GM’s government-appointed Chairman of the Board was out and about last night, speechifying at Texas Lutheran University. Ed Whitacre used the occasion to plea for the “modification” of Pay Czar Kenneth’s Feinberg’s pay caps. To recap the caps, the nationalized automaker’s top 25 executives took a 31 percent hair cut since joining the federal payroll. Aside from CEO Fritz “Opel Eyes” Henderson, that is, who had his cash compensation trimmed by just 25 percent (from $1.26 million to a paltry $950,000). Leaving only one other unnamed GM executive—cough, transparency, cough—who will “earn” more than $500,000 cash money for 2009. ‘Cause $500,000’s the new limit. And Ed’s not happy about that. “To find top-level people where you need them, that’s a more difficult thing to do at that salary level,” Whitacre said. “I don’t think [the caps] will be lifted, but hopefully they’ll be modified.” Now there’s a man who knows the value of politics. As for the value of GM stock, same deal. Or, in this case, no deal.

(Read More…)

You’ve got to wear some serious blinders to believe that New GM is in on course for that magic day when they de-nationalize themselves and return the U.S. taxpayer’s $52 billion (plus) “investment.” And Canada’s $10.5 billion, eh? In fact, Board Chairman Ed Whitacre just de-committed the company to a 2010 deadline for same. Still, GM and its camp followers have been in denial so long they’re in denial even when they’re telling the world they’re out of denial. Inside Line columnist Karl Brauer illustrates the conundrum: “Let me make one thing clear in the second sentence of this column. I am not saying GM has already pulled off a successful turnaround. But events of the last few weeks have established a momumental [sic] realization (at least for me): I think it’s possible GM might actually pull off a successful turnaround . . . And, as recently as four weeks ago, I commented that — despite GM’s latest rallying cry of ‘Let the best car win’ – I wasn’t convinced GM is offering the best cars on the market. I’m still not convinced GM offers the best cars available, but they do offer the widest range of really good cars I’ve seen from the company in my lifetime.” So what inspired Karl’s almost kinda maybe sorta don’t quote me on this ever faith that American’s nationalized automaker kinda maybe sorta might possibly potentially turnaround its miserable fortures? The new Medusa-class GMC Terrain, of course!

(Read More…)

Transparency. It’s what GM CEO Fritz Henderson promised taxpayers in sworn testimony in front of Congress, post $52 billion bailout (and the rest). As TTAC pointed out previously, bullshit. After not releasing the dead dealer list promised to Senator Jay Rockefeller, the nationalized automaker is now proud to announce that it’s beating its targets—without revealing the targets. “General Motor Corp. is outperforming the targets set in its earnings viability plan outlined in April, CEO Fritz Henderson said today,” Automotive News [sub] said today. “Henderson declined to list the areas in which GM is outperforming but said the company would provide details in its third-quarter earnings report later this month. ‘I’m not going to get into whether we’re generating cash or not generating cash, but I would certainly say the situation is more stable than what the outlook was even just two months ago.’” And why should we believe His Opaqueness?

(Read More…)

Sergio Marchionne stunned the mainstream media—literally—with his revelation that Chrysler has improved its post-C11 cash position from $4 billion to $5.7 billion. “’Some of you have been surmising we’re burning through cash,’ he said in brief remarks opening the company’s presentation of its five-year plan. ‘This is not true.’” Uh, yes, it is. Can you say “accounts payable?” When Chrysler entered into bankruptcy, it stopped production.  Remember the Chrysler Cash for Clunkers product drought? Like that. Since then, Chrysler’s been taking in [meager amounts of] cash without paying out anything much, as production more or less stopped during the interregnum. And now that production has resumed? Chrysler’s about to pay those 90-day payables. Look for Fiatsler’s cash pile to erode like a California beach during an El Niño storm.

GM’s last minute (i.e. post-German election) decision to pull out of a deal to sell its European Opel division to a consortium lead by Canada’s Magna Corporation has left chaos in its wake. The Associated Press reports that Opel workers throughout Europe are planning to strike GM on Thursday, protesting the automaker’s planned “rationalization” of  over ten thousand jobs. “IG Metall said workers at Opel’s four German plants would halt work Thursday, followed by similar moves Friday at other Opel locations in Europe.” Meanwhile, German Economy Minister Rainer Bruederle vowed “We will get the taxpayers’ money back.” Note: that’s German taxpayers’ money. And there’s only one way the nationalized automaker’s going to pay back that loan: with American taxpayers’ money. Seriously? Seriously. “GM Europe spokesman Karin Kirchner said the company is prepared to repay the euro1.5 billion bridge loan from the German government. ‘If we’re asked, GM will repay the bridge loan in question.’” Uh, that didn’t sound like a “request” to me. And speaking of plain speaking . . .

