GENERAL MOTORS, BANKRUPTCY AVOIDANCE?

Is General Motors Stalling Out?[1]Obama: Auto industry faces 'perfect storm'[6]
_____________________
GOOD MORNING FLINT!
07/16/08, BY Terry Bankert

Full cited article at http://goodmorningflint.blogspot.com/
Flint Talk chat snippets at http://flinttalk.com/viewtopic.php?p=32176#32176 ____________________


100TH BIRTHDAY SPENT IN AN INDUSTRIAL NURSING HOME-GM
GM, turning 100 this year, reported its largest annual loss in 2007, $38.7 billion, after a tax-accounting change, and hasn't posted a profit since 2004.[3]

WHAT WILL IT TAKE TO FIX GENERAL MOTORS
"I'm sickened by this," said John Lauve, 66, a retired GM manager from Holly, Mich., who has been an outspoken critic of the company's board of directors in recent years. "We can put a man on the moon but we can't fix GM."[2]

OBAMA RECOGNIZES THE PERIL OUR HEAVY INDUSTRIES ARE IN
Democratic Presidential hopeful Sen. Barack Obama said today that the job cuts at General Motors Corp. were "a sober reminder of the difficult economic times we're facing," and said the U.S. auto industry was facing a "perfect storm" of trouble.[6]

NO DIVIDEND/PROFIT TO GM OWNERS
General Motors, buffeted by a U.S. sales collapse and three years of losses, will suspend its dividend for the first time since 1922, cut the management payroll by 20 percent and sell assets to raise at least $15 billion in the next 18 months.[3]
GM did not say how many non-union jobs it would eliminate...[5]

About $10-billion of the $15-billion will be generated by the cost-cutting moves. Another $2-billion to $4-billion will come from asset sales. Tapping credit markets should add another $2-billion to $3-billion of financing.[4]

IS OUR COMPANY DYING, WHOSE COMPANY TOWN WILL WE BECOME?
It's hard to tell whether General Motors (NYSE: GM) has just stalled or is careering toward a wall.[1]

OBAMA MEETS WITH AUTO EXECUTIVE TO CREATE NEW POLICIES TO HELP THE AMERICAN AUTO INDUSTRY
Obama has reached out to auto industry executives in recent weeks, following a primary campaign where he frequently focused on the industry's opposition to tougher fuel economy rules. In his statement, Obama noted he had met with GM Chairman Rick Wagoner and Ford Chief Executive Alan Mulally to talk about the industry's concerns, and said the industry's success was crucial to the U.S. economy.[6]


GENERAL MOTORS, IS BANKRUPTCY AN OPTION? THERE IS TALK.
The spending reductions accelerate Chief Executive Officer Rick Wagoner's efforts to conserve cash and avert bankruptcy as a slowing economy and record gasoline prices push U.S. industry sales to a 15-year low.[3]

In addition to dreadful market conditions, GM also faces collapsing investor confidence amid whispers on Wall Street of a potential Chapter 11 bankruptcy filing, which has helped send the company's share price to below $10 for the first time since the 1950s.[4]

GM said it "anticipates it will report a significant second-quarter loss, driven in part by the previously disclosed negative impact of the American Axle and local union strikes in North America, as well as the continued weakness in the US car market and adverse vehicle segment mix".[5]

I WONDER IF WAGONER HAS A GOLDEN PARACHUTE
Whichever is occurring, the company, in a program that CEO Rick Wagoner calls "a plan to win," rather than simply to survive, is undertaking some draconian measures to try to fend off the automotive grim reaper. And it's all taking place against a backdrop of U.S. auto sales that have plummeted amid skyrocketing gasoline prices.[1]

Embattled General Motors Corp. will attack its looming liquidity crisis with another round of drastic cost cutting and a substantial gamble that the U.S. auto market will recover from its deep slump by 2010.[4]

Waning U.S. consumer confidence and a sharp rise in gasoline prices have sapped sales of GM's profitable pickup trucks and SUVs, contributing to a 16-per-cent sales decline through June. In making its latest plans, GM is assuming annual U.S. industry sales of 14 million units and oil prices ranging from $130 to $150 U.S. per barrel by 2009.[2]

GM..BUILD A SAFE, HIGH MILEAGE, ALTERNATE FUEL CAR WITH A GREAT RADIO!
With its fortunes in tatters, the company announced on Tuesday that it will cut its number of salaried workers, its production, and its dividend. It'll also borrow $2 billion to $3 billion as it tries to weather the downturn in the U.S. market. The ultimate objective is to raise about $15 billion, an amount it hopes will sop up losses and reverse the fortunes of its North American operations.[1]

