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GM Situation Becomes More Dire

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This is really starting to worry me....

Nov. 11 (Bloomberg) -- General Motors Corp., burning cash as U.S. sales slide, is being pushed closer to bankruptcy as it waits to learn whether the auto industry will win a new round of government loans.

Only federal aid can prevent a collapse of the biggest U.S. automaker, analysts including Buckingham Research Group's Joseph Amaturo said before the shares tumbled today for a fifth straight day. Reorganizing in court protection also may not be possible, because the credit crunch has dried up financing.

``Strategic bankruptcy is not an option for GM,'' said Mark Oline, a credit analyst with Fitch Inc. in Chicago. ``This is an issue of operating or not operating.''

The prospect of a forced liquidation raises the stakes for GM's quest for new federal borrowing after saying on Nov. 7 it may run out of operating cash as soon as year's end. GM had $16.2 billion on hand as of Sept. 30, down from $21 billion at the end of June, and needs $11 billion to pay its monthly bills.

``A bankruptcy wouldn't address our immediate liquidity concerns,'' said Renee Rashid-Merem, a spokeswoman for Detroit- based GM. ``It's not an option for GM because it creates more problems than it solves.''

GM's U.S. sales, which fell 21 percent last quarter and 45 percent in October, ``would be devastated'' by a bankruptcy filing, Chief Executive Officer Rick Wagoner said in a Nov. 7 Bloomberg Television interview. The ``unimaginable consequence'' of a bankruptcy ``motivates us to really come up with cash in every way possible,'' he said.

Obama-Bush Talks

Wagoner, 55, is cutting jobs and shutting plants after almost $73 billion in losses since the end of 2004. He told trade publication Automotive News that GM needs an aid package before President-elect Barack Obama takes office in January.

Investors may be concluding that GM won't succeed. The shares slid 27 cents, or 8 percent, to $3.09 at 9:45 a.m. in New York Stock Exchange composite trading. That extended yesterday's plunge to a 59-year low after Deutsche Bank AG said the shares may be worthless in a year.

GM, Ford Motor Co. and Chrysler LLC have asked for $50 billion in aid to weather the worst auto market in 17 years, people familiar with the discussions said. That would be in addition to $25 billion approved in September to help retool plants to build more fuel-efficient vehicles.

`Growing Support'

``There's growing support in Washington, in Congress, to give government assistance to GM and the other automakers,'' said Bruce Zirinsky, co-chairman of the financial restructuring department of Cadwalader, Wickersham & Taft LLP in New York. ``The question is going to be how that gets done and at what price to the shareholders and creditors.''

Obama spoke with President George W. Bush about the urgency for an aid plan at a White House meeting yesterday, aides to the president-elect said.

Earlier, the White House signaled its opposition to a proposal by House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada for Treasury Secretary Henry Paulson to tap the $700 billion bank-rescue package to aid automakers.

Democratic lawmakers reject Paulson's arguments that he lacks authority to do so, Senator Carl Levin of Michigan said yesterday in an interview.

Legislation's Wording

Should Paulson continue to resist using funds from the financial bailout approach, Congress would craft language to help the automakers and add it to the stimulus plan to be considered next week, Levin said. Treasury spokeswoman Brookly McLaughlin referred questions to the White House.

Bill Ackman, manager of the Pershing Square Capital Management LP hedge fund in New York, said GM shouldn't take government money because ``it has been hamstrung for years because it has too much debt and it has contracts that are uneconomic.''

Ackman, who said he doesn't have a position in GM securities, said yesterday on the Charlie Rose show the automaker should file for a so-called prepackaged bankruptcy with financing to keep operating while in court protection.

That may be difficult. Those debtor-in-possession loans have ``all but shut down,'' CreditSights Inc. said yesterday in a report. The loans, which are paid off when companies exit bankruptcy, aren't being made as lenders become more averse to risk, wrote Chris Taggert, a New York-based analyst.

