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Thread: GM Posts Record $7.6 billion Profit for 2011

  1. #1
    Havakasha is offline

    GM Posts Record $7.6 billion Profit for 2011

    Resurgent General Motors posts record $7.6-billion profit for 2011
    Just three years after its 2009 bankruptcy filing, the automaker surpasses what it earned during its heyday in the mid-1990s.

    In earning $7.6 billion last year, the automaker demonstrated how it has capitalized on its 2009 bankruptcy reorganization and federal bailout to shed brands, slash debt, rewrite union contracts and close surplus factories.

    By Jerry Hirsch, Los Angeles Times
    February 16, 2012, 6:42 p.m.
    Three years after nearly collapsing into liquidation, a resurgentGeneral Motors Co.has posted its best annual profit, surpassing what it earned during its heyday in the mid-1990s.

    In earning $7.6 billion last year, the automaker demonstrated how it has capitalized on its 2009 bankruptcy reorganization and federal bailout to shed brands, slash debt, rewrite union contracts and close surplus factories.

    The record annual earnings represented "a remarkable turnaround from what appeared to be a hopeless situation," said Jesse Toprak, an analyst with automotive information company TrueCar.com.

    GM now has about a $2,000-per-car manufacturing advantage over its Japanese and European rivals, a swing from a similar-sized disadvantage before the restructuring, said David Cole, chairman emeritus of the Center for Automotive Research.

    That's helped GM make huge profits at what are still relatively low levels of auto sales in the U.S. and made it competitive in the small-car business, where it now has competitive vehicles such as Chevrolet's new Cruze and Sonic sedans, Cole said. The automaker lost about $100 billion in the years before the 2009 rescue.

    GM is generating strong profits in North America and China. But it is losing money in South America and Europe, where it acknowledged significant problems that Chief Executive Dan Akerson said will require the type of wrenching restructuring the automaker underwent to right its North American operations several years ago.

    "We've got to look at every aspect of the business," Akerson said.

    The company is expected to reveal cost and production cuts in Europe within months.

    The annual profit for 2011 represented a 62% gain over the previous year. Revenue increased 11% to $150.3 billion. Fourth-quarter profit fell 7% to $472 million, while revenue increased 3% to $38 billion.

    Akerson said he wants GM's profit margin of 5.5% in 2011 to grow to match that of the best-performing auto companies, which is about 10%. That would put GM on track to earn annual profits of $10 billion.

    Last year's record earnings came at the same time the Detroit automaker recaptured its spot as the world's largest car seller. GM's global sales rose 7.6% to 9 million vehicles in 2011. It last held the top spot in 2007, before it was surpassed byToyota Motor Corp.the next year.

    But Thursday's results showed that GM still has work to do shoring up its overseas business.

    Most of the company's profit is coming from its North American operations, which produced $7.2 billion in operating income last year, up from $5.7 billion in 2010. GM accounts for about 1 out of every 5 vehicles sold in America.

    Based on those financial results, GM said it would pay profit-sharing of up to $7,000 to about 47,500 U.S. hourly employees.

    Europe remains the problem spot. GM lost $747 million there last year. Although that was just a third of the losses the previous year, the auto industry is expecting a difficult 2012 in Europe because of the sluggish economy there and the continuing debt crisis in Greece.


    http://www.latimes.com/business/auto...,5227978.story
    Last edited by Havakasha; 02-17-2012 at 01:28 AM.

  2. #2
    SiriuslyLong is offline
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    I wonder when the US Government is going to sell it's interest in GM. Perhaps that money can be used for education?

    Hmm, not for a while........

    "GM got about $49.5 billion in TARP money to date; taxpayers own 32% of GM. In order to break even on GM, the Treasury will need to sell its roughly 500 million shares in GM at an optimistic $52.39 a share, once you factor in dividends and interest.

    GM currently trades at $25 a share.

