I am surprised this has not been discussed here on NAM. Yesterday the debt ratings of both GM and Ford were down graded by Standard and Poor to junk status.

http://www.usatoday.com/money/autos/...-gm-junk_x.htm

 

I thought GM's bonds have been rated junk for a long time. I did not know about Ford. I read that GMAC made money, but the pension burden per car sold by GM is tremendous. Maybe this is one of the few things that unions cannot blame on Japan, Inc. or capitalistic China. With such pressures it is no wonder the products are suffering too. Perhaps GM and Ford will follow the airlines in share price, finance, labor, etc. Tumultuous times.

 

Im a supplier for GM and several of its major Tier1's... had 2 Teirs go bankrupt already this year. it's a big concern...

Delphi and I think it was Visteon that turned to junk status a couple of weeks ago too.

 

kenchan: Do you and others who trade with GM believe that this may be a long term ploy to gain leverage over the unions. The financial problems are real, but could management be allowing things to exacerbate as a strategy? Or have I been brainwashed by Michael Moore?

 

GM still doesn't get it. It's the product stupid. Unfortunately the top management has been focused on the stock payoffs for themselves for decades now. It's about time that reality has caught up with them. There are only 2 decent GM domestics available -- the Corvette and the Cadillac. Not surprisiingly they have been produced by the same engineering/design teams.
GM's philosophy has been the same for generations -- "We're in the business to make money not make cars". I feel sorry for the workers who expected the promised pension payoffs who aren't going to see sh*t when they retire because the General is going to hide behind the chapter 11 laws to get out of their of obligations. Funny that the US Congress just passed stringent bankruptcy conditions for individuals, but corporations can abdicate their financial obligations under chapter 11 with no serious ramifications. Look at MCI (Worldcom). A huge scam. The prinicipals should be in jail for decades. Anyone believe this is going to happen? In this country today?

Frankly I wouldn't mind seeing GM and Ford go under. It might be a huge wake up call to the arrogant, insulated CEOs and "upper management" of so many US corporations.
But I'm afraid it will take many more corporate collapses before the government (or the people) demand real accountability.

 

There cars are to big for the most part. Gas guzzlers .

 

if they lead the industry. But paying about $1500 a car for pension costs (GM) is a real boat anchor to profitiability. Some of the problems are real (anyone with defined pension plans that had stock in the late 90s is fealing the pain), some are self inflicted (GM has been competing with it's own divisions since formation, and both milk profits from finace arms and low tech trucks and SUVs).
Everyone is guilty here. The management for sure... But none of the employees was too unhappy as the profits from past good times were used to make promises for future benefits... Did you know GM is the largest private provider of health care benefits in the country? And fighting to retain jobs in the face of productivity enhancing automation is good for union members in the short term, but slowly strangles the goose that lays the golden eggs.

And the cars suck. There are some nice ones every now and then, but no one can use up cabin space the the interior designers at Pontiac!

Even if the cars didn't suck, and the plants were efficient, and they lead instead of lagged in technology introduction like Hybrids (one of the fastest growning market segments for cars), they would still have a huge pension overhang......

It will be bumpy for them for years, decades even....

Matt

 

Jackass. Their cars are large because that's what people want to buy.

GM is like a 200 year old oak tree. It rots from the inside out and one day it will die. Perhaps its time has come. Hopefully the GM worker bee won't get too screwed...

 

I have enjoyed your posts because they have been well considered and informative, but this seems out of character. Even if in jest the term "jackass" in reference to a NAM poster is unworthy.

Since this thread has been revived I just learned that the GM/Toyota joint venture (NUMMI) in Fremont, CA, might be terminated. Toyota management has been appalled by its inefficiency. The plant may be worth more as real estate than as a factory. I hope its 5,000 workers can be retrained to help promote or develop that real estate.

 

Sorry, but sometimes I just have to say what I'm thinking.

My wife sometimes calls me *******. Feel free to do the same when I deserve it!

 

plugot -

RIGHT ON... Too many companies (and people for that matter) are concerned with 'shareholder value' instead of producing a good product. They have it backwards. You see, if you build a great product at a fair price, people will want it, will buy it, and you won't have to worry about abstracts like 'shareholder value'... it'll take care of itself. MBA weenies.

Sadly, you are also right about our wonderful elected officials (..and YES, I DO VOTE!! - do you?...). Politicians in Washington seem to want to enact laws that protect legal entities like 'corporations' before laws that protect people. Your example of the recent revision of backruptcy laws is a great case-in-point... Folks in washington are listening (and taking money from) the banking/credit card industry/lobby instead of watching out for their constituents. But no one even notices. The credit card industry made a record 28 BILLION in profit last year, but I guess that isn't enough. Every other day I get some junk mail offering me 'instant' credit, low rates and no payments for blah, blah, blah... but they see us all as a bunch of deadbeats out to 'cheat the system'. Gimme a break.

I guess it must be the millions and millions of people running around declaring bankruptcy over and over every year and just living high on the hog of borrowed money!!

...I dunno, anyone I've ever heard of, who HAD to declare bankrupcy did it with extreme regret and shame. It was a total last-resort, and it ususally occured due to a health crisis, death in the family or divorce.

GEE, aren't you all glad our wonderfully powerful nation can afford to throw $20 million dollar cruise missiles around but we can't seem to come up with a plan that protects americans from this sort of personal catastrophe?!!

...Where is the country I grew up in??? ..I want the cold war back.



(***OK, Political commentary over...I now return us to the happy land of Motoring****



- - michael

 

Yeah I vote. Always the guy (sometimes the gal, no sexism in my voting) who comes closest to speaking truth. Of course, they always lose. - -

 

You sure?

 

Or, when the contract negotiations prevented automation and plant closings because of job loss. I'm sure most worker bees didn't understand that this just choked the goose that layed the golden eggs.... But then management, and especially product planning did that too!

Everyone was greedy here, holding onto a past that was never to be again, and loosing the ability to create the future that they wanted (unless economic failure was the plan all along!)

Just look at the United workers. Sure they've been screwed several times, sometimes self inflicted. But to have work stoppages at United now in complaint of the pension divestiture will just qualify them all for unemployment. Think that's what they want to happen? Right now, any job is better than no job....

Matt

 

Yes! I vote for you! LOL

Phil
(the ******* )