• Nov 7, 2008
Ford Motor Company's third-quarter earnings report released earlier today basically said, "Times are bad, but we'll be aight." General Motors' just-released earnings report for the same time period says "Holy effin' hell, we're running out of things to cut, please help us!" We'll try and it keep it simple, but the main number is $2.5 billion, as in $2.5 billion lost during the Q3 '08. That compares with a $42.5 billion loss this time last year, but the bulk of that was attributable to a one-time charge against the books. Unfortunately, not only was GM North America revenue down, but the automaker claims the credit crisis has made its way around the world and contributed to losses in GM Europe and GM Asia Pacific, as well as its own financing arm, GMAC.
Here's the bigger story: General Motors burned through $6.9 billion of its cash reserves during Q3 '08, which reduces its bank account from $21 billion at the end of Q2 to $16.2 billion today. That's barely enough for such a big automaker to survive the coming winter, so In response, GM has announced to create an additional $5 billion of liquidity by the end of 2009. Below are the big changes we can expect.

  • Retiming select vehicle programs in North America and Europe by three to 12 months, i.e. lengthening product lifecycles
  • Deferring capacity expansion projects
  • Lower sales promotion spending, i.e. less advertising
  • Less support of dealer network activities and channel consolidations
  • Scaling back production
  • Curtailing discretionary spending (travel, consulting, over-time, etc.)
  • Increase reduction in force from 20 to 30%
Three other things deserve mention. The first is that rumors of the Volt being delayed are untrue. In fact, GM says that spending on the Volt and other fuel economy initiatives will be increased. The second is that GM acknowledged it was considering acquiring Chrysler LLC (though it wasn't named directly), but the merger talks have stopped for the time being. And finally, the main message GM wants to get out via its earnings report is that despite cutting spending even more, it considers government aid essential for its survival. So, ball in your court, Obama.

Follow the jump for a pair of lengthy press releases from GM.

[Source: General Motors]

PRESS RELEASES

GM Announces $5 Billion In Additional Liquidity Enhancement Initiatives
  • Operating actions announced July 15 remain on track, targeted at $10 billion in cash improvements through 2009
  • Asset sales of $2-4 billion in process, including Hummer, ACDelco and Strasbourg facilities
  • Additional actions targeted at further improving liquidity by $5 billion by end of 2009
  • 2009 capital spending reduced by $2.5 billion; key product and technology programs on track
  • Additional GMNA structural cost reductions of $1.5 billion
  • Further working capital improvements of $500 million
  • Further salaried employment cost reductions of $500 million
  • Engaging the U.S. government to aid the domestic auto industry
DETROIT – General Motors Corp. (NYSE: GM) today announced it is taking further actions to improve liquidity and reduce structural cost in response to deteriorating global economic conditions, tight credit market conditions and a rapid retraction of sales in the auto industry.

"Volatility in the world's financial markets, tightening of consumer and business credit and historically-low consumer confidence has created a very challenging environment ," said Rick Wagoner, GM chairman and chief executive officer. "Given the current lack of credit availability we must take further difficult 'self-help' actions ."

Over the past several years, GM has been taking major actions to restructure its business and position it for long-term growth, making dramatic reductions in structural cost, revitalizing its product portfolio with award-winning vehicles, growing aggressively in emerging markets around the world and making demonstrable strides in advanced technology leadership (link to release).

As part of its ongoing restructuring, on July 15, 2008 GM outlined a number of initiatives aimed at improving liquidity by an estimated $15 billion through 2009 (link to release). Those initiatives included internal operating actions within the company's control that are estimated at $10 billion, asset sales estimated at $2-4 billion and capital market activities targeted at $2-3 billion.

To date, the $10 billion in internal operating actions have either been completed or are on track for full execution by the end of 2009.

GM's assets currently being assessed for potential sale include the Hummer vehicle business and brand and its ACDelco all-makes aftermarket parts business, which has distribution channels in more than 100 countries. GM is also evaluating strategic options for its technical and manufacturing center in Strasbourg, France. GM is also analyzing other potential asset sales.

