Posts Tagged ‘GM’

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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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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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Cartoon: GM, Obama and Government Motors

June 5, 2009

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Cartoon: GM 2011 New Car Line

May 27, 2009

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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.

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Cartoon: Fixing GM

April 10, 2009

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Cartoon: Obama vs. Wagner

March 31, 2009

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GMAC fell shy of bank standard

January 2, 2009

GMAC fell shy of bank standard

The financial arm of GM (GM) said its bondholders agreed to swap $21.2 bil in debt, but GMAC Financial fell short of the $30 bil capital level the Fed had required to approve its application to become a bank holding company. GMAC sought the designation to secure federal aid, but the Treasury came to its rescue anyway this week, injecting $5 bil into GMAC and lending $1 bil to GM to invest in GMAC. GM, which owns 49% of GMAC, fell 15.8% to 3.20.

Oh, that’s OK.  GMAC comes up 34% short of their promised debt reduction – down payment so “the Treasury” (we taxpayers actually) “come to GMAC’s rescue anyway”.  It’s just short of their promise $8.8 billion.  $8,800,000,000!  Don

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Rewarding Failure: Auto Companies

December 16, 2008

Rewarding Failure

By INVESTOR’S BUSINESS DAILY | Posted Friday, December 12, 2008 4:20 PM PT

Bailouts: The proposed $15 billion bailout of the Big Three failed in the Senate for one major reason: Some lawmakers stood up to the unions. But their stand may be moot, since automakers may get the money anyway.


Read More: Business & Regulation | Economy


For a full week, GOP lawmakers bore the brunt of the bitter battle waged over an aid package for GM and Chrysler. Though the idea is wildly unpopular among voters, some Washington politicians were desperate to pass it — particularly the Democrats, who are beholden to the Auto Workers and other unions for tens of millions in campaign donations.

In addition to major restructuring by the automakers, GOP senators insisted on givebacks by the United Auto Workers. The UAW responded with a resolute “No.” But the bailout foes won, killing the $15 billion in aid.

And they were right to do so.

As the chart shows, gold-plated union contracts are a big reason for U.S. automakers’ woes (though managerial incompetence at the Big Three also played a role). The average Big Three worker made $73.26 an hour in 2006; the average worker at a foreign transplant, $44.20. Bailout foes wanted the gap to be shrunk by the end of next year.

A chart making the rounds on the Internet tells it all: Last year, Toyota made 9.37 million vehicles. GM, virtually the same number. Yet, Toyota made a profit of $38.7 billion on its global operations, or $1,874 per car, while GM lost $38.7 billion, or $4,055 a car, almost entirely due to its operations in the U.S.

Even so, the UAW vowed to make no big changes unto 2011, when their current deal expires. That basically would lock in the Big Three’s lack of competitiveness for at least three more years, requiring billions and billions more in bailouts or bankruptcy.

Immediately after the bill failed Thursday night, Senate Majority Leader Harry Reid said he “dreads” seeing what the stock market would do on Friday. “It’s not going to be a pleasant sight,” he warned. For the record, the NASDAQ rose 2.2%, while the S&P 500 increased 0.7%. He needn’t have worried.

As for the UAW, they rolled the dice, betting they could lose in the Senate and still get bailed out. It looks like their gamble paid off.

On Friday, the White House said it might use money from the $700 billion Troubled Asset Relief Program — reversing its earlier stance. Why? “A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time,” White House spokeswoman Dana Perino said Friday.

We’re sympathetic, but this is the wrong path to take — especially after the president’s own party successfully made its case in Congress, and won.

We don’t want to see workers suffer or the auto industry disappear. But the fact is, under bankruptcy reorganization, they won’t. The workers will still exist, as will their skills. Unprofitable plants that can’t be turned around will close. A bankruptcy judge will sell unprofitable assets to those who can use them productively.

They won’t need a “car czar,” or congressional oversight, or political micromanagement. And out of this process, a slimmer, more competitive and, yes, even profitable Big Three can emerge if we let it — one that will be able to compete with foreign companies on our own soil.

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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!

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Pirates Hijack Ships & Auto Companies

November 20, 2008

“Pirates Hijack Saudi Supertanker”

Investors Business Daily – 19 Nov. 08

•    Put a Blackwater team on every ship. (Don)

toon111908Pirates who hijacked a Saudi supertanker now anchored it off Somalia’s coast, while the U.S. and other nations decided for now, not to intervene.  Filled with $100 mil in oil, it’s the largest merchant vessel ever seized.  Pirates took an Iranian Cargo ship Tue., the 7th vessel seized in 12 days.  Some shippers have said they’ll go round South Africa instead of via Egypt’s Suez Canal, citing piracy.

•    What they don’t tell you here – they have seized over 100 ships over the last two years. (Don)

Indian Frigate Sinks Pirate Ship

Investors Business Daily – 20 Nov. 08

The FIRST! – GOOD FOR INDIA! (Don)

The Indian warship INS Tabar sank a suspected pirate ship after a brief gunbattle in the Gulf of Aden, an area that has seen a surge in ship hijackings by Somalia-based gunmen.  Meanwhile, pirates succeeded in hijacking 2 more vessels in one of the world’s busiest shipping channels.  In the last week, pirates have captured 8 vessels, including a giant Saudi oil tanker.

Pulling Plug On GM Would Help Both Auto Industry And Michigan

IBD – John Tamny – 12 Nov. 08

Capital and jobs will continue to flee the state if GM is saved with the money of others.

Sectors reliant on government help are invariably weakened as opposed to strengthened.

Poorly run businesses find it hard to raise money.

Were GM a well-managed company, it would have no need to run to the federal government.

If there’s a defense of GM at this point, it has to do with dollar policy in this country that has made long-term planning very difficult. GM did relatively well when the dollar was strong due to lower gasoline prices that made its large vehicles very popular. But as GM presently seeks to create new, smaller models for a world allegedly running out of oil, a stronger dollar has driven down gasoline prices, which means its inventory might yet again not match future economic realities.

The complication there is that GM’s management has regularly advocated a weaker dollar, so the problem remains one of management clueless when it comes to understanding what makes the firm prosper.

In the end, the state of Michigan and the U.S. automobile sector are struggling not due to back luck, but precisely because they cling to a company that investors no longer value. And with GM shares near all-time lows, those with capital are stating loudly that so long as GM remains as is, the funds necessary for job creation will continue to flee.

So rather than waste precious capital in the naive hope of propping up that which investors don’t value, it’s essential to let GM fail. Only then will a necessary change of ownership occur;
toon112008

“GM, FORD BEG, WARN END IS NEAR” – IBD 19 Nov.08

Here’s why we say – let the auto companies file bankruptcy: (Don)

example: A Ford assembly line worker – works 2 weeks with 2 weeks off.  –
but paid for 4 weeks – for not working.  Engine plant near Ann Arbor.

“Job bank” – employees (8000) get paid $105,000/year – for years.

“a radio personality in Ann Arbor talks about a Ford worker paid to teach the Guitar to auto workers.”