GM to file for chapter 11

[Marc Thorpe]

I know the car manufacturing has been beating to a pulp

 

I have a question if someone can answer

 

Gm is currently heavy on TV adds,within the last week the Gov advised GM to prep papers for Chapter 11 by june.

Gathering they are headed down the road of bankruptcy,why the push on adds and what will happen to consumers/warranties who buy vehicles during this last push for sales?

 

I dont quite understand this and the gov is letting them advertise like crazy knowing very well if the boat sinks,consumers will be left without a life vest ?

[Reel North]

Chapter 11 is a bankruptcy RESTRUCTURING caveat in the legislation. It allows a company to continue normal operations, ie making cars and repairs etc. It is essentially business as usual, with creditor protection. GM is given a certain amount of time to cut costs, renegotiate debt, costs etc, to streamline the company and give it time to make it profitable. The big losers in a Chapter 11 filing are generally the shareholders, as the company value is essentially eliminated. Bondholders are second in line for losses. Air Canada did a chapter 11 protection a few years ago, and actually made money for about 10 minutes. Now they are looking to use Chapter 11 again.

 

GM is advertising heavily likely to attempt to increase sales in the short term to generate some cash, to fund day to day operations, and maybe to pay down some debt.

 

It is highly unlikely that GM will disappear completely from the radar screen, however, they are likely to come out of bankruptcy smaller and far leaner, with fewer brands, plants, and workers.

 

I would think realistically that GM is likely nearly done in Canada in the near future, since our strengthening dollar, high electricity and tax costs are uncompetitive with the US states we compete against for the plants. The provincial government has lost its way (and did years ago) as far as attracting and keeping businesses here in Ontario. The move to hammer companies with various taxes, high energy costs etc has made this environment high cost. However, productivity and quality are extremely high in Canada. GM may have forgotten that they need to encourage consumers to purchase cars that are reliable and safe, which is why they are in such a mess in the first place.

 

If you want to make a difference for the big 3 automakers, it is important to purchase one of their cars. Ford sales are rising recently, since they took none of the bailout cash available, and have taken responsibility and are trying to make internal changes to return to profitability.

 

Hope this ansers some of your questions

Edited April 15, 2009 by Reel North

[Marc Thorpe]

TKS RN,great reply ,I understand better.

 

I did buy a Dodge 2 weeks ago,against Tybo advice

 

Its ironic how now they are filling for chapter 11 ,I thought that's what the governments were trying to do with them all along.

 

I agree ,I dont think they will disappear,restructuring is in order

I think like all of us,when the sun shines we harvest as much as possible,but when the harvest is not so bountiful,we are to re-ajust.

Given their size its not quite easy,supporting them will only make things better in the long run

Edited April 15, 2009 by marc thorpe

[Reel North]

Agreed Marc.

 

It tells a bleak story when GM can get 15 or 20 Billion dollars, and it isnt enough to save them. Their cash burn rate is MASSIVE!!

 

Gm is a behemoth, along with all the NA original big 3. It looks today that Chrysler is in big big trouble. Fiat has threatened to pull out of their deal unless the UAW & CAW reduce labour costs to Japanese worker levels (I dont know what that is). Everything always seems to fall on the little guy. The biggest singles issue facing the auto makers right now, including toyota & honda, is that demand for vehicles is forecast to be about 11 million vehicles, but the cost structure is set up for about 17 million vehicles, with break even in around 15-16 million total units industry wide.

 

Simply put, there is far too much capacity, and some plants will need to be mothballed.

 

I heard a comment made by the ex-CEO of GM, which essentially was that small cars are a fad, and that Americans will always buy the largest car they can afford (aka SUV). He admitted that they hitched their wagons to SUV and Truck sales, as they are the most profitable, and that they gambled the comapny's future on the continued demand in that sector.

 

One thing that does have me concerned about the future of auto manufacturing in Canada is some of the wording in the US Stimulus package, which "encourages" products purchased under the stimulus bills to be mad in America. Obama claims that this is not intended to impact canadian steel, etc, however when US Steel shut the Hilton works and Lake Erie plants, the work was moved to Pittsburgh.

