GM Posts Record $39B Loss, Offers Buyouts

Horrendous 2007 Prompts New Round Of Buyout Offers For All 74,000 Hourly Employees

(CBS/AP)  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.

The earnings report and buyback offer came as GM struggles to turn around its North American business as the economy weakens.

But GM Chairman and Chief Executive Rick Wagoner said that the company made significant progress in 2007, reducing structural costs in North America, negotiating a historic labor agreement and growing aggressively in Latin America and Asia.

The Detroit-based automaker said it was offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers.

GM won't say how many workers it hopes to shed, but under its new contract with the UAW, it will be able to replace up to 16,000 workers doing non-assembly jobs with new employees who will be paid half the old wage of $28 per hour.

Much of GM's problem, analysts say, is image, reports CBS News correspondent Kelly Wallace. Studies have found there's now very little quality gap between U.S. and foreign cars but that's not the perception.

"The perceived quality, in other words, what's in customers minds is that the Asians are still making better cars than Americans so there is a perception gap," said Tom Libby of J.D. Power and Associates.

Ford Motor Co. and Chrysler LLC already have announced similar buyout offers.

GM shares fell 65 cents, or 2.4 percent, to $26.47 in premarket trading.

GM's annual loss of $38.7 billion largely was due to a third-quarter charge related to unused tax credits.

The 2007 loss topped GM's previous record in 1992, when the company lost $23.4 billion because of a change in health care accounting, according to Standard & Poor's Compustat.

Excluding the tax charge and other special items, GM lost $23 million, or 4 cents per share, for the year, compared with a net income of $2.2 billion in 2006, beating Wall Street's expectations. Analysts polled by Thomson Financial expected GM to post a full-year loss of 95 cents per share.

For the fourth quarter, GM posted a loss of $722 million, or $1.28 per share, in the fourth quarter, compared with a net income of $950 million in the year-ago quarter. Fourth-quarter charges included $622 million to Delphi Corp., GM's former parts division, for its restructuring efforts.

GM reported $181 billion in revenues for the year, down from $206 billion in 2006. Its automotive business saw record automotive revenues of $178 billion in 2007, up $7 billion from a year ago thanks to growth in emerging markets and favorable exchange rates.

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.

But GM's North American division continued to struggle, posting a $1.5 billion loss for the year, nearly identical to its $1.6 billion loss in 2006. GM's North American division also reported a loss of $1.1 billion in the fourth quarter, compared with a loss of $129 million in the year-ago quarter.

Wagoner said the weak U.S. economy and high commodity prices hurt turnaround efforts in North America. He said GM's decision to reduce low-profit sales to daily rental companies by 110,000 in 2007 also affected U.S. sales.

"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.

GM's results also were dragged down by its 49 percent stake in GMAC Financial Services, which lost $2.3 billion in 2007. GM reported a $1.1 billion loss attributed to GMAC.

GM barely retained its title as the world's largest automaker in 2007, selling just 3,000 more vehicles than Toyota Motor Corp. GM sold a total of 9,369,524 vehicles worldwide, up 3 percent from the year before.

In January, Ford President and Chief Executive Alan Mulally announced the company will be adjusting production and making further cost reductions in North America, including a new round of buyouts for its 54,000 U.S. hourly workers.

Ford said workers will begin leaving the company in April.

Chrysler, which is trying to cut up to 21,000 of its 45,000 U.S. manufacturing jobs, is giving workers on temporary or indefinite layoff up to $100,000 to sever ties with the company. Chrysler said the date workers will leave varies by plant, but some could leave as early as April.

[omega39-2009]

Don''t worry, they are all going to be retrained so they can...uhm..a..well..never mind then, carry on.

[walt1944-2009]

The former US automakers, with GM being the latest, have posted record losses and, as is usual, want to improve their bottom lines by going for the quick fix first: getting rid of production workers!

As is usually the case in situations like this, the corporate executives at GM and the other automakers think of getting rid of the "little guy" instead of looking at themselves, their own greed and stupidity, their own wasteful bad decisions, their own "agendas". In the business world, it''s "survival of the fittest" which means "survival of the executives" first, and to devil with the ones who make us the money in the first place.

