GM loses $9 billion in 2005

[Asher]

Who died from eating meat recently?

I know at least 1 person who died from eating mushrooms, anyway.

[Dinner]

Delphi actions could bankrupt GM
Auto parts maker asks bankruptcy court to void contracts, plans to close or sell 21 plants; is a strike coming that could force GM into bankruptcy?
By Chris Isidore, CNNMoney.com senior writer
March 31, 2006: 11:59 AM EST


NEW YORK (CNNMoney.com) - Delphi announced plans Friday to throw out its union contracts and shed more than 28,000 workers as it shut down most of its U.S. operations -- moves that could spark strikes at the auto parts maker and a possible bankruptcy filing at its biggest customer, General Motors.

Delphi (Research) filed motions with the federal judge overseeing its bankruptcy proceedings to shed contracts with the United Auto Workers union (UAW) and another union that it says it can no longer afford. It also announced plans to sell or close 21 of its 28 plants.

But it said it was encouraged by progress in talks with the unions, adding it's hopeful an agreement can be reached on concessions before a court hearing scheduled for early May.

The 21 plants that Delphi wants to shed employ 20,000 hourly workers, or about two-thirds of its union work force in the U.S. The company also plans to cut another 8,500 non-union workers worldwide, or about a quarter of that staff.

"While our court filings are necessary procedural steps to enable action that may become necessary at some point in the future, we are singularly focused on reaching a consensual resolution with all of our unions and GM before any court hearing is necessary," said a statement from Delphi CEO Steve Miller.

But the UAW, the company's largest union, attacked the court filing, saying it killed momentum towards a labor agreement.

"Today it appears there is no basis for continuing discussions," UAW President Ron Gettelfinger and union VP Richard Shoemaker, the top negotiator with Delphi, said in a statement.

"In the event the court rejects the UAW-Delphi contract and Delphi imposes the terms of its last proposal, it appears that it will be impossible to avoid a long strike," they said.

"The UAW has worked diligently in good faith to resolve the Delphi situation through collective bargaining instead of through a lawyer-driven court process or confrontation. Regrettably, Delphi has chosen another path."

GM said it was disappointed with Delphi's moves, adding it disagreed with Delphi management's approach. But it said it still hoped to reach a three-way agreement with the unions and Delphi.

"Motions to reject labor agreements are fairly common in reorganization proceedings and we have seen this approach play out to agreed resolutions in other cases," GM CEO Rick Wagoner said in a separate statement.

Delphi also filed with the court to void about half of its contracts to supply GM's North American plants. Wagoner didn't address that filing in his statement.

Shares of Dow component GM (down $0.38 to $20.68, Research) fell about 2 percent in morning trading.

The other major union at Delphi, the IUE-CWA, has also threatened to strike if its labor contracts are voided. But a decision by the bankruptcy judge on whether to let the auto parts maker out of its union contracts is likely months away.

Even with the union's statement Friday, some experts continued to say they expect Delphi and the unions to reach a deal without a prolonged strike. Bob Schulz, the chief auto debt analyst for rating service Standard & Poor's, said he didn't see the risk of a strike at Delphi or bankruptcy at GM as necessarily any higher Friday than before the filing.

"Resolving the issue probably required starting the clock and filing with the court. It isn't that surprising that they filed the motion," he said Friday. "There are a number of reasons why we think all three parties will reach a consensual agreement. There's a lot of time before the May hearing."

Threat to GM
But if there are prolonged strikes at Delphi, it would halt production at GM, a move that experts say would force the troubled automaker into bankruptcy court itself. GM spun off Delphi in 1999, but the parts maker is still its largest supplier and GM can't make cars for any prolonged period without it.

GM lost $10.6 billion last year and it would be in worse shape if a lack of parts led to a shutdown of GM plants. Under GM's UAW contracts, it must continue to pay its 113,000 hourly employees even if there is no work for them to do. And while GM's balance sheet appears strong, its assets would quickly dwindle without revenue from its auto sales.

