Is This the Beginning of GM's Demise?

[NYMINUTE]

NEW YORK (CNN/Money) - General Motors, struggling with declining sales and profits, said Monday it is reducing its white-collar work force to lower costs. <br /><br />The automaker's chief executive officer, Rick Wagoner, also purchased 50,000 shares of the company's stock, which tumbled to a 12-1/2-year low after its warning last week of weaker-than-expected profits. <br /><br />GM (Research) shares, which last week fell about $5.30 or more than 15 percent, bounced back about 4 percent on Monday to close up $1.07 at $29.69 on the New York Stock Exchange. <br /><br />But shares of the world's largest automaker are still down more than 60 percent since Wagoner took over as its CEO in 2000. <br /><br />Toni Simonetti, a spokeswoman for the automaker, said GM is using "accelerated attrition tools" -- including early retirement plans -- to reduce employment in its non-union operations to better align its cost structure. <br /><br />Robert Herta, a spokesman for GM who handles human resources issues, told CNN that the early retirement offer to some salaried workers was not new but rather part of an existing trend to reduce the white-collar work force at the world's largest automaker. <br /><br />"2005 is no different than what GM has done in the past," Herta said. "It's a voluntary program." <br /><br />The accelerated attrition program, as GM calls it, is being offered to salaried workers in GM's business units, which include finance, information technology, communications and marketing. <br /><br />The Wall Street Journal reported Monday that the cuts could be as deep as 28 percent in certain departments at the world's largest automaker. <br /><br />Simonetti would not confirm that number, but did say that the cuts in the specified departments could go as high as 20 percent in some cases. <br /><br />GM warned on Wednesday that it expects a big loss in the first quarter due to sluggish sales and stiff competition in North America -- news that shocked Wall Street and sent its stock tumbling nearly 14 percent to a 12-1/2-year low.

 

[DJ]

Re: Is This the Beginning of GM's Demise?

It's not the beginning of their demise. It's just a restructuring that they should have done years ago.<br /><br />Todays automotive marketplace is a completely different scene than ten years ago.<br /><br />GM failed to address overcapacity issues when they should have. They have realized that thier shrinking market share can no longer support the capacity they have available.<br /><br />Give them a few years, they will emerge stronger.

 

[NYMINUTE]

Re: Is This the Beginning of GM's Demise?

What about the shinking of jobs that they and Ford, and Chrysler have farmed off shore? Who is going to buy the products they make when they have no job or a job paying well below the level they made at one of the big 3 or other major outfits that have sold out to foreign manufacturing?

 

[SoulWinner]

Re: Is This the Beginning of GM's Demise?

Between the UAW, crappy designs, unreliable crappy vehicles, crappy depreciation and re-sale value, and utter ineptituded with all things automotive, GM would do the american car buying public a service by closing thier doors forever.<br /><br />Even Toyota has begun producing juck since they moved production to America. Aparently building automobiles is not Americas forte.

 

[DJ]

Re: Is This the Beginning of GM's Demise?

What about the shinking of jobs that they and Ford, and Chrysler have farmed off shore? Who is going to buy the products they make when they have no job or a job paying well below the level they made at one of the big 3 or other major outfits that have sold out to foreign manufacturing?<br />

Ford and Chrysler are a completely different story.<br /><br />Chrysler was bought by an offshore company. Mercedes Benz. Benz calls the shots-not Detroit.<br /><br />Ford, on the other hand, restuctured starting about eight years ago. Ford realized that there are too many nameplates in the market place (over (140) to compete at their past marketshare. Jobs were NOT farmed offshore, they were eliminated, as needed, as overcapacity was addressed. Almost all were addressed with retirement and attrition.<br /><br />Ford is still a 100% wholly owned US company.

 

[Bob_VT]

Re: Is This the Beginning of GM's Demise?