GM would have no choice but to shut down, said Maryann Keller, an independent auto analyst and consultant based in Greenwich, Connecticut. A GM failure that stops production would cost 2.5 million jobs in the U.S. in the first year, according to the Ann Arbor, Michigan-based Center for Automotive Research.

``In this world, you don't go Chapter 11 reorganization,'' Keller said in an interview. ``You go Chapter 7 liquidation.''

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

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Well, it looks as if the anti-GM, anti-Detroit people may have actually won the war.

Hopefully, what's BAD for GM will be BAD for this country as well.

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I think our economic troubles are just beginning...

Chris

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So what exactly would the "more problems" be if they went bankrupt? Would they really be able to restructure post bankruptcy without the UAW? Wouldn't that in itself be worth it??

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Well, it looks as if the anti-GM, anti-Detroit people may have actually won the war.

Hopefully, what's BAD for GM will be BAD for this country as well.

if they want to bring GM down, then lets do it in grand style. We can all write about it, and cash the advertising checks that pay for our newspapers and web sites.

People in the US love to see britney spears style near collapses, and then recoveries. I don't think that sort of binge and bust is healthy. But people seem to want things to fail because its a great story.

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If GM can last until Bush is out in January, it sounds like help is on the way. Why is Paulson so against helping the automakers??

Let Pelosi and Reid send some money to the Big 3. Get a clue Bush administration! Sorry for the politics. It just seems like if we can spend billions on AIG then why can't we send some money to GM, Ford and Chrysler considering how many jobs are at stake.

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I'm always amazed at how GM's biggest proponents on this site have NO clue as to the severity of the situation in Detroit. You bitch about the MSmedia, then these articles come out en masse and NOW you're paying attention?

For those of us that have been ridiculed, threatened and cursed for our views that weren't in complete lockstep with the powers that be here, this is an empty victory at best. I am truly saddened by what is happening---and, as I've said before, my whole future is somewhat dictated by the myopic management at GM.

This story was written YEARS ago....and while some of us felt that extreme measures were needed, no-one wanted to hear it. We hate on sites like TTAC---but, it turns out they're nearly 100% correct.

I hate to say it, but GM's only hope is government intervention now. Let's hope that its not British Leyland 2.

Remember, not all of those who's views you disagreed with were out to 'get' GM. My personal aim was just the opposite.

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JPMorgan: "GM Likely to Survive Survive"

NEW YORK (Reuters) - General Motors Corp's (GM.N: Quote, Profile, Research, Stock Buzz) extremely distressed debt is an attractive investment as the automaker has several options to improve its liquidity and survive the economic downturn, according to credit analysts at JPMorgan.

GM's bonds have tumbled as the company burns through cash and struggles to turn around its business amid a weakening economy and dire sales figures. Its shares have plummeted to the lowest level since 1946.

The automaker posted a $4.2 billion loss for the third quarter on Friday and said it would cut white-collar jobs and slash next year's capital spending budget by $2.5 billion to try to cope with a sharp sales slowdown.

In spite of this bad news, JPMorgan analysts rate GM's bonds a "buy."

"We believe GM has several sources of liquidity it can access to bridge the company to 2010 when it realizes considerable cost cuts," analysts Eric Selle and Atiba Edwards said in a report.

These include an overfunded pension plan, possible asset sales, capital market transactions, equity injections, cost cutting and government loans, they said.

GM's benchmark 8.375 percent bond due 2033 has dropped to 25.75 cents on the dollar, from 36.5 cents at the end of October, according to MarketAxess. The bonds had traded at more than 80 cents on the dollar at the beginning of the year and currently yield 32.5 percent.

The automaker's credit default swaps are also trading at extremely distressed prices, costing 68.5 percent the sum insured as an upfront cost, plus 5 percent in annual premiums for five years, according to Markit.

That means it costs $6.85 million to insure $10 million in debt for five years, plus $500,000 annually.

