GM motors going in the fottsepts of Rover...

[02GF74]

Thought I'd put the scarers on ya!!

Can't find the web psage but there is one that is saying there is 30% chance the GM will file for bankrupcy after the collapse of Delphi (parts suppliers to GM). Some stuff about losing sales here

Will that mean GM owend companises, of which Ford, Vauxhahll, Land Over(?) etc. will follow suite?

now discuss.

[Mo Murphy]

I think you'll find that GM are a little bigger than Rover were and that GM owe a great deal more money than Rover ever did, both of which make it unlikely that GM will go under.

Mo

[yellow]

Ford part of GM? That is news to me... I would guess that GM would take a blow, but that any blow that Ford would take (And thus Land Rover) would be independent from GM...

[RocKeR]

Ford part of GM? That is news to me...

Me too. Ford, and therefore LR, are nothing to do with GM (See here), and would therefore probably benefit from a GM downfall. Nothing scary here for LR..

B)

[headhunter]

At least if ever Ford went under, Land Rover owners would be OK except for the latest models, due to the very strong range of independent parts suppliers now in existence.

John

[john cranfield]

At least if ever Ford went under, Land Rover owners would be OK except for the latest models, due to the very strong range of independent parts suppliers now in existence.

John

If GM were to file for bankrupcy the chances of the company collapsing are slim. Too many companies have too much at stake and too many jobs on the line for various goverments to allow that to happen.

John

[02GF74]

Ford part of GM? That is news to me...

oh well, I thought GM owned everybody, including ford and ford owned every body else, so nothing to worry about then.

[Neil Marshall]

Delphi filing for Chapter 11 indicates a big hole in the accounts - however, under Chapter 11 protection from the courts, Delphi can cut all kinds of costs, including pension and health care contributions and leave debts unpaid, so they are now in a stronger position financially. Steel costs have also fallen back - a mega problem last year as GM refused to pay more for parts.

GM is heading for sh*t creek, however. IIRC 15% of GM's costs are so-called 'legacy costs' - huge healthcare obligations for retired employees agreed as part of a deal made 15 years ago with the United Auto Workers Union. So this company with 300,000 employees, is supporting the number of retirees appropriate for a company with a workforce of 800,000, adding $1,400 to the price of every vehicle built in the United States.

GM can't shrink as most European players have done - because of these union agreements, GM can't close plants or lay off workers without paying a stiff penalty, no matter how far its sales or profits fall. It must run plants at a minimum 80% capacity, whether they make money or not. If it halts an assembly line, GM must pay laid-off workers and foot their extraordinarily generous health-care and pension costs for the next two years. Current plan is to wait until older retirees die off, but sales and market share are falling. And there is an analogy with Rover - GM grew rich by making a vehicle for every market segment, but this has degraded into a series of contrived brands, most with little identity, and bland, overlapping product lines. So GM's "performance" division, Pontiac, is one of four units selling essentially the same family-hauling minivan. So it's a time bomb ticking away.

Neil

[Bush65]

I seem to remember that both GM and Ford have been making big losses.

[Neil Marshall]

I seem to remember that both GM and Ford have been making big losses.

GM's North American automotive operations lost $2.5 billion in the first half of the year. GM Europe made a tiny $37 million profit in the second quarter, its first quarterly profit for five years. Ford's precarious position can be seen by its sale of Hertz Car Rentals last month for $5.6 billion; its North American auto operations declared a pretax loss of $1.21 billion for the second quarter. Ford has lost US market share for 28 consecutive months - this was arrested in July and August only because it allowed consumers to buy Ford vehicles at employee prices - and third quarter losses are expected to be posted on Monday.

[landi41]

GM's North American automotive operations lost $2.5 billion in the first half of the year. GM Europe made a tiny $37 million profit in the second quarter, its first quarterly profit for five years. Ford's precarious position can be seen by its sale of Hertz Car Rentals last month for $5.6 billion; its North American auto operations declared a pretax loss of $1.21 billion for the second quarter.