Despite the seizing up of the credit markets, GM c ompleted some capital market transactions (link to release) in September to improve the company's liquidity by $500 million by year-end 2009. While GM has unencumbered assets of more than $20 billion that it could potentially use as collateral for a secured debt offering, the U.S. credit markets remain inaccessible, and the contagion effect on other financial markets around the world provides limited alternatives. Accordingly, t he timing of the $2-3 billion of capital market financing GM initially targeted remains uncertain.

In light of the further deterioration in the U.S. auto market and continued turmoil in the global financial markets, GM is making downward revisions to its liquidity planning assumptions. For planning purposes, GM is assuming U.S. light industry sales volumes of 11.7 million units in 2009, and 12.7 million units in 2010. GM is also revising its average oil price estimates to range between $60-80 per barrel in 2009, and $100-$120 per barrel in 2010.

In addition to its previously announced liquidity and capacity actions, GM is taking further actions to improve liquidity by an incremental $5 billion by the end of 2009.

GM is reducing its capital spending for the calendar year 2009 from approximately $7.2 billion to $4.8 billion. The reductions will be achieved by retiming select vehicle programs in North America and Europe by three to 12 months, and deferring capacity expansion projects. Every automaker is having to adjust portfolios and spending plans to some degree, due to the rapidly changing business conditions and increasing challenging regulatory requirements. Lengthening product lifecycles is a common response to these pressures.

Although the timing of several vehicle programs will be revised, key product and technology programs remain on track. GM has a robust pipeline of competitive new vehicles over the next two years. In GM's largest markets, U.S., China and Europe, 22 new vehicles will be launched in 2009, and 19 in 2010. In the U.S. alone, GM will launch 15 new vehicles through year-end 2010, 14 of which will be fuel-efficient cars or crossovers, including the Cadillac CTS wagon and SRX crossover, Chevrolet Camaro Coupe and Equinox crossover in 2009, and Saab 9-4x crossover, Chevrolet Cruze small car in 2010. Spending levels for the extended range electric Chevrolet Volt and other fuel-economy improvement initiatives to meet increasingly aggressive global fuel economy standards have been increased.

GM is also taking steps to reduce structural cost by an additional $1.5 billion. Actions being employed to achieve the savings include further reductions in sales promotion spending, further reductions in support of dealer network activities and channel consolidations, and further revisions to production scheduling reflective of depressed industry conditions. In response to declining demand, GM will re-rate operations at a number of operations in North America to scale back production, beginning in the first quarter of 2009.

GM also expects to make further reductions in engineering expense due to the aforementioned delays in capital spending. In addition, various types of discretionary spending, such as travel, use of consulting resources, and non-scheduled overtime for hourly and salaried employees, will also be restricted.

A number of working capital improvements, totaling approximately $500 million, are also being taken, including additional inventory reductions, with an emphasis on further cuts in components, buffer stocks and finished goods.

Measures are also being taken to further reduce salaried employment costs in the U.S. and Canada. The cost reduction target has been increased to approximately 30 percent, up from approximately 20 percent as announced on July 15. The reductions will be achieved with further contract and salaried headcount reductions by the recent over-achievement of the salaried window retirement goal, mutual separation programs, and if necessary, involuntary separations. Employment cash cost savings will also be achieved in Western Europe in 2009 as part of its necessary, broad-based labor cost reduction initiatives.

Salaried employees will not receive enhanced variable pay (incentive compensation) in 2009 for the 2008 performance period. GM had previously announced there would be no discretionary cash bonuses for 2008 for the company's executive employees.

In addition, GM suspended the company match for the stock savings (401k) plan in the U.S., effective November 1, 2008, and matching contributions for tuition assistance and other reimbursement programs are being suspended effective January 1, 2009.

Even if GM implements the planned operating actions that are substantially within its control, GM's estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company's estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programs, or some combination of the foregoing. The success of GM's plans necessarily depends on other factors, including global economic conditions and the level of automotive sales, particularly in the United States and Western Europe.

Further detail on the additional liquidity actions and GM's current liquidity position and outlook will be disclosed in a Form 8-K filing with the Securities and Exchange (SEC) later today.

