GM cuts overtime hours
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GM cuts overtime hours
The fact that up until now GM was working employees longer hours sounds like things were holding up pretty good until recently.
http://money.cnn.com/2007/08/22/news...ion=2007082215
http://money.cnn.com/2007/08/22/news...ion=2007082215
GM cuts overtime hours on softening demand
A weak housing market and high gas prices have hit demand for pickups and SUVs, prompting the automaker to cut scheduled overtime hours.
By Althea Chang, CNNMoney.com contributing writer
August 22 2007: 3:12 PM EDT
NEW YORK (CNNMoney.com) -- General Motors Corp. says it's cutting scheduled overtime hours in six plants to avoid excessive inventories of full-size pickups and SUVs after high fuel prices and a weak housing market have softened demand.
Consumers are less likely to take out home equity loans to fund a car purchase, and in the United States, a market traditionally more heavily weighted toward trucks and SUVs, that segment is taking a direct hit.
In addition, housing contractors, who represent a significant chunk of the market for pickups, are putting off new truck purchases during a slowdown in the housing market.
"Gas prices are still driving people out of the full-size segment and into crossovers" and sedans, said GM spokesman Tom Wickham, noting a trend spurred by soaring fuel prices following hurricanes Katrina and Rita last year.
"If inventory levels get too high, you're compelled to increase incentives which hurts the resale value of product," Wickham said. "We're working hard to improve resale value."
The manufacturing changes reduce expected overtime hours and do not affect overtime that might be required due to an interruption in manufacturing, GM says.
While GM has actually seen an increase in its share of the pickup and SUV segment, "the fact is we're selling fewer vehicles this than last year," Wickham said.
Overall, August U.S. auto sales could be off by 10 percent from a year ago, according preliminary data from industry sales tracker Edmunds.com, with falling home values and credit credit problems having a considerable impact.
A weak housing market and high gas prices have hit demand for pickups and SUVs, prompting the automaker to cut scheduled overtime hours.
By Althea Chang, CNNMoney.com contributing writer
August 22 2007: 3:12 PM EDT
NEW YORK (CNNMoney.com) -- General Motors Corp. says it's cutting scheduled overtime hours in six plants to avoid excessive inventories of full-size pickups and SUVs after high fuel prices and a weak housing market have softened demand.
Consumers are less likely to take out home equity loans to fund a car purchase, and in the United States, a market traditionally more heavily weighted toward trucks and SUVs, that segment is taking a direct hit.
In addition, housing contractors, who represent a significant chunk of the market for pickups, are putting off new truck purchases during a slowdown in the housing market.
"Gas prices are still driving people out of the full-size segment and into crossovers" and sedans, said GM spokesman Tom Wickham, noting a trend spurred by soaring fuel prices following hurricanes Katrina and Rita last year.
"If inventory levels get too high, you're compelled to increase incentives which hurts the resale value of product," Wickham said. "We're working hard to improve resale value."
The manufacturing changes reduce expected overtime hours and do not affect overtime that might be required due to an interruption in manufacturing, GM says.
While GM has actually seen an increase in its share of the pickup and SUV segment, "the fact is we're selling fewer vehicles this than last year," Wickham said.
Overall, August U.S. auto sales could be off by 10 percent from a year ago, according preliminary data from industry sales tracker Edmunds.com, with falling home values and credit credit problems having a considerable impact.
Last edited by johnsocal; Aug 22, 2007 at 03:11 PM.
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so they cut back overtime whats the big deal? if you cut back ot your also cutting operations costs. i believe there are several articals floating around saying that the whole automotive industry is seeing a decline in vehicle's sales its not just gm its every one.
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Here's a scenerio that could have been helping the auto business up until recently:
There's obviously a huge increase in foreclosures and people who are delinquent or not making their monthly mortgage payment at all. Often foreclosures can take between 6 months to a year until the people are forced out of their homes. During those 6-12 months those people who are not paying their mortgage will use that money to buy more stuff, pay-down credit cards, buy a new car, or make their existing car payment.
So while the housing industry is plummeting other sectors are weathering the storm better then most would have thought. Sooner or later other sectors of the economy could begin to seriously feel the pinch as those people were weren’t making any monthly mortgage payment (while they were foreclosed on) will finally be kicked out of their homes where they will now have to allocate that money to pay rent.
There's obviously a huge increase in foreclosures and people who are delinquent or not making their monthly mortgage payment at all. Often foreclosures can take between 6 months to a year until the people are forced out of their homes. During those 6-12 months those people who are not paying their mortgage will use that money to buy more stuff, pay-down credit cards, buy a new car, or make their existing car payment.
So while the housing industry is plummeting other sectors are weathering the storm better then most would have thought. Sooner or later other sectors of the economy could begin to seriously feel the pinch as those people were weren’t making any monthly mortgage payment (while they were foreclosed on) will finally be kicked out of their homes where they will now have to allocate that money to pay rent.
Last edited by johnsocal; Aug 22, 2007 at 10:57 PM.
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That means that GM is very likely not going to meet their earlier production counts for the year which means, ultimately, that they’ll make less profit/have a bigger loss.
That said, virtually every analyst is saying that the U.S. new vehicle market is going to be smaller overall this year than last year and smaller than originally predicted which translates to some tough (or at least slightly less profitable) times for all manufacturers but is even more problematic for any manufacturer already having difficulty.
Cutting overtime hours is the smart thing to do and we'll likely see all manufacturers taking similar steps to reduce production to levels they fell they can actually sell. It's also a sign of the times (and the signs aren't good for the industry at the moment).
Last edited by Robert_Nashville; Aug 22, 2007 at 04:54 PM.
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well my point is that its not a big deal for gm if all manufactures are taking a hit in sales it happens theres nothing they can really do about it.
now if you posted something where toyota and honda were increasing over time while gm was cuting over time i would be worried thats a big deal.
now if you posted something where toyota and honda were increasing over time while gm was cuting over time i would be worried thats a big deal.
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If indeed credit card companies begin to cut back limits, then it’s possible that almost overnight people will have access to less money. So that credit card you have with $10,000 credit limit could be cut back to $5000 and etc. While depending on credit cards as a source of income is never a good idea, but watching your credit limit get reduced even while you have superb credit is not a comforting thing either.
http://money.cnn.com/2007/08/23/pf/c...ion=2007082312
http://money.cnn.com/2007/08/23/pf/c...ion=2007082312
NEW YORK (CNNMoney.com) -- Fallout from the mortgage mess and lower home prices may have started to creep into the credit card arena, judging from July payments and some initial moves by issuers to tighten the screws on cardholders.
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well my point is that its not a big deal for gm if all manufactures are taking a hit in sales it happens theres nothing they can really do about it.
now if you posted something where toyota and honda were increasing over time while gm was cuting over time i would be worried thats a big deal.
now if you posted something where toyota and honda were increasing over time while gm was cuting over time i would be worried thats a big deal.
GM, Ford, Chrysler and some other's have enough problems they are trying to overcome that having another storm to wheather just makes an already bad situation worse...the entire new vehicle market going south is not good news for anyone.
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