GM executives have vowed to avoid bankruptcy, but they also say they don't expect any disruption in operations. As to the threat of a strike at Delphi, GM's statement Friday said the automaker "expects Delphi to honor its public commitments to avoid any disruption to GM operations."

The threat of a Delphi strike and the obligations GM has to its former workers at the parts maker led to an agreement this month for GM to offer some UAW members at Delphi $35,000 if they agreed to retire. GM is also offering its own workers up to $140,000 to retire or leave GM and agreed to rehire 5,000 UAW members at Delphi.

GM has already said Delphi's bankruptcy will cost it at least $5.5 billion before tax., But it could be on the hook for even more money if it has to contribute more to a settlement between the UAW and Delphi.

Even if there is an agreement at Delphi Schulz cautioned that GM's problems are far from solved.

"The Delphi situation is one of the negative wild cards. But GM's own operations in North America are the biggest issue," he said.

Delphi looking for deep wage cuts
Delphi's statement Friday said it is proposing its union members take a pay cut of nearly 40 percent, though that would be cushioned by a $50,000 one-time payment to compensate for concessions.

It is proposing cutting hourly pay nearly 19 percent to $22 from $27 right away, and then to $16.50 an hour in September 2007, when the current labor deal is due to expire. The $50,000 "wage buydown" payment would be made then.

As steep as the wage cut proposal is, Delphi's demand Friday is less severe than the 54 percent cut to $12.50 an hour that Delphi was originally demanding shortly after its Oct. 8 bankruptcy filing.

The plant closing or sale plans would also mean a nearly two-third cut in hourly employment, to 12,000 workers at the eight plants Delphi intends to keep in the United States, down from 32,000 union members now.

Check auto stocks here ...


The eight plants that Delphi intends to keep are in Brookhaven and Clinton, Miss., Grand Rapids, Mich., Kokomo, Ind., Lockport and Rochester, N.Y., and Warren and Vandalia, Ohio.

http://money.cnn.com/2006/03/31/news/companies/delphi/index.htm?cnn=yes

[DanS]

GM, Delphi and the union made their beds long ago...

[DanS]

GM recently announced that the accounts for its GMAC finance unit, which they are trying to sell, aren't reliable. Revisions ahead are likely.

[Apocalypse]

Well hopefully they'll all just go under and some Saturn-like company will come around again to produce cars that can compete with the Japanese.

[JohnT]

"Likely"? They've already revised FY 2005's loss downward by $2 billion to $10.6 billion the same time they missed their 10-K filing deadline two weeks ago, plus they've restated all earnings going back to 2000.

[DanS]

Further revisions.

[JohnT]

They'll soon revise themselves to $0 if this pace keeps up.

[Dinner]

Originally posted by DanS
GM recently announced that the accounts for its GMAC finance unit, which they are trying to sell, aren't reliable. Revisions ahead are likely.

The claim I heard was that GM was trying to make GMAC look rosier then they really were.

[DanS]

They "were" trying, or they "are" trying?

[JohnT]

nm...

[Kidlicious]

Originally posted by Oerdin


The claim I heard was that GM was trying to make GMAC look rosier then they really were.

fraud?

[Kidlicious]

Originally posted by DanS
GM, Delphi and the union made their beds long ago...

The only thing that matters now is who gets what's left.

[Kidlicious]

General Motors May Announce GMAC Stake Sale Monday, People Say

March 31 (Bloomberg) -- General Motors Corp., the world's largest automaker, may announce an agreement Monday to sell control of its finance unit to investors led by Cerberus Capital Management LP, three people with direct knowledge of the matter said.

Cerberus, based in New York, is teaming with investors including Citigroup Inc.'s private-equity unit to bid for General Motors Acceptance Corp., said the people, who declined to be identified before a formal agreement is reached. The Cerberus-led group offered about $11 billion in January for 51 percent of GMAC, a provider of auto loans, insurance and mortgages, one of the people said.

``The plus is the $11 billion that GM would get from the deal right now,'' said David Healy, an analyst at Burnham Securities Inc., who owns GMAC notes. ``The minus is the billions of dollars that GM has been getting from GMAC would be cut in half.''