    Moreover, the troubled automaker’s stock has been volatile with a high in 2011 of $38.98 on January 7, 2011, and a low of $19.05 on December 19, 2011, the report says.

    GM had a $23.1 billion initial public offering in November 2010 -- the largest IPO to date -- selling about 478 million shares.

    However, the SIGTARP report notes that Treasury still “holds more GM shares than it sold in that IPO.”"

    I wonder if we are going to get a dividend check??

    http://www.foxbusiness.com/investing...from-bailouts/

  3. #3
    SiriuslyLong is offline
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    Not to overly critical, I am glad the government gave GM an "orderly" bankruptcy and saved their ass. I'm sure the result is better than any other alternative (but we'll never know).

  4. #4
    SiriuslyLong is offline
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    Happy Friday Lloyd. Quit thinking and start posting otherwise you'll confuse yourself.

  5. #5
    Havakasha is offline
    I really question if you have a job. Lol. Or are you posting on your company's dime?

    "we will never know". I dont think thats true. More and more analysis points to the contrary.
    You ignore the millions of jobs saved in the industries surrounding the auto industry
    not to mention at the auto companies themselves.

    The low for the year for GM was $19.
    The stock is at $27.36 at this moment (not 25) Surely thats not close to the high of the year (36), but if the auto industry continues its recovery this year and into the future we have a chance to recoup much of our money. But dont ignore all the money that would have been lost to our economy if one or more of these companies had permanently folded. You right wingers like to leave out some of the facts when you argue your positions.
    Last edited by Havakasha; 02-17-2012 at 02:25 PM.

  6. #6
    Havakasha is offline
    Snyder/Reuters)
    Mitt Romney's Detroit News op-ed about how President Obama saved the auto industry the wrong way and therefore sucks has drawn a significant critique: Romney doesn't know what he's talking about. First off, let's not forget that the Bush administration had made loans to GM and Chrysler before Obama was even in office. We can see why Romney would gloss over that, but more interesting is the widely held view explained by the New York Times' Michael Shear:
    Officials in Mr. Obama’s administration, and many economists in both parties, scoff at Mr. Romney’s suggestion that a managed bankruptcy was possible without the billions of dollars in government aid to the car companies. They say Wall Street and private equity firms in early 2009 were in no position to lend the kind of money that the companies needed to manage the bankruptcy process in an orderly fashion.
    Steven Rattner, who headed up Obama's auto industry task force, is still more blunt, saying that Romney's claims about how the auto companies could have been saved "would get somebody a C-grade at best at the Harvard Business School" and that, in the 2009 search for private financing for the industry, "We took every phone call, we made as many outgoing calls as we could think of."
    Rep. Gary Peters (D-MI), too, makes this point, writing that "in early 2009 I met with Bob Nardelli, who was at the time the Chairman and CEO of Chrysler, and he told me that if the government did not act as the 'lender of last resort' the company was three weeks away from liquidation."

    A central part of Romney's insistence on his way of doing things, though, is that he doesn't think unionized auto workers suffered enough; he would have made sure the beating they took was fatal, to their unions at least. But as Peters continues,

    In Mitt Romney's experience as a leveraged buyout expert, he learned to put the claims of creditors and investors ahead of workers, but what President Obama understood is that the value of the American auto industry is more than just its return on investment for shareholders—it's also the millions of good paying, middle class jobs that the industry supports.
    Romney's false claims about bailouts and union bosses and crony capitalism may play well in the Republican primary he's currently fighting to win. But if he makes it to the general election, the strength of the auto industry and the jobs resurgence it's bringing with it will speak for the president who made it possible, not the candidate who wanted none of it.

  7. #7
    SiriuslyLong is offline
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    Quote Originally Posted by Havakasha View Post
    I really question if you have a job. Lol.

    "we will never know". I dont think thats true. More and more analysis points to the contrary.
    You leave out the millions of jobs saved in the industries surrounding the auto industry
    not to mention at the auto companies themselves.

