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SOURCE: AutoBlog.com

GM may use profits from China to float North American operations
Oct 24th 2008

Big Bob Lutz said that GM declaring bankruptcy is "out of the question." Of course, that was two years ago, when things like a $25 billion government loan would have sounded ludicrous. That was also before the auto industry mess got messier, and in order to stay true to those words today, GM is doing whatever it has to do to find money to stay in business. It heard Chrysler has an $11 billion piggy bank and a couple of jewels (Jeep and minivans) and GM said "Come here, girl! Lemme holla at you for a minute!"

Now GM is looking at its own international stable, and has its eye on China as a source of stopgap revenue for its North American operations. We've posted before on the fact that GM's international operations aren't doing too badly, and GM China sold 11.5 million vehicles last year -- more than any other manufacturer there. This year, it expects China sales volume to grow by 11- to 12-percent, and that means yuan in the bank.

MORE HERE
 

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The 11.5 million units must be a typo - I think the entire Chinese market is around that size, perhaps slightly larger. We've been told that the Chinese market size would surpass the U.S. sometime in the next decade, so if our market in an average year is maybe 15-16 million units, everything fits.

If they can't get something this simple correct, how much else in the article is suspect?

Edit: From Automotive News:
GM's Asia operations lost $163 million in the (second) quarter, swinging to a loss after a $280 profit in the year-earlier period. Revenue declined slightly to $5.2 billion from $5.3 billion during the same quarter last year. GM Asia increased market share to 7 percent from 6.7 percent but took a $285 million pretax accounting charge in the quarter.
So there's the answer to my question. How do they plan to fund NA with losses from Asia? Autoblog needs to do their homework.
 

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Sense: This article makes none

Were they previously considering NOT sending profits from GM China to North American ops?!!!

Who the HECK is running this company?!!!
 

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There will soon be no GM profits in China, so one cannot "float" on nothing. It seems that GM has no way whatsoever to make profits: It makes no money on small cars, SUV and truck sales are history, Europe is sliding into recession (and perhaps China, too), and GM's future "green" cars, such as the Volt, will not make any money (at least in the next few years), either.
 

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Were they previously considering NOT sending profits from GM China to North American ops?!!!

Who the HECK is running this company?!!!
Wait a second ... I'm not so sure this article has merit.

GM is a GLOBAL company, and it's financial statements reflect its global profitability, or lack thereof. GM is losing money, period. Profits in the Asia-Pacific region can't offset the losses in North America. GM has a net loss.
 

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I think GM should layoff all NA stuff, and reopen it in walmart way - close plant when it gets unionized.

Toyota deals a lot better than GM without unions.
Wow, this so would not address the underlying concerns that brought GM to where it is today. And Toyota didn't arrive at its present generally healthy financial position today because of its approach to unions.
 

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In response to media questions, GM addressed repatriating foreign profits during last quarterly results conference call.

Repatriating foreign profits can result in stiff taxes; however, I believe recent Fed 'bailout' packages supports tax relief for such moves, to GM's benefit.

Foreign exchange plays into repatriation also.
 

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GM has to do something. From what I've seen, the GM China vehicles are actually nicer on the eyes than GM NA. Not sure how GM managed to get something right, but if this works in China, perhaps they should get a clue and try it here - they can't do any worse than they are here - well, they could - as long as the Yutz has his finger in design decisions.
 

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Wow, this so would not address the underlying concerns that brought GM to where it is today. And Toyota didn't arrive at its present generally healthy financial position today because of its approach to unions.
In and of itself, no, but labor cost is a major factor. Toyota hasn't avoided unionized labor just on principle, it's financial.
 

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In and of itself, no, but labor cost is a major factor. Toyota hasn't avoided unionized labor just on principle, it's financial.
The elephant in the room is the absence of US single payer health delivery system for ALL Americans, which unnecessarily burdens U.S. North American automotive operations. Unions are NOT the problem. Unions are the SOLUTION for a better America and growing middle class, which has nearly been gutted after nearly 30 years of crackpot right wing political ideology.
 

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The elephant in the room is the absence of US single payer health delivery system for ALL Americans, which unnecessarily burdens U.S. North American automotive operations. Unions are NOT the problem. Unions are the SOLUTION for a better America and growing middle class, which has nearly been gutted after nearly 30 years of crackpot right wing political ideology.
Unions have sucked the corporate tit dry and subsequently killed the middle-class by making unskilled labor unnecessarily expensive. Unionism is socialism at its finest.
 

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In response to media questions, GM addressed repatriating foreign profits during last quarterly results conference call.