A sale would bring GM Chief Executive Officer Rick Wagoner a step closer to reducing the cost of making auto loans by regaining an investment-grade rating for GMAC. GMAC's credit rating, along with its parent's, was cut to junk last year as the company reported losses of $10.6 billion. Detroit-based GM is selling assets, firing workers and trying to get union workers to quit to cut losses.

Aozora Bank Ltd., owned by Cerberus, and Norinchukin Bank Ltd., a Japanese bank for farm cooperatives, will help fund the GMAC purchase, said one of the people with direct knowledge of the bid. Final details aren't yet complete and a deal could still be delayed past Monday, the person said.

Cerberus Chief Operating Officer Mark Neporent didn't return a call seeking comment. Citigroup spokesman Jon Diat in New York declined to comment, as did Tokyo-based spokesmen Tsutomu Jimbo for Aozora and Takeshi Mashima for Norinchukin.

Losing Market Share

``We're still actively engaged in pursuing the possible sale of a controlling interest in GMAC,'' GMAC spokeswoman Toni Simonetti said. She declined to comment on the likelihood or timing of a deal.

Wagoner has been shedding assets to cover the cost of developing new cars and trucks to win back buyers lost to competitors such as Toyota Motor Corp. GM's U.S. market share fell last year to its lowest since 1925 as Toyota and other Asian automakers' share rose to a record.

GM yesterday said it's in talks to sell shares of Japan's Isuzu Motors Ltd. The 7.9 percent stake in Isuzu is valued at 40 billion yen ($340 million). GM has raised $2.7 billion selling shares of Fuji Heavy Industries Ltd. and Suzuki Motor Corp.

Leading Bid

Last week, a group led by Kohlberg Kravis Roberts & Co. paid $1.5 billion for 78 percent of GMAC Commercial Holding Corp. The unit repaid $7.3 billion in outstanding loans to GMAC.

Cerberus has been the leading bidder for GMAC since Wachovia Corp., the fourth-largest U.S. bank, dropped out, people familiar with the talks said last month.

GM has made more money from auto loans and mortgages than building cars and trucks since 2002. Last year, the auto unit lost $12.9 billion and GMAC earned $2.4 billion, according to revised figures filed by the automaker this week.

Standard & Poor's Corp., Fitch Ratings and Moody's Investors Service have given GMAC a higher credit rating than GM since late last year on the expectation of a sale.

S&P, which rates GM debt five steps below investment grade at B, has left GMAC three steps higher at BB. Moody's rates GMAC at Ba1, five grades above GM. Fitch has the finance unit at BB, three steps above GM. All three ratings companies have said they will cut GMAC back to the same level as GM without a sale.

Late 10-K

GM delayed filing its annual report with the U.S. Securities and Exchange Commission until this week after saying on March 10 that it wouldn't miss a March 16 deadline. The report, which restated results from 2000 through 2005, resulted in a GM credit downgrade deeper into junk from Moody's and a warning from S&P that it might follow.

Cerberus, named for the three-headed dog that guards the gates to the underworld in Greek mythology, was founded in 1992 by Stephen Feinberg and William Richter. The firm was part of a group that this year agreed to buy U.S. grocery chain Albertson's Inc. for about $9.8 billion.

Former U.S. Vice President Dan Quayle heads up Cerberus's international activities and David Thursfield, who ran Ford Motor Co.'s operations outside of North and South America until April 2004, runs a Cerberus automotive unit.

In addition to the controlling stake in Aozora Bank, Cerberus has invested in a portfolio of apartments in northern Germany and Air Canada.

Citigroup Alternative Investments is the private-equity unit of the world's largest financial-services company. It has more than $35 billion in assets and invests with other buyout funds in acquisitions. Citigroup has invested more than $12 billion in the unit.

Looks like Dan Quayle is in on this.

[Ted Striker]

It does boggle the mind how GM management can be so incompetent, as the point was made, even 16 year olds know what the problem is.

The story of Saturn is indeed a sad one. "Oh they're being successfull we hate them!"

GG GM time to retire.