"We view the upside (driven by stabilization of U.S. sales volumes and liquidity enhancement measures) on the bonds as much higher and more likely than the downside of a potential bankruptcy," JPMorgan said.

"GM's recent product successes (award-winning styling, performance and quality) and its considerable international profitability give us confidence they can become profitable in North America selling cars," they added.

The analysts added that they have factored in economic weakness for the next 2-1/2 years.

In addition to GM's bonds, selling protection on the debt using credit default swaps is also attractive, as is buying its term loan, JPMorgan said. They added, however that the company's short-term survival will require the help of the government and/or its suppliers.

Analysts at independent research firm KDP Advisors, meanwhile, said they expect GM will benefit from additional government loans and that it is likely to avoid bankruptcy.

They have a "hold" recommendation on its bonds, however, due to the risk that the company may restructure its debt, or push them further down in the capital structure, which will be harmful to bondholders.

"The Detroit automakers have, in essence, been pursuing an out-of-court restructuring over the past three years. These efforts have produced a competitive labor contract with the UAW, a viable solution to reduce retiree healthcare expense, and a substantial downsizing of capacity and headcount," analyst Kid Penniman said in a report.

"Incremental gains achieved through bankruptcy would be minimal in comparison and would likely result in an even further deterioration of enterprise values as consumers would be far less likely to purchase an expensive vehicle from a bankrupt manufacturer, with or without government guarantees," he added.

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$73 billion in losses since 2004. No one is responsible for GM's downfall except GM. This has been coming for 4 years, and they did nothing to protect against it. The union stayed greedy and labor costs are too high, GM keep rebadging with the Epsilons, Lambdas, G5, Torrent, etc and they focused on big SUVs, and forgot about cars. They used the same business model that didn't work in the 70s, didn't work in the 80s, didn't work in the 90s, didn't work in the 2000s, and now it has caught up to them.

This is exactly the wake up call GM needs to get them to shed unnecessary brands, redo the UAW contract, and eliminate excess capacity, employees, dealerships, etc. I predict that they file for bankruptcy, but they won't go out of business. Circuit City filed for bankruptcy, they still have stores open and people shop there.

They'll get another $25 billion from the government, but if they screw that up, I highly doubt there will be a second bailout next year, they better get it right on the first try. The slippery slope of bailouts, is where does the government stop? Do they bail out airlines, DHL (who just laid off 9,500 people), Circuit City, Starbucks, or other struggling retailers?

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GM has $32 billion in debt and owes $7 billion to the VEBA fund in 2010. If (when) the bailout comes, $25 billion is going to buy one year of life, especially since some of it has to go toward updating factories and building "green" cars. It will get them to 2010, and get the health care burden off their back, and maybe the cash burn slows by then. They could become stable in 2010.

At this point, what if Toyota buys them? Toyota can buy the entire Big 3 if they wanted, but they are such a mess and riddled with debt they are worthless. If GM gets a big bailout and all those debts wiped out, it opens the door for Toyota to buy them for $5 billion or so and take over. Then in effect, the government would have written a $25 billion check to Toyota. (the government would have to take control of GM stock to prevent this)

Edited by smk4565
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JP Morgan is right except for one thing: I would give a congressional bailout a 20% chance at best. Too many Democrats on the left coast don't understand the consequences of a failure to act, and their constituents don't either.

