General Motors doesn't rule out more restructuring if 'situation deteriorates'

[neshapop]

PARIS - General Motors Corp. (NYSE:GM) doesn't rule out further restructuring if economic times get even tougher and says it is vital that U.S. lawmakers pass a financial bailout package.

"We'll take the actions that are necessary," Fritz Henderson, the automaker's chief operating officer, said Thursday in an interview at the Paris Motor Show.

"If the situation deteriorates further, we'll have to look at further actions, but we don't have anything planned today," he said.

In Washington, D.C., the House of Representatives will get another chance to vote on a financial bailout bill that has infuriated millions of voters after the Senate added tax cuts and other sweeteners, then passed it handily.

Senators advanced the much-criticized measure in a 74-25 vote late Wednesday, sending it to the other side of the Capitol for a showdown vote expected Friday.

GM, once the largest U.S. employer, marked its 100th anniversary last month facing a crisis like no other in its history.

It lost $57.5 billion over the past 18 months, including $15.5 billion in the second quarter. It's burning more than $1 billion a month in cash, has more than $32 billion in long-term debt, and a slumping U.S. market has forced it to close factories and shed workers.

In July, GM suspended its dividend for the first time in 86 years, and the company has been in perpetual restructuring since at least 2002.

It cut thousands of jobs and shut down several truck plants to deal with a collapse in demand for large gas-guzzling vehicles. Those cuts included a pickup truck factory in Oshawa, east of Toronto, with the loss of 2,600 jobs.

The Canadian plant, which at one time ran three shifts making pickup trucks, is now down to one shift and is slated to close next year. Meanwhile, Ford Canada has said it will eliminate 500 jobs at its main assembly plant in Oakville, Ont.

Henderson said it is "extraordinarily important" for the auto industry that Congress pass the bailout package for battered Wall Street financial institutions.

"If the bill doesn't pass, maybe you'll see more chaos in the credit markets," he said.

"Even if it does pass I still think that '09 will be weaker," he added. "I don't see anything which would suggest that you'd see a significant rebound, at least in the first half."

Overall U.S. auto sales plunged last month, dropping below one million for the first time in more than 15 years as some consumers struggled to get car loans and others stayed away from showrooms amid bank failures and Wall Street turmoil.

Sales at every major U.S. and foreign brand fell at least 24 per cent from the previous year, except for GM, which sold 16 per cent fewer vehicles.

"The fact that we performed better, I guess that's a silver lining," said Henderson. "But I can't say we're pleased with the overall level of sales in September."

http://www.cbc.ca/cp/business/081002/b100243A.html

[2002 Caddy]

Originally Posted by neshapop

GM, once the largest U.S. employer, marked its 100th anniversary last month facing a crisis like no other in its history.

It lost $57.5 billion over the past 18 months, including $15.5 billion in the second quarter. It's burning more than $1 billion a month in cash, has more than $32 billion in long-term debt, and a slumping U.S. market has forced it to close factories and shed workers.

In July, GM suspended its dividend for the first time in 86 years, and the company has been in perpetual restructuring since at least 2002.

It cut thousands of jobs and shut down several truck plants to deal with a collapse in demand for large gas-guzzling vehicles. Those cuts included a pickup truck factory in Oshawa, east of Toronto, with the loss of 2,600 jobs.

The Canadian plant, which at one time ran three shifts making pickup trucks, is now down to one shift and is slated to close next year. Meanwhile, Ford Canada has said it will eliminate 500 jobs at its main assembly plant in Oakville, Ont.

Henderson said it is "extraordinarily important" for the auto industry that Congress pass the bailout package for battered Wall Street financial institutions.

"If the bill doesn't pass, maybe you'll see more chaos in the credit markets," he said.

"Even if it does pass I still think that '09 will be weaker," he added. "I don't see anything which would suggest that you'd see a significant rebound, at least in the first half."

Overall U.S. auto sales plunged last month, dropping below one million for the first time in more than 15 years as some consumers struggled to get car loans and others stayed away from showrooms amid bank failures and Wall Street turmoil.

Someone define for this guy "if the situation deteriorated further"
Based on the above quotes it looks like we are mid Atlantic at 35,000 feet in a 767, both engines are out, we have no fuel, the rudder is stuck "hard over left" the co-pilot is hysterical and the pilot has passed out...The flight engineer turns the the head steward and says... "well at least there is lots of gin a tonic left for our first class passengers, let me know if the situation deteriorates further"

[mgescuro]

RESTRUCTURING??? AGAIN!!!?????

How many more times can GM restructure??
And why wasn't this dealt with 8 years ago when Lutz came on board?

I would love the opportunity to see the Org chart at GM and see the relationships between the divisions and departments.
How exactly are they structured now???

This is absolutely RIDICULOUS!!!

[t-rex]

Mmmmmmmmmkay. So any clue as to what exactly this "restructuring" will entail?

[F14CRAZY]

What is the definition of "restructuring"? Bankruptcy? Selling the entire company to Tata?

[jbernie]

Best that GM talk about restructuring now as opposed to in 2 years when they have have 3 years inventory on the lots and no one is in a position to buy anything.

Of interest from the reports on the Sept sales numbers, GM was down to 700,000 vehicles in inventory, lowest it has been in many years, along with cutting back on production GM is showing signs of doing things right and scaling back before it becomes a problem not well after it becomes a problem.

Though unlike the usual cycles the industry may go through, all automakers are facing common issues.