    The stock is $27.36 (not 25) Surely thats not close to the high of the year (36), but if the auto industry continues its recovery this year and into the future we have a chance to recoup our money. But dont ignore all the money that would have been lost if one or more of these companies had permanently folded.
    Oh, I got a job alright, and the family is in Barack's cross hairs.

  8. #8
    Havakasha is offline
    Damn, how do they let you spend so much time here? I am a freelancer, whats your excuse?


    You certainly werent able to deny what I posted about the facts of the auto industry in my last comment were you?
    You have never posted a single positive article on the U.S. auto and alternative energy industry.
    I dont think you have to worry about President Obama as he lowered taxes on the middle class. More likely you have to worry about your own self hatred (alternative energy field) as well as hatred of American innovation.
    Last edited by Havakasha; 02-17-2012 at 02:27 PM.

  9. #9
    Havakasha is offline
    What Romney Gets Wrong About Detroit Automakers Bailouts
    More facts that SiriuslyWrong will ignore.

    http://autos.yahoo.com/blogs/motoram...154006392.html
    What Mitt Romney gets wrong about the Detroit automakers’ bailouts


    By Justin Hyde
    Senior Editor of Motoramic

    By Justin Hyde | Motoramic – 12 hours ago
    Republican presidential hopeful Mitt Romney renewed his opposition to the Obama administration's bailout of General Motors and Chrysler today in several Michigan newspapers, contending President Obama's rescue made the companies worse. I wish I could leave politics to the professionals, but Romney's take just doesn't square with the facts as I lived them. Here's why:

    Romney's a Michigan native; his father George Romney was a well-liked governor and head of American Motors. Yet Romney is neck-and-neck with rival Rick Santorum in polls ahead of Michigan's Feb. 28 primary in no small part because of his opposition in November 2008 to the bailouts that saved GM, Chrysler and thousands of Michigan jobs.

    I covered those bailouts in Washington as a reporter for the Detroit Free Press, following them through Congress to the White House to the bankruptcy courts a few blocks off Wall Street. As a first-hand witness, I can attest that some of Romney's new arguments hold their own — but most don't. Let me explain, point by point:


    "Three years ago, in the midst of an economic crisis, a newly elected President Barack Obama stepped in with a bailout for the auto industry."


    In fact, the bailout began with President George W. Bush, who was forced to lend GM and Chrysler $17.4 billion in December 2008 after Senate Republicans blocked a rescue plan in Congress. Bush told reporters just last week that he was warned by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson that if he didn't act to shore up GM and Chrysler, up to 1 million jobs could vanish. Knowing what we know now, says Bush, "I'd do it again."

    "The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better."


    The crux of Romney's argument: If Obama had not acted, private companies would have stepped in and run a "managed bankruptcy." What this ignores is that in the fall of 2008, before Obama was even sworn in, no one on Wall Street or anywhere else was willing to lend GM and Chrysler a penny — let alone the $81 billion they and their financial arms eventually needed.

    Romney appears to argue that before UAW retirees could get medical care, Wall Street should have been made whole
    Both companies' bankruptcies required money on a scale not seen in legal history. Unlike airlines, which can keep running with much smaller short-term loans while they restructure, automakers need massive amounts of up-front capital to pay suppliers and workers while they build cars; their finance companies need even more to keep making car loans that can bring in revenues. The potential damage wasn't just layoffs; Chrysler executives testified on the first day of bankruptcy that without immediate cash the company risked destroying hundreds of millions of dollars' worth of equipment.

    Even after Obama took office, GM and Chrysler searched frantically for paths to avoid bankruptcy, including a possible merger. Chrysler held a one-week garage sale of its assets in February 2009, inviting anyone with enough money to bid for parts of the company. No one bit.

    "Ultimately, that is what happened. The course I recommended was eventually followed. GM entered managed bankruptcy in June 2009 and exited it a month later in July.