I don't recall enzl doing anything but rant and bitch about management, and call on management to resign, as if they were only making things worse. That's all many people here did. I don't recall any such suggestions from those who really knew how bad things were, or why. Perhaps they understood that Wagoner was dealt a bad hand, far worse than enzl seems to realize, than many of you realize. Wagoner realized the magnitude of the problems and did his best to address them, hampered by franchise laws and a union which only saw profits from sales of SUVS and rental cars which only hid the true problems. By the time the UAW realized how bad things were and agreed to concessions, it was too late. If the market had held up two more years, then it might not have been, but it would have been close. This is a management team coming in with the score at 30-0 and battling back to 60-55, only to have the game washed out by rain. It is mean-spirited at beast to then blame them for the final score. If the cash had held up till 2010, they would have achieved a turn-around and restructuring of North American operations of epic proportions. Without the collapse of the housing market and credit crunch, I think they would have done it, at which point they would all be heroes. I would have done some things differently, I have always said so. I am not arrogant enough or as ignorant of the real situation to think it would have made much difference right now. What else they could or should have done would have only helped long term. It would not have saved them now. There are people who realized before I did that they would not make it to 2010 without assistance. Enzl was not one of them. It is disingenuous now to say "I told you so".

Edited by thegriffon
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$73 billion in losses since 2004. No one is responsible for GM's downfall except GM. This has been coming for 4 years, and they did nothing to protect against it.

This has been coming for 30 years, and only in the last 10 have they done anything to prevent it. Investment in R&D was too low, they ramped it up. Sales to fleets were too high, they slashed them. Development work was duplicated, they consolidated it. Design was poor, they revived it, quality was low, they increased it. Healthca5re costs, always a problem, went through the roof (you seriously can't blame Wagoner for that), they finally found a way to offload it. Wages were too high, they found a way to cut them. They had to fix an immense structural problem, without panicking consumers by letting them know how bad a problem it was. How long did it take them to convince the UAW how bad things were and how much things needed to change?

JP Morgan is correct, GM has been pursuing an out-of-court restructuring for years that is on the cusp of paying off, and may pay off big time. It would be a shame if ignorance, malice and resentment were to prevent them from overcoming the last unexpected hurdle, a hurdle that GM cannot be blamed for in any way.

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Who like higher taxes?

Who likes their tax money being sent to China?

Who likes welfare for those who have created their own poverty?

Who likes trying to save jobs that were in actuality either lost long ago or will be lost in the near future?

I always thought it would be good if the US became a little more socialist. But the US is to socialism like a fundamentalist teenager is to birthcontrol. It is a dirty concept which they have intentionally shunned, but they both have urges on which they are acting and it is too late to take Family Planning.

The US is going to come out of this without the capitalist high ground, all the spending and taxes of socialism, and none of the benefits.

It looks like GM needed to charge ~$2,000 more for each vehicle over the past few years to have broken even. They should immediately raise their prices by that much. Heck, they could just leave the prices where they are and just HALVE the incentives. Then all they have to do is sell their vehicles. If they can't even do that then they aren't even worth trying to save. If they can't even do that then the US consumer doesn't believe they should survive.

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GM will survive in some shape or form. They will be cut down in size and leaner.

GM also will be to its core market only as they shead off all non car and light truck enterprises they have already not sold off. They are a car company and will only build cars.

For a company in this kind of trouble they have to take 3 steps back, make a few right moves and regrow the business.

I can see a GM with only a few divisions world wide and those product sold will be the same world wide.

If they are to develope electric and Hydrogen vehicles and or any other new technologies they can not aford to make 51 flavores of them. They will be the same world wide.

Also if GM wants everyone the world over to know they have changed they are going to have to show they have changed. Just making good new models is not enough anymore. GM will have to prove they are a lean eifficent company able and willing to make a excellent product and the bottom line turn a profit with them. GM is not playing horse shoes anymore and close is not enough. They need to be leaders in new productsa and stop just meeting or matching the compititision.

As boring as Honda is to the enthusitst they are a model of what GM need to be to convice investors to plop down their money again. Thes Chinese fire drills of the past near 35 years will not cut it with Wall Street anymore. They don't care if the ZR1 stops in 93 feet from 60 MPH. Wall Street want to see them sell car in great numbers to the unwashed masses of people just getting to work and home while making a profit.

Not only will efficent and aulturnitive fuel cars be important, but with the slow economy not going to recover soon selling a cheap car will be very important like the Beat.