I doubt GM will have a long range problem. I can see GM moving into China in the future and becoming a huge power again. Who ever breaks into China will end up being the leader just due to pure population.<br /><br />I would not blame UAW or design problems. The vehicles are designed to have a lower re-sale value. Look in your own house...microwaves, VHS players even your computer were very pricey in the past and are now mass produced at a low cost. I guess re-sale values of everything have dropped except real estate. It is our design that we purchase cheaper products made overseas and blame the Americans for the problem.<br /><br />I look in the mirror everymorning when I shave and see one of the people who can help change things.

 

[SoulWinner]

Re: Is This the Beginning of GM's Demise?

I would not buy a GM product if you put a gun to my head. I wouldn't accept a FREE car or truck from GM. Nor will I buy another Toyota that was built in the US. If the US wants to retain thier manufactuering base, stop overpaying union labor to produce crap, like everything in the GM line-up.

 

[kenimpzoom]

Re: Is This the Beginning of GM's Demise?

"GM stock... which tumbled to a 12-1/2-year low after its warning last week of weaker-than-expected profits"<br /><br />Why is making "weaker than expected profits" bad?<br /><br />I thought making a profit is good.<br /><br />WHo sets the expectation?<br /><br />Why do we penalize a company that doesnt achieve arbitray goals?<br /><br />Soulwinner, your dislike of GM in in a minority. Millions of GM cars and trucks are on the road every day, 99% of them trouble free.<br /><br />They arent perfect. If you want perfect, expect to pay 5000 bucks more.<br /><br />Ken

 

[jtexas]

Re: Is This the Beginning of GM's Demise?

I don't think a company's demise is signalled by the tossing out of a few accountants.<br /><br />SW, you & I are of like minds regarding the purchase of GM crap.<br /><br />Ken, it's not the "less than expected profit," it's the stock price down 60% since the current CEO took over. He's gonna lose his job if he don't get the stock price back up, not to mention the 50,000 shares he owns.<br /><br />The expectation is set by Wall Street Analysts based on company projections & Wall Street economic forecasts.<br /><br />We penalize companies who don't make their goals because we're mad at them for making us lose money; obviously it's not our fault we invested in them at an overvalued price.

 

[fixin]

Re: Is This the Beginning of GM's Demise?

Originally posted by SoulWinner:<br /> I would not buy a GM product if you put a gun to my head. I wouldn't accept a FREE car or truck from GM. Nor will I buy another Toyota that was built in the US. If the US wants to retain thier manufactuering base, stop overpaying union labor to produce crap, like everything in the GM line-up.

What a joke.You probably drive you foreign car with a support America sticker on the back.

 

[wajajaja]

Re: Is This the Beginning of GM's Demise?

the #1 selling lux car in the asian market is the BUICK, PER CBS SUNDAY MORNING 3/13

 

[SoulWinner]

Re: Is This the Beginning of GM's Demise?

Fixin,<br /><br />We own 3 Toyotas. The only sticker on any of these is each one has a Christian fish. If needed a full size truck I would buy an F-250, but for now I am selling my American made Tacoma and getting a Japanese made Land Cruiser. We typically own our vehicles for 10+ years, and nothing made in America can cut it for that long and that many miles without costing a fortune. Toyotas just keep on truckin'. If you don't like it, Don't yell at me, yell at GM.

 

[Dunaruna]

Re: Is This the Beginning of GM's Demise?

Well, in the great land of Oz, GM reigns supreme.<br /><br />All of our GM vehicles are locally built, maybe thats the difference - dunno. The only recent 'big scale' problems have been from the gen3 oil burners and I believe that was due to faulty Canadian made piston rings although the jury is still out on that topic.<br /><br />In respect to 4x4 vehicles, japanese made cruisers have had the lions share of quality for over 2 decades and they just keep getting better but the japanese made nissan patrols are a close second.<br /><br />Aldo

 

[Bob_VT]

Re: Is This the Beginning of GM's Demise?