 

These huge companies could care less about WHERE the products are made, but the profits that can be turned on each unit.

 

According to a recent report I read from Ford Canada, the new CAW contract negotiated with GM will actually cost the Canadian divisions 10.00/hr MORE in labour than in the US, all factors considered. That is why Ford & Chrysler have rejected the contract and are trying to negotiate it better.

 

I would certainly prefer to pay a little more for a truck (I use it for work - Ford F150) if the components were made in North America. There is an awful lot of offshore parts creeping in to these vehicles to cut costs. It just costs us more to maintain down the road, and forces more jobs offshore.

 

We manufacture lifting equipment for Water and Wastewater treament plants, and have comitted to purchasing only North American parts. Ever try to source bolts that are made in North America!??!

 

Cheers

Edited April 15, 2009 by Reel North

[OhioFisherman]

http://www.google.com/search?client=firefo...G=Google+Search

 

That is certainly not going to help them.

[Photoz]

Yeah h h h . . . . ain't it nice to be sittin' in a new Montana, fingers crossed, hoping nothing goes wrong with it. When in getting an oil change Monday, I got discussing the current situation with warranty (and even non-warranty) work, with my mechanic . . . I've dealt with this guy for 36 years, and NEVER have gotten any Bull from him. He informs me he's NEVER had so much stuff on back order as he has now!! You know, I looked at the Toyota & Nissan offerings in vans, before getting the Montana, but opted to spend $10,000.00 less . . . THIS may not have been a wise move? It would be a helluva thing, having to buy (or rent) another van, because I couldn't get a part worth a paltry few hundred bucks? I'd sure like to hear some further words of wisdom on this subject . . . as I'm certainly feeling a lot like 'Chicken ("The sky is falling in . .. the sky is falling in!!") Little these days!

[Reel North]

Here is one that will make you shake your head.

 

The head of the CAW is ready to play chicken with the Fiat & Chrysler merger. Apparently, he not prepared to match the wages paid by the Japanese automakers, and feels that the CEO of Fiat is bluffing by saying that they will kill the merger unless those concessions are made by hourly workers.

 

His feeling is that it is unlikely that Fiat would back out of the deal at this stage. He is willing to allow Chrysler to slide into bankruptcy should the deal fall apart.

 

Now that is a great plan for 8500 Chrysler workers. Wow.

[scugpg]

I know a few folks who are on the verge of forced retirement in Oshawa in June when they close the plant.

 

I can't imagine what they're going through, who knows if they'll get appropriate severance and/or pension at this point.

 

Could you imagine working there 30yrs and not getting severance or a pension that you were told you could rely on.

Edited April 15, 2009 by scugog

[Stoty]

Is it just me or does anyone else think they made the bed, and now are chirping about sleeping in it?

 

Maybe if you didn't pay your workers WAY too much money to do jobs monkey's can do...you wouldn't be in the situation..?

 

It's also pathetic that they are getting all this bailout money from taxpayers pockets.

 

I lost my job in January due to the company filing for bankruptcy...... why didn't I get bailed out?

 

My advice...take your $240,000 buy out ($120,000 x 2), $35,000 car voucher, and stop whining.

 

Just my $0.02.

[Gerritt]

Ohhhh... I see this going south now....

 

G

[Reel North]

Lets not pile on the workers here. Lets look at it from a business case

 

GM & Chrysler are bloated, and have too much capacity.

 

The benefits, pensions, and holidays are significantly more lucrative than anything other than government

 

The long term pension obligations of both companies are huge, and are significantly underfunded. Gm is currently 4.6 billion underfunded in their pension.

 

The Ontario government offered a "too big to fail" insurance program for the automakers and other large firms in the early 90's (thank Bob Rae), which only GM took advantage of.

 

The Ontario government is on the hook for the pensions of the autoworkers should the company go broke. There is currently only 100 million dollars to cover the pensions, which leaves us on the hook for 4.5 billion.

 

It is difficult to blame the workers for the generous compensation paid to them by the company, or to understand their reluctance to take significant paycuts.

