GM heading for Chapter 11?
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From: Florida
GM heading for Chapter 11?
more at the linkage
March 18 (Bloomberg) -- David Cole, president of the Center for Automotive Research in Ann Arbor, Michigan, blasphemed the auto industry in January by suggesting a U.S. automaker might go bankrupt. After General Motors Corp.'s bombshell this week, his words don't sound so profane.
Here are the lowlights of what General Motors told investors two days ago. Instead of breaking even in the first quarter, it now expects a first-quarter loss of $1.50 per share. Instead of earning $4 to $5 for the year, the best that investors can expect is $2. Cash flow will be a negative $2 billion, not the positive $2 billion the company forecast as recently as Jan. 13.
If you erased the company name from the balance sheet and showed it to a forensic accountant, the recommended treatment would probably be to seek protection from creditors by filing for Chapter 11 bankruptcy. It worked for the airline industry; the board of General Motors should be considering radical surgery before the patient finally turns up its toes.
If you want to insure $10 million of General Motors debt against the possibility of default in the next five years, it'll cost you more than $300,000 a year. That's up from $200,000 in December, and double the cost of protection a year ago.
March 18 (Bloomberg) -- David Cole, president of the Center for Automotive Research in Ann Arbor, Michigan, blasphemed the auto industry in January by suggesting a U.S. automaker might go bankrupt. After General Motors Corp.'s bombshell this week, his words don't sound so profane.
Here are the lowlights of what General Motors told investors two days ago. Instead of breaking even in the first quarter, it now expects a first-quarter loss of $1.50 per share. Instead of earning $4 to $5 for the year, the best that investors can expect is $2. Cash flow will be a negative $2 billion, not the positive $2 billion the company forecast as recently as Jan. 13.
If you erased the company name from the balance sheet and showed it to a forensic accountant, the recommended treatment would probably be to seek protection from creditors by filing for Chapter 11 bankruptcy. It worked for the airline industry; the board of General Motors should be considering radical surgery before the patient finally turns up its toes.
If you want to insure $10 million of General Motors debt against the possibility of default in the next five years, it'll cost you more than $300,000 a year. That's up from $200,000 in December, and double the cost of protection a year ago.
Moderator
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From: Louisville,Ky.
Well, with 20 years of wiring problems and smoking 305 engines, I'm suprised that it hasn't happened sooner. Yes the newer LS engined are a great improvement, it's a little late. All they have to offer in a performance car is the pricey Vette and the Way overpriced GTO.
FTE Leadership Emeritus
Joined: May 2004
Posts: 18,787
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From: Melbourne, Aus
Good link asa67_stang
Musclecar_Fan is right.
Vauxhall, Opel, Fiat and Saab (notice a trend here) are just killing GM (their Medical bill isn't all that cheap either...)
On the plus side, Holden, Subaru and Cadillac are pretty strong.
I am sure GM will pull through - they have been through far worse.
I would be really dissapointed if they close, the automotive industry would be a lot worse for it.
Even if you like Fords (and I do), you have to take your hat off to GM.
Prehaps the best engine in history (original small block)
The only TRUE american sports car (Corvette)
Some pretty good cars (I even think the Impala is alright - am I alone?)
I think a lack of competition would be a bad thing for Ford.
Ford is a very emotive automotive company, and thrives on strong competition.
I (as a Ford fan) am looking forward to these so-called hard times with Japanese, Korean and Chinese companies supposedly going to take over the market.
Yes, there are going to be some hard times ahead in the short term future, but I think the American automotive industry will flourish because of it in the long term.
Few car companies have history like Ford, GM, and Chrysler.
Musclecar_Fan is right.
Vauxhall, Opel, Fiat and Saab (notice a trend here) are just killing GM (their Medical bill isn't all that cheap either...)
On the plus side, Holden, Subaru and Cadillac are pretty strong.
I am sure GM will pull through - they have been through far worse.
I would be really dissapointed if they close, the automotive industry would be a lot worse for it.
Even if you like Fords (and I do), you have to take your hat off to GM.
Prehaps the best engine in history (original small block)
The only TRUE american sports car (Corvette)
Some pretty good cars (I even think the Impala is alright - am I alone?)
I think a lack of competition would be a bad thing for Ford.
Ford is a very emotive automotive company, and thrives on strong competition.
I (as a Ford fan) am looking forward to these so-called hard times with Japanese, Korean and Chinese companies supposedly going to take over the market.
