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Old 10th November 2008, 02:43   #16
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To me, GM, Ford and a lot of other goliaths need to reduce in size in order to survive. They are simply too large to be nimble. And nimbleness is a key criteria to survive and prosper in today's environment.

Maybe GM, Ford need to be split up and the profitable portions continue as independent companies. The non profitable, but needed sections (for jobs, preserving an important product line) given some kind of support. That way only the absolutely needed support will be given, with accountability too.
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Old 10th November 2008, 07:34   #17
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Originally Posted by prashanthyr View Post
To me, GM, Ford and a lot of other goliaths need to reduce in size in order to survive. They are simply too large to be nimble. And nimbleness is a key criteria to survive and prosper in today's environment.
That was known for decades, but the all powerful auto workers unions wouldn't have it. All this trouble is because of the overgenerous retirement benefits enjoyed by auto workers.

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You're completely right about the US government propping up GM/Ford when it comes to that. The last thing a new American president wants is to have 2 American institutions go bust first thing when he takes power.
He is still two months away from taking power. Will they survive until then?

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Originally Posted by AMATMO View Post
volumes dont mean anything if they dont generate profits,i think they should sell some products to other manufacturers and see if they can can profits even if it costs them their rank in terms of number of cars sold and go the european way they sould focus on improving their brand image
Now that the problem of American car makers is public, most wouldn't buy American cars. Even a patriot American wouldn't buy GM car if the company is likely to fold up soon. That itself will drive the volume and plunge the car makers into new lows.
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Old 10th November 2008, 17:14   #18
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GM will eventually go bankrupt and they will use that card to get a killer deal from the union (on wages, pension, health care etc.). Of course, the government bailout will come too...there are certain industries that Washington just won't let die.
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Old 10th November 2008, 17:55   #19
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Originally Posted by HotChillyPepper View Post
I think most of the companies are in the same situation, but they are not making it public due to many reasons. Most of us really dont know the seriousness of the issue till now. Inidan IT industry gonna take a huge hit by next year Q1. Currently Inidan Compaines are doing the projects signed off before and continue to generate income. But there is no new projects coming in. I feel companies will be forced to lay off by Q1 2009.


What would be the future?
Certainly a scary scenario!
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Old 10th November 2008, 20:21   #20
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These reports are suggestive but factual. Very likely that at least one of the big 3 Detroit automakers is likely to file for bankruptcy under chapter 11. And GM is the top candidate. But this will not mean they stop their operations. It is only beginning of recovery procedures. Like Delphi did it long back.
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Old 10th November 2008, 21:17   #21
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Default GM shares down 30 percent after broker downgrades - $0

news just in!!!
....
General Motors Corp will likely fall below its minimum cash needs of $11 billion to $14 billion in the first quarter of 2009 if the troubled automaker does not receive additional funding, said an analyst at Barclays Capital, and GM shares fell as much as 31 percent in morning trade.

Barclays' analyst Brian Johnson downgraded GM to "underweight" from "equal weight." Deutsche Bank also cut GM to "sell" from "hold," and saw an equity value of $0 for the stock, according to a report on theflyonthewall.com. Reuters could not immediately verify the report."While further government assistance would decrease the likelihood of a GM bankruptcy, we believe any government assistance would likely significantly dilute GM's equity," Barclays' Johnson wrote in a note to clients.
Johnson cut his price target on the stock to $1 from $4.
"Of the four broad options for government assistance for GM, we believe that political pressure to protect taxpayers may lead to a solution similar to the 1979 Chrysler bailout, which was accompanied by concessions from debt holders, labor, suppliers and management," Johnson said.
"In any scenario, we see little value for current equity," he added.
Separately, an analyst at J.P.Morgan Securities said both GM and Ford Motor Co. are likely to receive government aid, even as he widened his loss estimates for both companies after they reported far deeper-than-expected quarterly losses."Ford management's commentary on the third-quarter call as well as GM's comments raises our optimism that some form of government help is likely given dire Big 3 liquidity," JP Morgan's Himanshu Patel wrote in a note to clients.
On Friday, President-elect Barack Obama said help for the U.S. auto industry was a high priority and urged the Bush administration to do "everything it can" to accelerate disbursement of $25 billion of loans to the industry previously approved to make fuel economy improvements.
"We view government aid as probable and likely sufficient in amount, but significant uncertainty exists surrounding the form of this aid," Patel said.
Any government aid for GM is likely (to) come with significant taxpayer protection measures, suggesting near-term or eventual equity dilution, he added.
"GM equity could be interesting longer term, but we advise near-term caution given uncertainty on the structure of any potential government aid," Patel wrote in a note to clients.
The analyst widened his 2008 loss estimates for GM to $27.86 from $21, and for Ford to $3.35 from $3.20.
He also widened his 2009 loss estimates for GM to $22 from $16.25, and for Ford to $3.10 from $1.90.
On Friday, GM and Ford said their rate of cash burn had accelerated. The two burned through a combined $14.6 billion in cash in the face of deepening global downturn.
Ford and GM also said they expect their rate of cash use to decline in the fourth quarter.
JP Morgan's Patel expects GM will end 2008 with $12.6 billion of cash on hand, exclusive of government loans and modeling only $3 billion of capital raise.
However, Barclays's Johnson expects GM to end the year with $13.3 billion in gross cash.
Shares of GM were trading down $1.31 at $3.04 Monday morning on the New York Stock Exchange, while those of Ford were down about 5 percent at $1.92.
(Reporting by Tenzin Pema and Mary Meyase in Bangalore; Editing by Jarshad Kakkrakandy)


