GM hit 18 Year Low, to follow subsidiary Delphi bankrupt?

[Timmeh]

From NEWS.com.au:

SHARES of struggling General Motors closed at their lowest level in nearly two decades overnight as investors reacted to a strike threat at its largest auto parts supplier.

After having dropped more than 30 percent in the past month, shares of the world's largest automaker closed down 5.8 per cent at $US21.29, up from a low of $US20.90 in afternoon trading.
It was the weakest close since the crash of October 1987, said Art Hogan, an analyst at Jefferies, who said some investors are concerned that GM could follow its subsidiary, Delphi, into bankruptcy.

They have the same issues in term of legacy costs," he said

"If they had to follow the same path and file for bankruptcy as well, that would be a major issue."

A spokeswoman for GM downplayed those fears, and said the company had recently obtained major concessions from the union on health care costs.

The comments from the United Auto Workers "are related to Delphi," said spokeswoman Toni Simonetti.

The UAW said Wednesday that the "unprecedented" salary cuts proposed by Delphi could not be accepted by union members and warned that a strike was possible at GM's largest supplier.

"We have been subject to an unprecedented attack on our wages," the UAW said on its website. "Delphi's solution is to force its workers to near poverty-level wages while rewarding executives with $US90 million in bonuses."

A strike at Delphi could interrupt production at GM, a costly interruption at a time where GM can ill afford it.

GM has been struggling with a loss of profit and market share as consumers shy away from its gas-guzzling sport-utility vehicles. It lost $US3.8 billion in the first three quarter of 2005 and has seen sales drop by more than 20 per cent in September and October.

------------------------------------------------

Just highlighted some areas from a current article on www.news.com.au. I can't help but feel concerned if I was a GM shareholder, or enthusiast. I know alot of car manufacturers must be hurting somewhat in the current fuel climate, but losing 3.8 billion US in one quarter of a year is incredible.

I know media is often sensationalism at its finest, but doesn't look too healthy for Generic Motoring at the moment. Would Holden buy itself out of GM ownership if they went bankrupt (not saying it will happen but theorising)? Indeed, is Holden part of the big GM badge or is GM Daewoo a subsidiary? Not sure on how Holden fits into the big picture with this!

Considering GMs military contracts also (like Humvees and other ground support equipment), they must be doing something wrong!

From CNN News: GM sold 257,623 vehicles last month (Oct 2005), compared with 346,058 in the same period last year. GM's light truck sales, which include SUVs, pick-up trucks and minivans, sank 30 percent in October.

From VFacts Oct 2005, Holden sold a mere 13,923 vehicles. Ford Australia sold only 9,192 vehicles. So how does a company that sells 28 times as many vehicles each month (on a bad month, a year before that figure was 37 times as many) as Ford Aus still lose 3.8 billion US in three months. Does anyone else find that remarkable?

And consider this, from the Sydney Morning Herald:

Originally Posted by Sydney Morning Herald

The Federal Government will spend more on protecting overseas missions against terrorist attack and upgrading Australia's intelligence capabilities under a $1.1 billion national security program.

The Australian Security Intelligence Organisation will be provided with $48.1 million for enhanced capability "to meet the demands of counter-terrorism investigations", $5.2 million to enhance intelligence on proliferation, and $3.1 million to build language skills, all over four years. The extra funding for language skills follows a recommendation of the Flood inquiry into Australian intelligence agencies.

Defence will also get $14.8 million over four years for counter-proliferation intelligence, while Australia's overseas intelligence agency, the Australian Secret Intelligence Service, will be given $19.4 million.

Compares those figures to GMs losses, it seems the automotive world for one company in the US is worth far more than national security in Aus in dollar terms, which is small change! Goes to show how much money there is in the US.

Well, that's just my food for thought for this week. Not trying to stir a Ford vs Holden debate (oh no! I mentioned both words in one sentence!), just some food for thought. I know there are lots of issues to consider on all things I have posted about, but I just find some figures amazing when compared side by side that you never hear about much.

Tim

[big_waity]

As blue blooded as I am, would surely be a shame to see GM go under! I coulnd't imagine what life would be like. All those commodore drivers may end up in fords!?!?!

[SSBUB]

me? drive a ford? uh oh!

[Smoke Pursuit]

Nah they will be driving Kias - thats about as close as a holden now (Daewoo)

Mwahahaha.

I cant see the General falling over, but then again you never know.

[Polyal]

pfft...delphi deserve it out: :evil3:

[SSBUB]

if GM went under then possibly Ford could be in trouble too. Ok so there is one less on the market to compete with, but like it or not, ford and holden do share parts etc...ford would have to take up the reins by themselves.
As blue blooded as some are, you woudnt want GM to go under, and vice verca....its the great aussie rivalry with the the holden spin off of GM.

Originally Posted by SSBUB

As blue blooded as some are, you woudnt want GM to go under, and vice verca....its the great aussie rivalry with the the holden spin off of GM.

