GM Has Record $38.7 Billion Loss For 2007
GM is better at losing money then they are at making cars, says the Associated Press. The auto-maker lost $38.7 billion in 2007, a record for the industry. Still, they're optimistic:
During a conference call with analysts and media, Chief Financial Officer Fritz Henderson said 2008 will be difficult, but the company sees the potential for significant earnings increases by 2010 or 2011 once it reduces its work force and labor costs and transfers its retiree health-care costs to a new UAW-run trust.Ouch. Let's hope the predicted tsunami of bad auto loans doesn't affect their plans.The Detroit-based automaker said it was offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers.
GM won't say how many workers it hopes to shed, but under its new contract with the UAW, it will be able to replace up to 16,000 workers doing non-assembly jobs with new employees who will be paid half the old wage of $28 per hour.
GM posts $38.7B loss for 2007, offers buyouts to 74,000 hourly workers [LA Times]
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"potential for significant earnings increases by 2010 or 2011 once it reduces its work force and labor costs and transfers its retiree health-care costs to a new UAW-run trust."
I didn't notice anything in there regarding the improvement of their actual product. That might be a good place to start.
Scary how much they have been paying these low-skilled workers for so long. Too bad they can't just run a round of layoffs. You don't need to pay the minimally skilled $28 per hour. You can get them for $10-15, and quickly train them up.
Hell, just say $15 bucks and that gives them a good living wage.
How long til rational business practice means they should go out of business? Why has this not happened already?
What's happening to the American auto brands should serve as a stern warning to all corporations; thou shalt not abuse the customer.
I am deeply affected by the woes of the American auto manufacturers, and yet I will only buy Honda. Yes, I know Ford has a great system for tracking assembly and product defect issues, and I know first hand how improved GM cars have become. Chrysler is building compelling products, and yet, I refuse to buy them. That's because I want to buy a vehicle and keep it for 7 to 10 years. I've been burned too many times by Ford, Chrysler and GM and I'm simply unwilling to gamble $25,000 on a domestic brand that in the past has turned into a maintenance pig within five years.
Until the domestic brands shed the two albatrosses; bad brand perception and utterly unbelievable labor costs for bolting fenders on cars, it's going to be economically gloomy weather around Detroit.
The American manufacturers sealed their fate when they convinced the car-buying public they needed an SUV instead. They modeled their business so only SUVs made the company money, and guess what? People don't want 14 MPG behemoths anymore.
soon to follow: the inevitable fact that auto companies with actually decent, affordable, quality vehicles (the Japanese ones) will employ more Americans than the domestic auto manufacturers.
i suppose north americans are Americans too, right?
That's a good point - most of the best-selling Japanese or Korean models are made here in the US. Camry. Accord. Sonata. The UAW, of course, isn't pleased with that, because those companies won't suck the UAW's dick every time they grunt.
the scary thing is that i live in spring hill, tn, which has a booming economy based on the people moving down here from michigan to work at the saturn plant. it will be horrible for a lot of people around here when they close that plant.
@friendlynerd: Plus the CEOs and management will be Japanese, which is OH NOES bad for the American corporate types. And bad for the politicians because they won't be getting support from them OR the UAW. So, for us, its lose, lose, lose and a big win for the Japanese.
Too bad. Thanks for playing, stupid American car companies.
Even BMW is opening a plant in South Carolina...it is where their new 1 series is being built.
@chouchou:
Is there any fact to your argument?
As you may or may not know, Toyota was 2nd in recalls for 2007. 2nd to VW. I have a soft spot for Honda and they make a good car, but google "Honda Civic 3rd gear" and repost what comes up.
and another thing! :)
the nissan plant in smyrna, tn pays like 16/hr, while the saturn plant pays like 25/hr (or so i have heard). they do the same thing, and are 40 minutes apart from one another. the cost of living is not that different.
It sucks, bad. A lot of my family works for Chrysler in some capacity, so I do understand the damage this is going to cause over time. However, it could lead to something good - politicians not beholden to what is essentially unskilled labor making wayyy more than I do as an educated IT professional.
@friendlynerd: My old Nissan Altima was made in TN. After selling it to my cousin, it finally died at 180,000 miles with the only repairs coming after I (or my cousin) did something stupid.
My Explorer on the other hand...LOTS of costly maintenance.
I'd challenge you to find how many 1988 Accords are still on the road. Then find me how many 1988 Corsicas are on the road.
GM recently won green car of the year with their Tahoe Hybrid. It gets the same amount of City mpg as a Toyota Camry with a 4banger. 21/22.