GM has taken a host of aggressive "self help" actions to improve its business, but additional support from the U.S. government to aid the auto industry during this industry downturn is essential. The company has engaged in discussions with various U.S. federal government agencies and Congressional leaders about the important role that the domestic automotive industry plays in the U.S. economy, and the need for immediate government funding support given the economic and credit crisis and its impact on the industry, including consumers, dealers, suppliers and manufacturers. Many in the government have acknowledged the important role of the industry in the national economy and the discussions are ongoing; and at this point, their outcome cannot be predicated with certainty.

"These tough actions, though very difficult to make, demonstrate our commitment and determination to weather this economic downturn and emerge a stronger and more competitive company," said Wagoner. "We remain focused on retaining our focus on product excellence and our commitment to advanced propulsion technology leadership and returning the business to profitability despite the current market conditions."

Finally, GM has recently explored the possibility of a strategic acquisition that it believed would generate significant cost reduction synergies and substantially strengthen GM's financial position in the medium and long term, while being neutral or modestly positive to cash flow even in the near term. While the acquisition could potentially have provided significant benefits, the company has concluded that it is more important at the present time to focus on its immediate liquidity challenges and, accordingly, considerations of such a transaction as a near-term priority have been set aside.

# # #


GM Reports Third Quarter Financial Results

  • Unprecedented economic and credit market turmoil dramatically impacts auto industry and GM results
  • Market volatility results in $1.5 billion in non-cash charges for commodity and currency hedging
  • Company anticipates soft U.S. market for remainder of 2008 and into 2009
  • Emerging markets beginning to show impact of credit crisis

DETROIT –General Motors (NYSE: GM) today announced its financial results for the third quarter of 2008, reflecting rapidly deteriorating market conditions in the U.S., slowdowns in other mature markets around the world, and continued losses at GMAC Financial Services (GMAC).

During the third quarter the turmoil in the global credit markets resulted in the worst financial crisis in more than 70 years. The upheaval has had a dramatic impact on the auto business in particular, especially in the U.S. and Western Europe.

Tight credit, rising unemployment, declining income, falling stock markets, and continuing deterioration in the housing market in the U.S., resulted in an abrupt halt in consumer spending, with most consumers exiting the vehicle market. Many of those still intending to purchase vehicles were denied financing, or found the cost of financing prohibitive.

"The third quarter was especially challenging for the auto industry. Consumer spending, which represents close to 70 percent of the U.S. economy, fell dramatically, and the abrupt closure of credit markets created a downward spiral in vehicle sales," said Rick Wagoner, Chairman and Chief Executive Officer. "The U.S. government's actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy's and the auto industry's recovery, but further strong action is required."

GM reported a net loss of $2.5 billion or $4.45 per share for the third quarter, including special items. That compares with a net loss from continuing operations of $42.5 billion or $75.12 per share in the third quarter of 2007, which included a non-cash charge of $38.3 billion to establish a valuation allowance against some of the company's net deferred tax assets.

On an adjusted basis, GM posted a net loss of $4.2 billion or $7.35 per share, compared with a net loss from continuing operations of $1.6 billion or $2.86 per share in the same period last year.

Revenue for the third quarter was $37.9 billion, down from $43.7 billion in the year-ago quarter, reflecting dramatic sales declines across the industry driven by unstable market conditions, instability in the credit markets and dramatic retraction in consumer demand, especially in North America and Europe.

GM recorded net favorable charges of $1.7 billion for special items in the third quarter. Included in the charges was a curtailment gain of $4.9 billion resulting from the UAW Settlement Agreement becoming effective. The curtailment represents the accelerated recognition of net prior service credits, largely relating to the 2005 GM UAW healthcare agreement, scheduled for amortization after January 1, 2010.

The curtailment was recorded because GM's UAW retiree health plan will not exist after January 1, 2010, and therefore no further basis for deferring unamortized prior service credits exists beyond that date. The $4.9 billion curtailment gain was partially offset by a non-cash $1.7 billion settlement charge related to the elimination of post-65 salaried retiree healthcare coverage, including the cost of increased pension benefits that were announced in July as part of GM's operating actions to improve liquidity as well as the recognition of accumulated deferred losses related to the healthcare plan.