Yes, there are going to be some hard times ahead in the short term future, but I think the American automotive industry will flourish because of it in the long term.
Few car companies have history like Ford, GM, and Chrysler.
Last edited by BigF350; Mar 20, 2005 at 02:08 AM.
Guest
Joined: Nov 2004
Posts: 7,988
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From: north west new jersey
lets not forget chrysler had to do how many years ago. and is still here.
gm's rummer mill has been running wild with talk of dumping a brand name and taking on some of these not so great selling over seas brands is killing them. just as jag and others are doing to ford.
i work at a multibrand dealer with 1 a gm, buick. our rep keeps saying he thinks gm is going to dump saturn and merg 2 others into 1. gm is going to be around longer just not as big in number of brands held and sold. immo
gm's rummer mill has been running wild with talk of dumping a brand name and taking on some of these not so great selling over seas brands is killing them. just as jag and others are doing to ford.
i work at a multibrand dealer with 1 a gm, buick. our rep keeps saying he thinks gm is going to dump saturn and merg 2 others into 1. gm is going to be around longer just not as big in number of brands held and sold. immo
Posting Guru
Joined: Dec 2004
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I sure hope GM can get ther act together. Too many people's livelihood depend on it.
GM s have pretty good running gear but seem to be plagued with electronic problems.
My sister drove new Buicks right up to a few years ago. Never any problems with the motor or trans, but pesky little stuff like the guages not working pushed her into a Toyota Camry.
GM s have pretty good running gear but seem to be plagued with electronic problems.
My sister drove new Buicks right up to a few years ago. Never any problems with the motor or trans, but pesky little stuff like the guages not working pushed her into a Toyota Camry.
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Senior User
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Did GM recently drop Isuzu? Or at least nullify any existing partnership between them?
I ask this because while at work the other day I heard a radio commercial by Isuzu - and they were BLASTING out at GMC. They were basically making a comparo between one of their SUV's and a GMC counterpart. I had never heard such blunt advertising before. Ford and GM may make puns at one another in commercials, but Isuzu was calling GMC "garbage" and "junk" - right on the air! I remember this specifically - "GMC says their professional grade? They'll get a grade alright...grade F!"
It was pretty down and dirty. Even as competitors, GMC and Chevrolet never mention each other in commercials - I doubt Isuzu would either if they were still associated with GM.
I ask this because while at work the other day I heard a radio commercial by Isuzu - and they were BLASTING out at GMC. They were basically making a comparo between one of their SUV's and a GMC counterpart. I had never heard such blunt advertising before. Ford and GM may make puns at one another in commercials, but Isuzu was calling GMC "garbage" and "junk" - right on the air! I remember this specifically - "GMC says their professional grade? They'll get a grade alright...grade F!"
It was pretty down and dirty. Even as competitors, GMC and Chevrolet never mention each other in commercials - I doubt Isuzu would either if they were still associated with GM.
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Post Fiend
Joined: Jan 2004
Posts: 6,610
Likes: 2
From: Northwest, Arkansas
First off GM would only go Chapter 11 which is reorganization thus shedding some of their debt and being able to renegotiate contracts. If this were to take place then you can bet that Ford and others would be lining up to do the same thing or they could not be competitive with the leaner GM. This would cause a domino effect throughout the industry.
At one time you would think that something like this could not happen to a company like GM but then again I never thought I would see company's like AT&T and Sears being in such a position they would be sold out to other companies. So now nothing would surprise me.
At one time you would think that something like this could not happen to a company like GM but then again I never thought I would see company's like AT&T and Sears being in such a position they would be sold out to other companies. So now nothing would surprise me.
Laughing Gas
Joined: Jun 2004
Posts: 1,240
Likes: 3
From: Dallas, Texas
GM forgot the old school values "The buyer Comes first"
They sued there own employees to steal there pension fund, So they could go buy over sea's makers that were "In trouble to Start with" Then they pay 30 million dollars for lyrics to there commercials.
Anybody see the pattern here? I do. Fire all those involved and get some people that have a clue!!!
Fire all those speadsheet reading ID10T's. The bottom line is not "That we made .50 cents a share this quarter" It's how can we make a better car or truck "That the people want"
Oh yea, GM has the worst record for service!
The reason Chysler made it was leadership, Lee was the right man at the right time. He ruled with a big stick "We can't do that was not a option" for him!
They sued there own employees to steal there pension fund, So they could go buy over sea's makers that were "In trouble to Start with" Then they pay 30 million dollars for lyrics to there commercials.
