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GM's financial disclosures have been rather eye-opening as of late. The Detroit News reports The General just revealed it will be making annual payments to Delphi through 2015– or possibly through 2020– for "labor costs." The payments will run just $300 – 400m per year, but as they say, a hundred million here, a hundred million there and eventually you've spent some real money. What it means to the stockholders: GM is on the hook for a minimum outlay of $2.4b that could run as high as $4.4b over the next eight to eleven years. The revelation leaves one wondering what other incidental expenses are lurking over the horizon on GM's deathmarch road to recovery.
12 Comments on “Delphi: The Gift That Keeps On Taking...”
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Oh mama! Just when I thought GM’s prospects looked good, someone throws a googly!
Unfortunately, for GM, with the $39 billion loss, lack of confidence in management and short profit margin, it is all pointing to one thing.
GM need to start making cars people want quick smart!
I did a rough calcuation which shows the gravity of the situation.
If GM were to make $1000 on each sale and they sell 9 million each year, they would make $9 billion profit each year. However, GM openly admit that they make most of their profits on their SUV ‘s and pick ups, so let’s be generous and say 50% of their sales are SUV’s and pick ups, that means 4.5 million sales they make are generating little or no profit or, worse still, losses.
No sooner did they get rid of one dependant (the UAW) than another of their kids comes back to live with mum and dad (Delphi)!
Kids, eh? Who’d have ’em…….?
Has anyone been able to work GM’s potential liability if the VEBA goes tits up?
Mr Hal,
Would GM be liable if VEBA goes belly up? I thought the whole point was to rid GM of that millstone? The UAW can’t run their own healthcare system, so GM has to bail them out.
That can’t be fair, surely…..?
That’s quite a disclosure! Weren’t all these details released at the time the deal was made? I confess I might not understand it, but it looks a lot like a shell game.
Didn't TTAC post an article yesterday quoting Delphi execs begging a bankruptcy court to allow them to pay out several hundred million in bonuses to the top 400 or so criminals managers? Cronyism at its finest. Reason #298 to not buy a GM product. For all the GM and Delphi employees on this forum: Doesn't this make you want to quit today, move somewhere outside of MI and get a better job with a better company?
In answer to your question – Of course, many have left. Including myself some 5 years ago.
A shame really, I enjoyed working there. They were a damn good employer for me. The problem is, Delphi was stillborn by design.
The GM business model, as bad as it was for an OEM, was even less viable for a parts supplier, many of whose components are global commodities.
JKROSS 22 : I have a letter beside my key board right now
Basicaly it reads Dear Michael,we would like you to retire please take some money and get lost.
Your employer G.M.
In our socialist utopia called Canada,we have some severly f—–d up pension laws.Large employee pension funds underfunded.An even larger nanny state that says T.F.B.
At G.M. Canada things are not looking good.1.08 US buys you a loonie.Our big profit high volume Siverado, is a tough sell at 3$ US a gallon.
The Malibu is gonna eat our high volume Impala sales for sure.Our American brothers and sisters ate some big concessions.
All in all, me thinks I’ll stay a GM employee a little longer.
That way I can stay eating
Tough break mikey. Are you retirement age?
But Wait, There’s More!
From the Detroit Free Press, November 9, 2007 by Jewel Gopwani, comes this bombshell:
“Appaloosa Management LP, the lead investor in a deal that would have pumped up to $2.55 billion into the Troy-based supplier, said in a filing Thursday that it has terminated its agreement because certain conditions were not met.”
Also, “…investor Goldman Sachs saying it was no longer part of the deal.”
Finally, “…unsecured creditors have objected to Delphi’s investment plan, saying there’s a chance the investors could be given shares of the company at no charge, threatening to dilute the value of shares paid to creditors.”
The full story can be read at:
http://www.freep.com/apps/pbcs.dll/article?AID=/20071109/BUSINESS01/711090326/1014
It’s really looking like this deal has come undone.
jazbo123, you were smart to bail when you did. For the
rest of us who depend on Generous Motors and her
ugly spawn for a paycheck, it’s looking really dark…..
Ryan Knuckles I got the age and the service.its the cajones I’m lacking.
Katie:
I don’t know if GM is liable if the VEBA goes belly up. There are still unclarified issues around the VEBA and what guarantees GM may have given. A Caterpillar/UAW VEBA went bankrupt and there is ongoing dispute and litigation over who needs to make up the shortfall.
http://seekingalpha.com/article/48619-seeking-gm-veba-clarity
Mikey, You should retire while you can and also get a good payoff from GM Canada, you will fine that in retirement you can invest your lump sum payout and along with your GM Pension and Canada Pension you will live quite well, I did but worked for Bell Canada!