Posted on 03/22/2005 2:49:46 PM PST by quidnunc
It's hard to believe that the bond rating of General Motors may soon fall to junk, but it's true. Last week, GM announced an expected loss of $850 million, about $1.50 a share, for the first three months of 2005. The company slashed its profit forecast by $2 billion for the year.
It's troubling news, obviously, for GM's shareholders and employees. But if more Americans paid attention to the troubles facing General Motors, they might grasp the urgency of America's Social Security crisis. General Motors is going bankrupt for the same reason Social Security is going under: unfunded liabilities in the form of promised benefits to retirees.
Over the decades, union leaders have won such generous pension and healthcare benefits for GM employees that today GM is the world's largest private consumer of health care, covering the medical costs of more than 1 million people. Health care represents more than $1,000 worth of cost, on average, in every vehicle General Motors produces, its chairman, Richard Wagoner, has said.
GM spends more on health care than on steel. The health-care costs about $5.5 billion a year and growing are fixed. GM's unfunded health-care obligations amount to $57 billion. GM also holds America's largest private pension obligation. The company estimates its total future American pension costs at $87 billion.
The company's total market valuation stood last week at $16.39 billion. General Motors was once the leading car manufacturer in the world. Today, it's a pension fund and a health maintenance organization with a relatively small car-making operation on the side.
-snip-
(Excerpt) Read more at nysun.com ...
I'm not claiming to be a math whiz, but I'd check your numbers.
Here : "General Motors is going bankrupt for the same reason Social Security is going under: unfunded liabilities in the form of promised benefits to retirees"
That number includes retiree benefits, which is what's really killing GM.
They're talking about the new Ponticac G6, but what they're saying is that it has been a flop.
Let us not forget that southern Ontario has subsidized the auto sector to a highly valued position: southern Ontario now out-produces Michigan in auto production. The cruel irony is that as their dependence on American companies for jobs grow, the shrill anti-Americanism also grows.
GM is worth 27 billion...they have outstanding debt well in excess of 100 billion.
>>>>GM's pension obligation is $3 BILLION overfunded. They don't need to make a contribution through the end of the decade.
It was the union that put a stop to workers being forced to work over 40 hrs without o/t. They have done a lot of good over the yrs but now they are corrupt!Wrong on the 40-hour week. (Right on corrupt.)
A standard 40hour week is a union creation that defies the historical reality of automotive production. The automotive business is both cyclical and seasonal. It was the New Deal that imposed 30, 35, 40-hour weeks upon the industry, which, in turn, created this idea of "over time," which never before existed. The industry tried and tried to explain to the morons of the "brain trust" that fewer hours in November plus extra hours in April added up to the same as even hours all year long.
Besides, auto factory workers regularly got extra pay for extra work, for that meant $$ for the factory. "Piece-work," which the New Deal outlawed, was an excellent moderator of work flow and wages, and it was the best way for smaller manufacturers to compete with the Big Three, which otherwise creamed the rest on scale and productivity. When FDR and the UAW imposed regularity on auto employment, they merely assured that there would be fewer automobile producers, and, thus, fewer overall workers.
Yes, unions have brought benefits to workers. But they've taken away more money from the workplace in general than they've given to those workers they represent.
Yup the UAW has become what they organized to prevent
Contract is up in 2007
I only have a little over 2 years left and I am laid off right now myself
:>)
GM has a fleet of the same car...some more $ and some less $, but all the same with a different name.
If they come out with a 40 mpg SUV with 2/3 the power of a Yukon and a price in the low 20's and a warranty in the 100,000 range, then they'll move more vehicles than Japan, Korea, and Germany combined.
Who would have thought that national health care would become a competitive advantage?
so sorry!
maybe gm will realize that their dealers don't treat their customers very well, and that a gm car isn't the equal of a toyota.
thank a union and gm management for this.
Yep, a union shop can be just like letting the children run their school. The children lack the knowledge and judgement to run their school and that arrangement doesn't work well....lol
GM losesmoney on every car they sell..Perioed..Buiyers arfe conditioned to wait for the rebates and the zero % financing..which costs huge $$$$..plus, they keep on making the cars, as the inventory piles up on dealers lots..GM books a "profit" when the car leaves the manufacturing facility..Also,as they cut prices..the residual value that GM assumes on its leases is pure fiction...and they will have to eat that very soon..It's a death spiral..
I was wondering about that myself...maybe they'll just FEEL like they're a hundred? Baby Boomers are big on people only being as old as they feel, after all.
Not quite. GM makes money on SUV's, trucks, and Cadillacs IF they sell enough of them to cover the fixed costs of making these vehicles. They also make a lot of money on car financing. But yes they do lose money on their small, mid-sized, and some full-sized cars.
The UAW is a parasite that is finally killing its host.
Then what will those beer-bellyed bums do for a living?
The unions probably see their interests as being different from that of the shareholders, though IMO, they should be the same.
bump
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