GM: Possible pitfalls could derail rebound

Page 1 of 6  
GM: Possible pitfalls could derail rebound http://tinyurl.com/2tzt4l
Sharon Terlep / The Detroit News
General Motors Corp.'s already fragile turnaround could be derailed by
any number of threats looming in 2008, from more strikes at parts suppliers to a further meltdown of the housing market, according to the automaker's annual report filed Thursday.
In a lengthy inventory of potential pitfalls for the year ahead, a listing required each year by federal regulators, GM names many of the same risks that kept the automaker in red ink for 2007: a slumping U.S. auto market, turmoil at finance firm GMAC and the soaring costs of health care and materials used to build cars and trucks.
But this year, GM also must begin anteing up cash to set up a massive health care trust for hourly retirees. The automaker has to come up with $34 billion over several years to contribute to the fund, created as part of last year's labor pact with the United Auto Workers. GM's ability to spend in other areas of the business will be affected if it can't secure financing under favorable terms.
GM's worries are no surprise, but they come at a time when concern is mounting on Wall Street about the automaker's ability to forge a turnaround in the weakening U.S. economy. The landmark labor deal GM struck last year with the UAW promises relief -- as much as $5 billion a year -- but much of that savings won't start until the retiree health care fund kicks in around 2010.
The retiree fund, called a Voluntary Employees Beneficiary Association, or VEBA, was a central part of the four-year labor deals between the UAW and Detroit's Big Three automakers, designed to help them better compete with leaner foreign-based competitors. GM, along with Ford Motor Co. and Chrysler LLC, will offload retiree obligations to the union in the form of the trust.
GM said it will have to pay the union up to $34 billion to take over $47 billion in retiree obligations.
"Despite significant cost reduction programs that have occurred at GM's North American operations, negative cash flows at GM are expected to increase in 2008," Fitch Ratings analyst Brian Bertsch wrote this week in affirming its negative outlook on GM. The agency said its rating could be cut if GM continues to burn cash in its home market or if operations outside the United States become less profitable.
"Projected cost savings from the 2007 UAW agreement will be insufficient to reverse consolidated negative cash flows through 2009 without revenue stabilization. Given weak economic conditions, this is not projected to occur in 2008."
GM, in its report, said further production cuts will be necessary if the slumping economy or competition from rivals cuts deeper into its U.S. sales. GM slashed production about 10 percent in 2007.
Despite cutting billions from its costs over the past few years, the No. 1 U.S. automaker hasn't been profitable for a full year since 2004. GM lost a record $38.7 billion last year after posting a massive tax write down last fall.
Among GM's key concerns:
Work stoppages or financial problems at parts suppliers, especially if they interfere with production of high-margin vehicles like trucks and SUVs. GM already has had to shut down one truck plant because of the UAW's strike against American Axle and Manufacturing Inc.
Competition from rivals introducing key new models this year. GM's product cadence will slow down this year after a number of successful, high-profile new vehicles in 2006 and 2007.
Further losses at GMAC, of which GM owns 49 percent, due to the national mortgage crisis.
--
Civis Romanus Sum

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Lets say that someone wanted to buy GM or some parts of it.
What would be the best thing to buy?
The shares?
The plants?
Dealers?
Is the combined value of the shares worth more than what GM owns? Would it be interesting for someone to buy the whole thing slice it up and sell?
Are any plants worth buying or is it better to start a new plant?
Are the dealerships wort much? Is it worth enough to buy the dealer channels?
Obviously as a whole GM is still alife and will probably not die all together but it will surely be a lot smaller. What parts will survive? Possibly only the offshore operations.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Like the old saying; "Be careful what you whish for, your wish may come true."
If GM and the other domestics die, ALL vehicle operation will be off shore and vehicle priced will go way up without domestic competitors. Even today import brands sell for 20% to 30% because many buys have the mistaken idea they are somehow "better."
Look at what happen to TV sets and sneakers etc When the import brands came to the US they underpriced domestic brands and put them out of business. After the domestics were gone, prices skyrocket. TVs can be made for less than 20% of the selling price and the best sneakers are made for around $5 ;).
Obviously import brands will not continue to assemble some of their vehicles in the US or Canada with imported parts, as they do now. They can make and assemble the parts as well a the cars in lower wage countries, that do not have all the government regulations that they must deal with in the USA

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Or that some American made things are worse;>) The Big 3 screwed themselves on this one.

TV sets are much higher quality than they used to be years ago when most were made in the US. The technology is better nowadays, and as a percentage of our income, the prices are, I would say, much lower than what we had to pay before.

