General Motors Restructure

[Magic Medicine]

Ahh, but that is okay. If we are the main consumers and manufactures of products produced with copper, then the circle works. But, you need to manufacture for the countries who supply the natural resources we need. Or supply them with the natural resources we have that they don't. Like fighter jets.... (or food)...

I like the way you think, we get hosed on the trade agreements plain and simple

 

[JupiterSunsation]

The government seems to think it is important for just about every kid to go to college, I keep wondering where all the jobs will be when they graduate.

Education is never a bad thing. Keep in mind many of the industrial/service jobs require smarter people to do them. I have a buddy that went to a Ford sponsered mechanic school. Just to begin he had to have 2 years college. The cars/trucks are heavy on computers and they wanted smarter mechanics working on them.

I recently watched a HBO special about a midwest town that is facing a GM plant closure. It had a weekend racer slant on the story. Guy worked at the plant so he could race on dirt ovals on the weekends. Interviewed several GM lifelong employees and their families. It was a very interesting piece but the common denominator was uneducated multi-generation white trash that has unrealistic expectations towards the government/ employer. These people were an embarrassment to America. The people interviewed felt that the $22 an hour job being offered was underpaying what they thought they were worth. They interviewed many just trying to eek out their employment long enough to get a pension, just like their dad and grandfather did before them. I thought it looked pathetic and yet when the camera panned the parking lot at the plant you would be surprised at how many non-GM cars were there.....

I think the unions have ruined many good companies in America.........

 

[JupiterSunsation]

http://www.hbo.com/docs/programs/dirtydriving/index.html

http://www.youtube.com/watch?v=yhwE4wT08JM

Great show by HBO but depressing also.....

 

[sledge]

Ahh, but that is okay. If we are the main consumers and manufactures of products produced with copper, then the circle works. But, you need to manufacture for the countries who supply the natural resources we need. Or supply them with the natural resources we have that they don't. Like fighter jets.... (or food)...

Agreed! But again the devil is in the details: the U.S. outconsumes every country we trade with. We can produce for our trade partners, but they can't consume as much as we produce and consume.

Our trade deficits are highly correlated to our consumption excesses...plus or minus FX.

 

[RLJ676]

For all. The government will have to support a company which is modeled as a loser forever with our taxes. There is no way they will ever be competitive again.

I don't agree with this at all.

How does wiping the balance sheet clean, and getting competitive labor, etc make GM uncompetitive?

Now if the gov't decides to take over all product decisions, etc, we're screwed. But if (as they claim) that isn't the case, the actual passing of this would make GM profitable at a 10M a year industry......and very, very profitable anywhere near 16-17. This is assuming something similar to this plan happens.




As for "the global market", as I've been saying a global economy is great if you live in the bottom countries, not so hot if you live with the best standard of living in the world. A global economy moves towards equilibrium, which brings down the top and up the bottom. The countries with some degree of protectionism and pride are the ones who will be least affected. We have neither. We have a wide open market, and the jackasses here root against our biggest mfg companies....why, because they had bad luck in the 80's with a transmission. Now they are convinced a jap car is "American" and the only good thing to drive. The rest of the world is laughing at us and our reaction towards our auto industries while they do all they can to save and grow theirs.

 

[Ratickle]

I don't agree with this at all.

How does wiping the balance sheet clean, and getting competitive labor, etc make GM uncompetitive?

Now if the gov't decides to take over all product decisions, etc, we're screwed. But if (as they claim) that isn't the case, the actual passing of this would make GM profitable at a 10M a year industry......and very, very profitable anywhere near 16-17. This is assuming something similar to this plan happens..

Because they are not wiping the sheet clean with a company as a bankruptcy filing would. They still have to support their retiree health care, dental care, etc. Plus the current contracts with modfications, none of which I've seen do anything about the excess benefits pay, When compared to their Profitable competitors. ALl this does is postpone the filing of bankruptcy for a few years until they go completely under. Every car they build loses them money. Only the larger vehicles are profitable.

As for "the global market", as I've been saying a global economy is great if you live in the bottom countries, not so hot if you live with the best standard of living in the world. A global economy moves towards equilibrium, which brings down the top and up the bottom. The countries with some degree of protectionism and pride are the ones who will be least affected. We have neither. We have a wide open market, and the jackasses here root against our biggest mfg companies....why, because they had bad luck in the 80's with a transmission. Now they are convinced a jap car is "American" and the only good thing to drive. The rest of the world is laughing at us and our reaction towards our auto industries while they do all they can to save and grow theirs.

Well said

 

[RLJ676]

Because they are not wiping the sheet clean with a company as a bankruptcy filing would. They still have to support their retiree health care, dental care, etc. Plus the current contracts with modfications, none of which I've seen do anything about the excess benefits pay, When compared to their Profitable competitors. ALl this does is postpone the filing of bankruptcy for a few years until they go completely under. Every car they build loses them money. Only the larger vehicles are profitable.

I don't think that is correct, the retiree health care is covered by the VEBA, which is being half paid in equity. The healthcare was taken off the books in 06 by the VEBA agreement, and now we're further reducing that with the equity swap. This plan (which the bondholders won't agree to most likely) would make GM profitable (EBIT) basically next year, assuming there is any rebound at all (SAAR above 10M). I believe in whole it reduces liabilities by $44B, and the labor costs by $4 B annually.

Have you read the S4 from yesterday for this debt for equity exchange? It spells all this out, and I don't see anywhere it sets up a continuing need for taxpayer money. The key is the gov't staying the f' out of the business and letting us make the right cars and paying back the treasury ASAP.

 

[sledge]

paying back the treasury ASAP.

I haven't read the filings. But isn't that the back-end crux of a lot of all the bailouts - there's no defined exit strategy. It's one thing to be on the hook for an identure which can be repayed according to terms. Is there anything spelled out which will explicitly allow the company(ies) to buy back the equity? Or will Treasury have to file a shelf registration for an eventual public offering?

The actual dollar amount really is a pittance compared to the budget as a whole. But the lack of clearly laid out plans from the administration is what bugs the sh!t out of me.

Can't wait to see what kind of people get put on the Board of Directors. Will be fun come UAW contract negotiation time....

 

[RLJ676]

I haven't read the filings. But isn't that the back-end crux of a lot of all the bailouts - there's no defined exit strategy. It's one thing to be on the hook for an identure which can be repayed according to terms. Is there anything spelled out which will explicitly allow the company(ies) to buy back the equity? Or will Treasury have to file a shelf registration for an eventual public offering?

The actual dollar amount really is a pittance compared to the budget as a whole. But the lack of clearly laid out plans from the administration is what bugs the sh!t out of me.

Can't wait to see what kind of people get put on the Board of Directors. Will be fun come UAW contract negotiation time....

The plan talks on payback of the loan portion, the equity is much less clear. I'm not sure if it lays out how they'd exit out. I'm not sure even what the status of their stock would be if it's just standard shares or what. Frankly, I'd much rather GM not swap the gov't debt to equity and just take a SAAR of 11M to be profitable and pay them back ASAP and get them the hell out of there. They are the ones though who demanded liabilities reduced by 90%, which includes their debt.