In addition, GM reported charges of $652 million relating to its commitments as part of Delphi's bankruptcy proceedings, $251 million for impairment of investments in GMAC, and $641 million in restructuring-related and other charges. Details on these and all other special items are in the financial highlights section of this release.

GM Automotive Operations

GM reports its automotive operations and regional results on an earnings-before-tax basis, with taxes reported on a total corporate basis.

GM recorded an adjusted automotive loss of $2.8 billion ($947 million reported loss) in the third quarter 2008. The loss compares with adjusted automotive earnings from continuing operations of $98 million in the third quarter of 2007 (reported net loss of $1.6 billion).

The results reflect losses in GM North America (GMNA) driven largely by the U.S. industry volume decline of nearly 20 percent, and shifts in product mix. In addition, Europe saw rapid auto market contraction, leading to sharply lower GM Europe (GME) sales volume in the third quarter. GM Asia Pacific (GMAP) results were down due to commodity hedging charges and moderating demand in key markets including China, Australia and India. These losses were partially offset by very strong results in the GM Latin America, Africa and Middle East (GMLAAM) region.

GM's automotive results in the third quarter include $1.5 billion of expenses related to mark-to-market changes in the value of GM's commodity and foreign exchange hedging contracts, due almost entirely to falling commodity prices.

GM sold 2.1 million vehicles worldwide in the third quarter, down 11 percent year over year. Sales in GMNA were down 19 percent compared to third quarter 2007. GM global market share was 13 percent, down 0.7 percentage points compared with the third quarter of 2007, due largely to weakness in North America and Western Europe.

GMNA

GMNA revenue and earnings in the third quarter reflect dramatic industry deterioration and a sharp fall in consumer spending driven by the weak U.S. economy and a very harsh credit environment. Earnings were impacted by lower volumes, rapid shifts among U.S. consumers away from trucks and SUVs toward smaller cars, and unfavorable mark-to-market adjustments on commodity hedging.

GME

GME revenue was down 15 percent in the third quarter amid industry-wide volume declines ranging from 10 to 35 percent in certain major markets including the U.K., Spain and Italy. Overall GME sales volume was down 12.3 percent year over year, while up 10 percent in Eastern Europe. Earnings were largely impacted by the lower volumes, and unfavorable mix and negative pricing. In addition, unfavorable foreign exchange relating to the weakening of the British pound and the mark-to-market of commodity hedges negatively impacted earnings. Results were partially offset by favorable structural cost performance.

GMAP

Results in GMAP were impacted primarily by unfavorable mix and negative pricing. In addition, GMAP results were impacted by unfavorable hedging, which was largely offset by the favorable foreign exchange impact of exports.

Industry sales for the region were down by 134,000 units or 2.7 percent in the third quarter. Despite the slowdown, GM reported a 2.6 percent increase in sales volume, and modest gain in market share. Markets in the GMAP region are expected to remain soft through the fourth quarter, with further slow downs anticipated in Australia, China, South Korea and India as the contagion of the faltering U.S. economy and tightening credit conditions expand to other regions around the world.

GMLAAM

GMLAAM saw double-digit revenue growth, up 15 percent, and earnings, up 37 percent, in the third quarter, fueled by strong demand for Chevrolet and Cadillac products. GMLAAM sales volume was up more than 3 percent compared to the same period last year. Sales were especially strong in key South America markets, including Brazil, Chile, Ecuador and Peru, each setting all-time GM quarterly sales records. The region is on track for another year of record sales, although the effects of the global economic slowdown on credit availability and consumer behavior are likely to result in some moderation of demand in the fourth quarter.

GMAC

On a standalone basis, GMAC reported a net loss of $2.5 billion for the third quarter 2008, down $900 million from the year-ago quarter. GM reported an adjusted loss of $1.2 billion for the quarter attributable to GMAC, as a result of its 49 percent equity interest.

