ellives

Me either. The tone was set at the beginning so we know what camp this guy is in.

Huh? You guys are just being naive. These comments are simply traditional sales guy talk. They all do it. They talk future products. Whether a "true" sales guy will talk at all about past product is debatable and in Lutz' case was probably not wise but at least he's honest about his thoughts. Let's face the fact that car companies have become like most "consumer" type companies where they're all about new products. If you don't have them, you die. My company expects to sell product at the rate of 25% considered "new" products. Tough to do but it's necessary to survive.

I hope so.

It really doesn't matter who's first. GM must gain big concessions or it's "lights out." They need to be released from the shackles of the unions now to allow them the flexibility to turn the massive downward momentum they are currently experiencing.

There was a time when General Motors was seen as the paragon of financial quality. Its bonds were rated triple A, and it was known for the most conservative accounting. Let other companies use liberal accounting rules to make results look better; G.M. did not need such things. The announcement late Thursday that General Motors would revise profit figures for every year of this decade, and would have to restate the 2005 earnings it had already reported, shows how far the icon has fallen. Less than a year after it lost its investment-grade bond rating, its bonds are viewed as middling even among junk bonds. "You have to question what controls are in place," said Charles W. Mulford, an accounting professor at Georgia Tech. "When companies like G.M. are profitable, there is not a need to engage in aggressive accounting. What we are seeing now is a pattern of very aggressive accounting that took them well beyond the limits of generally accepted accounting principles." The restatements indicate that G.M. used some highly questionable accounting techniques in 2000, when it seemed to be flying high, and a year later when profits fell sharply. Yesterday, G.M.'s stock and bonds fell sharply, but ended above recent lows. Moody's Investors Service also warned that it might again cut G.M.'s bond rating. General Motors, meanwhile, was busy on another front. Negotiators for the company, the United Automobile Workers union and Delphi planned to work into the weekend in talks on buyout packages for thousands of U.A.W. members at Delphi. Union officials, who spoke on condition of anonymity, said a deal could be reached in the next few days. But it would be only a part of a bigger agreement involving the companies and the union. G.M. spun off Delphi in 1999, but has responsibility for retirement benefits for former Delphi workers. In its announcement Thursday, G.M., which originally said that its Delphi liability could be zero to $11 billion, revised that to $5.5 billion to $12 billion. G.M.'s record of financial excellence began long ago. It provided investors with audited financial statements long before it was required in the 1930's. In 1953, when Moody's and Standard & Poor's first rated the company, it received the coveted triple-A rating, conveying that it was the best possible credit. The company's financial reputation began to fray 25 years ago. It lost its triple-A rating in 1981 and the next year liberalized some accounting practices. The new policies matched practices of some competitors, but the change heralded other moves. The company soon became a constant presence at hearings of the Financial Accounting Standards Board, arguing for weaker accounting standards. At one hearing, G.M. told the accounting rule makers that it should not be required to follow revised pension accounting rules because they conflicted with its union contract. The rule makers were unimpressed. Today, G.M.'s generous pension policies are one reason it is in trouble. In 1984 and 1986, when it made two major acquisitions, buying Electronic Data Systems and Hughes Aircraft, it used tracking stock, which it invented. Those shares were supposed to trade based on profits of the acquired subsidiaries. Abraham Briloff, an accounting professor at Baruch College, complained that G.M. was overstating those profits because they ignored good will charges, but G.M. made no changes. Then in 1987, G.M. decided that it had been too conservative in evaluating the useful lives of many of its assets. By stretching out the depreciation of the assets, it increased pretax profits that year by more than $1 billion. But a few years later, it had to write down the value of many assets. The latest announcement, coming just when G.M. had planned to file its annual report, seemed to indicate that the company may have been in an argument with its auditors from Deloitte & Touche. It cited consultations with Deloitte as a reason for one change. A Deloitte