Anybody see the pattern here? I do. Fire all those involved and get some people that have a clue!!!
Fire all those speadsheet reading ID10T's. The bottom line is not "That we made .50 cents a share this quarter" It's how can we make a better car or truck "That the people want"
Oh yea, GM has the worst record for service!
The reason Chysler made it was leadership, Lee was the right man at the right time. He ruled with a big stick "We can't do that was not a option" for him!
Senior User
Joined: Feb 2005
Posts: 181
Likes: 0
From: arizona
Gm is suffering primarily due to problems in North America. It's no wonder, with Toyota taking over as number 1, Toyota, Honda, and Nissan all having factories here, GM is being hit hard. Ford is way down, too. They're market share is a fraction of what it was 5 years ago. You see the Ford wannabee Toyota's and Nissan's all over!
My take is that it's a US manufacturing problem as well as a GM problem. I love Ford's but I'll buy a Chev or Dodge before I walk into a dealership where the vehicles have an "a" or a "u" on the end.
My take is that it's a US manufacturing problem as well as a GM problem. I love Ford's but I'll buy a Chev or Dodge before I walk into a dealership where the vehicles have an "a" or a "u" on the end.
Post Fiend
Joined: Feb 2004
Posts: 10,728
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From: Damascus-Boring, Ore
The question isn't whether GM will be around or hang on, the question is whether retirees and employees will hang on to their pension and heathcare benefits. Hellooo! The unspoken question that follows is this: Could Ford afford not to follow into Chapter 11, since their primary competitor would be shedding upwards of $3000/unit in production costs? fordborn- you nailed that one flat. At the expense of their shareholders, employees, and retirees, I might add. Of course, the taxpayer will pick up the difference- those pension funds are guaranteed by you-know-who.
Then there's Chrysler- a dead issue since it's Daimler/Chrysler. Make no mistake, Chrysler's as American a corporation as Nissan (who happens to be owned by Renault). The fate of GM and Ford are tied together right now, along with the fate of what's left of the American Auto industry.
Then there's Chrysler- a dead issue since it's Daimler/Chrysler. Make no mistake, Chrysler's as American a corporation as Nissan (who happens to be owned by Renault). The fate of GM and Ford are tied together right now, along with the fate of what's left of the American Auto industry.
Laughing Gas
Joined: Jun 2004
Posts: 1,240
Likes: 3
From: Dallas, Texas
Most of the problems for any American company is this. They all ran over to China thinking about that 1 Billion Chinese buying power. Problem is China does not allow the American Dollar to be used in there economy! They have seen to many Countrys get beat over the head by the American dollar.
Also The Euro is trying to take over the American Dollar in the Eastern Hemsphere, And they are winning, Except China of course. China ships goods to America and converts the Dollar to gold.
Take a look at why Gas prices are going up and gold also. The Chinese are using more fuel then ever and buying Thousands of pounds of gold to back up the economy.
Just remember 2/3rds of Americas dollar is oversea's, If it was to come back you could light a Cigar with a $100.00 bill, cause that's what it would be worth!
Anyways America does not make anything now, we traded for a service Economy which makes us Servents!
Also The Euro is trying to take over the American Dollar in the Eastern Hemsphere, And they are winning, Except China of course. China ships goods to America and converts the Dollar to gold.
Take a look at why Gas prices are going up and gold also. The Chinese are using more fuel then ever and buying Thousands of pounds of gold to back up the economy.
Just remember 2/3rds of Americas dollar is oversea's, If it was to come back you could light a Cigar with a $100.00 bill, cause that's what it would be worth!
Anyways America does not make anything now, we traded for a service Economy which makes us Servents!
Mountain Pass
Joined: Jan 2005
Posts: 182
Likes: 0
It's a global economy now. We as Americans will adapt, we always have. The horse drawn buggy builders thought their world was coming to an end with the the auto coming into play. But it didn't. They adapted to the changing times and carried on. That's just what we're going to do, adapt to the changing times. You nailed it, China's thrist for oil is not going to slow any time soon. Simple supply and demand is what raises the cost of fuel. Read it all in the Wall Street Journal.
Does anyone know if the American auto makers use the Toyota method of building cars? No stocking of parts in the factory, only the parts needed to build an ordered car. This method saves millions. Dell and New Balance use the same method.
Does anyone know if the American auto makers use the Toyota method of building cars? No stocking of parts in the factory, only the parts needed to build an ordered car. This method saves millions. Dell and New Balance use the same method.