We will be lucky at this point if the economy recovers in two to three years if nothing bad happens. We are one terroist attack away from a market crash. If 911 happand today we are screwed and the bad guys know it.

We have had more close calls than thay have told us and they have done a good job the last 4 years. The new administration will be tested and we had better hope they don't fail.

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JP Morgan is right except for one thing: I would give a congressional bailout a 20% chance at best. Too many Democrats on the left coast don't understand the consequences of a failure to act, and their constituents don't either.

I don't recall enzl doing anything but rant and bitch about management, and call on management to resign, as if they were only making things worse. That's all many people here did. I don't recall any such suggestions from those who really knew how bad things were, or why. Perhaps they understood that Wagoner was dealt a bad hand, far worse than enzl seems to realize, than many of you realize. Wagoner realized the magnitude of the problems and did his best to address them, hampered by franchise laws and a union which only saw profits from sales of SUVS and rental cars which only hid the true problems. By the time the UAW realized how bad things were and agreed to concessions, it was too late. If the market had held up two more years, then it might not have been, but it would have been close. This is a management team coming in with the score at 30-0 and battling back to 60-55, only to have the game washed out by rain. It is mean-spirited at beast to then blame them for the final score. If the cash had held up till 2010, they would have achieved a turn-around and restructuring of North American operations of epic proportions. Without the collapse of the housing market and credit crunch, I think they would have done it, at which point they would all be heroes. I would have done some things differently, I have always said so. I am not arrogant enough or as ignorant of the real situation to think it would have made much difference right now. What else they could or should have done would have only helped long term. It would not have saved them now. There are people who realized before I did that they would not make it to 2010 without assistance. Enzl was not one of them. It is disingenuous now to say "I told you so".

If you believe that I wished this for GM, you haven't been reading the lion's share of my almost 2000 posts here.

Reread some of them before you write such untruths...I've offered dozens of suggestions---many of them on the record in 2005 when gas prices were low and GM was selling tons of profitable trucks. I'm going to lose alot more than you could imagine if this thing goes bad, thus I feel no shame in saying whatever I want--in fact, I feel I have an absolute right to, just as I had the right to object to RW's Ship of Fools running GM into the ground. I'm a stakeholder in this thing, not merely a fanboy, so I take your slights personally---I could be jobless very quickly---so I'm deadly serious in my viewpoint---I'm not some kid trying to tease GM'ers on this site (although you guys do make it so easy.)

Remember: If only the Queen had testicles, she'd be king.

I learned from an old football coach that luck is simply preparation meeting opportunity and I'd say GM was simply not prepared for this latest turn. You can hate on me all you want, but as far as prognostication goes--it certainly appears I might have had a few relevant points along the way, no?

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My, we are sensitive. I didn't accuse you of anything you didn't repeat right there. I never said you wished this, I never said you didn't have a stake. Plenty of other people have acted with malice and resentment toward GM, but I never said you did. I just don't think you understand how bad things really were when it looked like they were "selling tons of profitable trucks". I think GM was already run into the ground and in need of rebuilding. Those truck sales just hid the underlying problems, problems they have finally come to grips with. The high sales they had in years past were just a fantasy, inflated by dumping into daily fleet and bolstered by unsustainable rebates. To some extent they had no choice. Despite what many people seem to think they have been restructuring for years, and it cost them a ton of money to do so, but without it they could have only suffered a slow and agonizing death. They looked at it and said "this can't go on", and they made a valiant effort to fix it, and under the circumstances they did a stellar job. The money that's gone is money that was promised long ago to employees and retirees. That's not Wagoner's fault. The sales that have been lost were unsupported by true market demand. That's not Wagoner's fault either. They've got themselves into a position where they can control inventory, where legacy costs will be sustainable in future, where they can earn money and start to rebuild. But they can't do that in an economy that has turned into a basket case because the housing bubble has burst, manufacturing jobs in other industries have been decimated by idiots at retailers like Wal-Mart who source candy from China instead of Chicago. How is Wagoner responsible for that? I can understand you're upset and worrid, and have been for a long time, but GM has been making a last stand at the Alamo and the bullets have just run out. You think firing Bowie or Crocket or Travis would have made any difference at all?