GMAC's automotive finance operation experienced pressure from lower used vehicle prices and weaker consumer and dealer credit performance. GMAC's ResCap operations reported further losses as a result of adverse market conditions, which drove high credit-related provisions and weak revenue. GMAC's Insurance business remained profitable.

Cash and Liquidity

Cash, marketable securities, and readily-available assets of the Voluntary Employees' Beneficiary Association (VEBA) trust totaled $16.2 billion on September 30, 2008, down from $21.0 billion on June 30, 2008.

The change in liquidity reflects negative adjusted operating cash flow of $6.9 billion in the third quarter 2008, driven by the industry-wide slowdown in vehicle demand and compounding credit crisis, especially in North America and Europe. During the quarter, GM drew the remaining $3.5 billion of its secured revolving credit facility and made $1.2 billion in payments to Delphi as required by agreements between the companies as part of Delphi's bankruptcy proceedings.

GM expects adjusted operating cash flow in the fourth quarter to be much improved versus the third quarter, and more consistent with the first half of the year. Improvements in fourth quarter cash flow are largely driven by anticipated improvements in working capital in North America relating to sales allowances, and lower fourth quarter finished vehicle inventory in Europe.

Improving its liquidity position remains a top priority for the company. In response to deteriorating market conditions, GM announced today that in addition to the $15 billion in liquidity initiatives it outlined in July 2008, it has identified $5 billion of incremental liquidity actions. Cumulatively, GM has announced actions aimed at improving liquidity by $20 billion through 2009. To date, $10 billion in internal operating actions have either already been completed or are on track for full execution by the end of 2009.

Even if GM implements the planned operating actions that are substantially within its control, GM's estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company's estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programs, or some combination of the foregoing. The success of GM's plans necessarily depends on other factors, including global economic conditions and the level of automotive sales, particularly in the United States and Western Europe.

Further detail on the additional liquidity actions and GM's current liquidity position and outlook will be disclosed in a Form 8-K filing with the Securities and Exchange (SEC) later today.


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    • 1 Second Ago
  • 83 Comments
      • 6 Years Ago
      Bad GM, Bad company! No dinner for you tonight. Cash ain't gonna do it for ya. What did you do with your billions in profits while you were prostituting Tahoe's, Suburbans, and (ack!!!) Trailblazers??

      Nothing short of a engineering and product strategy renissance will save you.
        • 6 Years Ago
        Yea they should have been like toyota and offered the tundra, Taccoma, Highlander, and 4-runner.
        • 6 Years Ago
        and camry, prius, corolla, yaris, better worldwide strategy. Thanks for proving my point.
      • 6 Years Ago
      The CEO compensation scapegoating is so stupid, and could only be dredged up by ignorant people who can't do math. That, or pro-union people who've completely lost common sense.

      Let's say for sake of argument that Richard Wagoner makes $400 million dollars in cash a year. GM lost 2.5 billion dollars this quarter. So in the span of a quarter, that would mean Wagoner made 100 million dollars (400mi/4).

      What's $2,500,000,000 - 100,000,000?

      $2.4billion. Gee, not quite evening out GM's losses is it?

      Point is, CEO pay is a DROP IN THE BUCKET compared to losses from union benefits and pension. You need to cut the fat where it's the worst, and that's with union compensation. Cut the union fat first, because that's where it's worst.
      • 6 Years Ago
      Maybe another major war will break out & allow these Companies to start making real money.
      • 6 Years Ago
      GM is already over the point-of-no-return. without drastical restructure in the very short period and given its currently stringent cash position, i'm not optimistic about its viability even government providing the requested funds.
      • 6 Years Ago
      Ah accountability. Its not just for executives. Its for all employees in my opinion.

      You can put your hands over your eyes and ears and pretend not to hear, but union leaders negogiated contracts that have basically made this company unmanoverable.

      It is unfortunate but I think the only way to fix this INDUSTRY is to Let GM go bankrupt. Let it be a lesson to us all that nothing in life is guarrenteed and that if you suck enogh blood out of a company, sooner or later it will die.

      Same lesson should be learned by government , it can't suck the taxpayer dry or continously run a huge deficit. Sooner or later to run out of money and the debt collector comes and demands payment. We all need to face that fact.