SLICING THE WHITE COLLAR, THE BLUE COLLAR SOON TO BE DICED
General Motors Corp. is slicing into its white-collar ranks in both Canada and the United States and could shut down its Oshawa, Ont., pickup truck plant earlier than expected as it takes further steps to shore up cash in the worst North American vehicle market in a decade.[2]


MOST OF US THINK YOU COULD FIRE 80% OF THE SALARIED RANKS
The company will cut its truck production by 300,000 units, double the expectation of just a month ago. And it'll trim the ranks of its 40,000 salaried employees, mostly through initiatives. The objective there is to lop about 20% from salary costs in the U.S. and Canada.[1]

ATTENTION UNIONS THE SALARIED WORKERS ARE LOSING 80% OF THEIR HEALTHCARE!
In a wide series of moves aimed at bolstering liquidity by $15 billion U.S. over the next 18 months, GM said yesterday it would cut its salaried workforce in both countries by an unspecified number, freeze pay for remaining salaried employees until 2009, eliminate health-care coverage for U.S. salaried retirees over 65 and cut cash bonuses for executives. The company estimated the white-collar cuts will reduce cash costs by more than 20 per cent, or $1.5 billion U.S., in 2009. It has about 2,500 salaried workers in Canada.[2]

WHO IS BUILDING THE CARS THE EMERGING MIDDLE CLASS IN CHINA IS BUYING?
GM isn't, of course, the only car company that's making draconian changes in the face of a near-market crash in the U.S. Only Honda (NYSE: HMC) and Hyundai of the bigger carmakers reported that their sales grew last month, and for Honda, it was by only a single percentage point. Last week, Toyota (NYSE: TM), which is gaining steam on GM and Ford (NYSE: F) for global car sales supremacy, announced that it would shut down U.S. truck and SUV production and begin making its Prius hybrid here.[1]

SALARIED MIDDLE MANAGERS ARE AT FAULT, THEY SHOULD ALL BE FIRED
Sales of the Prius fell by 34% in June at precisely the time that buyers are looking for more efficient vehicles. The culprit? Toyota failed to keep up with demand for the vehicle, which gets about 46 miles to the gallon. So you have to wonder why the company is just now starting to turn out the model in our country.[1]

HUMMER ON THE BLOCKS
The Detroit-based automaker said it would also suspend its 25-cent quarterly stock dividend immediately, look at selling $2 billion to $4 billion worth of additional assets, including its Hummer brand, and tap capital markets for at least $2 billion.[2]

THE BEAN COUNTER HAVE WEIGHED, THE ENGINEERS ARE NEXT.
"What we saw today is the accountants' plan," industry consultant William Pochiluk, president of AutomotiveCompass LLC, said yesterday. "What we haven't seen yet is the product plan. What's missing is a very aggressive product plan."[4]

WILL GM EVER BECOME A SURE BET AGAIN?
As for GM, whether it's Bear Stearns, an IndyMac, or potentially other formerly strong U.S. institutions, we now seem to be living in a time when downward slides are awfully hard to reverse. So good luck to Wagoner and his minions. But Fools, there are lots better places for your shekels than the shares of automakers that suddenly seem unbelievably cheap.[1]

OBAMA: WE NEED NEW DIRECTION
"When a mainstay of the American economy is forced to make a restructuring decision like the one General Motors is announcing today, it is a sober reminder of the difficult economic times we're facing and of why we need change and a new direction in Washington," Obama said[6]
–END ARTICLE

posted here by
Terry Bankert

-- where did this stuff come from
[1]
The Motley Fool
http://www.fool.com/investing/general/2008/07/15/is-general-motors-stalling-out.aspx

[2]
The Gazette
http://www.canada.com/montrealgazette/news/business/story.html?id=3f751cad-1d2c-43af-be48-8bca98836b0d


[3]
The Seattle Times
http://seattletimes.nwsource.com/html/businesstechnology/2008053805_gm16.html

[4]
The Globe
http://www.theglobeandmail.com/servlet/story/LAC.20080716.RGM16/TPStory/Business

[5]
The Dispatch
http://www.dispatch.co.za/article.aspx?id=225137
[6]
Freep.com
http://www.freep.com/apps/pbcs.dll/article?AID=/20080715/NEWS15/80715042/1002

[trb]
Comments of Terry Bnakert to inlcude cap headlines unattributed.
http://attorneybankert.com/

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BY Terry Bankert 7/16/08.http://attorneybankert.com/
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