More: http://www.marketwatch.com/news/story/gms-stock-falls-30-after/story.aspx?guid={CAFEF63F-017D-42E2-874A-14146A6D20A5}&siteid=bnbh
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Old 10th November 2008, 21:33   #22
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Originally Posted by HotChillyPepper View Post
But there is no new projects coming in. I feel companies will be forced to lay off by Q1 2009.
What would be the future?
I certainly do not agree with that. It is not true that no new projects are coming, and it is also not correct to opine that they will lay off people! At least we should not spread words of panic, as it affects us only at the end of day, since companies say 'as it is known in the market' etc. Already some companies are using this reason, without any real cause, to make people suffer.
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Old 11th November 2008, 22:16   #23
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Originally Posted by Shyamtanu View Post
I certainly do not agree with that. It is not true that no new projects are coming, and it is also not correct to opine that they will lay off people! At least we should not spread words of panic, as it affects us only at the end of day, since companies say 'as it is known in the market' etc. Already some companies are using this reason, without any real cause, to make people suffer.
Shaym,
you are right that we should not spread the words of panic. I also a strong believer of facts. Do you know how many people lost their job in US this year? You may not believe: 1.2 million (and growing)
Source: This year's job loss total: 1.2 million - Nov. 7, 2008

Now if you think its just the small players doing it, you are wrong. The list include industry leaders like Intel (10,500), DHL(9,500), Yahoo(430 till now), Virgin Media (2200), Nokia-Siemens (9000 for now) are a few to mention.

And if you say India is not affected, its not true. Many of the Indian companies already started cost cut and lay offs. L&T doing 10,000. Textile business in India lost job 7,000,00 ( Source: India Inc cuts jobs, frills to stay in shape- Jobs-News By Industry-News-The Economic Times). Our IT companies are yet to receive the ripples. They have are still having the advantage of higher exchange rates so the effect is slow. By the way the Jeans you purchased for 2500Rs last year will cost you 1300Rs only now.

I personally know a well known Indian IT company sacked 30 of its employees for submitting fake medical bills for reimbursement. Now everyone know the real reason behind it. So my suggestion: Be a little extra cautious about every transactions with your employer. They may catch on the point you think is the silliest.

There is no point in sitting calm thinking that the slowdown is not going to affect me anyways as my company is so strong and have a great track record. I m putting this point across not to panic, but to show you guys the real picture. Lets dont close our eyes not that. Find more on: India Inc Job cut saga so far…

Last edited by HotChillyPepper : 11th November 2008 at 22:31.
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Old 12th November 2008, 15:32   #24
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Atleast it's not enough of a deterrent to the Camaro launch. An automotive bailout package is anyway on the cards.
So should one buy a chevy right now?
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Old 12th November 2008, 15:52   #25
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The typical American way of business is to build super large capacities - work on lower per unit margin but make huge profit through high volumes. All this works well in fair weather, any external variable which affects the fair weather means the whole system starts collapsing like a domino. Unfortunately most economies including India seem to think the Amercian way is the best way forward
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Old 12th November 2008, 15:55   #26
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So should one buy a chevy right now?
If they need to sustain, they need to establish themselves in other parts of the world like India or China.

So, i guess they would.
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Old 12th November 2008, 16:49   #27
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but in case of bankruptcy their Indian unit will also get affected? Wouldn't it?

I think there is a hope that they will be bailed out - apparently Obama is in favor of this
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Old 12th November 2008, 18:46   #28
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Default What if Daewoo Car unit getting sold by GM

If GM wants to clear the Daewoo Car unit, then M&M, Tata or some Tractor companies could bid that. I am not surprised if Steel Mittal or Oil Ambanis bid that
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Old 12th November 2008, 19:25   #29
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how many people lost their job in US this year? You may not believe: 1.2 million (and growing)
Americans never worked for what they got. And that is the main reason for global economic problem. Everybody knew about the slump, only people couldn't predict the time.

The GM problem may be what is common in most of the big industries - communications (feedback) and complacency. GM has been having problems but has not taken any measures to avoid such complaints. To avoid that Toyata works in small units. It gives more flexibility and better feedback.
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Old 12th November 2008, 19:30   #30
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This was mentioned by me long time back in 2006 in earlier posts on Aveo LS. But hopefully US Govt should come in and handle this tough situation.
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