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It's not like the UAW hasn't given up anything. I am not a union supporter, but it isn't easy for union management to go to their members and say, 'hey, boys and girls, I have a 50% pay decrease coming up."

HOW MANY ON THIS BOARD COULD ACCEPT A 50% PAY CUT?

I'm with Grif on this one: the degree of malice around here and on the major news outlets is staggering. If you were on the Board of GM in '85, what would your decisions have been? They invested in new factories. They 'created' Saturn. They invented the truck bubble (because Japan had no trucks). Were all of these tactics successful? No. But there is a precedent of another industry that America once dominated and now has no play in: electronics. I wonder if the Board members of Zenith, RCA and others knew what was coming in the early '60s when Japan Inc started dumping crappy transistor radios and cheap B&W TVs on our shores.

What we, as a nation(s) have to decide is: ARE WE WILLING TO SUPPORT OUR WAY OF LIFE OR NOT? It's that simple. To expect Detroit to compete with nations like Japan (closed market) and China (1.2 billion cheap laborers waiting in the wings) is ridiculous. Masterfully, Detroit has been maneuvered into a situation where they have slashed and downsized to the point where they are virtually irrelevant. Twenty five years ago, they accounted for 75% of the market and the jobs. Now, it's substantially less. Now, many pundits will tsk, tsk and declare,'well, who cares if Detroit goes down - it's not like they employ many people.' Masterful, absolutely masterful.

It's a pretty simple decision, guys: are we going to be part of the solution, or part of the problem?

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A challenge all American industries face is creating jobs you can't outsource. If a person in China can assemble a car just as well as a person in Detroit and does it for 1/4th the pay, companies will build the car in China. Detroit has to find a way to out innovate Japan and China, build something they can't build and make it better than they can. Make a Volt that goes 300 miles instead of 40, or the same body gap tolerances of a CTS into a Cobalt, or a two-mode hybrid Cruze that gets 70 mpg, or a CTS with an 8-speed transmission and bio-diesel engine. Detroit and any other American person or business has to compete with the whole world, and there is a lot of talent and competition emerging from all over right now.

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Here's my take:

If RW & Co. knew that this day was inevitable, why did it take 7 years into his 8 year reign of error to address the crushing weight of the healthcare, retiree and union payscale?

Answer: This company was being managed quarter to quarter for the sake of share price, which, not coincidentally, is exactly the shortsighted behavior that has doomed GM to its current fate--and also maximized RW's pay as well.

If RW knew that the product wasn't truly competitive, why did it take years to bring Lutz into the fold? And why were products developed under Lutz' regime still allowed to exit the factories with flawed execution? From Aura's panelled sunroofs that rattled at 5k miles to the Solstice's lack of trunk space for a lunch box---where was RW at that time?

Answer: Playing golf with boardmembers 'bankruptcy-proofing' his golden parachute---while asking Union-members to take a historic pay/benefit haircut.

If RW knew the day of reckoning was coming--and he should of, given that ResCap was a GM property at some point--why wasn't GM prepared?

Where are the international small cars that every other global car manufacturer is capable of? (The war in Iraq is 6 years and counting--no thought that the Middle East might jerk around supplies?)

Here's some more damning evidence of his 'vision':

Why didn't GM go out and get a financing package similar to Ford's? Again, a GMAC owner should have known how historically loose and cheap borrowing was at the time.

Why wasn't Ghosn and the Nissan/Renault people more seriously considered, if he REALLY knew the dire possibilities? If they were a few bad quarters away from disaster (and clearly, they were) why not grab a life preserver?