      Some have faced it with house foreclosures already.
      • 6 Years Ago
      attention Russell :

      Bare something in mind fella before critising imports and that is GM and Ford products are classified as imports all over the world aswell so the rest of the world can react against them in all the other countries of the world as you would like to see it happen in the US.

      What will come of the GM and Ford then ... have a think about it champ !!
        • 6 Years Ago
        Big Rocket - you are correct and i offer my apology. I did think more about my comment afterwards and conceded it was wrong - and ignorant.

        PLEASE ACCEPT MY APOLOGIES ... !!

        However, my comment about GM, Ford and the Motor Industry in general stands and as far as i am concerned - i tell it the way is.

        We are a good bunch of people over here in Oz and have always supported the US and UK in battle and continue to do so.

        This discussion is about cars and that's were i will like to leave it.

        I offer goodwill to all

        Cheers


        • 6 Years Ago
        Shane From Australia @ Nov 7th 2008 9:24PM wrote: "the arrogant American population..."

        What? Just because two anonymous Autoblog users (Russell and zamafir), presumably Americans, disagree with you, now all of a sudden the American population is arrogant? Or does this have to do with a laundry list of the perceived sins of the United States, such as the war in Iraq and Afghanistan, of which your country Australia is a member in the coalition? Your anti-American attitudes are so very misinformed, it borders on being ignorant. But I, for one, would never make the mistake of assuming all Australians are ignorant just because of one bad example.
        • 6 Years Ago
        Att Jamafir - believe it or not but the Falcon and Commodore in Australia is regarded as one of the poorest quality, most unreliable and troublesome vehicles to own and have seen mass sales reductions over the past few years.

        Better still - Toyota alone sells more vehicles then Holden and Ford combined ... PERIOD !!

        As i said, if the arrogant American population wants to make it hard for 'imports' into the US then just remember American owned automotive subsidaries all around the world are imports aswell and the population of the rest of the world can easily play the same game.

        What happens to GM, Ford and Chrysler then ... EXACTLY

        Remember - all automotive companies are mult-national organisations competing worldwide so what ever you idiots try to do against the Japanese or European manufactuers in America the rest of the world can do the same against American brands everywhere else.

        Worth thinking about before before jumping on 'ya high horses.

        And what absolute pure rot that if GM and Ford collapsed then the rest of the global automotive market will aswell ... what absolute shear ignorance at it's best.

        In case you haven't buddy but the world consists of many great car manufactuers with most of them not only engineering far superior products then GM and Ford but actually have a positive, profitable and well-organised culture which is damn sight more i say about your beloved brands.

        Truth be told, If GM and Ford collapsed then most of the world wouldn't give two-hoots while the rest of the great brands including Toyota, Mazda, Honda, Subaru, Mitsubishi, Nissan, Hyundai and the VW group will be all to glad (and quick) to fill the void.
        • 6 Years Ago
        "Bare something in mind fella before critising imports and that is GM and Ford products are classified as imports all over the world "... and 'all over the world' they're selling fine. Look at Ford's numbers in China or Europe (not a tiny, smaller then california market like australia). IF GM/Ford began to fail worldwide then the entire auto industry world wide would collapse. GM and especially Ford make awesome products overseas. Or do you really hate the caprice and falcon that much
      • 6 Years Ago
      Looks like they're finally citing examples of ridiculous spending and inefficiency other than "THOSE BLASTED UNIONS!"
      • 6 Years Ago
      Why don't they limit the executive compensation to $1 million pa. It is still a lot of money to spend.
        • 6 Years Ago
        @alex:

        When Steve Jobs re-took the helm at Apple, his pay was $1 and a lot of stock options.