 

However, it IS difficult to understand the CAW attitude (UAW is far more willing to make concessions) that the entitlements are still there when the economy is in recession, and the employer is facing a potential chapter 11 filing, or in the case of Chrysler, a potential liquidation and total loss of pensions etc.

 

Lets not turn this into a mud slinging match.

 

The fact of the matter is that everyone needs to look at this very closely, and make it work. The loss of these jobs will absolutely DEVASTATE Ontario's economy. If you think things are tough now, this is a fairy tale compared to what COULD happen.

[irishfield]

Chapter 11.... that's where all the suppliers go out of business for failure of GMC to pay them, legally.

 

Guess the writting might have been on the wall... oh way back around '92 when we all got screwed with GM not paying the likes of TRW and other tier one suppliers for over a year. Call it free restructuring then to the tune of 40 some billion. Of course that got passed down to the tier 2 lads like us that didn't get paid for over a year and a half. Of course companies like ours where still expected to pay for raw materials in 90 days or less and our employees weekly..... MANY didn't survive that! Many many more aren't gonna survive this round!!

Edited April 15, 2009 by irishfield

[Reel North]

The government has put in place a 5 billion fund for suppliers of GM & Chrysler to ensure they get paid for parts. That is a huge issue in the industry that the small players are forced to use expensive credit facilities to keep open when the big 3 take a year or more to pay for retooling. It all needs to be reworked.

[John]

Agreed Marc.

 

It tells a bleak story when GM can get 15 or 20 Billion dollars, and it isnt enough to save them. Their cash burn rate is MASSIVE!!

 

Gm is a behemoth, along with all the NA original big 3. It looks today that Chrysler is in big big trouble. Fiat has threatened to pull out of their deal unless the UAW & CAW reduce labour costs to Japanese worker levels (I dont know what that is). Everything always seems to fall on the little guy. The biggest singles issue facing the auto makers right now, including toyota & honda, is that demand for vehicles is forecast to be about 11 million vehicles, but the cost structure is set up for about 17 million vehicles, with break even in around 15-16 million total units industry wide.

 

Simply put, there is far too much capacity, and some plants will need to be mothballed.

 

I heard a comment made by the ex-CEO of GM, which essentially was that small cars are a fad, and that Americans will always buy the largest car they can afford (aka SUV). He admitted that they hitched their wagons to SUV and Truck sales, as they are the most profitable, and that they gambled the comapny's future on the continued demand in that sector.

 

One thing that does have me concerned about the future of auto manufacturing in Canada is some of the wording in the US Stimulus package, which "encourages" products purchased under the stimulus bills to be mad in America. Obama claims that this is not intended to impact canadian steel, etc, however when US Steel shut the Hilton works and Lake Erie plants, the work was moved to Pittsburgh.

 

These huge companies could care less about WHERE the products are made, but the profits that can be turned on each unit.

 

According to a recent report I read from Ford Canada, the new CAW contract negotiated with GM will actually cost the Canadian divisions 10.00/hr MORE in labour than in the US, all factors considered. That is why Ford & Chrysler have rejected the contract and are trying to negotiate it better.

 

I would certainly prefer to pay a little more for a truck (I use it for work - Ford F150) if the components were made in North America. There is an awful lot of offshore parts creeping in to these vehicles to cut costs. It just costs us more to maintain down the road, and forces more jobs offshore.

 

We manufacture lifting equipment for Water and Wastewater treament plants, and have comitted to purchasing only North American parts. Ever try to source bolts that are made in North America!??!

 

Cheers

 

The problem with the Fiat/Chrysler deal is that it is not really a deal at all. There is no money, no management, no real forward technology and no guarantees. The only committment that Fiat has given, and even that is shaky at best, is that is will supply current small car technology, meaning engines and other parts. In exchange Fiat gets 25%. And........Fiat itself is struggling! Unless I am VERY mistaken, North American buyers will not embrace Fiat no matter what nameplate is on the trunk. There are far, far, better cars from Europe than Fiat that we have sent packing with their tails between their legs.....Peugeot and Citroen come to mind (probably the best diesel technology in the world). Hell, Hyundai and Kia, with some of the best new small cars to come along from Asia in the past 10 years are struggling to sell enough to make them viable here. Wanna buy a Honda or Toyota for $10,000 less? Buy Hyundai or Kia.