You guys let RW off way to easily. At the end of the day, he's the captain of this ship---yet I've never heard anything but excuses, half-hearted cost cutting efforts and sales of once valuable (or simply poor) acquisitions sold at fire-sale prices.

You can't even give this guy credit for the GMAC sale---GMAC couldn't borrow money at competitive rates at the time of the sale to CERBERUS--that's why it was sold---the dangerous, predatory mortgage lending went on unabated while Rick was in charge----ironically, it was Rick's mismanagement of that sub-prime lending that has led to the current financial crisis and lack of available funding for the ultimate sub-prime candidate-- GM itself!(--see where DiTech puts its Billboards for firm evidence of this.)

Or, he's just a victim of circumstance. Please. :rolleyes:

Edited by enzl
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Masterful smk, that explains why Toyota builds all their cars in China instead of the US. Oh wait, they don't.

Alone among major industries, automakers know that JIT, lean production, and market responsiveness requires you to build plants to serve local markets wherever possible. You really don't want to be loading a cargo ship full of thousands of SUVS just as oil prices start to rise. It's too late to cut production when they're halfway across the Pacific. Haven't you noticed BMW, Mercedes, Hyundai, Kia, Nissan, Honda, Toyota and now VW building more and more plants in the US? It's not just a matter of labor costs and tariffs. It's lead time and transport, and inventory control.

But then that's typical of the dime-a-dozen MBA's on Wall-Street who only know how to manage a paper trail, and have driven one business after the other into the ground. I'm sure GM's bankers are still asking why they build cars in the US instead of China, and why like Chrysler they weren't taking to Great Wall about importing 20-year-old carburetted Hiluxes to replace the Colorado.

Case in point: Oneida used to make cultery and china in the US, in company-owned factories. They were premium products and they could charge what they wanted to compete with American and European competitors whose costs were similar. Then they decided to outsource everything and sooner than you can cash your redundancy check they were bankrupt. Brilliant.

Edited by thegriffon
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some things it does not make sense to make here. their transaction price is too cheap and labor cost too high here to do.

and then there are things like cars.

i would really like to know within the last 5 years of anyone who has suffered catastrophic personal torment in the last five years from owning a domestic product.

even as late as 2000 or so, people were still buying lots of domestic cars. the home equity goldmines drove many people into luxury makes, because they were niche players and there were so many brands (too many?) in that end of the market. Most of GM's stuff was blue collar, and the cadillacs were not up to date. Pretty soon trucks are what is keeping GM afloat. Of course you are going to make as many as you can, volume and margin? HELLOOOOOO.

going from 2 dollar to 4 dollar gas killed trucks. at the same time, the home bust forced people out of their leased lexus RX and into a highlander. more folks buy import brands for the first and second time.

pretty soon there is lots of competition for your dollar. its natural with that many choices for the market to get watered down. What is unnatural is the market place's reward for mediocrity (toyota). And now that is the standard?

I actually tend to think most people's opinions against GM are still relative to interiors. People got used to plush Audis and Mercedes and such. GM was putting cost cut interiors in their cars to shave whatever costs they could think of. Most people who can't think for themselves then form their car purchase on a few things

1. status-what will people think of me if i drive a CHEVY? ewwwwwww I'll drive a TOYOTA instead (I'm smarter than you)

2.interiors- especially to yuppies and women, things like panel gaps and plastic gloss took a way too proportionate focus in people's mindset. GM never bet the farm on any knockout interiors

3. consumer reports. we are a country of followers. we want the expert to tell us what to buy because the choices are so many and we would rather go by what the website says and blame them if they are wrong, instead of driving and evaluating everything themselves and taking responsibility for their own choice. CR said toyota was it, and hence, game over.

i don't think GM has any ability in the next five years to make a dent on those three things. If people are still pointing to the Corvair and Vega and such for ways to pick on GM, its not anything that will be gone in 5 more years, ESPECIALLY if they declare, then its nothing left.

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