4 day week at Holdens

[jpd80]

Originally Posted by bobthebilda

it may not be stock levels, they could have just realised that making less cars is probably more profitable than making alot of cars for $30000 and then selling them to fleets at $25000. Far better to lose $5000 on 1000 cars, than to lose $5000 on 5000 cars.

Strange as it seems, Holden could be in a similar position to Ford where
rebalancing the line to lower rates is to expensive and time consuming.

As Ford finds adding a Saturday or two is more practical, so to it seems
Holden feels dropping a shift every week does similar for them...

[FPV GTHO]

Originally Posted by jpd80

An example of a smaller plant and workforce being worked hard
that's contrasted by a large plant and workforce under producing....

You tell me which plant is more efficient.

The sad thing is, its really only relative. Just 6 years ago Holden were doing ~150K units on triple shifts but Ford could could put out 100K on a single shift. Had Ford run on triple shifts, with appropriate product demand and parts supply why couldnt they push out 300K units running the same schedule as Holden?

[GS608]

Originally Posted by Chilliman

They've really backed themselves into a corner haven't they - the media may go on about the Falcon being replaced by the Taurus, but at this rate the Commodore could well be replaced by the Cruze!!!

and you know what, if it did current and future Commodore buyers would still buy that over the Falcon because it's still a Holden : Although Ford would have majority of the large car class it would shrink as the Cruze sinks 4k sales a month

[bobthebilda]

Originally Posted by XR-CHIEF

and you know what, if it did current and future Commodore buyers would still buy that over the Falcon because it's still a Holden : Although Ford would have majority of the large car class it would shrink as the Cruze sinks 4k sales a month

But the issue for Holden is that they will be slowly replacing a $36000 drive away price car (commodore) with a $22000 drive away car (cruze).
And the cruze will have alot more competition in its class than the commodore has. All things being equal (change over from cruze to commodore in the future), holden will have to take out 40% of its costs, just to be in same position as now.

[BENT_8]

Originally Posted by bobthebilda

Then in early may 2009, they stopped afternoon shift, and had day shift workers working on week, and then afternoon shift workers working the day shift the nex week. And that has basically been going on until now. So come July 2010, day shift workers will be working 4 days a week, and then afternoon shift 4 days the next week, most will be working 4 days a fortnight. Its probably what you would class as a part time job.

Not even close.
Of the current workforce, 85% are back on full time, the other 15% are on part time by choice.
Its been like this for the last 3 months.

As has been said, they are just clearing old stock.

I do however doubt the second shift will go ahead.
They are talking 500 extra workers and building 250-70 on day and 200ish on arvo's but i dont think the demand will be there.

[Fordman1]

Originally Posted by BENT_8

Not even close.
Of the current workforce, 85% are back on full time, the other 15% are on part time by choice.
Its been like this for the last 3 months.

As has been said, they are just clearing old stock.

I do however doubt the second shift will go ahead.
They are talking 500 extra workers and building 250-70 on day and 200ish on arvo's but i dont think the demand will be there.

And there-in lies the problem...

They are clearing old stock (with downdays !!).

Poor planning, over production, no idea once again !! (still).

13 days is 65 % of a months production - you can't do that and come close to making money !! I'm predicting there will be no new employees.

Poor (part time) workers getting shafted by "Government motors" again !!

[jpd80]

So, while Ford has right sized production capacity and employees to current market needs,
Holden is trying to get by with a higher line speed and more employees working less days per week.
Looks like Holden are "trimming" until the market catches their current line speed which
seems a very odd thing to do, it's a gutsy move because things can go pear shaped real quick.

[cosmo20btt]

Originally Posted by Joe5619

I just can't understand how they can be cutting back in a year they have double digit growth in sell through. It can only mean they have massive stock levels. Yet over at Ford, they simiply can't build enough & need to work Saturdays..


I do feel sorry for the workers, half pay every 2nd week & now 8 weeks of 4 days only!! Ashame some of those works cant be sent to Ford

This makes a bit of sense as over time I have heard mummers that Holden had always put through any purchase orders as sales, so if some one did not purchase a Holden it still went though as a sale. However very hard to prove.

[ZA-289]

Holden are too afraid to sack workers beucase of the negative publicity. Its as simple as that.

[Brazen]

Originally Posted by bobthebilda

But the issue for Holden is that they will be slowly replacing a $36000 drive away price car (commodore) with a $22000 drive away car (cruze).
And the cruze will have alot more competition in its class than the commodore has. All things being equal (change over from cruze to commodore in the future), holden will have to take out 40% of its costs, just to be in same position as now.

