The plant produces three lines of automatic transmissions. GM previously announced plans to phase out production of two types of four-speed transmissions produced by the plant. Still, plant and union leaders were hopeful GM would still need the plant to produce the more fuel-efficient, rear-wheel drive six-speed transmission.

GM officials said Monday that production of the six-speed transmission has been halted at Willow Run, and production is being consolidated with the Toledo plant because of the steep drop-off in demand for new vehicles. The Toledo plant produces the same type of six-speed transmission as Willow Run and also is in the midst of retooling to produce a front-wheel drive six-speed transmission.

Skidmore and township officials said they believe GM also plans to produce more six-speed transmissions at a facility in Mexico.

One of the four-speed transmission lines at Willow Run will stop production July 31. The other four-speed transmission line will stop production in June 2010. Some workers will stay on to build components that are shipped to other plants until December 2010, GM officials said.

GM’s announcement is another financial blow to the township, already hurting from the housing crisis.

“We were already in a crunch with the economy,” township Clerk Karen Lovejoy Roe said. “We have the largest foreclosures in the county. Property values are down. Our revenues for next year are going to be the same as they were in 2004.”

The township estimates a fully closed Willow Run plant would generate $175,000 in taxes for the township in 2011.

Donald Grimes, an economics professor at the University of Michigan, said he doubts the property would be reused for other types of manufacturing.

“Manufacturing is shrinking,” he said. “It’s a huge plant, physically.”

Grimes said the plant’s proximity to Willow Run Airport could be attractive to a future user. Authorities have been discussing a regional agreement to develop the areas around and between Detroit Metro Airport and Willow Run Airport as an aerotropolis, a center for development of aviation-intensive businesses, as well as retail, residential, research and entertainment districts.

GM’s reorganization plan also calls for closing assembly plants in Pontiac and Wilmington, Del., this year. Plants in Spring Hill, Tenn., and Orion, Mich., will shut down production but remain on standby.

Along with the Willow Run plant, powertrain plants in Livonia and Flint and plants in Parma, Ohio, and Fredericksburg, Va. will close next year. Closure of a plant in New York was previously announced.

Stamping plants in Indianapolis and Mansfield, Ohio, also will close. A stamping plant in Pontiac will be idled but remain on standby. Closure of a stamping plant in Grand Rapids was previously announced.

GM says it will also close service and parts warehouses in Boston, Jacksonville, Fla., and Columbus, Ohio, by the end of this year.

All told, GM aims to trim its work force by 18,000 to 21,000 employees.

Human resources and corporate staff will help identify opportunities for salaried employees at Willow Run, said Daphne Adams, a plant spokeswoman. The UAW Local 735 is petitioning the union to request that GM transfer Willow Run employees to Toledo to produce the six-speed transmissions. Skidmore estimated 450 employees could be eligible for transfer, while the remainder could accept a buyout or be laid off.

This isn’t the first time Ypsilanti Township has lost a GM plant. In 1993, the automaker shut down a 2.5-million-square-foot assembly plant just south of the transmission plant, idling some 2,500 workers.

Since 2002, Ypsilanti Township has approved tax abatements on the Willow Run plant, and GM invested $577 million in the facility.

Reporter Dave Gershman can be reached at 734-994-6818 or dgershman@annarbornews.com.

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GM, Ford, Chrysler, UAW – BAILOUT

December 5, 2008
Auto Execs

Auto Execs

General Motors CEO Richard Wagoner, UAW President Ron Gettelfinger, Ford CEO Alan Mulally, and Chrysler CEO Robert Nardelli listen to a question during a Senate Banking Committee hearing Thursday. AP

Is our Congress really stupid enough to give these clowns any of the taxpayers hard earned money?

Look into the faces of these incompetents – and haven’t we had enough of seeing Ronnie Gettelfinger right there in line for a hand-out?

Look into these faces – all of them multi-millionaires themselves.

Don’t let your Congress person do it!