**GM preparing for bankruptcy**

[vztrt]

Holden will stay with GM

http://www.theage.com.au/national/sm...0601-bt07.html

Small car pulls Holden out of GM wreck
Toby Hagon
June 2, 2009

TAXPAYER funds and a locally built small car will save Holden from the chopping block as parent company General Motors enters Chapter 11 bankruptcy protection.

There were fears that Holden, which has not posted a profit since 2004, would be lumped with other "bad" assets and liquidated or sold when GM restructured its global business during a planned 90-day stay in Chapter 11.

But the Australian car maker's decision to build a small vehicle at its Elizabeth plant in South Australia, with $149 million from the Federal Government, appears to have guaranteed it a role in a smaller and leaner GM.

Holden spokesman Scott Whiffin refused to comment on the fate of 6500 workers or whether Holden would join the European Opel subsidiary -- and, likely, Saab and Hummer -- in being sold as part of a huge General Motors reorganisation designed to return the company to profitability.

But industry sources and company insiders said the recent Government subsidy through the controversial Green Car Innovation Fund had secured the future of the Australian brand.

They said the company might have found itself on the wrong side of the ledger had it not expanded beyond the Commodore large car.

Holden head Mark Reuss said the new car "redefines our future in Australia", adding: "We're known for large cars today. We're going to also be known for very fuel-efficient, responsible small cars and large cars here in a new era in Holden."

Federal Industry Minister Kim Carr is optimistic about Holden and its operations, including the Melbourne engine plant and the Adelaide vehicle production line that builds the Commodore, still Australia's best-selling car.

"I remain very optimistic that Holden will weather the global financial storm and emerge stronger," he said. "The co-operative efforts of management, workers and the Australian Government have put the company in a good position to deal with whatever General Motors may announce."

He said the Holden operations were not likely to be sold off and that, therefore, there were no potential buyers.

It is unclear what impact the publicity surrounding GM will have on consumer confidence. Holden has called a media conference this morning. With RICHARD BLACKBURN, JAEDENE HUDSON and JACOB SAULWICK

[SLO AU XR8]

So the media are saying Holden is a guaranteed safety with no idea on whether or not GM will or will not sell Holden...... Nice work again

[shakows]

Good article, setting out the facts and not just pretty goverment and Holden PR

http://business.watoday.com.au/busin...0601-bsyj.html

Holden, however, is merely a bit player – and a loss-making one at that – on a heavily indebted global stage awash in red ink. .... Holden produced just 119,000 cars last year, making it about the same size as Saab. One-third of that tally, however, was a Pontiac model shipped to the US – a line General Motors since has discontinued and, with it, any residual interest in an Australian automobile manufacturer.

[R-Design]

Reuss was just on the Today show pulling the company line.

1. Holden to stay a part of the new GM,
2. New product's on the way (Cruze to be built in Oz from 3rd quarter 2010, and more fuel efficient Commodore in a few months).
3. No job losses in the immediate future.

A bit of a fluff piece, I guess we'll here more of the same at 9:00.

This is the story Ch 9 have been running on GM's filing for bankruptcy in the US:

http://news.ninemsn.com.au/video.asp...2-ee7165a31eca

[ltd]

There will be job losses of over 20,000 in the USA, hopefully there won't be any here. With the demise of the Pontiac brand, the export G8 for Holden has evaporated.

[Wally]

Originally Posted by Falc'man

How is Ford "after trophy sales" when they started to re-structure way before any of this was happening, or that they pressed on with R&D and didn't stop spending on new car developments in the middle of GFC? They're clearly building better, quality products; GM has relied too much on it's arrogant ways, then in recent times looked for the cheap Korean alternative.

I do agree, they (GM) will come out of all this alot better off than they are at the moment, but that is obvious, isn't it? However, it's to the detriment of their own reputation, and even worse, the detriment of tens of thousands without jobs. They were too stubborn to restructure. It was as far back as the early eighties they were advised to shape up... plenty of warning...

Ummm, I was using verbatum verbage from a Ford executive during an interview a few weeks back. They are trying to garner switches in brand loyalty.... which is a good thing isn't it?