I dont think Cruze will be taking sales away from Commodore, not to a large extent anyway - they are two different markets and price points. If this is the case Commodore sales wouldnt have increased since Cruze came on the scene.

People have to remember that large cars are only 10% of the market. Cruze has much bigger fish to fry: i30, Corolla, Mazda3, Focus, Tiida, Civic, etc. And to a lessor extent take fleet sales from Camry and future 4 cylinder Falcon.

[My poor XF]

Originally Posted by Brazen

People have to remember that large cars are only 10% of the market. Cruze has much bigger fish to fry: i30, Corolla, Mazda3, Focus, Tiida, Civic, etc. And to a lessor extent take fleet sales from Camry and future 4 cylinder Falcon.

Just on the cruze as a fleet car, dad's corolla is up for change over and he had planned on getting a cruze, only to be told that the catholic education department, here in SA anyway, won't offer them anymore due to the fuel hose recall and some cars having fuel sprayed over the engine.

I don't know to what extent this sort of issue could effect the Cruze and it's fleet appeal. Suffice to say it can't be good.

A new Mazda 3 will be the corolla's replacement.

[Wally]

So if the shifts have been shortened to sell old stock, does that mean the VF is around the corner?

[Bud Bud]

Originally Posted by My poor XF

Just on the cruze as a fleet car, dad's corolla is up for change over and he had planned on getting a cruze, only to be told that the catholic education department, here in SA anyway, won't offer them anymore due to the fuel hose recall and some cars having fuel sprayed over the engine.

I don't know to what extent this sort of issue could effect the Cruze and it's fleet appeal. Suffice to say it can't be good.

A new Mazda 3 will be the corolla's replacement.

What an odd conclusion considering Toyota's recent global history and the fact that they have just been slapped with a big fine by the US for not coming clean soon enough about those problems! I wonder if the Catholic admin has banned any Toyotas as replacements as well?

I think Holden would be smart to wind down production before the release of a new car, otherwise old stock would still need to be discounted heavily regardless anyway. I would have thought that this would be considered prudent management rather than some what of a shell shocked, no idea, brain dead decision made by an inept company.

I also would have thought that if the changes are not real significant from the VE as we know it (ala VE II) and they still end up selling from 50% to nearly 2 to the 1 Falcon more, even after the car is 4 years old, then this will also help their bottom line as well. The FG will be 2 years old by then and Ford will also need to look to the future. Can they afford to carry the FG for 4 years and then only have a minor upgrade? They probably will have to and I would think that this would be smart also.

Considering the hell that the Auto industry is emerging from and the changed (perhaps for ever) auto making climate that everybody is dealing with, I don't think this is as bad as some here think or even wish. We are still very luck to have both still going in this country and are also indeed lucky to still have Toyota here as well. We still do not know what ramifications their global problems will have on our local operations here as they are still dealing with it themselves now. They may be made to close selected plants around the world just to survive into the future as well, who knows.

Being in S.A. I hope that Holden gets back to somewhere near where it was before the crisis as we don’t need another in MMAL here.

Bud Bud.

[bobthebilda]

Originally Posted by Brazen

I dont think Cruze will be taking sales away from Commodore, not to a large extent anyway - they are two different markets and price points. If this is the case Commodore sales wouldnt have increased since Cruze came on the scene.

People have to remember that large cars are only 10% of the market. Cruze has much bigger fish to fry: i30, Corolla, Mazda3, Focus, Tiida, Civic, etc. And to a lessor extent take fleet sales from Camry and future 4 cylinder Falcon.

Its not a matter of the Cruze replacing the commodore in sales, its a matter of Holden deciding to build large quantities of commodores in the first place. If most commodores are going to fleets, and are selling below manufacturing costs (as they havent made a profit for a long time), then why would there be any desire to build such a car. After all most companies exist to sell a product for more than make/ buy it at.

Holdens intention has always been to try and keep the line going, thus instead of supplying the market with 60,000 commodores, they can make 30000 cruzes and 30000 commodores. Holden arent supplying the market, they are trying to create the market, at a huge cost to their bottom line.

[Brazen]

Originally Posted by bobthebilda

Its not a matter of the Cruze replacing the commodore in sales, its a matter of Holden deciding to build large quantities of commodores in the first place. If most commodores are going to fleets, and are selling below manufacturing costs (as they havent made a profit for a long time), then why would there be any desire to build such a car. After all most companies exist to sell a product for more than make/ buy it at.

