GM reports $42.84 billion loss in 2007
13 Feb, 2008
19 Comments 
GM’s global operations has just reported a record net loss of $38.7 billion ($42.84 AUD) for all of 2007.
Despite the enormous figure, CFO Fritz Henderson expects the company to be solidly profitable in North American by 2010 or 2011.
How does GM (North America) expect to become profitable? The company will begin by replacing older, high-cost workers with new workers who will essentially do the same jobs for less money (AWAs anyone?). GM will also hire these new workers with reduced health care benefits.
” In order to get North America sustainably profitable and generating cash, we need to win in the market and rein in costs, we need to step on the gas on how we are performing in the market.” Henderson said today
However the massive loses are a result of the way in which GM has calculated certain tax assets and the multi-billion dollar figure is not entirely accurate.
GM’s worldwide automotive operations were actually profitable last year, making $553 ($612 AUD) million, having lost $339 ($375 AUD) million in 2006.
Confusing figures aside, GM still lost money in North America. The company reported a pretax loss of $1.5 (1.66 AUD) billion for 2007. The U.S. government has acknowledged that GM’s losses show a weakening American auto industry, but one which would ultimately pull through the slump.
The old General’s Asia Pacific operations (including Holden in Australia) generated $425 ($470) million in profits for 2007.
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February 13th, 2008 at 2:57 pm
Yeah, AWA’s are brilliant for cutting labour costs. Negotiate the terms of the contract to have them reduced the next time the contract is up or mid contract at the employers discretion.
Vote:February 13th, 2008 at 3:23 pm
gives new meaning to the term GM crops!
Vote:February 13th, 2008 at 3:24 pm
Unlike Ford, what does GM have in the cupboard to see?
SAAB and Hummer.
Beat the c*nts in upper managment are still being pai multi-million dollars every single year…
Cheers
F-0
Vote:February 13th, 2008 at 3:29 pm
Always blame the workers, there too old or they get paid to much, or is it possible their health benefits are too much or etc. etc. I know lets make the cars in Korea, or Asia, anywhere where they pay sweet F A for labour.
Vote:Of course there is an alternative. Makes cars that people want and get rid of the incompetance at the management level. But I suppose when you pay millions for your managers, itt must cost even more to get rid of them than the rank and file worker.
February 13th, 2008 at 3:31 pm
Despite America’s technological prowess the Japs always beat them with the consumer application of this technology.
The Japs just stick to the same old formula and these Yank executives at GM still can’t figure it out.
The current idiots running GM should fall on their swords as they are obviously incompetent. These idiots are paid multi million dollar salaries and to stuff up this completely makes the mind boggle. Perhaps the workers they are so keen to screw should be given some input. Doubt if they could do worse.
Vote:February 13th, 2008 at 3:59 pm
I’m so informed now!
Vote:February 13th, 2008 at 4:03 pm
While GM (and Ford & Crysler) return multi-billion dollar losses, the likes of Toyota (and Honda & Mazda)are returning multi-billion dollar profits.
I bet Toyota’s Kaizen practices don’t look so silly now, do they !! We all know who the smarties and sillies are in the game.
Been many long years coming for GM to be put back into thier box and that’s were they should stay.
Vote:February 13th, 2008 at 4:20 pm
Yeah!
Vote:February 13th, 2008 at 5:37 pm
Only three or four more years of this and the US-owned car industry will be gone, a victim of failure to change the culture from the arrogance of the sixties in the face of increasingly smart competition.
Vote:February 13th, 2008 at 5:42 pm
It seems very careless. I’d be terribly cross with myself if I’d lost this amount of money.
Vote:February 13th, 2008 at 7:25 pm
well they have mastered sub-par cars now time to bring in sub-par workers! goodbye consumer confidence. The reason why GM, Ford and Chrylser aren’t making profits is because the are devoloping to many cars for to many brands for different markets! its called globallizing. if they do this then they will get a better return for investment. Look at the main jap brands that are doing so well, they have 2-3 brands globally and for example GM have 5 or 6 brands just for the nth americian market. Now how many of these brands cars are exported out of north americia?