Our gutless government will essentially allow them to import anything they want and compete for our American jobs and money. For us to improve, we have to do just that...quit crowing about American quality and American engineering - which have not been so great in recent years - and actually product quality things that people want to buy.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

I can agree that The Big 3 made a lot of mistakes, but (and I don't like to agree with Hunt) some people do actually see a Toyota or Honda badge, and immediately think it's better then something with a Chevy or Ford badge. That and you have to admit, GM especially is turning around quite a bit. When even the critics are saying GM is doing good, you know they are.

Funny. I used to remember people keeping TV's, fridge's, stoves, all kinds of things, many many years. If it broke, they would bring it in for repairs. What do most do now? We go and pick up a TV for $200 at Wal-Mart, and when it breaks (usually within 30 days of the 1 year (if your lucky) warranty expiring), we go buy a new one. I purchased my first DVD player in 1998. I worked at an electronics store, and with my discount (not including taxes) it sold for $449 (Canadian). Too expensive? Hell yes. How much are they now at Wal Mart? $29.99. The difference, you ask? I have gone through many Wal Mart (and more expensive versions from other stores) DVD players, even though I still have that $449 model from 1998, and it still works...It just doesn't really match anything else I have...

Therein lies the problem. There is nothing wrong with competition, but when Toyota and Honda can build there cars in countries where they pay the workers half of half what they would have to pay here, how are the Domestic brands supposed to survive? Everything needs to be on an even playing field.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Domestics are building great vehicles today. The fact is all manufactures are building great vehicles today; the only real difference is style and price.
Why anybody will spend 205 to 30% more money for an import, hoping the will not get one of their bad 2%, when there are so many good domestics, where you have no greater chance of getting one of THEIR 2% that are bad, makes not sense to me.. The odds are you will get one of the 98%, they all make that are trouble free, no mater which brand it on the hood ;)
I buy a lot of new cars and I have owned a bunch of Hondas and Toyotas over the years and they proved to be no better, or worse, then the domestic brand I now buy. My last import was a '97 Lexus, I owned three of them prior to that one.
The two different brands on domestics I own now have proven to be just as good, but have cost me a lot less to buy and a lot less to have serviced at the dealership.
I stopped buying Lexus because the dealership was taking me for granted as a customer, thinking I would pay whatever they expected. They were wrong. I found a V8 American luxury brand, down the street, that was just a good for $20,000 less. I saved so much on that car that I also purchased a sporty convertible from that dealership as well.
I currently run a 2007 convertible and a 2008 luxury car purchased for the same dealership that takes good care not to lose me as a customer.

.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Some domestics may be great; others perhaps still crappo. The Big 3 have a track record of being, well, rather undependable in what they offer.
I think all three have things to be ashamed about in the recent past, and it wont disappear with a run or two of good models, new sheet metal.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Perhaps in your opinion but you can't prove that by me. I haven't owned a vehicle, foreign or domestic, in the past twenty five years that was problematic. The only exception was a Honda that blew an oil seal early on, and I have owner s slew of them. Apparently most GM buyers do not agree with your opinion either, because they still buy more vehicles from GM than any other manufacturer. You don't stay number one is sales of anything if you do not sell a good product.

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Mike hunt wrote:

And it doesn't look like GM will stay number one for long, if it even still is. So what's your point again? GM has some work to do, and I think even GM knows it.
nate

--
replace "roosters" with "cox" to reply.
http://members.cox.net/njnagel
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Get real, look at all of the latest surveys, the vehicles GM builds today are as good as, or better than, any other brand on the market, and generally cost less to drive home

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Mike hunt wrote:

http://bp1.blogger.com/_A-bXyPL07Ww/Rxv7K8w92II/AAAAAAAAAnY/QVaOXl7ptaE/s320/notThisShitAgain.gif
Only a complete idiot could make a statement like the above, unless you consider minor details like "reliability," "durability," "performance," and "handling" to fall under the category of "style."
nate
--
replace "roosters" with "cox" to reply.
http://members.cox.net/njnagel
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Obviously style refers to the look and type of vehicle. Only and idiot would expect every vehicle to have around the same "performance," and "handling" but they are all nearly identical in terms of "reliability," "durability," in that they all fall within the same 2% range in that regard, according to every current market survey of new and longer term owners.
After owning a fleet service business or over ten years, servicing hundreds of thousands of vehicles that are run up to five years or 300K WOF, our records clearly show it to be actually closer to 1% in the real world, when vehicles are given the proper preventive maintenance. You of course are entitled to you own opinion and can spend your money wherever you choose

http://bp1.blogger.com/_A-bXyPL07Ww/Rxv7K8w92II/AAAAAAAAAnY/QVaOXl7ptaE/s320/notThisShitAgain.gif
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Mike hunt wrote:

Then there are other differences.

