Sunday? Sunday! That’s the day The Detroit Free Presschose to tell the world that GM’s recent accounts contain a time bomb: the revelation that the company raided—sorry, “borrowed from”—its employee pension fund to buy out United Auto Workers employees and pay into their health care fund. Even though we’ve become used to gigantic numbers, the sums involved are staggering. “Details are emerging about how General Motors Corp.’s U.S. pension funds went from a $20-billion surplus at the end of 2007 to a $12.4-billion deficit 12 months later.” I make that a $32.4-billion swing. It’s also approximately $11.4 billion more than GM’s CFO estimated its pension deficit, as declared in The General’s December pre-bailout report.
“For those who want to use as little gas as possible but still need the capabilities of a full-size pickup truck, the hybrid twins from General Motors will fit the bill nicely. So let the love affair continue.”
REMEMBER WORLD WAR 2? who did America & the World turn to in that time when Japan & Germany were murdering millions of people in the world – The WORLD turned to the Americans for help and how did America help win the war against Japan – I’ll tell you who it was, The Big 3 Auto Companies that’s who- FORD – GM & CHRYSLER – they rebuilt and retooled all their factories and plants so that they could build Tanks – and Jeeps and Trucks and Troop Carriers -Boat Guns and Ship Artillery Cannons – and many types of Weapons and other Equipment – Do you think that when World War 3 comes that Japan and other companies will retool their factories to help America – NO THEY WILL NOT. After 9/11 in New York, Who was it that gave 10 million dollars each? There was only 3 companies that gave that much and guess what else they gave? They gave Fleets of Cars and Trucks / SUVs’ and Building Spaces – It was the Big 3 -FORD -GM & Chrysler that’s who it was – I’ll tell you who else gave, it was USA Harley Davidson Motorcycles they gave 1 million dollars and a fleet of new Motorcycles for N.Y. Police Department – and with all that giving during one of our nations darkest time- Honda & Toyota and all the other foreign car companies DID NOT GIVE ONE PENNY to the people of the United States of America for 9/11 or Hurricane Katrina. Ford- GM & Chrysler Did.
Holy trough snuffling, Batman! That’s one piggishly large salary. Not in absolute terms. In absolute terms it’s a pittance. Lest we forget, try as we might, Tom Cruise scored $20m for Eyes Wide Shut. And that was back in ’99. And you could make a case that that GMAC CEO Alvaro de Molina’s ’08 compensation package was money well spent. After all, Big Al Jr. was at the sub-prime specialist’s helm when it scored $6 billion from Uncle Sam’s magical bottomless pocketbook AND de Molina got the Fed to throw out the rule book and make GMAC a bank instead of forcing it to file for bankruptcy as they’d promised. Reuters! Break it down!
You just know it’s got to be GM. And so it is. The words flew out of the mouth of Steve Tihanyi, the man who oversees GM’s sponsorships. Or, more accurately, the elimination of GM sponsorships. After all, in Bailout Nation, you can’t be seen to be having a good time on the taxpayer’s nickel. (Although GM spokeswoman Kelly Cusinato helpfully pointed out that there are no advertising or marketing restrictions attached to the government loans or the company’s viability plan.) The latest casualty: GM’s 25-year sponsorship of the NCAA men’s basketball tournament. Bloomberg:
The company will slash by at least 60 percent on-site spending at the Final Four, even though this year it will be held blocks from GM’s headquarters in Detroit. The company is trimming dealer-incentive trips to the championship rounds and billboards downtown. Tihanyi wouldn’t comment on how much the 60 percent cut in on-site promotion and entertainment would save.
Not literally. But close enough. At this point, GM would gladly transfer ownership of its German division to Daimler for about the same price Cerberus paid Daimler for Chrysler (without withholding a 19.99 percent share). Yesterday, GM’s European workers took the streets in Austria, Belgium, France, Poland, Russia, Spain, Sweden and Britain. They were protesting fact that their employers may stop paying them to build cars no one will buy. The International Herald Tribune ties cause to effect (not terribly difficult but needs must): “Targets outlined in the [congressional viability] report included the elimination of 47,000 jobs worldwide, including 26,000 outside the United States, $6 billion in grants from governments abroad by 2010 and labor-cost savings in Europe of $1.2 billion.” GM will no doubt use the industrial actions as a gun to the head of foreign governments, extorting bailout bucks in the great American tradition. (Collusion anyone?) Students of the Roman Empire know the deal: the foreign outposts revolt as the center no longer holds. Or, as Chinua Achebe pointed out, things fall apart.