Agreed 100% on that one. I'm sure they'll pull through.

[347Stroker]

Originally Posted by SSBUB

if GM went under then possibly Ford could be in trouble too. Ok so there is one less on the market to compete with, but like it or not, ford and holden do share parts etc...ford would have to take up the reins by themselves.
As blue blooded as some are, you woudnt want GM to go under, and vice verca....its the great aussie rivalry with the the holden spin off of GM.

Ford and holden share parts...hang on...

I have never seen a Falcon with an M21, or a 10 bolt Chev for that matter, but have seen plenty of Holdens with 9" diffs, Top Loader gearboxes etc..

Hell, even in the V8 Supercars, the Commodores have Ford diffs and suspension geometry, so I guess the parts sharing is one sided.

As for on a greater scale, Borg Warner supply both Ford and Holden, but Ford have been using WarnerFord/borg Warner since the beginning of time, so I cant see it affecting Ford all that much.

I cant see GMH going under though, as they are one of the only profitable businesses in the stable, and would be sold off to regain some cash stocks.

[Dave_au]

Originally Posted by 347stroker

As for on a greater scale, Borg Warner supply both Ford and Holden, but Ford have been using WarnerFord/borg Warner since the beginning of time, so I cant see it affecting Ford all that much.

The issue at hand is that suppliers can obviously produce a particular part for less if they supply more of it - essentually they can absorb their development and cost overheads over a greater number of units, so for instance, 100 units may cost $100 to produce, but 50 units may cost $75 to produce.

[Captain Stubing]

Originally Posted by 347stroker

Ford and holden share parts...hang on...

It's the smaller things that are shared... I remember being a back seat passenger in a work Falcon (might have been about ten yrs ago). Whatever the car was, I pulled off the cover from the interior light, and on the inside there was a Holden part number moulded on the inner surface.

Who knows what other small parts are shared! (Wreckers, I guess!)

[spoonage]

Originally Posted by swanny

It's the smaller things that are shared... I remember being a back seat passenger in a work Falcon (might have been about ten yrs ago). Whatever the car was, I pulled off the cover from the interior light, and on the inside there was a Holden part number moulded on the inner surface.

Who knows what other small parts are shared! (Wreckers, I guess!)

Yeah I noticed that in my old .. *gasp* Holden (sorry) Berlina. It had the light with the 2 map lights and I thought it looked extremely similar to one in the Fairmont. So took it off and low and behold, 2 part numbers, 1 Ford and 1 Holden. Both with their company logos on it.

[4Vman]

Originally Posted by swanny

It's the smaller things that are shared... I remember being a back seat passenger in a work Falcon (might have been about ten yrs ago). Whatever the car was, I pulled off the cover from the interior light, and on the inside there was a Holden part number moulded on the inner surface.

Who knows what other small parts are shared! (Wreckers, I guess!)

Holden and Ford share the same basic BW diff assembly, and Holden want the same 6sd auto too..

[Steffo]

The autmotive world of the future is going to look very different to today's... and I don't see any independant American manufacturers as existing. They're going to go the way of the British Auto Industry, it will just take a bit longer because they're so big. Ford is by no means out of any trouble either.

Toyota is going to be one of the few independants IMO....

[XLS99 Ute man]

its acaully quite scarey when you think about it...

[Hardtopxb]

I hope GM/GMH dont go down the drain,can you imagine having an argument with a Daewoo,Nissan,Volvo, etc etc driver regarding performance potentials, rivalry etc..scary..

[4Vman]

Originally Posted by Timmeh

The comments from the United Auto Workers "are related to Delphi," said spokeswoman Toni Simonetti.

The UAW said Wednesday that the "unprecedented" salary cuts proposed by Delphi could not be accepted by union members and warned that a strike was possible at GM's largest supplier.

How typical of unions... its better to have the company go broke and everyone ends up unemployed and also risk the bankruptsy of their customer and its employee's than make concessions to keep people employed albiet at reduced salary's for a short period...

[Falcon Freak]

Originally Posted by 4Vman

How typical of unions... its better to have the company go broke and everyone ends up unemployed and also risk the bankruptsy of their customer and its employee's than make concessions to keep people employed albiet at reduced salary's for a short period...

The local unions are threatening to do the same to the local automotive industry when the EBAs are due for renewel in 2006. I heard that they are already playing hardball with some component suppliers and are giving indications that will not back off from their wage claims. People in senior positions have told me that if the unions win next year that a lot of local component suppliers will simply begin to wind down their local manufacturing operations.

As to Delphi USA it is odds on that they will go on strike before Christmas. Which will make GM USA's situation worse. Holden seems to be protected from this to some extent as they have a lot of unsold vehicles which could cover any lost production.

Details about GM's cuts

'Interesting' times ahead.

FF

[SSBUB]

GM have closed 9 production assemblies in US just recently....apparently Renualt has some interest in buying GM....*gasp* at the rumours!