Dunaruna.... the Nissan Patrol is not released in America but it is a neat little vehicle.<br /><br />I used to work for Nissan (A French owned company) and after the Iraq fiasaco I moved on to Chevrolet.<br /><br />I work at a Chevrolet dealership now and I asure everyone if we had to give them away at gunpoint it would not be the christian thing to do.<br /><br />I agree that "re-alignment" of staff is needed and will happen at GM. It will be a healthy move.

 

[Dunaruna]

Re: Is This the Beginning of GM's Demise?

Wow, patrols not release in the U.S.? You guys are missing out one sweet SUV. Their latest 4.2L turbo deisel auto have had nothing but rave reviews.<br /><br />Aldo

 

[SoulWinner]

Re: Is This the Beginning of GM's Demise?

Yeah Aldo, I know. Thanks for reminding me. I have thought about buying one from NZ or AU, and there are some in America, but for us the Cruiser is easier to get parts for.

 

[Wingnutt]

Re: Is This the Beginning of GM's Demise?

I guess that I’ll jump into the fray now. It’s not the individual autoworker who produces a low quality automobile. Instead the problem starts with the CEOs and works down to the industrial engineers. Starting with the directive that a new vehicle shouldn’t last more that a couple of years after the financing ends, down to the selection of the cheapest materials available in order to maximize profits. IHMO, this is the basic problem with the big three. Personally, I will NOT buy an automotive product made by the big three because of the planed obsolesce. I won’t even go into the pure profit amounts built into every car and truck they produce. My plans of right now are to restore my older vehicles and keep them for quite a while longer. I refuse to buy a product that is designed to last a specific amount of time, to say nothing of the $25k + price for a new car.

 

[Twidget]

Re: Is This the Beginning of GM's Demise?

Im not a big GM fan, but my company vehicle is a '98 Astro. It has about 200k miles, it will be retired at 250k miles.<br /><br />The van has had maintenance/tires and a ball joint in the time I have used it. Very reliable vehicle, I just hate the lack of leg room.<br /><br />Since I use the Astro for work, my Ram quad cab only has 28k miles on it in 3 years. It hasn't had a chance to cause problems, but I really like it.

 

[kenimpzoom]

Re: Is This the Beginning of GM's Demise?

Originally posted by jtexas:<br /> Ken, it's not the "less than expected profit," it's the stock price down 60% since the current CEO took over. He's gonna lose his job if he don't get the stock price back up, not to mention the 50,000 shares he owns.<br /><br />The expectation is set by Wall Street Analysts based on company projections & Wall Street economic forecasts.<br /><br />We penalize companies who don't make their goals because we're mad at them for making us lose money; obviously it's not our fault we invested in them at an overvalued price.

I think it is a crock that a companies performance is gauged by how well it meets a "guess".<br /><br /><br />The stock price is down because they made less than expected profits. I would expect it to go down some, but I think the market way overreacts to not meeting a guess.<br /><br />If you have ever done a forecast (I had to one time), it is complete BS. I could have done better if I had thrown a dart.<br /><br />My account at work is a poor performer due to contracts going to other companies, yet the accountants raised the plan. How am I supposed to make more money than last year if the contracts went to someone else. They knew the contracts went to someone else, yet they expect to make more money? How? The only hope is the contract winner screws up.<br /><br /><br />Ken

 

[jtexas]

Re: Is This the Beginning of GM's Demise?

Ken, <br /><br />Having been a party to a number of budgets and short term forecasts for a really big corporation, all I can say is, I agree with everything you said. And please accept my apologies on behalf of my counterparts at your company for saddling you with an unrealistic plan.<br /><br />I'm going to let you in on a little secret about the revenue planning process at major corporations: it's a joke. At least it's the butt of several really funny jokes (I won't repeat 'em here because you have to be an accountant to get 'em). Our division goes through a series of very complicated, detailed, convoluted calculations to arrive at the forecast. Then we wait until the guys "upstairs" decide what they want to tell Wall Street, and figure out how to work that in so it looks logical and methodical. And plausible. God I love this job!<br /><br />As wingnutt said (not in so many words), sh!t flows downhill!<br /><br />jtw