spokeswoman declined to comment. Some of the changes may also have reflected changes at the top of the company. In December, G.M. announced that John M. Devine, who had been chief financial officer since 2001, would step aside and be succeeded in January by Frederick Henderson, who had been running the company's European operations. That move came weeks after the company said it had uncovered accounting errors that would be detailed in the annual report. While the changes will raise its stated loss for 2005 by $2 billion, those additional losses do not affect cash flow and attracted less attention than the issue that was new, and that the company said had delayed the filing of its annual report. The new issue concerned the cash flows from its mortgage subsidiary. The cash flow accounting for such things is not new, or controversial. When a company makes a loan, or has it repaid, the cash flow belongs in investing activities. Interest payments go into operating cash flow. But G.M. said that some cash flows that should have been classified as investing showed up as operating. "The question is, What causes this fundamental type of miscalculation to occur," said Gary J. Previts, an accounting professor at Case Western Reserve University. "It seems pretty clear." But he said that despite the series of restatements, "I think they are still a quality shop" when it comes to accounting. Other changes G.M. is making, some of which it had previously disclosed without giving exact numbers, indicate that it took advantage of hundreds of millions of dollars of supplier discounts it had not yet earned in 2000 and 2001, and also failed to record a $55 million expense in 2001, instead treating it as a reduction in shareholders' equity. Mr. Mulford of Georgia Tech had previously criticized that accounting, and G.M. had defended it. But now it plans to change it. Another change that G.M. disclosed also made its previous accounting seem questionable. In 2000 it recorded a $27 million gain when it sold precious metals that had been in its inventory. But it now says it had agreed to repurchase the inventory in 2001. That made the transaction a financing, not a sale, and no income should have been reported. The net result of all the changes, G.M. said in a filing with the Securities and Exchange Commission yesterday, is that its profits from continuing operations will be reduced for every year from 2000 to 2002, increased by a small amount for 2003, and left almost unchanged for 2004. The more important change for the future is that G.M. will now have $548 million in a deferred credit for the supplier discounts it previously reported but had not earned. That means that pretax profits in 2006 and later will be that much higher because the credits it wrongly took earlier will now be available again. "We call that déjà vu earnings," Mr. Mulford said. Investors reacted calmly. G.M. stock, which had closed as high as $93.62 in 2000, when it reported the profits it is now changing, fell 5 percent yesterday, to $21.13. But that was still well above the recent low of $18.33, set Dec. 29, when worries over how the company would meet its retiree health care obligations were high. While its bonds sagged, they, too, remained above recent lows. A bond issue due in 2033, with an 8.875 percent coupon, fell to 71.5 percent of par value. That raised its yield to maturity to 11.92 percent, from 11.40 percent a day earlier. But that bond traded as low as 61.25, for a yield of 13.89 percent, on Dec. 29. (Prices and yields move in opposite directions.) Moody's, which may cut ratings again, now rates them B2, which it defines as bonds that "lack characteristics of a desirable investment." G.M. said it would file the annual report within two weeks, after it quantifies the cash flow issues. "Accounting problems and restatements are never good, and they certainly don't inspire confidence in management and corporate controls," wrote Shelly Lombard, a bond analyst with Gimme Credit. "But this restatement, while G.M. says it may be material, sounds like a reclassification of cash flows, not a reduction." She added that while a delayed filing of G.M.'s annual report was not likely to lead to a bankruptcy filing, "G.M. has enough other reasons to file bankruptcy eventually, and we remain negative on G.M. bonds." G.M., which had a triple-A rating for 28 years, and an investment- grade rating for another 24, was dropped to junk status less than seven months ago. The fact that analysts now think a bankruptcy is possible is a mark of how far the mighty have fallen. Micheline Maynard contributed reporting for this article. http://www.nytimes.com/2006/03/18/business...gin&oref=slogin

My boss tooled up in his new Escalade this week. The dealer told him to take it easy on it for the first 200 miles so he hasn't put it through it's paces yet. Sweet looking wheels though.