        I'm all for paying execs a good wage (something like $300k), but the rest of the compensation should be performance-based, either as bonuses or options, not guaranteed payments. The point is to make the executives goals aligned with the goals of the company and shareholders, otherwise it's just a perverse situation.
        • 6 Years Ago
        Rick Wagoner is no executive. He's one of the biggest dummies in the corporate world! Fault for GM's problems rests with the top. And an idiot like Wagoner should've been dumped ages ago by GM shareholders.
        • 6 Years Ago
        Anything crossing the border assembled or not, Chevy Ford or Honda.
        • 6 Years Ago
        @ soccer mom
        Steve Jobs essentially is paid based on the performance of the company. So if Apple loses money, he does too.
        • 6 Years Ago
        The only way to help the Big3 is to tax import cars.
        You can drive whatever you want, if that happens to be an import you'll just have to pay more.
        • 6 Years Ago
        "If you reduce the pay, why would anyone take the job? They could make the same amount elsewhere with less responsibility!"

        The same could be said for the president of the United States.
        • 6 Years Ago
        Who would take the job? Precisely! Make those idiots that were at the helm of this mess take a hike and hire people who are so confident in their ability to turn a company around that they take their pay in stock options only.
        • 6 Years Ago
        In addition to what Alex stated, in the face of BILLION dollar losses, cutting executive compensation would have little impact. GM is a company that is fundamentally dysfunctional. It must be allowed to fail.
        • 6 Years Ago
        If they cut the gravy train at the top they might be reduced to people who are there because they have a passion for the company and want to turn it around. Either way this current management team is not worth what they are being paid. If they were this company would not be in this position. It is appalling that they could report this kind of loss and horrible cash flow position and then make a few small trimmings. They just announced they wont be around in a few months at this rate and still don't have the courage to make huge cuts. If they had real courage they would file for protection and get the courts to help them cut the company in half. Just coasting towards an iceberg like this and expecting the government to bail you out is madness.

        The only positive I can see to all of this is that if one of the big three goes down it will reduce competition and improve things for the other two since the market obviously isn't big enough for all three. It is a tough pill to swallow but we could come out of it with two strong North American Automakers instead of three welfare cases that can't compete.
        • 6 Years Ago
        Pay them a basic salary ($300k?)
        Give them a "performance" bonus, up to another $300k
        Finally give them stock options up to a maximum of say $500-700k worth of shares - HOWEVER, don't let them excercise these options for atleast 3 to 5 years - this will prevent short term gains - hell make it 10 years if you really want to.


        On another note, when the Honda or Toyota is built at an American plant, by an American worker, using materials some of which are sourced from American companies then it is no longer an import, and does not affect any sort of trade defecit.

        And there is a reason why the Japanese companies are dominating the auto industry now, they are not producing junk like the big 3.

          • 6 Years Ago
          may i ask......just what is your experience in the auto world?300k....hell no...lets cut meat...not trim fat
          • 6 Years Ago
          I'm pretty sure anyone can survive on atleast $300k a year, it is not like these people are doing rocket science.

          I can understand if the people tasked with comming up with innovative ways of powering a car got paid alot more, but the management of the company for the most part only push papers, play golf, etc.
        • 6 Years Ago
        ckm, you should be comparing apples to apples. Rick's total compensation comes to under $10M. Steve Jobs had a salary of $1, but nearly $600M (yes, that is 60 times of what Rick made) in stock options, back-dated, mind you (a legal, or sometimes illegal way to steal money from shareholders).
        • 6 Years Ago
        We don't need GM, we have Toyota, Nissan, Honda right?
        Buying foreign = more trade deficit
        More trade deficit = your currency down the drain
        If US auto industry fails there will be time when you won't be able to afford that new Camry.
        So go ahead, keep buying imports.
        • 6 Years Ago
        @Russell

        So will I be paying the tax then on a Honda made in Ohio but not a Chevy made in Canada or a Ford made in Mexico?
        • 6 Years Ago
        You're absolutely right. WTF are we bailing these fools with overpaid salaries out? 20-30$ million execs while the highest paid guy at Toyota makes $1million. Execs making 350+ times more than the regular employee. Don't tell me they are worth the money when the company is on the verge of bankruptcy. Only in the U.S. is the payscale so screwed up.
        • 6 Years Ago
        start at the top. and cut some of those crazy salary's.

        • 6 Years Ago
        That's the logical thing to do. But the corporate boardroom is anything but logical.

