GM Posts $31 Billion Loss as It Awaits Government Response to New Bailout Request
As General Motors waits for the government's verdict on its restructuring plan and request for more money, it disclosed this morning that it lost $30.9 billion in 2008, making the year one of the auto giant's worst in decades.
That dip includes a loss of $9.6 billion—or $15.71 per share—in the last quarter alone. The company also spent $19.2 billion of its cash reserves in 2008, including $6.2 billion in the fourth quarter.
Plagued by falling consumption and frozen credit, GM received $13.4 billion in federal loans under the Troubled Asset Relief Program from December through February. One of the conditions was that GM submit a viability plan to the government, clearly outlining how it planned to restructure.
The company did that last week. At the same time, however, it announced that it would slash 47,000 jobs in 2009 and shut five U.S. plants by 2012, as well as sell or close Saab, Saturn, and Hummer.
Restructuring the company, GM said last week, would require as much as another $30 billion. But that's better than financing a bankruptcy reorganization, its officials insist, which they estimate could require almost $100 billion.
Tomorrow, GM's chief executive is meeting with President Obama's auto industry task force, which will oversee its restructuring. While the president has underscored that "millions of jobs depend" on the auto industry's survival, he hasn't indicated if he's in favor of giving the auto giants more money than they've already received. By releasing its glum numbers today, however, GM executives may be hoping to convince him that he must do exactly that.
Reader Comments
throwing good money after bad.
I would normally agree with Jordan777 IF I believed the root cause of the problem was being addressed. But I have yet to see where it has been addressed. Based on the last GM "plan", I'm pretty sure it was based on over 11 million car sales. Yet the "experts" published recent reports suggesting that they expect just over 9 million cars to be sold. Thats like you telling your banker you will catch up your past dues and be on time with payments based on an expected future income/raise you are pretty sure you wont get.
Not to mention the real catalyst in this mix is the banking industry. People can't buy cars if they cant get loans. Credit is hard enough to get now. How to you expect more ppl to buy cars when more and more people are being laid off? When people are Laid off is usaully ends up affecting their credit.
My concern is the even with the money we are throwing at this, the problem will persist and they will end up Bankrupt anyway. Lets see, how many billions did we just give them and then they just posted another 30 billion dollar loss. Hmmmm...so what will change again to reverse a 30 billion dollar a year loss? Also note that this loss is based on 2008 car sales. I would expect, as the experts predict, that car sales will be significantly less in 2009 so the amount of costs to be cut only increases in 2009.
Lastly, I still do not understand why chapter 11 would cost more. I have managed companies out of bankrupcy. It does not cost the DIP lender (which would be the Gov) more.
Ever wonder what exactly would cost the gov more?
If it is the fear of GM suppliers being affected. Guess what, there affected now. If GM needs more billions now it means they cant pay the bills NOW.
If it is the fear there will be more ppl laid off and collecting unemployent and other benefits, Im pretty sure the State Unemployment check will be less than what is being paid from the Gov, thru GM, to laid off employees now.
With or without chapter 11, whatever cuts need to be made in the workforce and/or factories closed to reach profitablity, those will need to happen either way and should happen either way. Therefore, the impact on the Taxpayer will still be there..either way. The only differnce is under chapter 11, cost can be reduced much more quickly and with less interference.
This is just a opinion. I do not pretend to know all the facts, nor do I really have any answers. Seems no one else does either. To me, it seems chapter 11 would allow for more expeditious changes to reduce costs and jumpstart the industry again.
Is anyone listening?
How many times do the analysts, bankruptcy specialists, government, and auto companies have to repeat THAT IT WILL COST THE TAXPAYERS WAY WAY MORE MONEY TO ALLOW AN AMERICAN AUTO MANUFACTURER TO FAIL. How many times? And that is not even considering the million(s) of jobs and related jobs that would be lost in this economic downturn we are in. Please pay attention to the reality of the numbers. Bankruptcy costs the taxpayers of the United States WAY WAY MORE MONEY than a loan (LOAN) bailout.
Bankrupcy is the only answer
Look at the numbers. Still 27,000 more unemployed and 5 plant closures. This certainly does not mean more cars. Also, even if the UAW drops the job banks, if I understand correcty, GM will still have to pay these 27,000 unemployed workers for MONTHS to produce nothing as the JOB BANKS they are talking about eliminated would not kick in until AFTER the employer paid "supplimental" unemployments checks are cut in order to insure the laid off workers still gets 95% of an already over paid job salary. And that lasts for MONTHS. So basically, they are asking the public to continue to pay this special group of folks to set home and do nothing.
GM should file bankrupcy and kill these contracts that are killing them. The bring ppl back to work at a reasonable wage comesurate with the skill and job. I do not view an UAW worker family any more or less important than mine and if my goverment money I will get thru normal Unemployement is limited then so should theirs be.
It is GM management fault for continuing to copitulate to the unions over the decades. As my Dad always put, with unions these day, the tail wags the dog.
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