GM's issue is not quality, or not being Green. It is perception. The perception some of you have belongs in the 80s and 90s. Its 2008 and I emplore you to check out a domestic manufacturer and the reviews from the major autorags. Anyone see the latest reviews of Toyotas Sequoia? Its smaller than a Tahoe and gets worse mpg. So include the proper parties in your arguments.
probably more Accords. I'm not arguing for the sake of argument. just because an 88 Accord is on the road does not mean GM or Ford or Chrysler make crap cars now. Its like saying "I had a crappy blender from Oyster in 88 and now their product sucks" There is no merit in that. No proof, no go.
@coaster.n3rd: It is NOT just perception though. A large part of it is that people simply DO NOT LIKE the the cars the domestic automakers are producing. Most of the foreign cars have a much more stylized/sporty look while the domestic cars all look damn near the same.
I hear this "perception" argument fairly often. It's funny - what creates or drives a perception? Did the LIBERAL MEDIA make it all up? Did a group of Honda owners just decide to form a little conspiracy club of sorts to convince Americans that their Chevys weren't built well or worth the asking price?
Being a Consumerist reader I'm sure you know that perceptions are largely driven by word of mouth from people who actually own the products. There's no conspiracy here.
If American companies want to change their perceived quality, they need to make quality cars. They may be starting to do that now, but it's going to take time and hard work. Hyundai didn't reinvent itself overnight, and neither will GM, Chrysler, or Ford.
this one: [www.google.com]
im not trying to be smart, i really just cant find a link to anything else about it, other than news and such. :)
@Pinget: Because as much as 38 billion is, it's not that much to GM.
Correct me if I'm wrong (I know the kind readers here will), isn't GM the biggest company in the world.
According to the numbers, the vast majority of the $38 Billion loss is due to GMAC( Home mortgage lending) and a different accounting procedure. In terms of car sales alone GM actually made more money.
Financially speaking, GM is a bank that makes cars , not a carmaker that lends money. Hence GM could sell record numbers of cars and still lose money.
This has little to do with foreign competition, seeing as how Toyota and Honda dont sell home loans. Neither do they have union workers.
@coaster.n3rd: plus the chevy truck that just hit 1 million miles. The american cars can be really good vehicles with proper care.
Sometimes though, you get a crap car.
@coaster.n3rd: Imagine the mileage a hybrid NOT SUV would get if automakers put some of them on the market.
Of course, hybrids have an unexamined environmental problem all on their own. What happens to the batteries when they failed.
Not to say I'm dissing US vs. Foreign automakers, but right now my 2008 Subaru Outback (which is technically NOT an SUV but the EPA does mark it as such for their purposes) regularly gets ~23 - 24 mpg (according to its own computer and closer to 25 - 26 mpg on all highway driving trips) and has an EPA rating of 20/26 (new adjusted EPA rating standards).
I'd love for some of the urban and suburban dwelling SUV and truck owners (and yes, I do understand a pick-up truck is essential for those who are in certain businesses as a commercial vehicle and people in outlying areas might need a vehicle with more oomph) to tell me what's so important about having one over a more efficient station wagon other than the fact SUVs are so incredibly popular right now due to marketing techniques employed by the manufacturers.
GM actually has me excited with their Volt concept car. I'd love to see that vehicle come to fruition and have the technology advance. The question with the Volt is, will the savings in gas costs override the additional cost of electricity and the emissions that escape for electrical plants as a result. :-)
It's never just one trade-off, is it?
Shed no tears for GM . They sure as hell weren't shedding any for you when your only choices were Chevy , Ford or Plymouth. We got here because of the myopic greed and stupidity of men like Ed Cole , Roger Smith and James McDonald (all past GM presidents). They could have demanded that their battalions of engineers and scientists design world class cars and trucks and that their assembly line workers put them together with skill and care or be fired. Every one of the former executives that helped put GM in the position that is in retired unimaginably rich and comfortable. And for God's sake please don't all of you "buy American" zombies start saying it's the customers fault. Great world class cars and trucks can be built here at a profit - the Japanese have been doing it for 25 years.Responsible critics were warning GM that this day was coming back in the 70's and ealy 80's. The dumb assholes just wouldn't listen.
@CHOUCHOU Since when is it up to you how much a "low skilled" worker makes. If someone can make 50K a year why shouldn't they. I just don't understand how you take it upon yourself to decide how much someone is "worth". You comment pisses me off on so many levels.
Whoops My previous comment was directed at the wrong person. Sorry CHOUCHOU
@coaster.n3rd: Yes, but at the same time there's more to a car than gas mileage (and 21 MPG is NOT something to brag about). My bf had a somewhat new (a couple years old) Dodge, which cost a boat load in maintainence. He might as well have bought a new car, thats how bad it was.
If you can't engineer a good engine under the hood, I don't care what you're selling. Hyundai solved that problem with their guarantees, GM thinks they're going to solve it by making it more fuel efficient but with the same crap engineering.