As all things are like this, the issue is complicated. Respect Toyota for having the forethought to start building cars in the US. For us to now slap tarriffs on foreign cars is fruitless. To your point of listing off all the foreign manufacturers, MY point is that if there were tariffs on these cars 25 years ago, there wouldn't be many of those on your list in existance. In fact some have said that GM could have easily bought Toyota for less than the money they've wasted in other areas. I did not intend to suggest tariffs are a solution to the current problem. I am quite familiar with the laws of supply and demand and have explained some of the intricacies of same on this very forum. You *did* hit the nail on the head for what my original point actually was however when you said "slows down..." My real point was if tariffs could be enacted on foreign cars, the market slide GM is experiencing would slow down a bit and give them a breather to figure out what they want to be when they grow up. As things stand now the alligators are nipping at their heals and it's tough to make rational decisions when this is happening.

The problem is the 7-8% growth rate is not sustainable. Nobody is getting that as an annual raise, or at least very few. Of course there are always banks that are happy to lend the student and their parents money to pay the schools for the privilege - only to saddle them with debts for 20 years after graduation. Not my idea of an exciting scenario. Heck I just had a discussion with my brother who is just having his first kid and I pointed out that one school I've looked at recently is 10 times the cost of what it was when I went there 20 years ago. At $40K/year for 4 years, the total now would be about $160K plus for an education. My brother did the quick math in his head and realized if you use the same ratios, 10 times $160K is $1.6 million for his kid's education - a daunting number in a stagnant economy struggling to pay for healthcare and retirement costs for baby boomers.

He's probably right. It's the lemmings that are causing the problem now. They've gotten the idea that Toyota is better and following themselves right over the cliff. I've been shocked by the number of 50+ people are buying Toyotas now instead of the typical Buicks and Grand Marquis-type cars. Sad really. Until the lemmings group together and DEMAND the politicians enact legislation requiring congressional term limits we'll continue to have the thievery we have in congress now and the likes of Ted Kennedy and the rest of them. We only have ourselves to blame for not getting organized. Wow there's a theme here in this thread and it just came full circle. Go figure.

Well see herein lies the problem. Our markets are open now and we're dragging the wages and therefore standard of living up for these countries. Unfortunately, and conversely, as a result we're dragging our own standard of living down. The horse is out of the barn now though. The only way to slow thing down now is to slap tariffs on cars and clearly GWB has no interest or intention of doing that - he and the congress are selling the country out. I don't agree we'll have equilibrium with where these countries are now, but we'll certainly be closer together than we are now.

"Cheap" is a relative thing. In my area, public colleges (and good ones at that) are less than 1/2 the cost of private ones. Still the best bargain out there for a quality education as far as I'm concerned.

I absolutely agree with this. My own boss is an example. No kids - makes over $1M / year plus his stock which he's sold another $1M worth so far this year and he kids me about when I'm buying a new STS. I had to point out the cost of college to which he responded in pure shock saying "I don't have to worry about that." Problem is no one can do anything about it other than stockholders and as long as they're making a profit, they won't complain either.

The pay scales I can't comment about because I just don't know the details. Like I said, it's a good thing they're unionized. No idea on the non-performing parent as well. The problem is no one likes to deal with sticky issues - and this is certainly one of them. We probably all know parents who we've wondered about but have never taken action. Of course having said this, have you seen the price of a private college these days? Personally I think a kid who has the potential will do well at any college, public or private. Nevertheless these private colleges enjoy very competitive recruitment every year. Somebody is paying the bills eagerly. Of course private colleges are also key centers for wealth re-distribution by charging top dollar published tuition prices and then providing scholarship money to those that can't afford it.

There is a flaw in this logic. The law of supply and demand will actually force wages to a natural equilibrium point. If the wage gets so low people can't support themselves, they'll get out of the business, thereby reducing the supply and the wages will go up. The argument always ends up being about what the equilibrium point is. Nope - you won't buy much on 9 bucks and hour but obviously there are plenty of people around making more since the economy didn't collapse. Agreed the unions have historically kept wages up. The problem is the domestic (unionized) automobile industry has also been on a steady decline for a long, long time. One could argue the wages have been artificially kept high during this period. As I have said many times before, unless the UAW can get into all manufacturers, the union model simply fails. It has to be everywhere or it doesn't work. If some aren't union, then they have a cost advantage and will eventually put the union shops out of business, although it clearly may take a long time. This is the main reason municipal employees are all unionized. There is no profit and loss statement to be concerned about with their employers since they are paid by taxpayers which of course have unlimited funds. In some respects they probably have to unionize because otherwise they'd never get a raise because no taxpayer is going to vote for an increase in taxes. A vote down of a propose tax hike just happened last night in my town. Teachers are the ones I loath the most however, since they only work nine months a year and have a pension, whine about how little money they make but (at least in my town) won't police themselves and get rid of poor performing teachers who have tenure. On this we agree. Costco does a good job with everything from what I can see. Unfortunately they are too far from me to be useful but I don't shop at Sam's either for what that's worth. I try to give my business to local vendors whenever I can. My cars are repaired by a local mechanic and I buy from him whatever services he sells if I need them.

