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.