No one said anything about a conspiracy. perception comes from the truth and I will be the first in line to tell you GM made crap cars 20 years ago. But now it seems the tables have turned. how long before the back lash against Toyota for not fixing the sludge and trans issues in the Camry? Things are different now, check out an American car without the attitude and ou will see the difference.
A. Spring Hill is not a Saturn Plant anymore.
B. Reading the whole article will enlighten you to see that GM is looking to reduce the wages of its workers to a reasonable real world rate.
C. Don't blame GM for what the UAW made them do.
@pyloff: As someone who has invested in an education and thus, higher skills, I find it offensive that people who can barely get out of high school and did not make any such investment in themselves be paid as much or more than me (with equal years of experience).
January 2007. GM sales + Toyota sales -
Seriously, the styling of the new Malibu and the CTS are so hot they can't keep them on the lots. Saturn +27% for 2007 with style and a great car. The American public wants to buy domestic vehicles and thay are not that the doestics make a great car.
Google "Tundra tailgate"
Um, GM didn't 'lose' $38.7 billion dollars. They took a special charge against unused tax credits. The actual loss was about $23 million. Think of it this way, if you had a special $1 million tax break from the gov't that had conditions attached, and you didn't meet the conditions (and therefore didn't receive the tax break), did you lose $1 million? No, you lost a tax break...same thing here. Nice job of sensationalizing though.
Would you rather have A.
5yr 100,000 mile warranty thats transferable and covers parts+ Labor, includes roadside assistance and rental
or B.
10 year, 100,000 mile warranty that is non transferable and does not cover labor costs, rental or roadside assistance.
Which would you rather have?
Why is anyone surprised? GM makes mediocre and unreliable cars. And there is so much redundancy in their vehicle line-up. A lot of waste. They should just kill off all their other brands and just have Chevy and Cadillac. From a business standpoint, I don't see why it's necessary to re-badge the same vehicle under 4 different nameplates.
I agree with you on all three cars mentioned. As I said, they might be making quality cars now (I'll wait at least 3 years before making a final judgement on that) but we were talking about perceptions.
Perceptions don't change overnight. So, if these cars hold their shit together (and I actually hope they do!) things might start to turn around.
I've said for years I'd like to buy an American car again if they made something I wanted to buy that would last awhile.
And don't forget GM killed the electric car.
Also don't forget that GM graced us with the Hummer and Escalade. Brilliant!
1.its a saturn plant if it makes gm vehicles with saturn emblems on them.
2.yes, and reading the article with enlighten you that they are still firing people, and hiring new people at half the wages, while the previous employees, if they agree to the new rate, must now live on half the income.
3.i dont blame gm, but its interesting why such articles come along every so often with only three auto companies in the headlines, and they are all out of detroit...
@coaster.n3rd: The problem is, a car is not the kind of purchase someone usually gives second chances on. I have had 2 cars in my life, a 93 saturn and a 2000 honda. The saturn was always in the shop, needed its tires and batteries replaced all the time ( and took expensive tires ) while the honda just runs, gets me where I need to go, no hassle whatsoever. I hear people say they love their newer saturns, but I'm still a loyal honda girl, and probably always will be. A car is just too big of a purchase for me to forget my past experiences, and I think a lot of people feel that way.
Your three years are up. Al ot of people don't know the 2008 Chevrolet Malibu rides on the same platofrm and has virtually the mechanics as a 2004 Chevrolet Malibu. The Epsilon I platform has been around for quite some time. Again perception plays the role of the antagonist.
Saturn Aura has been out for 2 years now. Why does that matter? Other than the sheet metal on the outside it is identical to the Malibu. Both won North American Car of the Year.
1. It doesn't. It makes a Chevy.
2. Too bad for them for letting a union run their life.
3. Again, google Toyota, VW and recalls.. see what happens.
Serves them right. Any company that would force a tracking and monitoring system that you have to pay for monthly on all their vehicles has certaintly lost my respect and business (OnStar).
@K-Bo:
2000 Honda what? An s2000? Or just a model year 2000.
You got hosed by the shop if "it took expensive tires" and thats your fault. You can put shitty wheels and tires on a Corvette. I'm calling shenanigans due to the lack of any true info in your comment.
@aikoto:
You don't have to pay for onstar if you don't want to. No one "forced" you to do anything.
Please people, only a few of you had anything smart to say.
@Silversmok3: You are correct; majority of this loss isn't money lost, it's changes in accounting procedures that ended up with a huge "Loss on the Books" but they physically didnt lose any more or less money. They would be in the same (physical) financial state if that huge 31 billion dollar accounting change hadnt happened, but wouldnt be reporting such a huge loss.
That's what happens when quality isn't there. Why bother with GM if for the same price you can get Honda/Toyota.