 

If we look deep within ourselves, we will find the answer. You can not go on with a fat and stupid mentality registering approximately 2 cars for every one drivers license and expect things to sustain themselves forever.

 

Throwing money at a dying monster will never fix the problem. The monster needs to be allowed die and be resurrected into something that can compete.

[mbac31]

I for one look at this from a Business aspect. I own my own business and if I ran it like these guys who would be there to bail me out. Knowone, thats who! I for one am glad that they are going under. These companies have been living high on the hog for way to long. Their problems start from the top down. Dealers have the attitude that our truck is the best. Screw the customer. I speak from experience. I have bought several. I hope they all lose their status and that we will see a better company come out of this. I do currently drive a GM amd will not sooner than later. I will be buying foreign. Keep a Canadain working. Are you kidding me. Go to the lots where these workers park their cars. How many foreign cars/trucks do you see. Many more than domestic. City of Toronto has tons of Hondas on their roster. Someone call the Waaaaaaaammbulance. Mayor Miller, socialist Jackass, buy Canadian, all the government is crying. I work for GM, I just spent $50,000 on a hotel room last night because I'm a CEO. I make this much for sweeping the floor How much do you make at your real job? . I find it very sad that these guys are loosing their jobs. But yet they were the ones who backed the union. Give me more, Give me more. Please. One bad apple after another. Yet guys who have supplied them have to settle for a percentage of what they sold them. This just makes it legal for them to screw everyone. I can go on but that would be a very long post.

 

My 2 cents

[blue pickeral]

Buy a vehicle to help out the BIg 3? Ridiculous. I work as hard for my money as anyone else. I'm not going to spend it on a vehicle to support a company only to have it sit busted in the driveway. I buy the vehicle that suits my needs.

 

Why are the unions not backing the GM pension plan? They've collected thousands of dollars in membership dues over the years. Why doesn't the CAW start retraining plans? It is their workers they are supposed to care about.

 

GM workers made NO pension plan contributions, so this should have left them all kinds of RRSP contribution room each year. Did any of them bother to fend for themselves? If tax dollars are used to back their pensions, I want my fair share as well.

[Billy Bob]

My stocks went DOWN the tubes and so did much of my retirement money.......... No one is bailing me out because I saved and only spent within my mines. I have lost money in the stock market before and again no bailout......... If they can swim OK, if not let them go........BTW are these INTEREST FREE loans that they are suppose to pay back ? ? ? or just the principle being payed back ? ? ?

 

ALL I can say in Japanese is....................... TOYOTA

[2 tone z71]

My stocks went DOWN the tubes and so did much of my retirement money.......... No one is bailing me out because I saved and only spent within my mines. I have lost money in the stock market before and again no bailout......... If they can swim OK, if not let them go........BTW are these INTEREST FREE loans that they are suppose to pay back ? ? ? or just the principle being payed back ? ? ?

 

ALL I can say in Japanese is....................... TOYOTA

 

Blah blah blah blah blah people still are will and always continue to buy GM

[OhioFisherman]

If you understand the principals of a contract negotiation at all nobody ever starts out with exactly what they will settle for, the company or the union. You settle for the best you can get.

 

Be interesting to me to see exactly what salary cuts the execs are willing to take? Would they be willing or forced to work for the comparatively mere pittance the Japanese auto executives work for?

 

http://www.forbes.com/forbes/2006/0904/112.html

[LeXXington]

We need the jobs here but not all this Bull,

 

CAW/UAW Big bosses got what they wanted at the expense of the business.

 

The management never stood up to the union or built things the customer needed.

 

Just stop telling me.. to big to fail. Must give us money, must give us a pension.

 

I feel for the worker but thats life.. deal with it like the rest of us.

 

If one goes bankrupt it will be better for the rest, stop allowing all the cars from other places to come into NA.. Make at least 50% built in NA at a normal wage. Get rid of the union. Problem solved.

[bigfish1965]

Okay..we are not going to solve this issue here. Everyone had a hand in the failure. Let's close this now and all think about the summer fishing.