General Motors Corp. reported a $38.7 billion loss for 2007 on Tuesday, the largest annual loss ever for an automotive company, and said it is making a new round of buyback offers to U.S. hourly workers in hopes of replacing some of them with lower-paid help. GM was profitable in every region outside North America. GM’s Latin America, Middle East and Africa division reported a record $1.3 billion in earnings, up 140 percent from 2006. GM’s Asia Pacific division earned $744 million, up from $403 million in 2006, while GM Europe reported a profit of $55 million, down from a profit of $357 million in 2006. “We’re pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow,” Wagoner said in a statement.
This is where I see the problem. They acknowledge half of their problem. Half their problem is that the North American work force is eating them alive. Their compensation is way too high and their benefits and unions are raping the company. They are going to solve this by buying the high paid employees out and taking a one time hit for the long term growth of the company. It is going to have to be a huge buy out because half of these people won’t be able to find a job paying more than $12 an hour anywhere else and they know it. GM is living in a fantasy world if they think the unions won’t take the next batch of employees and raise their salaries back up to the same level. The unions need to be busted. Here’s the part their missing and the cause of the second half of the financial crisis.
Their cars and trucks are the ugliest on the market. Their designers need to be fired and replaced with new blood. The only thing the American car market has put out that anyone gets excited about is a replica of a model from the 60′s. In the blog world you bring back old posts for filler, but at GM and Ford it’s called going back to the well. Have you ever driven a $50,000 sport utility from GM or a Denali? They take their base model and add leather and a bigger engine but leave the dash and components all the same. When you buy a luxury auto you want it to be completely different than the $30,000 model. In addition, the foreign manufacturers are eating their lunch. Hyundai is the company to catch right now in my opinion. The Elantra is the best deal going and the all the cars they offer are nice looking cars. The price to value ratio is the strongest on the market. GM has more labor in the car than Hyundai has in the whole thing, materials and all.
Lucky for GM the stock isn’t going anywhere. It’s too low to sell and most of the shareholders are 70 years old and are “buy and die” stockholders anyway