This is a question I open up to those experts out there who really know, or at least to those of you who are like me and have an opinion.

While visiting my wife's uncle in Canada over the weekend, he was telling me how the plant he works for (GM transmission plant) will be closing next year. He also mentioned that he believes that if there isn't a large change in things for GM in the next 3-5 years, that GM will be going under as a whole!

Now, I am not claiming he is an expert on the future of GM, but he is one of the head honcho's in his factory, so I do know he has some intimate knowledge behind GM.

Does anyone else know anything on the future for GM? Are they really doomed? Or if things persist as they are currently, will they stay a float for a very long time to come?

 

If things persist as they are currently... GM lost over $15,000,000,000 last quarter and cannot go on like that for a long time to come. GM is now trying to figure out how to weasle out of contributing $31.7 billion to VEBA that they promised the UAW to fund retiree health care. They have concluded that bankruptcy is the way out and are now trying to assess how many US market share points they will lose by declaring bankruptcy.

 

Wow it's the first time I've read a piece put in those terms!!!

 

GM did not lose 15 billion, it lost only 3 billion in cash, the rest were write downs and other accounting stuff. Still nothing to write home about, but not 15 billion.
GM has no concluded any sort of bankruptcy at this point, or do they plan on ever doing that. They are having a lot of trouble, but GM is cutting the fat, pumping out better product, as well as launching better and better cars.
GM is not trying to weasle out of not paying down into VEBA, they are counting on that to help cut down on healthcare/pension costs. Great idea, and Im glad that the UAW went along with it.

GM is closing plants, yes, but they are also adding lines to others that are making product that people want. Same thing that happend with trucks. People wanted more trucks, so they made more plants. We now have too many truck plants that make trucks that people dont want to buy. And the people that do want to buy trucks, thier orders can be filled by 1/2 the number of truck plants currently out there.

Of course, if GM continues to slide, people continue to view GM as a maker of poor quality cars, and thier image tarnished forever, then Im sure that within 3 years we could some serious stuff happening. Lets hope that it doesnt happen like that. Lots of people's jobs depend on a company like GM directly or indirectly.

 

Nearly $9 billion is due for the VEBA fund in 2009 and GM cant pay it and still have operating capital.

 

GM doesn't have 3-5 years - the clock on that started running back in 2005, when it became so obvious that GM was in trouble. Now, GM has perhaps 3-5 months, at the most, to figure out something.

The optimists and nuthuggers have held tight to their opinions, all while GM's market capitalization has been cut to a tenth of what it was ten years ago, and GM now how a balance sheet valuation of around negative $58 billion. Other than the fact that there's finally some good product in the showroom (but not uniformly great product - it's possible to find holes in each brand's lineup), there are virtually no bright spots. Delphi is about to go into its fourth year of bankruptcy, the average per-unit transaction price has gone to hell, capital costs are skyrocketing, there's no cash left for substantial product development, and the few products left in the pipeline will have minimal positive impact on the bottom line for several years to come.

If GM was in any other business, it'd be obvious to everyone that two-plus decades of poor leadership have finally sunk the ship.

The bond insurance market gives GM an 85% chance of defaulting (that's a kind substitute word for "bankruptcy") in the next five years.

 

I dont think even great leadership could have saved GM from the fate it's quick approaching. American manufacturing has been dying for 30 years due to the need to make everything cheaper. To compete with Asia. It was impossible due to the value of the dollar. Now that the dollar has tanked we have a whole new set of problems. There was no way out of this. Its a natural cycle where buisness based in areas with cheap labor win and eventually destroy the competition. The only way American compaines could have survived was to buy the japanese out right. Then to swallow the Koreans and Chinease and eventually india. We can point to any number of mistakes we see in hind sight but it was always a matter of time.

 

I just really love the whole premise of this thread. You along with everyone even remotely connected to the automotive industry want to know what the future holds......and take it from me, the closer you are to the issues, the more sleep you're likely to be losing these days. I've been in this industry for years with various suppliers and I've never seen this much uncertainty about the future. If there were a source - any source - that could tell anyone what would happen, even in the most vague terms, whoever controls that source would be richer than Bill Gates.

Your concerns are well founded, but for all the people talking about GM's lack of money and how they are doomed in six quarters (or whatever time frame they choose), just remember there are a lot of good, smart people working there that don't want to lose their jobs or see the company file bankruptcy. For all the specifics people discuss, things can and always will change.

 

you mean making a ****ty product for 25+ years had nothing to do with it?

 

FWIW, I have 5 GM products in my driveway and the only reason I haven't purchased a new GM vehicle in the last 3 years is because of their durability and dependability. (If it ain't broke, why replace it?)

 

What ever happened to the winky club always telling us that the future product the general was bringing out would knock our socks off. It seems there were several vehicles coming out that we would be amazed by that they couldn't devulge any info about but would awesome. The Malibu and G8 came out, was that it?

 

Falchulk what are you talking about? American manufactoring had is best year ever last year, products produced here totaled $6,000,000,000,000. Thats trillions! GE, Boeing, Caterpillar, JD, ExxonMobil and AB had pretty good years. With union labor no less.

Look at the latest JD power durability scores, just off the top of my head I know Chevy, Pontiac and Saturn are below average. But thats 2005 vehicles?, by the time the 2008 models get posted GM will be in bankrupcy. There are many reasons they are failing like labor costs, old plants, quality, poor car selection/too many trucks. Latest problem I see is too many ads for the Volt, how about some ads for those $25-35k G8's and Saturn Auras collecting dust on dealer lots. I havn't seen a G8 ad since march madness. I see the "not for sale" Volt EVERY DAY!

 

They are trying to prop up peoples perception of GM, by showing the Volt all the time.............. much as Toyota and Honda basically advertise that their cars run on rainbows and daisies.

Their big problem, again with perception, is that some executive will open his mouth............. and everyone will just be reassured about how out of touch they think GM is.

It is a perception game now, and GM is losing. Putting duct tape on all of the executives mouths would be a good start for the future.

 

*yawn* GM isn't going anywhere.
They weren't in danger in 05,06,07 and they aren't now in 08,09,10.
Sure they aren't profitable and they will certainly loose market share. Cut backs will be made etc etc. But the company in some form will go on.

Heck this is America. The government will either bail them out or foreigneers will buy them.
Either way they still exist.
Thinking otherwise is

 

GM going under?!? GM has been a driving force in this country's economics for over a Century now. Yes they may be losing market share and money faster than ever, It's not like they didn't know they would face challanges at some point. Every major corporation will have to adapt to changes at some point. You will never run a market with no competition. Remember that we dealt with a gas crunch in the 70's and GM came out of that fine. I hope GM does slide to #2, #3 or lower. That way we can see all of the heat get put on the new #1 and watch the market scrutinize them like they have GM for the last 100 years.