    The Chrysler timeline was similarly swift. But something else happened along the way that was truly egregious. Before the companies were allowed to enter and exit bankruptcy, the U.S. government swept in with an $85 billion sweetheart deal disguised as a rescue plan."

    No entity blocked GM and Chrysler's path to the bankruptcy court except their own executives. Had the government not intervened as Romney suggests, GM and Chrysler likely would have been liquidated by their Wall Street bondholders, some of whom held out for a few more pennies on the dollar at the risk of the entire bankruptcy case. One auto industry think tank estimated doing so would have led to 1.3 million job losses and threatened Ford, Toyota and other automakers.

    "Chrysler's 'secured creditors,' who in the normal course of affairs should have been first in line for compensation, were given short shrift, while at the same time, the UAWs' union-boss-controlled trust fund received a 55 percent stake in the firm."


    Chrysler's secured creditors were a group of Wall Street banks — including J.P. Morgan, Citigroup and Goldman Sachs — and investment firms, some of whom had bought the company's secured bonds in the months ahead of bankruptcy hoping to cash in. They could have rejected the government's offer of 28 cents on the dollar in cash for their $6.7 billion in bonds and paid to liquidate Chrysler themselves, but decided that not only would they come out even further behind, they'd also be blamed for destroying an American automaker. (GM's secured creditors − also mostly Wall Street banks — were paid in full, and endorsed the Obama bankruptcy plan.)

    As for the "union-boss-controlled trust fund," that's what's known as a VEBA trust that now pays the health care of 426,409 retirees from GM, Ford and Chrysler — and in return, owns all future health-care obligations from the companies for those retirees. With this, Romney appears to argue that before hundreds of thousands of UAW retirees got health care, Wall Street should have been made whole.

    "American taxpayers have been left on the hook for billions to benefit unions and the union bosses who contributed millions to Barack Obama's election campaign. Such a state of affairs is intolerable, and as president I would not tolerate it. The Obama administration needs to act now to divest itself of its ownership position in GM."


    If the Obama administration sold its 500 million shares in GM today, it would lose at least $14 billion. GM shares have struggled even as the company reported strong profits, in part over concerns about an underfunded pension plan. If GM shores up its pension costs, its shares could rise — although they would need to nearly double before the government broke even.

    There's ample factual reasons to criticize the bankruptcies — from the treatment of Delphi's retirees and GM's unsecured bondholders to the advantages GM, Chrysler and Chrysler's new parent Fiat gained over Ford. But doing so requires acknowledging that Obama's decisions, including his call to save Chrysler when some advisors were ready to let it go, were mostly right: GM and Chrysler came out stronger and leaner, keeping jobs in the country that would have disappeared if they'd gone out of existence.

    Even in Detroit's more conservative newspaper, the comments this morning on Romney's new op-ed are running about 2-1 against him. Romney has plenty of time to change minds, but these comments left the factory with a few too many defects -- and losing your home state over its keystone industry would be a political sting no amount of Vernors could soothe.


    Keep reading...

  10. #10
    SiriuslyLong is offline
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    Quote Originally Posted by Havakasha View Post
    Damn, how do they let you spend so much time here? I am a freelancer, whats your excuse?


    You certainly werent able to deny what I posted about the facts of the auto industry in my last comment were you?
    You have never posted a single positive article on the U.S. auto and alternative energy industry.
    I dont think you have to worry about President Obama as he lowered taxes on the middle class. More likely you have to worry about your own self hatred (alternative energy field) as well as hatred of American innovation.
    Efficient.

    Dude, I love the US Auto industry. In fact go buy yourself a Dodge Ram with a full size bed and the new Ram Box option. I don't buy foreign cars. You are so stupid for making such stupid statements. You're like a baby, "mom, S&L never posts positive articles on solar."

    I don't have a agenda I read from like you.

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