1) SUV/Truck sales went off the cliff when gas prices skyrocketed.

2) All sales are going off the cliff now due to the credit issues.

From the way the numbers are looking, no company is immune, no company really saw both of these issues coming, and when you look at the sales number, the only people to do well were VW, Mercedes Benz (both relatively small players) and GM oddly enough the biggest player.

[YupYupYup]

Originally Posted by t-rex

Mmmmmmmmmkay. So any clue as to what exactly this "restructuring" will entail?

Don't expect much when it comes to the CBC (news outlet)...They aren't the brightest apples of the bunch. Let's just say that business isn't their forte/ expertise.

[fp115]

Originally Posted by mgescuro

RESTRUCTURING??? AGAIN!!!?????

How many more times can GM restructure??
And why wasn't this dealt with 8 years ago when Lutz came on board?

I would love the opportunity to see the Org chart at GM and see the relationships between the divisions and departments.
How exactly are they structured now???

This is absolutely RIDICULOUS!!!

Ridiculous? Clearly you don't understand the importance of doing so. How much legacy costs have been removed from the past major restructuring? (Hint: its greater than $15b).

Having to do it again would mean additional job losses, more than the 10% that have been getting laid off recently and have until the end of October to leave without any sort of exit bonus. This will have a total savings of 15% to GM's payroll.

[joemac]

Originally Posted by mgescuro

RESTRUCTURING??? AGAIN!!!?????

How many more times can GM restructure??
And why wasn't this dealt with 8 years ago when Lutz came on board?

Who, two, four and even eight years ago predicted the US economy meltdown in 2008?

The economic struggles today are a direct result of our counties economic state, not bad business decisions by automakers.

This is absolutely RIDICULOUS!!!

How it is ridiculous when it's impossible to predicting the future economic state years in advance?

It's pretty obvious with tightening credit lines, or none at all. The retail customer base for automobiles will dry up very quick. With no financing available sales will tank.

GM's not alone. All automakers have made adjustments to the horrible market conditions. GM just happens to be the largest in the US, so it's adjustments are larger more realized than others.

[lam]

Originally Posted by fp115

Ridiculous? Clearly you don't understand the importance of doing so. How much legacy costs have been removed from the past major restructuring? (Hint: its greater than $15b).

Having to do it again would mean additional job losses, more than the 10% that have been getting laid off recently and have until the end of October to leave without any sort of exit bonus. This will have a total savings of 15% to GM's payroll.

Mgescuro just doesn't get it.
Should the market get a lot worser , GM will have to do more cost cutting.

[mikesright]

Originally Posted by mgescuro

RESTRUCTURING??? AGAIN!!!?????

How many more times can GM restructure??
And why wasn't this dealt with 8 years ago when Lutz came on board?

I would love the opportunity to see the Org chart at GM and see the relationships between the divisions and departments.
How exactly are they structured now???

This is absolutely RIDICULOUS!!!

Every car maker is having to "restructure" right now. The market is built for 17million car sales a year and we are down to 12.8 million and falling. Restructuring means closing plants, more buyouts, and possibly brands and assets being sold or closed. The worst predictions for auto sales, up until a few months ago, were dismissed by every auto executive as much too negative, that is, until we passed those predictions by 2 million units to the downside and had a month that was less than 1 million units total. That's not happened in 20 years, and even then it was catastrophic!

[johnnyl321]

Originally Posted by joemac

Who, two, four and even eight years ago predicted the US economy meltdown in 2008?

The economic struggles today are a direct result of our counties economic state, not bad business decisions by automakers.



How it is ridiculous when it's impossible to predicting the future economic state years in advance?

It's pretty obvious with tightening credit lines, or none at all. The retail customer base for automobiles will dry up very quick. With no financing available sales will tank.

GM's not alone. All automakers have made adjustments to the horrible market conditions. GM just happens to be the largest in the US, so it's adjustments are larger more realized than others.

actually, a lot of people have been forecasting this since 2005. started small enough, and just grew bigger and bigger. finally, the population noticed that the party years of 02-03 and 04 were over and the hangover was just beginning. how many people still bought into flipping houses to make a few hundred grand....or in 04 when gas was still under 1.50 a gallon they hurried in to buy those suburbans and hummers and excursions, so what if they only had one kid? these were good times and THEY'RE GOING TO LAST FOREVER!!!!! then, reality set back in and adjustable rates reset....the iraq war proved it was going to affect fuel prices and hasn't backed off, now has it?
no my friend...a lot of people, me included, were forecasting this for a few years now. thankfully, i didn't overspend or overreach THIS TIME. i learned my lesson the hard way about 10 years ago.

[kenman923]

That could mean axing some brands if I am not mistaken.

[joemac]

There have been pundits and speculators been saying negative this and that about everything for years. GM you know has been predicted by many to be bankrupt in 2002, 2003, 2004, 2005, 2006, 2007. What happens when their wrong, well that's swept under the rug.

Just like gas prices many were predicting $5 a gallon this summer and $200 a barrel. Where are they now when they are wrong?

If people beat on something long enough, by sheer circumstance sometimes they align, or sometimes we talk ourselves into it.

If people truely had a crystal ball, we'd all be filthy rich bathing in stock, golden parachutes in tow, would have won the lotto 20 times, and have playmates draped across each arm.

[fp115]

Originally Posted by kenman923

That could mean axing some brands if I am not mistaken.

That is not an option when do not want to waste cash.