GM: It's Canada's Fault
GM's record losses last year is Canada's fault– at least part of it anyway. GM CFO Fritz Henderson told Financial Post "three-tenths of a billion" of the $38.7b loss was due to foreign exchange losses. In other words, "This is largely driven by the strengthening C-dollar versus the U.S. dollar and the impact on our balance sheet through the 2007 calendar year." And in spite of CAW president Buzz Hargrove's insistence he will give no concessions in the upcoming contract negotiations, the handwriting is on the wall; Canada is now the most expensive place in North America to build cars. David Healy, an analyst at Burnham Securities: "[GM]'s strategy would likely be to do some hedging and hope that everything settles down. But Mexico and the U.S. are looking more attractive than they were to build future product." Looks like Buzz may be reconsidering his stance, if he wants to keep his union's members employed and paying their dues.
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Alright, this blame game has gone too damn far!! : ) The Big three need to understand that they are in the business of building cars. Cars that people want to buy! If they were to accomplish this, while making a net profit on each desirable car they sell, then the company will make money. Building mediocre cars, that people don't want, and selling them at a net loss can only last for so long.
GM has it backwards again. The Canadian dollar has been relatively stable against other world currencies. It's the U.S. greenback that's tanking. Physician, heal thyself.
If the closing of those factories results in Canada learning that the government cannot pick winners and losers, and should get out of the tax and subsidize game, it will be the best thing that ever happened to them. Go, Buzz.