Nobody is questioning what the UAW wants. The problem is they want it at the expense of GM when GM doesn't have the resources any more. Do you believe your own words when you blame the lack of unionization of Toyota and Honda on the economy? The problem is they can't make a reasonable case for themselves. You even say it - lack of college degree or higher. The bar is being raised everywhere and Americans need to raise their game if they want to stay in it. I agree with your assessment that low mortgage rates and the military are keeping things going. Both amount to a simple fact: The US is borrowing their continued prosperity. Eventually we'll be tapped out and then the other shoe will drop. The governmental borrowing we can blame on George W. Bush. His era will be over in due time as well and history will prove his administration as one of the worst in US history. I don't get this statement at all "Supply and demand is something that works in labor as well." To me the union proposition argues away from the concept of supply and demand. Care to explain?

This statement alone confirms how out of line union wages are. I'm not convinced the statement is accurate but clearly there is a downward drag to wages being brought to the table by the transplants.

Whether GM declares bankrupcy or not the UAW is gone. Make no mistake about it. The retiree benefits will probably be slashed too either way. Thinking about the other divisions does make the prospect of the parts being greater than the whole interesting - for an ever so brief moment only.

This just shows a lack of product management strategy. A strategy should be established that is affordable from an engineering perspective and the plan should be executed. Period. No negotiating around individual pet projects. If it's not part of the strat. plan, it's out.

What are you a hundred? Are you burning your bras too? Those ideas are relics of the past. It's simple economics and organizational dynamics. The competition has to be between companies and not within companies. The UAW has to face it for GM to survive - the jig is up - the fat lady has sung. The days of unions are over (other than the municipal unions which are another topic entirely.) The UAW is simply deceiving their members. There *is* no solidarity since the UAW hasn't gotten into Toyota and Honda. The patient is brain dead and the body doesn't know it because it's being kept alive by artificial means.

In actuality it *has* been tough to sell GMAC for various reasons. I think the point is it's been a good thing they've been forced to sell other assets. It's always nice to gain the cash from an asset sale but not at the expense of the profit generation engine that GMAC represents. Think of it like retiring - you gain your time back that was previously spent working, but you lose the income.

Sorry but this comment is too simplistic. You simply can't blame one person for the problems at GM, whether you happen to like this person or not. If RW was really the cause, the board would oust him. They didn't, so either he really isn't that bad or the board is incompetent. While the article at the start of this thread is gloomy, there is some modicum of substance in things being said, particularly about the union and compensation overall. GM needs major change and I really don't like the idea of bankupcy but to the point of the article, if they parties can bring themselves to solve the issue, maybe bankrupcy is the answer. This is a lot like an argument a friend of mine has with me. He believes the congress is incapable of enacted legislation that directly impacts them, such as congressional term limits and points to Ted Kennedy as proof.

I think you're being naive. Globalization is a natural effect which quite honestly I believe has been accelerated by the internet. Tariffs only delay the inevitable. Why is it the US should have a monopoly on good paying jobs and lifestyles?

This assessment is absolutely true. Labor rate in China is currently about $.60 and compare this to the current US labor rate. The disparity can't be ignored. The quality issue will be resolved over time.

Plymouth is already gone.

Having this happen could work over time. Having the channels together would eventually get the buying public to learn it. Once this happened GM could easily decide to kill divisions and/or merge them or whatever without killing dealerships.