I agree with the sentiment that GM management have done most of the damage to what was once the biggest corporation in the world. I suggest they ignored the Japanese invasion too long and when they finally decided to compete, their stocks were too depleted to put up a fight and remain competitive. In a nutshell I think 30 years of Detroit arrogance is to blame.

[vztrt]

'Government Motors'

http://business.theage.com.au/busine...0601-bsyd.html

It's Government Motors
MICHAEL WEST
June 2, 2009

"BUSINESS as usual" will be the message from government and Holden executives today, despite its US parent General Motors lapsing into bankruptcy. Some 6200 jobs are safe, and one of Australia's largest manufacturers will stay in business for the foreseeable future. That's the good news.

The bad news is that taxpayers will continue to prop up Holden, and the iconic car maker will become a far-flung subsidiary of the US Government.

Under the mooted restructuring of what has already been nicknamed "Government Motors", the US Government will emerge with a controlling 60 per cent stake.

Industry insiders are confident that GM will be split into a "Bad GM" and a "Good GM", with Holden to be held in the Good GM. Nonetheless, the vagaries of US insolvency, the severity of the global financial crisis and the likelihood that Barack Obama will act squarely in the US national interest means the future of Holden is not easily predictable.

No car maker is making a profit. And the question will persist: will the US Government move to sell or shut down Holden if it is not making money?

The numbers are telling. Holden has not made a profit for five years. In its last published accounts for the year to December 2007 it reported a $6 million loss.

Since then, Holden's sales have shrunk by roughly one-third. Exports, which had been touted as the path to a recovery in profits, slumped 86 per cent last year as GM jettisoned the Pontiac brand, and with it a deal to sell Commodores rebadged as Pontiacs in the US.

Amid the gloom, GM has not fared worse than many of its rivals. Overall, new car sales dropped 20.3 per cent in Australia this year while sales of the flagship Commodore model fell only 11.3 per cent.

Like its parent, however, Holden has suffered from the same gross strategic error of making big fuel guzzlers.

That has left the brand on a taxpayer drip-feed via assorted tariffs and grants. Some $6.2 billion was earmarked for car makers last year through the Green Car Innovation Fund.

Such is the Government's investment in Holden - and its importance to the economy - that it would rescue the business even if GM were to sell its subsidiary, as it has done in Europe.

Source: The Sydney Morning Herald

[vztrt]

Obama is confident

http://business.theage.com.au/busine...0602-bt6p.html

GM can rise again: Obama
Anne Davies, Washington correspondent
June 2, 2009 - 6:26AM

General Motors, the iconic American car company, can "rise again" from bankruptcy to out-compete its rivals, President Barack Obama said today.

His comments came as as he announced the US government would plough another $US30 billion into the struggling automaker to help it complete a major slimming down.

"I'm confident that the steps I'm announcing today will mark the end of an old GM, and the beginning of a new GM; a new GM that can produce the high-quality, safe, and fuel-efficient cars of tomorrow; that can lead America towards an energy-independent future; and that is once more a symbol of America's success," Mr Obama said just a couple of hours after the company formally filed for bankruptcy protection.

But the president also warned that General Motors' restructuring would take a painful toll on many Americans who have relied on the company.

"I know you've already seen more than your fair share of hard times. We saw 400,000 jobs lost in the auto industry in the year before this restructuring even began. I will not pretend the hard times are over. Difficult days lie ahead. More jobs will be lost. More plants will close. More dealerships will shut their doors, and so will many parts suppliers," he said.

"But I want you to know that what you're doing is making a sacrifice for the next generation - a sacrifice you may not have chose to make, but a sacrifice you were nevertheless called to make so that your children and all of our children can grow up in an America that still makes things; that still builds cars; that still strives for a better future," he said.

Soon after, GM chief executive Fritz Henderson outlined in more detail the company's plan to "right-size" its operations, which involves reducing its capacity to 10 million vehicles a year, at which point GM would break even before interest, tax and depreciation.

But Mr Henderson did not indicate when he believed GM, which has been in the red since 2004, would again turn a profit.

Questions also remain about General Motors' international operations.

