Posts Tagged ‘GM’


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.


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!



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


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.


Cartoon: GM, Obama and Government Motors

June 5, 2009


Cartoon: GM 2011 New Car Line

May 27, 2009


GM, Segway Gear Up For Electric Transport

May 12, 2009

GM, Segway Gear Up For Electric Transport

IBD – 8 April 09

NEW YORK — If Hummer took GM (GM) to the large-vehicle extreme, the automaker’s latest project takes it to the other extreme, offering a solution to the world’s urban transportation problems in two wheels, not four.

General Motors and Segway announced Tuesday that they are working together to develop a two-wheeled, two-seat electric vehicle designed to be a fast, safe, inexpensive and clean alternative to traditional cars and trucks for cities across the world.

The Personal Urban Mobility and Accessibility, or PUMA, project also would involve a vast communications network that would allow vehicles to interact with each other, regulate the flow of traffic and prevent crashes from happening.

“We’re excited about doing more with less,” said Jim Norrod, chief executive of privately held Segway, the Bedford, N.H.-based maker of electric scooters. “Less emissions, less dependability on foreign oil and less space.”

A PUMA prototype, billed as a cheap and clean alternative to traditional cars, sported around New York Sunday. AP

A PUMA prototype, billed as a cheap and clean alternative to traditional cars, sported around New York Sunday. AP View Enlarged Image

The 300-pound prototype runs on a lithium-ion battery and uses Segway’s characteristic two-wheel balancing technology, along with dual electric motors.

It’s designed to reach speeds of up to 35 mph and can run 35 miles on a single charge.

The companies did not release a projected cost for the vehicle, but said ideally its total operating cost — including purchase price, insurance, maintenance and fuel — would total between one-fourth and one-third of that of the average traditional vehicle.

Larry Burns, GM’s vice president of research and development, and strategic planning, said the project is part of Detroit-based GM’s effort to remake itself as a purveyor of fuel-efficient vehicles.

Ideally, the vehicles would also be part of a communications network that through the use of transponder and GPS technology would allow them to drive themselves. The vehicles would automatically avoid obstacles such as pedestrians and other cars and therefore never crash, Burns said.

As a result, the PUMA vehicles would not need air bags or other traditional safety devices and include safety belts for “comfort purposes” only, he said.

Though the technology and its goals may seem like something out of science fiction, Burns said nothing new needs to be invented for it to become a reality.

“At this point, it’s merely a business decision,” he said.

Burns said that while putting that kind of communications infrastructure in place may still be a ways off for many American cities, the automaker is looking for a place, such as a college campus, where the vehicles could be put to use and grab a foothold in the market.

There’s currently no timeline for production, Burns said.

The ambitious announcement also comes at a time when GM’s future is hanging by a thread after receiving billions of dollars in federal aid and is in the midst of a vast restructuring that could still lead to a filing for bankruptcy protection.

Meanwhile, the ongoing recession has resulted in some of the lowest industrywide vehicle sales in more than a quarter century.

But Burns argued that some of the most revolutionary ideas have been born out of tough economic times.

“The next two months, and really 2009, is all about the reinvention of General Motors,” he said.


Cartoon: Fixing GM

April 10, 2009


Cartoon: Obama vs. Wagner

March 31, 2009