False.
False.
You're still an idiot.
nate

--
replace "roosters" with "cox" to reply.
http://members.cox.net/njnagel
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

He has never let facts get in the way of his cheerleading, has he, Nate;>)
I have owned a number of GM vehicles since the early 80's and EVERY ONE of them had serious and costly defects which were not caused by, nor could they be prevented by, maintenance or severity of duty issues.
They were ALL defective parts or design flaws.
- the conversion V8 diesel - the metric tranny for that diesel - the 440T4 metric tranny for gasoline engines - the CS small frame alternator - the small V6 gasket leakage problems - the 3800 gen II plenum problem - the four wheel disc brake weaknesses ** - defective run of engine control modules (one or more series)
The CS alternators could be controlled by maintenance...if you call replaceing them every three months "maintenance".
The four wheel disc rear adjustment problems could also be made liveable by using the parking brake religiously and constant maintenance. These were really just poorly designed and implemented.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Surly you are not suggesting import brands over the years have not had major engine, tranny, and brake problems? Those I owned certainly had their share of problems, terminal rust, paint coming off, gasket and oil seal failures, to so nothing of Toyotas current oil sludge problem that has never been properly addressed simply pushed ahead a few years, till the extended warranty expires.
If one lives in hilly country one would be well advised to use the parking brake all the time. Why leave you 30K parked on a hill and count on a small pawl in the tranny to make sure it does not run down the hill if bumped by another car attempting to park? Another reason to use the parking brake is to be sure it will not corrode and be useless if need to stop the car if one has a brake failure
wrote in message

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

For years, I have had better luck with certain foreign brands than with GM. GM has sucked butt for a long time... They may have started to clean up their nasty act lately, but their attitude is crappola.

We dont live in hilly country. Texas is not the California backlot many believe it is. But the worst problem is that I had a wife and teenaged daughter. They never managed to learn that the car was defective and in order to keep dad from having to re-do the shittola rear discs every few months, they had to use the parking brake religiously. Other 4WD (four wheel disc) systems didnt have that limitation.
GM has made a lot of shit, and they have not supported their loyal customers, regardless of the mindless raving that you continue to spout. They have the engineers to remedy it. But, they are like an unfaithful wife. How many times do they "do better" and then screw you again before you write them off.
They deserve a severe punishment tour.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
I can't answer that for you, I have never had a GM vehicle that was problematic

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Then you must not have owned any in recent years, or you are conveniently blind.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Mike hunt wrote:

Some, maybe. Some are of consistently higher quality than domestics. Only import I've had engine issues with was a well-used Corrado G60; it's had a set of rod bearings (replaced in the car) while it's been in my care, it's currently parked because the supercharger is blowing oil. Compression is kinda low too, but it's got about 140K miles on it and I suspect most of those were hard ones. (I know the last 30K or so were; SWMBO has a heavy foot!) Other than that, I've done no more than belts, hoses, and fluids and maybe an occasional alternator or starter to my cars. I did replace the transaxle on an old Scirocco at about 210K miles because it had a loose bearing that made the output shaft seal pass oil, but it was still working fine. That was the best damn car I ever owned...
Now I have a Porsche 944 which does require a little more care and feeding, but there's other benefits to owning that car, such as it drives like nothing else. (no differences except price and style my ass.)

I have never had any of those issues, and I've been driving "well used" imports (mostly VWs) since I got rid of my old Dart back in 1998ish.

And that's one of my (many) pet peeves with my company Impala - if I don't remind the service people to adjust the parking brake at *every* oil change, it stops working. I've never had that problem with any import.

My personal vehicles are all stickshifts and have proper lever actuated parking brakes, not that silly foot pedal like GM uses, so using the parking brake is a) easy and b) not a problem.
nate

--
replace "roosters" with "cox" to reply.
http://members.cox.net/njnagel
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

A heavy foot does not constitue hard miles. Hard miles are taxi miles. Going fast, accelerating fast, braking hard, do not make hard miles on a decent car. 140,000 is not low mileage, but it's far from high mileage. Most GM's since the early 90's would reliably go over 200,000

That would be typical of most GM cars as well.

I guess - more than a little care and feeding. Nice cars, but definately a car lover's car - one that you have to not mind tending to frequently.

I know there are some problems with the newer Impalas that I believe are inexcusable, but you're the only one I've heard of with this particular problem. This might be unique to your car.
--

-Mike-
snipped-for-privacy@alltel.net
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Related Threads

    Motorsforum.com is a website by car enthusiasts for car enthusiasts. It is not affiliated with any of the car or spare part manufacturers or car dealers discussed here. All logos and trade names are the property of their respective owners.