Mr Henderson and White House advisers have said the plan involves making more of GM's cars in America.

Asked by journalists what that would mean for international operations such as China, Mr Henderson said GM remained committed to producing cars in the markets where they sell them and sourcing supply chains locally as well.

China, he said, had been one of GM's strongest growth areas.

But this raises questions about the future of exports from subsidiaries like GM Holden.

GM Holden recently lost nearly $1 billion in export sales after plans to sell the Holden VE Commodore V8 as the Pontiac G8 in the US were scrapped.

However, the good news is that Mr Henderson said GM remained committed to the global development of its products, which means the technology and design centre in Australia is likely to continue.

The company plans to shed 21,000 union workers as well as 22 per cent of its salaried executive, engineering and administrative staff.

Fourteen US plants will close between now and autumn 2010, with six to close in Michigan, two in Ohio and one in Indiana. These Midwest states already have some of the highest unemployment levels in the nation.

[Dave_au]

I wonder what the reaction will be from key stakeholders in the US (being the UAW, US Senators, US Governors and the US/Canadian taxpayers) when they find out a backwater operation called GM Holden is given the green light to continue as is when they are closing factories in the US.

[EgoFG]

Originally Posted by Wally

Ummm, I was using verbatum verbage from a Ford executive during an interview a few weeks back. They are trying to garner switches in brand loyalty.... which is a good thing isn't it?

Yeah, I reckon people here misunderstood his expression, comparing it to say a 'Trophy Wife' (marry her ONLY because she looks good)
A 'trophy sale', is referred to in my industry as a competitive win.

[kezzer]

One of the reasons GM is in this mess to begin with are the unions. One reason the japanese auto industry in the US remains viable, they are not unionised, hopefully with the restructure GM will em off.

[Wally]

Originally Posted by EgoFG

Yeah, I reckon people here misunderstood his expression, comparing it to say a 'Trophy Wife' (marry her ONLY because she looks good)
A 'trophy sale', is referred to in my industry as a competitive win.

As Terminator X suggested, it seems to be a "touchy subject" for some and thus the hair triggers I guess.

[vztrt]

Apparently Holden is about to turn a profit!

http://www.theage.com.au/national/no...p.html?page=-1

No plans for job cuts at Holden despite GM bankruptcy
Mex Cooper, Richard Blackburn
June 2, 2009 - 10:52AM

Holden has no plans for job cuts despite its parent company General Motors filing for bankruptcy in the US.

Holden chairman and managing director Mark Reuss said the Australian subsidiary would be part of a new, leaner GM which would emerge from bankruptcy.

Despite plants being closed and jobs slashed in the US, Mr Reuss said Holden's operations would not be affected.

"This has no direct (impact) on our employees, our dealers or our Holden suppliers or most importantly our customers,'' he said.

Mr Reuss said decisions taken during the past year, including the production of a small energy efficient car backed by taxpayers' money, had saved Holden.

"We are a viable sustainable business in the long-term ... we are cash-flow positive, we are liquid, on the verge of turning a profit this last month,'' he said.

Mr Reuss said it was a "pretty good day'' for the Australian subsidiary, which would be one of three Asian Pacific manufacturing operations to be part of the new GM.

"It's sort of like studying for the final exam and the final exam is here and we've passed,'' Mr Reuss said.

Mr Reuss said he did not believe GM's financial troubles would stop Australian customers from buying Holdens.

Holden was "on the verge" of turning a profit in its local operations, Mr Reuss said.

He said the bankruptcy of Holden's parent company General Motors would have no immediate effect on the local business, which was "cashflow positive" and "liquid".

"This is an epic day. It's sort of like studying for the final exam. The final exam is here and we've passed," he said.

Mr Reuss said Holden had been identified as a vital part of GM's business in the Asia-Pacific region.

And he said the company's forward product development plans were continuing unabated, including moves toward more fuel-efficient versions of its best-selling Commodore.

"We still have the best-selling car in the country - we have a viable sustainable business," he said.

Mr Reuss said the company's dealer warranties and after sales service would not be affected by its parent's filing for Chapter 11 bankruptcy protection overnight.