Another example of the Great Emperor Bush II''s "Ferengi Economics" (or "What''s the PROFIT in it FOR ME!") at work!

SIG HEIL, BUSH!!!!

[borris007-2009]

Maybe the US folks should start focusing on their own homegrown issues instead of meddling in other nation%u2019s business%u2026 Case in point GM%u2026 If the US government had really done what was best for their citizens, by providing medical coverage to its%u2019 own citizens, the US auto giant wouldn%u2019t be in the mess it is in now%u2026 for decades GM and the other US manufactures had to flip the bill for health coverage for current and retired employees, a huge disadvantage compared to other like manufactures from Japan, Germany, Canada, and Korea to name a few%u2026. Where was the US government? One possible answer: The US Government was involved in building new power plants, schools, hospitals%u2026, in Iraq for Iraqi citizens.

Remember GM and companies like GM help created the middle class, which made America prosperous%u2026 too bad the US government and majority of citizens that vote in the government are too foolish to understand this.

[omega39-2009]

under its new contract with the UAW, it will be able to replace up to 16,000 workers doing non-assembly jobs with new employees who will be paid half the old wage of $28 per hour.

Anyone want to guess why the housing market is in trouble?

[olebd]

$28 per hour must have made for a cozy living for somebody who holds a mechanicala screwdriver all day. Now, thanks to the greedy unions, GM will find a way to replace all these $28/hour workers with $14/hour workers. Hmmm, I wonder if they will be monkeys or illegal aliens?

And what about all those levels of upper management? What are they goingn to sacrifice? Perhaps a million or two in their yearly bonuses? No worries! Just market more to China and India...the car market is alive and well over there.

[namesnames]

unions, like parasites, eventually kill the host.

[omega39-2009]

unions, like parasites, eventually kill the host.

Posted by namesnames

Of course bad management is blameless eh? Afterall the reasoning goes, he''s got an MBA, he could run a company or a country. I''ve got news for you, when gas was at its highest and the boneheads in management at the big three decided to focus on building big Suvs and trucks, they led the company to ruin. Just like the "MBA" in the white house is leading the country to ruin.

[olebd]

The bottom line is the big 3 had their warning signs for many years but failed to adapt to produce reliable, quality products at a decent price.

[rowdytexan2]

Surprise! Surprise! Amerians can no longer afford $50,000 gas guzzling cars. Can''t afford their homes either! Now exactly WHAT could be the problem?

Now that they''re sluffing off their most expensive employees they''ll get to hire all those illegal aliens at $7/hr with no benefits and still pay they executives millions. Next thing we''ll hear is that their retirement funds no longer exist for the employees who spent their lives making those millions for them.

[archiej2]

The principles of CEOs like Rick Wagoner and his counterparts should have no "escape clauses". We continue to hear the same jaded clichi, "We must pay these exorbitant salaries and bonuses to retain leadership with the talent and expertise essential to the success of the corporation". When in reality, a great number of these licentious corporate executives are merely exploiting their positions for personal gain while they continue with their ultimate quest to destroy the middle class. Get rid of these corporate bums!

[archiej2]

omega39 - You''re a MORON!!! Go back to school and take a class in economics you dummy. The principles of CEOs like Rick Wagoner and his counterparts should have no "escape clauses". We continue to hear the same jaded clichi, "We must pay these exorbitant salaries and bonuses to retain leadership with the talent and expertise essential to the success of the corporation". When in reality, a great number of these licentious corporate executives are merely exploiting their positions for personal gain while they continue with their ultimate quest to destroy the middle class. Get rid of these corporate bums!

[nolalou]

Maybe GM stands for Gross Mismanagement!

