Posted Mar 30th 2006 1:36PM
According
to newswire Reuters, General Motors is in discussions with an investor group to sell a 51-percent stake in GMAC
financial. The Cerberus Capital Management-led coalition is expected to be worth around $11 billion, with a
‘broad structure of an agreement’ already settled.
The deal isn't final yet-- GM’s board must sign off on the deal to sell the stake.
[Source: Reuters]
There is no doubt that a UAW strike against Delphi will be very disruptive to GM's production. What side (the Union or GM) will bleed the most? Unlike earlier years and strikes, there was a viable Auto Company to return to after the strike. It appears that will not be the case this time around. How long have previous UAW strikes against GM been in number of weeks? Do the UAW workers at Delphi and GM plants have a strike fund awaiting them from the UAW should a strike by the UAW take place? If so, to what level of a worker's/striker's present gross pay will there be? If so, for how long?
Once GMAC is sold there I am thinking that there will be more accurate and eye opening information as to how useless GM really is when it comes to making and selling cars and trucks.
March 30 2006 at 6:36 PM Report abuse Permalink rate up rate down ReplyGeneral Motors is doing the exact same instant-cash-raising move a good sized department store chain here did a number of years ago by selling off their only profitable division to raise some operating capital for the rest of the fast sinking entity. Woodward Stores, based in Vancouver, British Columbia, had been operating in the red since the 1982 recession. The only profitable division for Woodward's Stores was their Food Floor division which was solidly in the black, and in most locations, was somewhat separate from the other departments making it rather easy to divest. Problem was, no one at Woodward's thought about the competition; (e.g. Montgomery-Ward, T. Eatons, Sears & Roebuck) as in how poorly they were also faring in the fast-changing marketplace, getting caught in the exodus of conusmers moving away from department stores to box stores and 'power centers' that specialize in only one line of goods. In 1987, they sold off the profitable Food Floor division to Safeway to prop up the sinking ship which only prolonged their agony as Woodwards tried to 'find itself' in the marketplace as GM is presently doing with their respective brands of cars. Woodwards lasted just long enough to celebrate their 100th Anniversary in 1991, and declared bankruptcy in the spring of 1992. I only hope GM will realize it can only have so much market share these days, and can profitably carry only two or three brand names here in North America; not the five they have now. Let's hope General Motors doesn't live only to see 100 years in 1908 and then die as this defunct department store chain has done. GM desparately needs GMAC for some degree of financial stability right now, as it finds its right course to profitability and selling it off at this point in time is dead wrong. I'm only hoping they can find the right road making cars and trucks profitably, but if the absolute worst happpens, and the bottom drops out of the car & truck market for GM, they will have GMAC to fall back on. Then, if GM has no other alternative where we lose the 'Motors' in the company name, they can follow the path of Studebaker, Graham-Paige, and Hupp Corporation and simply become an investment house, but at least the shareholders will won't lose it all if it doesn't work out in car and truck manufacturing.
March 30 2006 at 5:13 PM Report abuse Permalink rate up rate down ReplyRegarding:
"> What are they going to do when they have no other assets to sell and have to really run the US operation?
Maybe they'll start to run it properly.
"
The company needs to downsize drastically. The money
from the sale will help fund the blue collar buyouts. In addition, they layed off a little over 1% of
the company a couple of days back. This will be repeated this year until about 7-10% of the
white collar people are gone. That won't
hurt productivity that much as GM needs to utilize better IT tools anyways in it's
marketing/engineering groups (and these tools
are coming on line). So, do the same or more
with fewer people = make (hopefully) some profit. I wouldn't be surprized if GM lays off another
7-10% of the white collar people next year in the
run up to the UAW contract negotiations
(as a sign of good faith). The biggest threat to
GM at the moment is the fact that Delphi is
probably going to ask a judge to throw out their
UAW contracts tomorrow. Then, GM, Delphi, and the
UAW have until the middle of May to work out a
deal, or Delphi gets struck and GM is in a world
of hurt. Look for the GMAC/Isuzu funds to help
avoid this problem.
The bottom line is that the UAW is a leech
on society. They are like a mafia that extracts value out of companies by holding them hostage. Toyota/Honda/Nissan/etc were smart to build
their plants as far away as possible from this parasite. Let's hope that one way or another,
the UAW dies.
Regarding:
"> What are they going to do when they have no other assets to sell and have to really run the US operation?
Maybe they'll start to run it properly.
"
The company needs to downsize drastically. The money from the sale will help fund the blue collar buyouts. In addition, they layed off a little over 1% of the company a couple of days back. This will be repeated this year until about 7-10% of the white collar people are gone. That won't hurt productivity that much as GM needs to utilize better IT tools anyways in it's marketing/engineering groups (and these tools are coming on line). So, do the same or more with fewer people = make (hopefully) some profit. I wouldn't be surprized if GM lays off another 7-10% of the white collar people next year in the run up to the UAW contract negotiations (as a sign of good faith). The biggest threat to GM at the moment is the fact that Delphi is probably going to ask a judge to throw out their UAW contracts tomorrow. Then, GM, Delphi, and the UAW have until the middle of May to work out a deal, or Delphi gets struck and GM is in a world of hurt. Look for the GMAC/Isuzu funds to help avoid this problem.
The bottom line is that the UAW is a leech on society. They are like a mafia that extracts value out of companies. Let's hope that one way or another, they die.
Don't cry for me Argentina! GM is going under, it's quite obvious this bleeding wilddebeest has been stuck in a major artery. Yet the funny thing is that even the vultures don't want to gorge themselves on this rotten carcass.
The stench of this company is only matched by the ignorance of the poor people who work on the line and actually "believe" in their employer. Sadly, management continues to screw themselves, shareholders, and the people who show up each and every day for work.
Oh, but HOW I creamed myself over the new GMT-900's!!
It's like the middle aged woman who still wears ripped fishnet gloves and lace, longing for the days of Motley Crue, Loverboy and The Cars playing over the car stereo.
At this stage of the game it's really too late, they should just force the strike with theunion and be done with it. I suppose appearances need to be kept up so the bankruptcy court will be a bit nicer to them as they restructure. Sad too since they were finally building some cars that were interesting: Solstice/Sky, Aura, Enclave, Camaro concept...
RIP GM.
The profitability of GMAC at the moment depends on GM's credit rating, hence GMAC is not making anywhere near what it should. GMAC makes most of it's profit by borrowing from one source then lending to another, just like anyone else, the worse your credit rating the more it costs you to borrow. By selling a controlling interest in GMAC the idea is that GMAC would then not be tied to GM's credit rating and would be able to borrow on much more favourable terms, in turn they would make more profit, be more competitive when it comes to providing auto loans (for GM cars) hence boost GM's car sales. GM will still own 49% of GMAC so will still take a share of these increased profits. I'm sure another $11BN in the bank will help when it comes to funding the country's largest private health 'club'!
March 30 2006 at 3:13 PM Report abuse Permalink rate up rate down Reply> What are they going to do when they have no other assets to sell and have to really run the US operation?
Maybe they'll start to run it properly.
Seriously, the more GM's fate depends on the desireability of its cars, the better. Maybe that will force them to come to terms with the problems they've been trying so hard to ignore.
Selling off the only profit producing asset paves the way for bankruptcy proceedings doesn't it? Or at least makes it possible - which is leverage when dealing with the UAW.
March 30 2006 at 2:03 PM Report abuse Permalink rate up rate down Reply