Repatriating foreign profits can result in stiff taxes; however, I believe recent Fed 'bailout' packages supports tax relief for such moves, to GM's benefit.

Foreign exchange plays into repatriation also.
I know we're not supposed to get political here, so I wont comment on the candidates except for specifically one's planned policy in regards to repatriating funds . . .

One candidate, who I will call "The One", wants to heavily tax companies that send jobs overseas, in order to force companies to create American jobs, rather than foreign ones. Well, to sell in China, you have to build in China. It is Chinese law. So, GM builds lots of vehicles there and is making profits in that region. But GM would already have to pay a heavy tax to send those profits here. "The One" would make it much worse (double). So basically, if GM wants to use Chinese profits (or in the current case, Cash) to keep it's American workers employed, they can't.

If GM wants to compensate for currency fluctuations by building Saabs in Sweden or wants to be able to build a very small car sold around the world, at a profit by building Aveos in Korea, it gets hamstrung. GM can't keep the jobs in the US that they DO have, because the growing business ventures can't support the domestic operations without being penalized. "Change" in this specific case, would be bad for GM.
 

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I know we're not supposed to get political here, so I wont comment on the candidates except for specifically one's planned policy in regards to repatriating funds . . .

One candidate, who I will call "The One", wants to heavily tax companies that send jobs overseas, in order to force companies to create American jobs, rather than foreign ones. Well, to sell in China, you have to build in China. It is Chinese law. So, GM builds lots of vehicles there and is making profits in that region. But GM would already have to pay a heavy tax to send those profits here. "The One" would make it much worse (double). So basically, if GM wants to use Chinese profits (or in the current case, Cash) to keep it's American workers employed, they can't.

If GM wants to compensate for currency fluctuations by building Saabs in Sweden or wants to be able to build a very small car sold around the world, at a profit by building Aveos in Korea, it gets hamstrung. GM can't keep the jobs in the US that they DO have, because the growing business ventures can't support the domestic operations without being penalized. "Change" in this specific case, would be bad for GM.
Keep politics out of this thread or it will be shut down. If you don't believe me just wait for the moderators to come through the thread.

And just for clarification, it doesn't punish companies for sending jobs overseas, it takes away the tax credits they currently receive for doing it. Just think of it as the end of the subsidization of sending jobs overseas.
 

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Unions have sucked the corporate tit dry and subsequently killed the middle-class by making unskilled labor unnecessarily expensive. Unionism is socialism at its finest.

+ Eleventybillion.

Maybe, if GM didn't have to spend more on labor, they could use better materials or go that extra step in the engineering process and still be able to make money.
 

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The elephant in the room is the absence of US single payer health delivery system for ALL Americans, which unnecessarily burdens U.S. North American automotive operations. Unions are NOT the problem. Unions are the SOLUTION for a better America and growing middle class, which has nearly been gutted after nearly 30 years of crackpot right wing political ideology.
Fine, let's levy a tax on all imported products to pay for the federal boondoggle known as Single Payer Health Care. Hell' that'll even make us more competitive in the global economy
Ed
 

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So, GMAC was formerlly the only true cash cow in the North American automotive buisiness....with a lot of financial companies, they've fallen on hard times.

GM is running short on cash, so they want to trade it for.....Chrysler?

If GM could retain some of Chrysler's talented engineers, it's minivan expertise, and the Jeep brand and products, Chrysler still only holds approximately $11 billion in cash.
That is Chrysler's only good thing. Everyone in the company that doesn't make a Jeep or a minivan will have to be RIFed. That sucks. GM has no use for any other Chrysler product...it already makes trucks, it already has RWD cars (it's a matter of selling them in the US), and they already have great V8 engines.

And, how far is $11 billion going to go? At the current rate, approximately one year will pass by when GM runs out of the $11 billion, then it's back to square one, except by then the popular truck line will be aging along with all the ignored car models and the same unfair union contracts.

I am afraid that GM needs to start building up inventory now...run overtime shifts. Use the government loans to build new, high tech factories in places like Canton, Mississippi...Corpus Christi, TX...Birmingham, AL...and Mexico. Then lock everyone out of all UAW plants. Unfortunatly, GM will have to shrink it's lineup to the point where it can build in 3 or 4 plants in the US and import everything that it doesn't make here. (Nissan has one factory in Canton that makes 7 models). GM will also have to temporarily cut engine production and options until it can get a foothold again in this region.

A massive white collar reduction is also needed. GM pays their line workers too much, yet they are super top heavy also. Exactly the wrong way to do it.


In case anyone wanted to know my opinion, that's it.
 
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