Holdens intention has always been to try and keep the line going, thus instead of supplying the market with 60,000 commodores, they can make 30000 cruzes and 30000 commodores. Holden arent supplying the market, they are trying to create the market, at a huge cost to their bottom line.

Holden last year made an operating profit, they made a book loss by writing down the value of assets and by a one-off charge of closing the FamilyII plant. Companies are quite eager to instigate asset right downs and 'one-off charges' as these reduce the corporate tax payable, and can be used in some cases as carry forward losses.

Operating profits are more important to gauge the intrinsic viability of an entity: ie the money coming in is more than the expenses going out.

Some companies run at an operating loss, but state a book profit by revaluing and increasing the value of their assets, such as land, brand 'goodwill', capital equipment etc. The problem is these profits can only be realised if these assests are sold, and that would mean no more business.

My point is that if Holden can be running at a operating profit during one of the most horiffic years in the car industry whilst also losing their biggest export contract, then I am confident that Holden is quite secure.... for the time being.

As for production, the Commodore is readily available for US, middle east and UK customers. Soon as these markets recover, so will Holden. Imagine if the Cruze takes off and is selling 4000 a month alongside 5000 Commodores, utes and Statesmans. That could mean Holden selling 9000 local Holdens a month! Add in the few hundred they sell in NZ a month, 1000 a month they sell in middle east and 3000 a month they may sell as police cars in the US and add in potential Cruze exports... well they could be looking pretty good.

[irlewy86]

Originally Posted by Brazen

Holden last year made an operating profit, they made a book loss by writing down the value of assets and by a one-off charge of closing the FamilyII plant. Companies are quite eager to instigate asset right downs and 'one-off charges' as these reduce the corporate tax payable, and can be used in some cases as carry forward losses.

Operating profits are more important to gauge the intrinsic viability of an entity: ie the money coming in is more than the expenses going out.

Some companies run at an operating loss, but state a book profit by revaluing and increasing the value of their assets, such as land, brand 'goodwill', capital equipment etc. The problem is these profits can only be realised if these assests are sold, and that would mean no more business.

My point is that if Holden can be running at a operating profit during one of the most horiffic years in the car industry whilst also losing their biggest export contract, then I am confident that Holden is quite secure.... for the time being.

As for production, the Commodore is readily available for US, middle east and UK customers. Soon as these markets recover, so will Holden. Imagine if the Cruze takes off and is selling 4000 a month alongside 5000 Commodores, utes and Statesmans. That could mean Holden selling 9000 local Holdens a month! Add in the few hundred they sell in NZ a month, 1000 a month they sell in middle east and 3000 a month they may sell as police cars in the US and add in potential Cruze exports... well they could be looking pretty good.

You forgot the $200 million loan from the government.

Operating profit on paper not a profitable business by nature.

[Gaz]

Originally Posted by Wally

So if the shifts have been shortened to sell old stock, does that mean the VF is around the corner?

Yep, just around the corner, through that set of lights, out onto the highway, round the bend, through the roundabout, back onto the highway and in 27,000km you have reached your destination :monkes:

[Brazen]

Originally Posted by irlewy86

You forgot the $200 million loan from the government.

Operating profit on paper not a profitable business by nature.

I think it was a line-of-credit not a loan, in case General Motors collapsed so that Holden could be self sufficent. Im pretty sure it was not exercised. And even if it was it would have been considered a liability on their balance sheet and not add to their operating profit.

[bobthebilda]

Originally Posted by Brazen

Holden last year made an operating profit, they made a book loss by writing down the value of assets and by a one-off charge of closing the FamilyII plant. Companies are quite eager to instigate asset right downs and 'one-off charges' as these reduce the corporate tax payable, and can be used in some cases as carry forward losses.
Operating profits are more important to gauge the intrinsic viability of an entity: ie the money coming in is more than the expenses going out.
Some companies run at an operating loss, but state a book profit by revaluing and increasing the value of their assets, such as land, brand 'goodwill', capital equipment etc. The problem is these profits can only be realised if these assests are sold, and that would mean no more business.
My point is that if Holden can be running at a operating profit during one of the most horiffic years in the car industry whilst also losing their biggest export contract, then I am confident that Holden is quite secure.... for the time being.
As for production, the Commodore is readily available for US, middle east and UK customers. Soon as these markets recover, so will Holden. Imagine if the Cruze takes off and is selling 4000 a month alongside 5000 Commodores, utes and Statesmans. That could mean Holden selling 9000 local Holdens a month! Add in the few hundred they sell in NZ a month, 1000 a month they sell in middle east and 3000 a month they may sell as police cars in the US and add in potential Cruze exports... well they could be looking pretty good.

