Is GM going bankrupt?

[Ned]

Originally posted by chegitz guevara


Yeah, all companies owe their workers is the lash and enough bread and water to do their jobs. Too bad they won't be able to buy any cars.

Why do conservatives never see that unless you pay your employees, you have no one to buy your goods? What, you think the employees of other companies are going to buy them, when other companies are going to do the samething you do? Conseratvies are always so short-sighted. That's why you're the enemies of humanity.

Why do commies insist that private companies pay their labor above market rates?

[Dinner]

The Economist's take on all this:

Both GM and Ford have sizeable cash piles ($26 billion in GM’s case) and credit lines available, so the extra cost of financing resulting from the credit downgrades should not hurt too much in the immediate future. But it remains to be seen how long both firms can remain solvent if their core operations continue to bleed money and their legacy costs continue to grow. Bankruptcy no longer seems far-fetched. Indeed, the opportunity to emerge from Chapter 11 as smaller, leaner operations, stripped of some burdensome liabilities and better equipped to move back into the fast lane of carmaking, may be starting to look like an appealing option.

http://www.economist.com/agenda/displayStory.cfm?story_id=3956067

[asleepathewheel]

Originally posted by Ned
Cavuto said that he saw a pattern in failed companies. The seemed to have a hard time defining their business. I worked for just such a company. Near the end, it too could not define with any clarity what its business was. It failed.

That's depressing, isn't it? I worked for a firm like that for a brief time, needed the income, but got out as soon as I got another sniff. Death in the air.


Great thread btw Very insightful.

[Kidlicious]

Originally posted by Oerdin
Both GM and Ford have sizeable cash piles ($26 billion in GM’s case) and credit lines available, so the extra cost of financing resulting from the credit downgrades should not hurt too much in the immediate future.

The thing about that is that they are required to keep those large balances by their creditors.

[Kidlicious]

Originally posted by Ned
Why do commies insist that private companies pay their labor above market rates?

Because the market rate is too low?

[Ned]

Originally posted by Kidicious


Because the market rate is too low?

Now, how would one know that?

[JohnT]

He'll have the Neighborhood Planning Committee of Wage Decisions weigh in on the matter.

[Ned]

John T, is that where they pull numbers out of thin air?

[pchang]

Actually, there isn't much air in the place they pull the numbers from. And the air that is there is definitely not thin.

[JohnT]

Yeah, well, talking about pulling numbers out of your ass, I should know better than to posts ideas that occur to me when I wake from a mere 4 hours sleep.

That post of mine, about GM's interest cost? Incorrect, as the rating decline affects future issues not current contractual obligations. So the (for ex.) 3.5% 2002 issue is still just 3.5%.

However, GM's debt repayment schedule shows that $45 billion of their $300 billion is due by the end of this year, meaning that if GM rolls over that debt they will have to pay interest rates worthy of their new credit rating. The weighted average interest rate for that debt is currently 3.5%, a full 2.5% points below the 7% rate quoted above (I got that figure from the WSJ, somewhere.) This alone will increase their carrying costs by $1,125,000,000 per year.

In case y'all are interested in the long-term debt structure, here are some numbers: $38 billion of GM's debt is due in 2006, $24 billion due in 2007, $11 billion in 2008, $9.6 billion in 2009, and 2010-and-after $91 billion is due, with the weighted interest rate of all debt payable from 2006 onwards being 4.9%.

[JohnT]

Originally posted by Provost Harrison


Hence your motor industry is dying...you need to keep up...oil prices are going to keep on going up and up.

An odd thing for a Britisher to say. How's that Jaguar division of Ford doing? And who is it that builds Rolls Royces - Volkswagon?

As noted above, Oerdin reminded me that Ford has hybrids available, so it looks as if I might be able to do both things at once.

[JohnT]

Originally posted by Oerdin
The Economist's take on all this:



http://www.economist.com/agenda/disp...ory_id=3956067

Though GM has $26 billion in cash, they've already announced that the figure is going to drop $2 billion - and that was before the rating decrease.

[JohnT]

Originally posted by chegitz guevara


Yeah, all companies owe their workers is the lash and enough bread and water to do their jobs. Too bad they won't be able to buy any cars.

Why do conservatives never see that unless you pay your employees, you have no one to buy your goods? What, you think the employees of other companies are going to buy them, when other companies are going to do the samething you do? Conseratvies are always so short-sighted. That's why you're the enemies of humanity.

Never heard Henry Ford described as a Progressive before... not too sure if he'd like that, either.

And, Che? If you're not going to talk about the issue at hand and rather would just insult the people participating in this thread, be a man for once, swallow your bile, and leave.

Here's an assignment to show you what would be helpful, more helpful than blanket insults: I made a comment earlier about GM's labor costs being $74/hour. Explain to us, using Communist financial theory (if such a thing exists), how that isn't enough and how you expect GM to continue paying it, while supporting new car development for an ever-changing market, increased debt carrying costs, and, of course, your basic COGS - after all, you need steel, iron, copper, electronics, upholstery, stamping dies, welding machines, thousands of miles of conveyor belts, and thousands and thousands of additional items in order to build a car, and all that stuff has to be paid for.

To give you an idea how how much material is needed to build cars, GM's COGS for their worldwide automotive divisions, less direct labor costs, was $138 billion ($161b in gross sales, COGS of $159.5, worldwide direct labor costs of $21.5).

Please, we're fascinated in how you'd fix this.

[JohnT]

Cavuto said that he saw a pattern in failed companies. The seemed to have a hard time defining their business. I worked for just such a company. Near the end, it too could not define with any clarity what its business was. It failed.

He has a point, but I don't think that applies in GM's situation. They know what the corporate mission is, they're just not as good at it as they used to be. Or they are, and the competition just got better.

[Kidlicious]

Originally posted by Ned


Now, how would one know that?

Ummm. Because they don't have enough money?