(Read More…)

You can certainly understand the feds’ desire to make GM’s nationalization look like a temporary measure rather than the economic quagmire that is was, is and will be. But anyone with half a brain knew that the not-so-dynamic duo’s suggestion of a 2010 share offering was about as believable as the idea that the U.S. government can save money by creating a new entitlement program. OK, less. Add Jerry York to that half-a-cranium club. Speaking at The Reuters Auto Summit, the ex-ChryCo exec, former GM board member and Kirk Kerkorian front man called any discussion of a 2010 GM IPO the “dumbest thing in the world.” Seems that “They’re not going to be able to make up all the volume that they had with the four brands they are shedding with four brands they are retaining . . . I think that inevitably their market share is going to go down a point or two just by virtue of shedding those four brands.” Saying that, after saying that, Jer’ added some kind words to his piercing glimpse into the obvious. Mr. York praised New GM’s old management. “They’ve done a lot of the right things and we’ll all know in another six to nine months whether they need to do more structurally.” I’m guessing . . . yes!

\

GM was given its last $30B of taxpayer money as it entered bankruptcy in early June of this year. By the time GM exited Chapter 11 protection on July 10, there was only $16.4B left in its bailout escrow account. According to an 8-K form filed today with the SEC, GM now has only $13.6B remaining in that account, less than one-third of GM’s $50B total bailout (not counting assistance to GMAC). GM’s rescue of its major supplier, Delphi, consumed $2.8 billion from its escrow account. According to the form:

Approximately $1.7 billion was utilized to acquire a membership interest in the new Delphi entity and approximately $1.1 billion was expended in the acquisition of Delphi’s global steering business, certain domestic facilities and other related payments

(Read More…)

The Wall Street Journal reports GM could conclude its Opel division sale by as early as Thursday, after Fritz Henderson and German officials both signaled that talks were nearing an end. Magna and its backer Sberbank will put down €500m ($740m) for 55 percent of Opel, while Opel’s labor unions have agreed to €265m worth of cost savings. The German government aid package said to total €4.5b through 2015 has yet to be finalized, but this apparently will not affect the deal. The major issue still under negotiation is the potential job loss across Europe, as the EU has already warned Germany that it my not “buy” jobs with its aid package at the expense of other EU nations. Which means Spain, Belgium, Britain and Poland still have to play “shuffle the jobs.” Magna has said that Opel could shed as many as 10,500 jobs, including 4,000 in Germany. On the upside Opel’s unions are getting ten percent of New Opel, although their decision making power is another of the issues still being negotiated. GM fought long and hard to prevent the sale of Opel to Magna/Sberbank, but with the major obstacles to the deal overcome there’s little left to do but grin and sign the papers. And then sit back and watch as Opel’s technology is leveraged to create a modern (and heavily subsidized) Russian auto industry which will challenge Chevy’s position in the Eastern European markets.

“There must be increased access to capital through the entire supply chain — from the largest tier one to the smallest family-owned firm,” Dave Andrea, vice president of industry analysis and economics at the Original Equipment Suppliers Association told the Senate Banking Committee [via The Freep]. “Without assistance this country will needlessly lose manufacturing capacity, technology development and jobs.” Which is about what suppliers have been telling congress since bailout mania struck. What the Freep fails to properly explain is that the supplier bailout passed earlier this year was an unmitigated disaster for suppliers and their relations with OEMs.

(Read More…)

After four years in Chapter 11 protection, GM’s largest supplier Delphi is returning to the land of the living. For now. Along the way, though, Delphi racked up some impressive bills. Automotive News [sub] estimates that GM has spent $12.5b on Delphi during its bankruptcy, and has pledged a further $1b in debt assumption, $2b in forgiven claims and $1.75b in investments in the new company. For these (taxpayer funded) sacrifices, GM will get Delphi’s money-losing US operations and steering unit business. Delphi’s new owners Elliott Management and Silver Point Capital walked away from $3.5b in debt to assume control of the company, and $6.25b in pension obligations were dumped by Delphi and had to be assumed by the Pension Benefit Guarantee Corporation. Delphi’s bankruptcy alone cost $400 million in legal and professional fees. The new company’s manufacturing base has been migrated outside the US, and its main business will be in supplying electronics and air conditioning systems. Expected annual revenue is $10 billion compared to the $22.59 billion the firm earned in 2005, before entering bankruptcy. But rather than tut-tutting the waste, greed and ineptitude that has marked Delphi’s bankruptcy, let’s take this moment to remember the thousands of employees and retirees Delphi has cast aside in the name of rescuing the US auto industry. For, as the Sibyl of Delphi foretold in the 9th Century B.C.E., love of money and nothing else will ruin Sparta.