[runningralph]

The model of an efficient corporation designed years agor said that the top executive should be 20 times that of the lowest employee. In actuality they are more like 100 times. Legislation is needed to regulate this and to curtail the "golden parachutes". There should be no incentive to quit a company, only incentives to make them more productive, efficient and profitable.
Labor unions should organize in countries where cheap labor is used to create unfair competition. Unions have been a mixed blessing for workers in the US now it''s time for them to go after China, Mexico, Brazil, Japan, Korea etc

[pzabbie]

WAIT a minute! You al%u2019 blame the government for this??? This is Capitalism at its finest!!! The Big Three pay way too many people way too much money to make cars. Your only problem is that you can%u2019t see that it%u2019s a global economy now. %u201C$28.00 an hour for non production help%u201D??? That%u2019s secretaries, folks. Like it or not, China is going thru its Industrial Revolution. Without all the pitfalls we as a Nation endured. Russia is getting rich off its oil money. Welcome to the real word folks. You are paid too much to make cars. I work for a Japanese tier one parts supplier, in production. I make a fair wage for what I do. It ain%u2019t 28 bucks an hour, but you know what? We can%u2019t make enough parts! I get all the overtime I want. The sooner The Big 3 and the U.A.W. realize this is simply an adjustment of the market to their excesses, the sooner the American Auto Industry will come back as a world leader.

[omega39-2009]

omega39 - You''''re a MORON!!! Go back to school and take a class in economics you dummy.
Posted by archiej2

Hmmmm, since I had also identified the failure of management, I can only surmise that you had read the first part of my post where I had pasted the statement of the clod I was responding to. Next time, bother to read the whole post before you let loose.

[rowdytexan2]

unions, like parasites, eventually kill the host.

Posted by namesnames

Au contraire...Unions allow collective bargaining to keep these companies paying a decent wage...when the unions are gone, everyone in this country will be making minimum wage!

[omega39-2009]

WAIT a minute! You al%u2019 blame the government for this???
Posted by pzabbie a

They deserve some of the blame yes. When you allow people buying over 6000 pounds of SUV to slap a magnetic real estate sign on it and write off almost half the cost while offering a miserable, limited, $2000 tax break to hybrid owners, well you both subsidize and drive a failed policy.

[king77shaw]

what''s good for GM is good for ....... China ?

[ibzjem]

They deserve some of the blame yes. When you allow people buying over 6000 pounds of SUV to slap a magnetic real estate sign on it and write off almost half the cost while offering a miserable, limited, $2000 tax break to hybrid owners, well you both subsidize and drive a failed policy.

Posted by omega39 at 10:00 AM : Feb 12, 2008

that''s because the initial hybrid cars were Toyotas and Hondas. The American manufactures are behind the curve and their special interest groups no doubt have more clout than the foreign competitor''s.

[rowdytexan2]

$28.00 an hour for non production help%u201D??? That%u2019s secretaries...

So in your eyes secretaries shouldn''t make as much as a guy holding a screwdriver????

[byeneocons]

I''m sure the top CEO''s at GM got record bonuses this year. It''s the greed decade.

[omega39-2009]

that''''s because the initial hybrid cars were Toyotas and Hondas. The American manufactures are behind the curve and their special interest groups no doubt have more clout than the foreign competitor''''s.

Posted by ibzjem

Probably all true but it still doesn''t absolve GMs management from the bad decision to focus on gas guzzlers when the price of oil was triple what it was under Clinton. It also does not absolve the government from it''s failure to break the dependence on foreign oil by eliminating the over 6000 pound tax break and expanding the hybrid tax breaks to the consumer.

[random_radar]

You have to wonder what is going on when a company is paying its employees to quit.

[lochlan-2009]

pzabbie- That''s right. It''s the new world order. To say government is not behind this is completly inaccurate though. They are the reason the majority of large American companies outsourced. It''s called free trade. Get rid of the tariffs and you are encouraging companies to seek huge profits from cheap labor in poor countries. America has been hijacked by the corporate oligarchy, and the media (being corporate owned) refuse to keep the people informed and knowledgable. There are still people in this country who have know idea how much money the Bush/Cheney Administration have stollen (I''m sorry, I mean contracted out at excessivly high prices) from this country. Misinfromation has been the entire purpose of republican talk radio, and these people think it''s a WWF show.

[poopusbuttus]

Pay close attention dummy libs, this is exactly what is going to happen if a dummy lib gets elected and hits the big corporations with their income redistribuation taxes.

Layoffs, buyouts, and move outs overseas......