He said the company had taken the necessary actions to ensure its viability, including reducing its production to meet demand.

He also claimed the company's research showed that consumer confidence in Holden was holding up well.

"The confidence level of Holden dealers is good. We feel very good about the business," he said.

He said Holden had "made its own luck" in escaping the axe that has fallen on several of the General Motors' underperforming brands around the globe.

He said the company had been scrutinised by its global parent and been given the tick of approval.

"We've had two (third parties) look at Holden. We have a very good earning power in the future," he said.

"My dad said to me when I was a little boy the harder you work the more luck you get.

We've been creating our own luck here," he said.

He also thanked the Australian Government for its support.

"The confidence the Australian Government has shown in the local industry has been very important," he said.

Mr Reuss said the jobs of its more than 6000 workers were not under immediate threat.

"We have no plans for any job losses right now," he said.

The company was working to develop new export opportunities to cover the recent loss of a $1 billion Commodore export program, caused by the GM financial meltdown.

"I can't stand here and tell you our product plans. The export business we lost ... we are working very hard to replace that in Adelaide," he said.

Holden's Elizabeth plant in South Australia is working at roughly two-thirds of capacity after the loss of the Commodore export business.

Mr Reuss said the company was looking at export opportunities but refused to speculate on what they might be.

He did confirm that the company would be exporting V6 engines to Mexico for the Cadillac SRX.

He also confirmed that GM had approved a $450 million investment in a new Australian-built small car.

There was speculation the funding could be under threat after GM global boss Fritz Henderson told US media none of the US Government's estimated $US50 billion of emergency funding would be sent overseas.

Mr Reuss said Holden would match the Australian Government's $150 million "three-to-one" with the money coming from General Motors' Asia-Pacific operations.

"The rest of this is coming out of General Motors. We're part of the Asia-Pacific region and there's money flowing from the company in making that investment," he said.

Mr Reuss also hinted that Holden's local sales had bounced back in May.

"You'll see the market numbers here for the last month moderate a little bit," he said.

Official industry sales figures are released tomorrow. So far this year sales have been about 20 per cent down on the same time last year.

[HO 3]

Its official, GM now stands for Government Motors, R.I.P.


Cheers Mick

[galaxy xr8]

Well he is right in reading that statement,
He said the bankruptcy of Holden's parent company General Motors would have no "immediate" effect on the local business,
The word "immediate" is used and I think is the key word here,
We have not seen the worst of this GFR here in Aust, and neither has GMH.

[the big jg33]

Woke up today to see a press conference on the news, what greeted me was the CEO of holden australia, fronting the media, Mark reuss, faced with Gm's imminent bankruptcy, one couldnt help but notice the stress on this man as he was trying to do what was the industry norm, say 2 years ago and put a positive spin on a company which may be up the creek before we know it, every comment almost seemed pained, as it left mr reuss's mouth, now that Gm's bankruptcy has finally hit, it will be interesting to see how Holden copes, there was mention of an export program, albeit the pontiac/commodore G8, im kind of asking myself that program was probably there best shot in the past so what would replace it? Jobs seemed to be safe, although at lower production levels jow safe are they really, if you get to see this press conference, you may see what im referring to as far as a man giving people the answers they want to hear, but will the workers actually get the end result as promised, and will holden come through this all, its a true testament to Fords management, that although things are bad due to GFC as a company they are ina much better place, and surely Gm's bankruptcy has got to work in fords favor as far as product range and perception to the general public goes, i beleive it will be a very long time before GM remotely even becomes a fraction of the great company it once was, the stigma of having to bite the bullet and declare bankruptcy, cant be a good thing. would appreciate your thoughts on this (was actually a new topic in light of todays announcement) moved to here

[kypez]

I probably going to get fried for this but why cant they go bankrupt? Why does the company need to survive. Govt's bailing them out could use the money to give to the competition to bring them up to being able to service the extra demand as a result of the fall of the other company. Production lines can be refitted for the other company's product. Jobs and components will be safer than a failing company given help that is not certain to succeed anyway.

In Aust and US, why cant Ford/Toyota get the funding to expand their resource. Yes, they cant do it now, but with that much money, I'm sure its possible... isnt it?!