Vote:February 13th, 2008 at 7:25 pm
hang on this thing contradicts itself……..
“GM’s global operations has just reported a record net loss of $38.7 billion ($42.84 AUD) for all of 2007.”
and then it says……..
“GM’s worldwide automotive operations were actually profitable last year, making $553 ($612 AUD) million”
what am i missing people???
one paragraph says a billions lost and the next says millions in profit???? WHAT THE????
i think what it means is they are hiding the real profit perhaps?
Vote:February 13th, 2008 at 8:42 pm
To answer above, what happened is GM had stored up $38.1 billion worth of tax credits over the last umpteen years, which can be used to offset the tax paid on profits made by the company. However they only work on the tax you would normally pay on company generated profit, and they are only valid for X many years, and last quarter they expired because GM hasn’t been making enough profits to use them.
Thus as far as assets go, GM ‘lost’ $38.1 billion, however excluding that special charge, on its operations it made $553million in profit, mainly from last quarter.
Vote:February 14th, 2008 at 9:38 am
So why does the business model of car makers such as, well, particularly Toyota, work, when they are virtually one company and do not have any subsidiaries (you might include Lexus but that’s about it, possibly Daihatsu?), and the business model of GM and Ford does not – both have bought up as many brands as they possibly can and have tons of subsidiaries (Ford: Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover, and previously Aston Martin; GM: Chevrolet, Buick, Pontiac, GMC, Saturn, Hummer, Saab, Cadillac, Holden)…
Vote:February 14th, 2008 at 10:41 am
The reason the business models of so many non-US auto companies work is that they were never subject to the wage and condition negotiations of the once powerful UAW union in the 60s, 70’s and 80’s.
It is estimated that Ford now faces a cost of about US$2000 per vehicle to pay the retirement and health benefits of its past employees!
GM and Chrysler also face similar problems. Its not just a case of paying your employees less per hour, but having employees that won’t cost them money AFTER they retire.
This is why despite selling large numbers of vehicle, having profitable foreign brand and very profitable finacial arms (ford credit GMAC ect) they still are considering bankruptcy from the costs associated with their past and some current employees.
The cost to them is not just the $30 or so dollars an hour they pay their factory workers now and in the past but the tens of thousands each may cost them per year in retirement.
Firms like Toyota and BMW ect donot have anywhere near as many US employees on wage deals like the US big 3.
Vote:February 14th, 2008 at 12:36 pm
Godspeed – Toyota owns Lexus and Scion while having controlling interest (52%)in Diahatsu and Hino with shares in Isuzu, Yamaha, Subaru and Denso.
Dir1 – it is not just the expense of employees but also the rather inefficent and poor structure of GM in general. For years they many laughed at Toyota’s Kaizen practices but now others including those outside of the automotive market strive to achieve the same efficiencies based upon a similar model. Toyota were decades ahead of the Americans.
Vote:February 14th, 2008 at 12:52 pm
Joel- you’re preaching to the choir man!
I agree, manufacturing practices, corporate structure, brand image… there are more issues than you can point a stick at.
These can be all be changed, but the cost on the books of one or two generations of past and current employees will be felt on their balance sheet for the next 30,40 or 50 years.
The only way out of this is to declare bankruptcy and recieve US chapter 9 bankruptcy protection. But this is hardly going to help the other areas… consumer sentiment especially.
Its a long hard road ahead… one they may not survive in their current form.
Vote:February 14th, 2008 at 12:58 pm
Eitherway – GM, Ford and Cyrsler have no one to blame but themselves and i have absolutely no sympathy for them what so ever. Thier past orragance has come about to bite them in a very harsh and swift manner. Serve themselves right as this world without GM would be no lose.
Vote:February 23rd, 2008 at 11:42 pm
The best car in the world is the Toyota Corolla! It is cheap and is the best drive! haha Who cares about GM!
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