No worries....In furture all North American cars will be built in China with cheap labour and then everyone can retire :)

[Neil Marshall]

No worries....In furture all North American cars will be built in China with cheap labour and then everyone can retire

Dave, my wife and I spent some time with friends in Minnesota this February to enjoy driving in the snow and to shoot pistol again. We went out with one suitcase each and both came back with two, bursting at the seams with clothes, outdoor gear and stuff - better quality and a third of the UK price. When we got back and cut all the tags off we couldn't believe it....we couldn't find a single thing that had been made in the US. Stuff like Columbia and Ralph Lauren still use US cotton, but they're sewn in China.

We used to have a car manufacturing industry in the UK - now we have screwdriver operations, with most of the parts sourced from Taiwan, China or Eastern Europe. Germany will have to go the same way. I've got loads of chums in the US who run stamping or precision metal manufacturing plants and they're only just waking up to their future - making the easy stuff has gone, so they're all scrambling for high added value manufacturing where, unfortunately, volumes are much lower and investment costs are frightening.

Hate to say it, but the US will go the way of the British Empire and the world will be run by our friends in Beijing.

Neil

[landi41]

"Hate to say it, but the US will go the way of the British Empire and the world will be run by our friends in Beijing."

All very interesting Neil............. (glad you enjoyed your trip over)

Anyway here is what i can't figure out..........

With all of the brite economists, etc. in the US (i'm thinking of Harvard here)

Do they not realize that when they downsize American industry and cut jobs to the very bone that there will be no one with any amount of money to buy anything...no matter where it is made?

and i agree on your comments about China will be the new "player" on the worlds stage, the have had over 5000 years to get their act together and it will happen..............

As an aside.............. Our Canadian politicians ever ready to stradle the fence (and please the Americans) have recently come up with a paper supporting Taiwan independence................

They were warned (just the other day) by the Chinese Ambassodor that this position would have grave consequences for Canada/China relations.............

Ho Hum...how is your day going ?? :)

[Neil Marshall]

As an aside........... Our Canadian politicians ever ready to stradle the fence (and please the Americans) have recently come up with a paper supporting Taiwan independence.........They were warned (just the other day) by the Chinese Ambassodor that this position would have grave consequences for Canada/China relations.........

Wise men should back the winners!

I believe all of this stuff is Darwinian - you can postpone the inevitable, but not stop it occurring. Fact is that manufacturing migrates to the cheapest source of production. The Chinese have their own problems, with workers wanting more for their labours, but they will go on being the cheapest place for a long time yet - think of the number of poor rural peasants who would do anything in the short term to raise their standard of living. India will come next. The US has been protected historically because it has operated in a bubble - the chickens are now beginning to come home to roost.

Neil

[landi41]

We are home

:)

[Neil Marshall]

GM posted it's third quarter figures today and yet again they're a stinker! The North American operation lost a further $1.6 billion due to lower production volumes, continued increases in health care costs, higher material costs, and a shift in vehicle mix away from full-sized sport utility vehicles. GM's market share in North America was 25.6% in the third quarter of 2005, compared with 28.5% a year ago. 25,000 production jobs are going, along with more plant closures, so that each plant can operate at 100% capacity - a target that's just not credible. Retirees are going to accept a reduction in health care support.

The pressure is on in Euorpe too. The Hyundai-Kia group has announced plans to extend its dramatic growth pace in Europe by the end of the decade to more than 1.3 million annual sales - virtually the same level as Ford, GM and Renault. We're going to need a new Smiley soon, one with slanted eyes.

Neil

[Neil Marshall]

This is what one leading analyst said earlier today about GM:

Just how serious are things at GM? Well, the company has

announced a whopping third quarter loss of $1.6 billion -

much worse than expected.

For the world's biggest carmaker (let's get that one in

while we still can) the business of making and selling

automobiles is horrendously unprofitable. In fact, if it

weren't for the finance arm, the bottom line would be even

worse. For some time now, both GM and Ford have been

relying heavily on their finance operations (prompting

some to observe that they function primarily as finance

lenders with the business of car making a loss-leading

subsidiary activity).

But GM's finance arm, GMAC, has been unable to paper over

the cracks for a while and the scale of the latest losses

is certainly worrying.