So werent all these market doing well in 2004, 2005, 2006,2007, and didnt Holden make large losses during these times. Your belief that making alot of stuff at the expense of sustanability and profit, is quite unbeleivable.
Enron was once the 6th most valuable company in the US, unfortunately once the real world realised their business model was quite defficient, it become worthless within a few months. Theres no doubt the brains at Holden and the Federal Government could make 10,000 to 15000 cars a month, its just a matter who wears the cost, GM USA or the Taxpayer.

[marty1000cc]

Originally Posted by Brazen

I think it was a line-of-credit not a loan, in case General Motors collapsed so that Holden could be self sufficent. Im pretty sure it was not exercised. And even if it was it would have been considered a liability on their balance sheet and not add to their operating profit.

...Correct.

[Joe5619]

Originally Posted by Brazen

Holden last year made an operating profit, they made a book loss by writing down the value of assets and by a one-off charge of closing the FamilyII plant. Companies are quite eager to instigate asset right downs and 'one-off charges' as these reduce the corporate tax payable, and can be used in some cases as carry forward losses.

Operating profits are more important to gauge the intrinsic viability of an entity: ie the money coming in is more than the expenses going out.

Some companies run at an operating loss, but state a book profit by revaluing and increasing the value of their assets, such as land, brand 'goodwill', capital equipment etc. The problem is these profits can only be realised if these assests are sold, and that would mean no more business.

My point is that if Holden can be running at a operating profit during one of the most horiffic years in the car industry whilst also losing their biggest export contract, then I am confident that Holden is quite secure.... for the time being.

As for production, the Commodore is readily available for US, middle east and UK customers. Soon as these markets recover, so will Holden. Imagine if the Cruze takes off and is selling 4000 a month alongside 5000 Commodores, utes and Statesmans. That could mean Holden selling 9000 local Holdens a month! Add in the few hundred they sell in NZ a month, 1000 a month they sell in middle east and 3000 a month they may sell as police cars in the US and add in potential Cruze exports... well they could be looking pretty good.

Go and read the articles again mate... Even without the "one off write downs" they still made an operating loss! And as an accountant the comments like "Companies are quite eager to instigate asset right downs and 'one-off charges' as these reduce the corporate tax payable" are just so wrong, wrong, wrong, wrong!! If they want to pay less (or no) tax, they would report a break even positive, not a loss of 230M!!! Not to mention the ATO tells you how much you can write off & lets not forget there are legal laws in regards to all of this!! Also writing down assets is not a "free" write off as you seem to think it is. The asset was purchased at one point in time (i.e. money spend, with no effect on profit), so only fair & true to value it at the current value!! No point saying you own a machine you paid 100K for it you can only sell it for 10k!!

[Chilliman]

Originally Posted by ZA-289

Holden are too afraid to sack workers beucase of the negative publicity. Its as simple as that.

Nailed it!

[bobthebilda]

Originally Posted by ZA-289

Holden are too afraid to sack workers beucase of the negative publicity. Its as simple as that.

It wouldnt come down to sackings, it would be a redundancy situation as per the EBA. I am sure alot of workers would put their hands up if they offered more voluntary redundancies, and no one could argue how bad it was if someone wanted a voluntary redundancy. The problem is that the redundancy provisions in the EBA are very very generous, and Holden just couldnt afford to pay them.

[Wally]

Originally Posted by irlewy86

You forgot the $200 million loan from the government.

Operating profit on paper not a profitable business by nature.

How does a loan affect P&L? The interest (discretionary expense) would actually reduce profit because it adds to COGS, just as depreciation (non cash expense) does.

A loan sits on the balance sheet as a current liability not as income on a P&L.

The easy way to see if they have an underlying profit is to look at the cash at bank minus depreciation and writedowns.

[vztrt]

Originally Posted by jpd80

So, while Ford has right sized production capacity and employees to current market needs,
Holden is trying to get by with a higher line speed and more employees working less days per week.
Looks like Holden are "trimming" until the market catches their current line speed which
seems a very odd thing to do, it's a gutsy move because things can go pear shaped real quick.

I guess I can see why they would go this way. VF is coming soon and the supposed aussie cruze is coming online. So short term pain for long term gain can pay off. A few companies did this during the GFC and its paying off.