If GM fails, let it. Why give them a strut up?! Give the competition a pat on the back for having the foresight and reward them, not reward the failing company.

Also, doest this mean that the US/Aus govt will be biased towards GM as they are majority stake holder?! how is that fair to competition when Ford has done the hard work and made sacrifices to stay viable?!

[SB076]

Originally Posted by vztrt

Apparently Holden is about to turn a profit!

http://www.theage.com.au/national/no...p.html?page=-1

hmm funny, even though sales volume is down, the cars are selling for less, production has effectively halved, they are going to turn a profit this month - that doesnt make any sense to me. If thats true why didnt they turn a profit last year, when volumes where up, prices where up and their production was higher - think there is some creative accounting going on

[R-Design]

You'd think Holden's future might depend on what happens with GM Daewoo. They too (along with GMH) seem to think they'll be better off under the new corporate structure.

Sounds like 'New' GM's got a standard line to feed their OS divisions to keep them in line.

http://joongangdaily.joins.com/artic...sp?aid=2905588

[kypez]

Originally Posted by SB076

hmm funny, even though sales volume is down, the cars are selling for less, production has effectively halved, they are going to turn a profit this month - that doesnt make any sense to me. If thats true why didnt they turn a profit last year, when volumes where up, prices where up and their production was higher - think there is some creative accounting going on

this is entirely possible because you dont have to be selling lots and lots of cars to make profits. ie, the cost involved in producing more cars can increase at an increasing rate.

example, to build 10 cars may cost $10 a car.
to build 20 may cost $7 a car
but to build 30 car might see the cost become $9 a car increase the cost of labour, parts, power used, etc.

so it is very possible (but this seems more a spin doctors work) to increase profit by lowering production = reduced cost.

[SB076]

Originally Posted by kypez

this is entirely possible because you dont have to be selling lots and lots of cars to make profits. ie, the cost involved in producing more cars can increase at an increasing rate.

example, to build 10 cars may cost $10 a car.
to build 20 may cost $7 a car
but to build 30 car might see the cost become $9 a car increase the cost of labour, parts, power used, etc.

so it is very possible (but this seems more a spin doctors work) to increase profit by lowering production = reduced cost.

But they have decreased the number of cars they are producing last year they made approx. 600 cars per day, currently they are making (I beleive) less than 300 - therefore with overheads etc, each car is costing more to make and they are selling it for less (reduced prices) Typically the more you produce the less it costs, as all your fixed costs and overheads are spread over a greater number of cars.

[galaxy xr8]

I know of a certain CEO of one of the major 4 bank's in Aus to which my Partner had a one to one meeting with the other week, and talked exstensivley to him about such topic's and according to him,
He believe's that Australia should not have an auto car industry, it is not viable.

[vztrt]

Originally Posted by SB076

hmm funny, even though sales volume is down, the cars are selling for less, production has effectively halved, they are going to turn a profit this month - that doesnt make any sense to me. If thats true why didnt they turn a profit last year, when volumes where up, prices where up and their production was higher - think there is some creative accounting going on

I'm trying to work out how they could almost turn a profit when they went down to one shift yet are keeping two shift's worth of workers.

GM has been buying up all the engineering from Holden and moving monies across so this may boost their profits.
But I guess they may be doig well in part sales due to the larger amounts of VE's on the road. Normally during harder times sales decrease but part sales boom.

[SB076]

Originally Posted by galaxy xr8

I know of a certain CEO of one of the major 4 bank's in Aus to which my Partner had a one to one meeting with the other week, and talked exstensivley to him about such topic's and according to him,
He believe's that Australia should not have an auto car industry, it is not viable.

You could say pretty much the same for most industries, manufacturing, farming, textiles and especially finance - problem is what do you do when more people are unemployed than employed? Interesting that a bank CEO would say that maybe they should look at their own industry and explain why money is so much cheaper to borrow in other countries - such as Japan, Europe and China than Australia?

[SB076]

Originally Posted by vztrt

GM has been buying up all the engineering from Holden and moving monies across so this may boost their profits.
But I guess they may be doig well in part sales due to the larger amounts of VE's on the road. Normally during harder times sales decrease but part sales boom.

