GM in trouble

[Hoss 350]

Well, I saw in the paper today that GM had decided to cut stockholder dividends and top-management salaries in an attempt to stay afloat and to show the UAW that everybody is willing to make some cuts. These two actions are, IMHO, proof that GM is an intelligent company concerned with the long-view approach to staying afloat (or at least they have changed thier attitude, because it didn't used to look that way...). Cut back on stockholder return, take some hits on the stock price, cut back on top management salaries. The people voting for the cuts are the people that are taking the hit. That is corporate maturity at it's finest.

But in the end, both of these add up to trivial amounts in the grand scheme of saving GM. The big one will be whether or not UAW decides to help out, or if they will stand by their guns and run GM out of business in the US and into Mexico or India. Sure glad I don't own anything GM right now... 'course, Ford isn't exactly making me warm and fuzzy at the moment.

Any of you esteemed gents have any thoughts on all of this?

 

[Hoss 350]

Just to add to my previous posts, here are some of the numbers...

Cut the dividend to $1 per share annually. This adds up to $565 million.

Salary of GM Chairman and Chief Executive Rick Wagoner will be halved. (How much this is, I do not know... Maybe $20 million is a guesstimate)

Vice Chairmen John Devine, Robert Lutz and Fritz Henderson will see their salaries cut by 30 percent. Again, no guess as to how much we are talking about. How about $50 million for the lot.

So, my guesstimates on the cuts add up to $635 million.

GM lost $8.6 billion in 2005.

Largest problems listed were high labor costs and high cot of raw materials (which have gone throught he roof in the last two years, no doubt)

So, my previous post of the triviality of the cuts does hold water. However, these are substantial cuts to those that are taking them, and for a company to cut the pay to it's stockholders BEFORE cutting pay to it's workers is really an anomaly that I do not know what to make of. I guess I have never seen this before.

Does it mean that UAW has GM by the cojones? I would guess that it does, very much so. I am interested to see what becomes of all of this.

 

[whatabudro]

I own a GM product, but those yahoo's had nothing to do with it.

 

[dmftoy1]

I'd bet your estimates are low on the salaries of the senior folks. It should be published in the annual reports. I work for a company that isn't even a drop in the bucket when compared to GM and our senior execs make serious money. (not in the same category, but our CEO makes almost double digits in the millions and we're only a $150 million a year company)

That being said I think you're 100% right . .unless the whole company gets 100% behind making changes they're going to be hurting. I think the same will be true at Ford.

Just my .02

Regards,
Dave

 

[Tail_Gunner]

The move by GM management was long overdue. In my previous job, I visited a couple of GM or former plants to do hearing testing. One was an assembly plant in KC, the other was a battery plant SW of KC. I was amazed at how little control management had in their own buildings. It was clear that the UAW, if not running the show, had way too much say in controling day to day operations.

In the case of the assembly plant, when the folks started coming in for their hearing tests after lunch, many of them smelled strongly of alcohol. A few couldn't even walk a straight line, yet they were assembling cars. I'd have bet between 10% and 20% couldn't have passed a breathalizer test. Heck, one guy couldn't even get through a 5 minute hearing test in spite of the fact I tried to get him through it for over 25 minutes before I had to give up on him. This ain't heresay, I was there, and smelled the alcohol on the the breath of these folks myself, and honestly, I was appalled.

Bottom line, if GM doesn't change the way things currently are, 20 years from from now, if GM is even still in business, every GM product made will say "MADE IN MEXICO BY NON-UAW EMPLOYEES".