        Buuh bye GM. Times are changing. We really don't need GM anyway. Survival of the fittest. They're big and bulky, they're slow to react. Dinosaur anyone?
        • 6 Years Ago
        I have worked for GM in the past and am a contractor for GM. I know what I am talking about.

        I know their job stress, the kind of responsibility they have to shareholders.

        I repeat, $1 million pa is more than sufficient money as compensation. You will easily find smart and hard working people for that kind of salary.

        They should be given company stock; even the company makes profit, they get bonus. Google is an excellent example of that strategy
      • 6 Years Ago
      GOOD GRIEF...

      How did any business get started in this country, without socialistic big government endowment?

      IF GM cannot find it's way to do business, with all the MBAs and everything else they have.. Then they need to clear out, and let someone else do that business. Under the GM name, or under a new name when someone buys the liquidated capital assets.

      Cars may be in lower demand, but the demand isn't ZERO. Americans will likely be GLAD to buy a new american car built by people who know how to build cars, not just shuffle money out the door.

      Someone will buy those capital assets, and hire workers who are capable of using those assets, and start to build new cars.

      It would be a rough transition, but this slowly bleeding to death, and taking the tax payers down with the ship is NOT ACCEPTABLE.

      If you are so concerned for the labor at GM and it's suppliers, then why aren't the union guys complaining that their white-collar compatriots are being discarded without any sort of real consideration? What about THOSE workers, who might actually have some advanced skills, and debt for that education...

      If the laborers are so CONCERNED ABOUT GM, now...

      WHY THE HELL DOESN'T IT SHOW WHEN IT COMES TIME TO NEGOTIATE UNION CONTRACTS???

      The unions who are so afraid of these companies going down, and are CLAMORING about a few executives and their pay rate, have SOAKED the company at every given opportunity, and have only thought about themselves. Wagoner doesn't get a pass on this, but the unions have bitten the fingers off of the hand that feeds them, and now they want the tax-payers' hand to chew on.

      NO. Not acceptable. Not EVAR. You don't get to use the EVER-SO-WILLING government, and the IRS Agency of the government to come after MY income, and millions of others, with the muzzle of a gun, to pay you for your mistakes. The Government isn't going to be your bedfellow without dictating some terms, either. Good luck with that one.

      You have made your bed for DECADES. Now you get to lie in it, and then try to re-build the auto industry when you have finally gotten a FRAKKIN' CLUE!

      Until you (GM, unions, auto industry as a whole) can build something that makes sense for me to voluntarily pay you for, you don't get my money.

      FIX IT. It isn't my damn job to make money for you.
      • 6 Years Ago
      • 6 Years Ago
      It all started 25+ years ago.
      American cars stunk. Crap. Junk for the most part.

      People started buying foreign. Today, there is a generation of adults who were taught as children that American cars were junk, and their parents were right, at the time.

      Those children now buy only Toyotas or Hondas from what they learned at an impressionable age from their parents.

      Quality has improved, but no one believes it. Sure, there are still some marginal pieces out there, but they have made a good deal of progress.

      But it's too late. Company name and car name brand equity is practially ZERO for the big three, IMO.

      I don't know what could fix this. Throwing money at the problem certainly wont.

      It wont fix the "Whats good for GM is good for America" mentality.

      It wont fix the 1950's/60's and early 70's attitude that is still embedded in GM and the Union. Yep, both sides are to blame here, IMO.

      It wont fix arrogant dealerships from trying to screw customers in the service department. Been there, done that as a customer with my Buick Enclave.

      It wont fix getting the Nintendo/Wii generation children over from Toyota and Honda to buy GM. They ain't comin back.

      I try to support GM, but it's getting hard to do. I do like the new Camaro, though. All these nice cars are coming out at a bad time. But GM could have a go at it if they can get to 2010.

      Issue warrants with the loan. No bailout. A LOAN. The gov't liquidates if they dont pay, just like any other debtor would.

      • 6 Years Ago
      Bailout?? Since when are low intrest loans being given money when you HAVE to pay it back??
        • 6 Years Ago
        When you can't pay them back. There's no collateral on these loans. You know, the same god damn irresponsible lending that created the economic down tern in the first place.
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