IMO and I have no facts to support this but I beleive Holden must be doing something right or has some large benefit to GM (maybe federal funding, or licensing agreements etc) as GM are not prepared to look at selling Holden, or cutting it free as they have with other branks including US brands.

Maybe Holden has been producing a profit to GM (in regards to licensing, or some other form)

[R-Design]

"The road ahead for Holden"

An interesting commentary about GMH's situation.

http://www.businessspectator.com.au/...7?OpenDocument

[JPFS1]

Originally Posted by galaxy xr8

I know of a certain CEO of one of the major 4 bank's in Aus to which my Partner had a one to one meeting with the other week, and talked exstensivley to him about such topic's and according to him,
He believe's that Australia should not have an auto car industry, it is not viable.

That's the biggest load of BS i've heard. The banks can hardly ever get interest rate predictions right, but we should listen to their advise on the automotive industry? one which they are most detached from?

I can only speak on behalf of Ford here, so, as far as his statement, all I have to say is there is a viable business to be had for Ford AUS operations. Ford AUS is not just about building Falcon & Territory. There is so much more going on behind the scenes from an engineering, development and testing point of view, many just don't realise.

[SB076]

Originally Posted by JPFS1

That's the biggest load of BS i've heard. The banks can hardly ever get interest rate predictions right, but we should listen to their advise on the automotive industry? one which they are most detached from?

I can only speak on behalf of Ford here, so, as far as his statement, all I have to say is there is a viable business to be had for Ford AUS operations. Ford AUS is not just about building Falcon & Territory. There is so much more going on behind the scenes from an engineering, development and testing point of view, many just don't realise.

Maybe the bank CEO would like to compensate the tens of thousands of aussie workers that would be made redundant if such a thing were to happen. They might also want to take into account what impact that amount of job losses would have on society (and even there own bank with home foreclosures etc) My opinion is that Australia would be more viable without that bank CEO

[Dave_au]

Originally Posted by SB076

Maybe the bank CEO would like to compensate the tens of thousands of aussie workers that would be made redundant if such a thing were to happen. They might also want to take into account what impact that amount of job losses would have on society (and even there own bank with home foreclosures etc) My opinion is that Australia would be more viable without that bank CEO

Stop getting so emotional over it, simple macroeconmics suggests that Australia should stay out of car manufacturing and most manufacturing altogether, and it's unlikely that the industry will be viable in the long run.

Demand forces over the next 20-30 years will probably force production to go offshore as it is anyway, the belief everywhere in finance, banking and accounting is that fundamentally our automotive industry system is flawed against global competition and purchaser preferences and it's a losing battle.

According to the Australian Newspaper back in 2008, the automotive sector receives 55 per cent of all government support for the manufacturing sector, despite employing only 2.5 per cent of the sector’s workforce.

Look at the history of the last 20-30 years of automotive manufacturing in Australia and see how it's in such a dire state, we have had Nissan, Chrysler then Mitsubishi, Leyland, Mazda, Mack Trucks all exit, and that's just a few.

[Bud Bud]

Originally Posted by SB076

IMO and I have no facts to support this but I beleive Holden must be doing something right or has some large benefit to GM (maybe federal funding, or licensing agreements etc) as GM are not prepared to look at selling Holden, or cutting it free as they have with other branks including US brands.

Maybe Holden has been producing a profit to GM (in regards to licensing, or some other form)

I agree, while I can only go on what I have read from info I can get my hands on, I have never seen Holden mentioned for the chop. They still have the no 1 selling car in Australia and offer unique design architecture as well. Once SAAB, Hummer and their Euro operations are off loaded, there will be less competition between siblings and maybe Holden may Holden an even bigger stake in GM’s future.

The new GM may have big plans for Holden as they are a stream lined unit compared to their US operations, especially with all the plant closures over there as well. They may even become the centre for the new GM Asian operations in the future, who knows! Afterall they still build part of GM's power train here as well.

One thing is for sure, I have not seen where Holden was ever slated for the scrap heap along with the ones that have been identified already during this debacle.