Somewhere in the background, a White House spinmeister is busy telling the cross-dressing Fox News anchor (if he doesn’t, he should) that his viewers should chill about the $3.6 trillion deficit generated by her boss’ budget. “The average taxpayer knows that this is an investment in America that will reinvigorate the economy and, thus, generate new tax revenues and hey, presto! It will make itself disappear!” Or some such crap. The average person knows his or her government is out of control. They are also increasingly aware that GM is doomed. As I stated in last General Motors Death Watch, as the enormity of this collapse reveals itself (-$3,529,166.67 per hour) the American taxpayer will draw a line in the metaphorical sand. In fact, the coming tussle over the Detroit bailout could be the beginning of the end of Bailout Nation. We shall see. Meanwhile, lightly used Ford GTs are selling for $130K, a 2000 Ferrari 360 is going for $90K and today’s Maserati GranTurismo (or a Quattroporte) can be had for less than $100K. At the low end, prices are also slip sliding away. And yet, it’s still not time to buy. How scary is that?
As the salesman retrieved the key for the demo GranTurismo, I approached the trunk of the sleek silver siren sitting on the showroom floor. Even though I was opening the Maserati’s boot rather than its bonnet, I felt like a pre-teen rifling through a copy a Playboy while the drug store owner helped Mrs. Myers with her prescription. The fact that the Maserati’s electric rear lid opened at all was heartening. And then I saw it: a blue box. Genuine Maserati parts. Fumble, fumble. Uh-oh. A trickle charger. A classy, digital battery booster, but a direct link to the most troublesome car I’d ever owned (a British two-seater named after a man called Trevor). It seems that Maserati’s latest product for the American market is still a bit… problematic. But not for the reasons you might think.
General Motors has finally announced their fourth quarter results and its terminal. The ailing American automaker’s cash burn was a staggering $6.2 billion. That might have a little something to do with the fact that GM’s revenues shrank by 34.2 percent, from $46.8 billion to $30.8 billion. Q4 operating loss: $5.9B. Net loss: $9.6B (compared to a not inconsequential $1.5B a year previous). For those of you keeping score, today’s results mark GM’s fourth year without booking a profit and the second largest loss in GM’s entire history. Reacting to the carnage, the man at the helm recycled a press release from somewhere in the middle of this slide into bankruptcy. “2008 was an extremely difficult year for the U.S. and global auto markets,” CEO Rick Wagoner said in a statement. “We expected these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions.” At GM, restructuring actions accelerate you. Nose first. Pro forma mea minimus culpa filed, Red Ink Rick is headed to DC with his well-worn begging bowl . . .
The Detroit News reports that House Minority Leader John Boehner isn’t happy about the way their hometown heroes have been running things for the last, oh, three decades.
When it comes to the auto companies, they’ve avoided making the tough decisions for 30 years—and that’s why they’ve ended up where they are. Until I’m convinced they’re willing to make the tough decisions that stakeholders, their bondholders, their employees—everyone is willing to step up and do what they have to do, I’m not willing to commit taxpayer funds.
Boehner’s right. But this statement has enough wiggle room to hide Jeff for all time—“willing to make” instead of “make.” And speaking of weasel words . . . where does a federalpolitician get off lecturing Detroit on its refusal to make “tough decisions”? In fact, what does John Boehner know about business?
It’s not a question of if GM will file for C11. GM blew past “if” a long time ago. By the turn of the century, the artist formerly known as the world’s largest automaker was doomed. Still, if they had greeted Y2K by mortgaging everything (a la Ford) and used the cash to buy out dealers and kill brands and ditch models and pay off the UAW and… nah. By the time The General re-launched their refreshed GMT900 SUVs in May 2005, the gig was up. By that point, GM should have been in C11. In this alternate universe, GM might have had enough cash– their cash not our cash– to make it out of bankruptcy. Now, I’m not optimistic. But one thing’s for sure: this Death Watch series is, like GM, on its last legs.
Whoa. I mean, way-hey! It seems like just a thousand years ago that GM started hyping their retro-styled rear wheel-drive Chevrolet coupe. And now, at least a week before GM scarfs another “bridge loan” and a good month before the company files for Chapter 11, one of our valued contacts has sent us these dealer prep sheets (PDF) for the new 2010 Chevrolet Camaro. Thank God GM Car Czar Bob Lutz is still alive to see this day.
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