Originally Posted by bobthebilda

It wouldnt come down to sackings, it would be a redundancy situation as per the EBA. I am sure alot of workers would put their hands up if they offered more voluntary redundancies, and no one could argue how bad it was if someone wanted a voluntary redundancy. The problem is that the redundancy provisions in the EBA are very very generous, and Holden just couldnt afford to pay them.

I know plenty of people did at Ford when they threw out packages. Alot of people were knocked back. Mind you the deal was fantastic.

[jpd80]

Originally Posted by Brazen

Holden last year made an operating profit, they made a book loss by writing down the value of assets and by a one-off charge of closing the FamilyII plant. Companies are quite eager to instigate asset right downs and 'one-off charges' as these reduce the corporate tax payable, and can be used in some cases as carry forward losses.

That directly contradicts the Holden press release that indicated the
cancellation of the G8 export program cost the company $225 million.
That's not a loss of projected income, it's an actual LOSS.

But I do take on board what you're saying about write downs and carrying them forward
to avoid future taxes. Ford and GM have been at this game for years and writing down
the cost of platforms enables them to look very skinny, it's just that the press are a bit dumb
and continue to run around proclaiming the apocalypse is coming....

[Joe5619]

Originally Posted by Wally

The easy way to see if they have an underlying profit is to look at the cash at bank minus depreciation and writedowns.

Don’t agree with that. Best way to look at the underlying profit of a business is to look at the Profit, less any one off transactions (depreciation is not one, redundancy packs is a good example).. And this is why companies report to the public this way... They say we loss 230M, but take out the off transactions & we made xxx.

Depreciation is not a "free" expense, as some people seem to make it out to be.. If you own a machine that is worth 10K today & in 12 months time, it is only worth 5K, that machine has costed you 5K in that year. This is what deprecation is doing. Just like if you bought brand new machine today worth 10K, it goes on the balance sheet & does not affect Profit..

What you might be talking about is a "Statement of Cash" which lists all the movements of cash. This statement has nothing in common with a P&L & would not show deprecation, but would show the 10K for the new machine bought I mentioned above. Only Aust publicly listed companies (I think that is the law anyway) need to report that statement to the public. Therefore, local subsidiary of a US listed company will not release this statement. I'm not sure if the US has something similar, which would capture Ford in total??

[bobthebilda]

So I guess the big question is, when you look at ASICs corporate register, is exactly which of the following entities in GM web of OZ companies, did the loss occur. Does company B get the government money to shoot straight of to GM USA, whilst entity D runs down the assets, who then receive a payment from entity D to keep it afloat.

ACN 004 125 197 EXAD *GENERAL MOTORS-HOLDEN'S LIMITED
ACN 004 125 197 EXAD *GENERAL MOTORS-HOLDENS LIMITED
ACN 006 893 232 REGD *GENERAL MOTORS-HOLDEN'S AUTOMOTIVE LIMITED
ACN 004 688 831 REGD GENERAL MOTORS-HOLDEN'S SALES PTY. LIMITED
ACN 004 125 197 EXAD *GENERAL MOTORS (AUSTRALIA) LIMITED
ACN 103 162 956 REGD GENERAL MOTORS AUSTRALIA LTD
ACN 006 962 572 REGD *ISUZU - GENERAL MOTORS AUSTRALIA LIMITED

[Joe5619]

Originally Posted by bobthebilda

So I guess the big question is, when you look at ASICs corporate register, is exactly which of the following entities in GM web of OZ companies, did the loss occur. Does company B get the government money to shoot straight of to GM USA, whilst entity D runs down the assets, who then receive a payment from entity D to keep it afloat.

ACN 004 125 197 EXAD *GENERAL MOTORS-HOLDEN'S LIMITED
ACN 004 125 197 EXAD *GENERAL MOTORS-HOLDENS LIMITED
ACN 006 893 232 REGD *GENERAL MOTORS-HOLDEN'S AUTOMOTIVE LIMITED
ACN 004 688 831 REGD GENERAL MOTORS-HOLDEN'S SALES PTY. LIMITED
ACN 004 125 197 EXAD *GENERAL MOTORS (AUSTRALIA) LIMITED
ACN 103 162 956 REGD GENERAL MOTORS AUSTRALIA LTD
ACN 006 962 572 REGD *ISUZU - GENERAL MOTORS AUSTRALIA LIMITED

I'll probably find most of them are non operating entities.. The company I work for has a legal entity that is not used anymore, but we keep it because it is cheaper to keep it, then legally wind it up for some reason.. Not sure what the reasons are, a bit over me head to be honest

[BHDOGS]

From what i heard from a mate who works at holdens the new vf is the same with some minor interior changes even he said they had thought the changes were to small