Vote Republican. Keep the corporate tax rate low so they will stay over here.

[lochlan-2009]

By the way, $28/hr now for secretaries is for buying the now $4/gallon milk and $3/gallon plus gas costs.

Inflation is the Fed making $$$.

[mbcsmith]

Another great victory for labor unions. They have finally killed the goose that laid the golden egg.

[mbcsmith]

Why can''''t GM do what the Japanese do ? Why? Then they''''d make a profit. Why don''''t they HIRE some Japanese to make them solvent? Why ? Why can''''t the stock holders, with this HUGH management Failure, INSIST on the Resignation of the Whole Top mangement tier?? If they don''''t GM will just continue to go down the Drain.


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Posted by apple2pie at 10:08 AM : Feb 12, 2008

Why? Because the labor unions have destroyed the once great manufacturing sector of this country. Would you pay $90/hr for something you can get for $20/hr. Are you really that stupid.

[lochlan-2009]

Keep the corporate tax rate low so they will stay over here.

Posted by poopusbuttus

Don''t you mean keep the tariffs high so that, when a company goes overseas for cheap labor, it costs them all their profits on that cheap labor to get their product back into the country for sale.

[poopusbuttus]

Don''''t you mean keep the tariffs high so that, when a company goes overseas for cheap labor, it costs them all their profits on that cheap labor to get their product back into the country for sale.


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Posted by lochlan


No, I mean Vote Republican to keep the corporate tax rate low so they will stay over here, grow their company, and hire more people to match the our growing population.

Which, is exactly what I said before.

[occams_taser]

GM is run by idiots.

[occams_taser]

How many millions did the executives pay themselves for this "accomplishment"? Too bad they can''t offshore the job of GM CEO to someone in India or China who would do it better and cheaper!! LOL!

[lochlan-2009]

No, I mean Vote Republican to keep the corporate tax rate low so they will stay over here, grow their company, and hire more people to match the our growing population.

Which, is exactly what I said before.

Posted by poopusbuttus

...and how does that prevent them from moving to India for an 80% reduction in labor costs AND "no corporate tax"?

[poopusbuttus]

...and how does that prevent them from moving to India for an 80% reduction in labor costs AND "no corporate tax"?


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Posted by lochlan


Are you sure about those numbers? At any rate, there is a degree in which the govt must get involved to penalize company''s for moving overseas.

I agree, the penalty''s are too lax. This situation can be worked out.

Having said that, if you''re informative enough to know that cheap labor costs and "No Taxes", as you put it, means they are tying to save a buck by moving overseas, then why on earth, if this is and major issue that guides your voting, would you want to tax them even more by voting in a Democrat?

Like I said, this is an issue on the Republican side that can be worked out with the corporations to keep them over here. But, the only stumbling block? -- The Libs.....

[MIpapaof4]

Not my fault. In Sept. I bought a new Chevy Silverado. I did my part to help them

[pzabbie]

So in your eyes secretaries shouldn''''t make as much as a guy holding a screwdriver????


My point is that NEITHER of them should make that much money,

[lochlan-2009]

this is an issue on the Republican side that can be worked out with the corporations to keep them over here. But, the only stumbling block? -- The Libs.....

Posted by poopusbuttus

I think you''re wrong there. Republicans are in the same boat as the Dems in dismantelling our tariffs, and I don''t like either of them for it. The republicans on the other hand have helped big business oil and defense contract companies way way to much for my liking, and the invasion of Iraq and Afghanistan, to further enrich these same companies at the expense of American soldiers, American tax payers, and the innocent citizens of the countries we invaded, to the point of sending our country into a recession has got me more then steamed. Add to that the violations against our constitution and their assault on American freedoms and my blood starts to boil. Vote republican.... Never again!!!

[yamuttya]

Detroit is dying because they decided to be stubborn and braindead about climate change decades ago.
They continue to hide their heads in the sand.
They continue to die
Duhhhhhhh.
The world has changed.
Detroit never figured that out.
Good riddance.
Idiots!!!!!!