[Dave_au]

Originally Posted by SSBUB

Renualt has some interest in buying GM....*gasp* at the rumours!

I would have thought Renault had their hands full already with Nissan - which is having some revival, but nothing like the sales the company experienced in the early 1990s.

I would expect to see a move more from the cashed up Toyota or DaimlerChrysler.

[Electric]

Originally Posted by Dave_au

I would have thought Renault had their hands full already with Nissan - which is having some revival, but nothing like the sales the company experienced in the early 1990s.

I would expect to see a move more from the cashed up Toyota or DaimlerChrysler.

I think you will find the value of the combined DaimlerChrysler is less than what EACH of them was worth before the merger..... so hardly cashed up.

[Dave_au]

Originally Posted by Electric

I think you will find the value of the combined DaimlerChrysler is less than what EACH of them was worth before the merger..... so hardly cashed up.

Well they just had a big friday last week getting rid of Mitsubishi, plus its number 33 out of the Forbes top 2000 companies list - the only motor manufacturer to beat it is Toyota.

http://www.forbes.com./afxnewslimite...fx2348731.html

DaimlerChrysler led large-caps higher, gaining 0.83 eur or 1.92 pct to 44.08. The car manufacturer announced on Friday it will post a one-off gain of 501 mln eur from the sale of its remaining 12.4 pct stake in Mitsubishi Motor Corp.

[4.9 EF Futura]

Not sure if anyone was watching the US markets last night but there was some incredible news and presentations from GM.

30,000 people to be let go over the coming 24 months. Thirty thousand. Absolutely incredible number of people to be let go. All in agreement with the UAW and their Canadian counterpart (eh). Although apparantley a lot to come from early retirements and 'natural attrition'. Setting up some sort of 'jobs bank' where people are put off work, paid (without benefits obviously) so GM has the option to bring them back when (if?) things turn around.

Production costs expected to fall about $7 billion p.a. from $42 billion average... contingent healthcare liability has been cut by around $15 billion. To put this in perspective i think GMH Australia's net profits are around $200 million pa. The amount GM USA spends on healthcare would dwarf GMH Australia's entire turnover. That's scary amounts of money.

Share price still got hammered about $1. US markets are very cruel.

EDIT: But look at the numbers, filing for chap 11 protection is very unlikely

[SSBUB]

toyota wouldnt be so bad buying GM in the scheme of things - as long as they still carry the Holden Badge here in oz and keep Holden in Australia.

[SB076]

Originally Posted by SSBUB

toyota wouldnt be so bad buying GM in the scheme of things - as long as they still carry the Holden Badge here in oz and keep Holden in Australia.

Sorry but did you just mention the H word?

Seriously though I sincerely hope GM stays a float there will be massive amounts of job losses otherwise, plus without anyone to push Ford/FPV the standard of our cars will fall IMO.
Interesting note is that I have been told by someone the Holden Aust is actually making money, dont know if it can stand alone???

[EF, What else?]

"Interesting note is that I have been told by someone the Holden Aust is actually making money, dont know if it can stand alone???"

I don't think Holden could stand alone, they rely on GM components to much, and with there GM supplies drying up if they were to go bankrupt, where would they turn? Ford :jab:

[4.9 EF Futura]

Originally Posted by EF, What else?

"Interesting note is that I have been told by someone the Holden Aust is actually making money, dont know if it can stand alone???"

I don't think Holden could stand alone, they rely on GM components to much, and with there GM supplies drying up if they were to go bankrupt, where would they turn? Ford :jab:

Very good point. GMH itself is reasonably profitable and a strong company - but would have to wonder what happens if can no longer source parts at mates rates from parent company...

[SB076]

Originally Posted by 4.9 EF Futura

Very good point. GMH itself is reasonably profitable and a strong company - but would have to wonder what happens if can no longer source parts at mates rates from parent company...

Something similiar happened when TWR went into recievership I was told a lot of work was done behind the scenes so the HRT could continue racing (TWR owned HRT) - dont think it would be that same with GM and GHM as there would be far more complications.

Holden could source products from almost anyone to continue building there cars, ie Damiler Chrysler, Toyota, Mitsubishi etc yes it wouldnt be pretty but there would be alternatives to sourcing from GM but whethers is viable is another matter

[Dave_au]

Originally Posted by 4.9 EF Futura

but would have to wonder what happens if can no longer source parts at mates rates from parent company...

Sometimes long term supply contracts are better than internal transfer pricing/

[Psycho Chicken]

I bloody well hope not, the Avalon will be renamed the Lexcen and Commodores will all be Avalons.

[SSBUB]

Originally Posted by Psycho Chicken

I bloody well hope not, the Avalon will be renamed the Lexcen and Commodores will all be Avalons.

Well thats what i meant by keeping the holden brand name as australian and still making 'aussie commodores'...but yeah your right, there is the problem of the all important engine!