Is there some light in the gloom for GM this week? Well,

at least the announced deal with the UAW on healthcare

will provide some respite and GM is saying that it will

yield a saving of a billion dollars a year. Investors

agreed that the deal sounded good, but against the scale

of GM's legacy liabilities - tens of billions of dollars -

the task ahead still looks pretty daunting.

Is the deal a sign of a new and more accommodating

attitude from the UAW and how far will the UAW accept

further cost cutting, which many observers have concluded

is still needed? We'll have to see, but there could be

some trying times ahead as GM tries to keep the momentum

going and the UAW faces pressures on several fronts (with

industrial action at Delphi still possible).

Ultimately, it is hard to get away from the fact that GM

is not performing at all well in the US marketplace

(though Europe is at least looking better lately) and

hasn't been for some time. The buck stops there: what do

consumers want to buy and at what price?

It's the underlying competitiveness deficit - the high US

cost base is just a part of the story - with the Japanese

makes, in particular, which should be keeping Rick Wagoner

awake at night.

While a few steps in the right direction were taken this

week and the glass is maybe half-full rather than

half-empty in terms of attitudes and a general acceptance

that some things have to change, there's a long way to

go.

Also today, Ford announced third quarter losses:

The Ford Motor Company said today that it lost money in the third

quarter as deep discounts and falling sales of profitable sports utility

vehicles almost tripled the loss at the automaker's North American

division. The quarter marks a turning point for the company, because

until now it had been profitable, unlike its rival General Motors. It was

Ford's first quarterly loss in two years. But like its rival's, Ford's

domestic operations have struggled mightily because of competition

from foreign automakers and its high labor and health care costs.

The company will announce a restructuring plan, including "significant

plant closings," in January, William Clay Ford Jr., the company's

chairman and chief executive, said today in a conference call with

analysts and reporters. He had previously said the company would

disclose those plans when it announced its third-quarter results, but

today he said that he wanted to give two executives who were recently

appointed to the task time to develop recommendations.

"This is certainly not business as usual, we need a dramatically different

business structure and we need innovation to drive everything we do."

Mr. Ford said the company was also in negotiations with the United

Auto Workers to make a deal similar to the one the union reached this

week with G.M. on reducing health care expenses for retirees and

workers. The U.A.W. was expected to provide details of that deal, which

G.M. says will cut $1 billion in annual health benefits, during a news

conference today.

Ford lost $284 million, or 15 cents a share, in the third quarter, compared

with a profit of $266 million, or 15 cents in the quarter last year. Revenue

rose 4.4 percent, to $40.9 billion in the latest quarter, from $39.1

billion a year earlier.

Losses at the North American division, the company's biggest,

jumped to $1.2 billion from $481 million a year ago. For much

of the summer, Ford matched G.M.'s aggressive employee discount program

in the United States, slashing prices by thousands of dollars on some of its

most profitable trucks and sports utility vehicles.

The company said the summer incentive program, which was responsible for

rising sales in July and August, will reduce sales in the current, fourth, quarter

of the year. For the full year, the company expects to sell slightly more vehicles

than last year. "It's very reasonable to assume that we are going to have a

payback coming," Don Leclair, executive vice president and chief financial

officer, said in the conference call.

Sales of sport utility vehicles and trucks have also fallen as gasoline prices

have risen, and for a time last month spiked past $3 a gallon. "The future

arrived faster than we expected because of this year's sharp spike in fuel prices,"

said Mr. Ford, who noted that the company has already been turning its focus

to producing more cars and crossover vehicles that are more fuel efficient and

smaller than sport utility vehicles.

Ford's European operations reported a wider pretax loss - $55 million, up from

$33 million a year earlier - because of higher material costs. Revenue at the E

uropean unit increased 8.5 percent, to $6.4 billion. The company's Asian and

African businesses reported a $21 million pretax profit, down from $35 million

last year. But the company's investment in Mazda produced a $112 million profit,

up from $13 million. Ford Motor Credit, the company's profitable and successful

finance arm, reported a fall in profits - down $157 million from last year, to $577

million. The company said borrowing costs increased and its loans to customers

were bringing in less money. Mr. Ford said the company intended to keep the

division in the company, drawing a distinction with G.M., which earlier this week

said it was considering selling a majority stake in its finance arm.

Neil