[joyous88]

Welcome to the conservative agenda, led by GW Bush,

Trickle down; Reagan and now Bush and the Republican borrow and spend faux economy, want four more of the same? Keep voting for these idiots.

[joyous88]

Any one still blaming Clinton for this mess is another IDIOT;

Clinton had a republican government and got done only what the Republicans wanted, they impeached him remember?

[random_radar]

My Honda Accord has 235,000 miles on it. Great car, all I ever had to do was change the oil!

[incog-nito]

So they will buy out some employees, move more jobs overseas or hire new workers at half the pay (see article).

GM is just a microcosm of what is happening to America as a whole.

[antoniof123]

Any one still blaming Clinton for this mess is another IDIOT;

Clinton had a republican government and got done only what the Republicans wanted, they impeached him remember?

Posted by joyous88 at 11:16 AM : Feb 12, 2008

Almost 100 percent true but Bill Clinton listened to the people by following what we wanted remeber that is why we reelected him. At no time was he appoinited by the courts. He fought congress for the people by standing up to the neo cons and they were disgraced even all the fear that they tried to put on us we removed them. Next remove more this happened in 1954 and 1956 because of an idiot named MaCarthy then it was 40 years out how long will it be because of a President.

Neo cons America is not stupid. You can say what you want but it will not change our minds our parents knew you and we should have listened to them.

[yamuttya]

I know people who have never bought an American car. Not because they weren''t patriots......because Detroit isn''t patriotic. Their cars have su(ked for decades!!!!.
They have been dragged kicking and screaming into the climate debate. They are in denial.( extremely stupid )
People aren''t stupid. Especially when spending thousands of dollars.
The Prius is the car of the future.
The Prius is made in Japan.......duhhhhhhhhh.
Idiots!!!!!!!!!
Shame......
Detroit you have betrayed us all.

[themightyhoe]

Whether you like it or not, outsourcing is gonna save GM. They are getting low cost parts from all over the world and bringing thier costs down to increase thier profit. The had no choice but to embrace outsourcing. Evolve or die. The government could put bigger tariff''s fully asembled vehicles imported from foriegn countries. Make them asemble them here. The govenment could also fix the health care system. Thats GM''s biggest problem right now. Yes they fell asleep at the wheel for a few years. But they are making the best cars and trucks they have ever made right at this moment. It''ll take a few years to gain back people''s trust but they will be back on top.

[yamuttya]

But they are making the best cars and trucks they have ever made right at this moment. It''''ll take a few years to gain back people''''s trust but they will be back on top.


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Posted by themightyhoe at 11:37 AM : Feb 12, 2008


I pray that you are right( but im not holding my breath,( Detroit is dysfunctional )

[themightyhoe]

yamuttya,

Detroit didn''t betray America. Detroits arsenal of Democracy won WW2 for ya.

[yamuttya]

yamuttya,

Detroit didn''''t betray America. Detroits arsenal of Democracy won WW2 for ya.


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Posted by themightyhoe at 11:40 AM : Feb 12, 2008

follow the discussion.
We''re not talking about WW II.
We''re talking about Detroit''s failure to keep its eye on the ball,
to address the issue of Japanese efficiency,
to address the issue of climate change,
to address the issues of a changing marketplace,
to get real.

[yamuttya]

The bottom line is the big 3 had their warning signs for many years but failed to adapt to produce reliable, quality products at a decent price.


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Posted by olebd at 09:26 AM : Feb 12, 2008

exactly

[incog-nito]

themightyhoe: Outsourcing may save GM, but it''s a race to the bottom for American workers. It increases unemployment (real unemployment, not the cooked up numbers from the Dept. of Labor) and drives wages downward. As jobs continue to move offshore, real income will continue to decrease, resulting in less purchasing power. Outsourcing may reduce the cost of some consumer items, but the last time I checked the cost of big ticket items like houses, cars, education, health care, and even cars, continue to rise. Just like many big corporations GM is no longer an American company. It''s a multinational company and does not necessarily have the U.S.''s best interest in mind.

Like you said, it''s up to America to cut down on outsourcing by imposing tariffs on imports (other countries do) and fixing the health care problem. I read an article somewhere where a GM executive suggested we go to a universal system.