CAW In Serious Denial Over Auto Industry's Situation

You have to love the monumental hubris of the auto workers unions.

Yahoo!: CAW reaches tentative deal with General Motors Canada after only three days of talks

The Canadian Auto Workers union has reached a tentative labour agreement with General Motors of Canada Ltd. that calls for a freeze on base wages as part of the automaker's restructuring, the union said Sunday.

Okay, blah blah. Fine. Here's the story's money shot:

"These changes represent a major sacrifice by our active members and retirees," said CAW President Ken Lewenza.

"Major sacrifice?" How magnanimous. Get off your cross, Ken (can I call you Ken?).

Reality check: it's way past time for the unions to tighten their belts, for the domestic auto industry sits on a razor's edge. If it falls off the edge, and GM, Chrysler or Ford go into creditor protection, your beloved active members and retirees will get nothing.

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Auto Bailout Collapses, So What?

For a whole lot of obvious reasons, this is pretty much all anybody seems to be talking about today:

CNN: Auto bailout collapses in Senate

Deal to move forward on $14 billion stopgap measure falls short, possibly dooming GM and Chrysler to bankruptcy.
The future of the U.S. auto industry was in doubt Friday morning after a proposal for $14 billion in federal loans died in a late night Senate vote.
The Senate voted 52-35 to bring the measure for a vote -- short of the 60 votes needed to advance the legislation. The failure followed the collapse of negotiations between Senate Democrats and Republicans seeking a compromise that both parties, as well as the companies and the United Auto Workers union, could accept.

*sigh*

It's disappointing, but hardly surprising that so many people insist that a bailout of the Detroit Three is the key to saving their bacon.

Save them, so they can do what, exactly? So they can continue to piss away money and shareholder value?

Save them so they can keep making uncompetitive automobiles?

Honestly, restructuring under Chapter 11 is probably the best thing for the automakers in the long run.

Way back in in the depths of history, there was just as much doom, gloom, and boo-hooing about permitting airlines to go bankrupt.

Today, airlines seem to go in and out of court-ordered restructuring on a revolving schedule. Somehow, amazingly, air travel hasn't ground to a halt.

The fact is, the Detroit Three need to be destroyed in order to be saved.

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Ford, GM, Chrysler All Pulling Together

Best commentary yet on the baillout of the Big Three.

Hat tip to WC Varones.

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GM Negotiating For Chrysler. Wait, What!?

So the WSJ and NYT reports, and pointed out by Calculated Risk.

Calculated Risk: GM to Acquire Chrysler?

The WSJ reports that GM has recently talked with Cerberus about acquiring Chrysler's automotive operations in exchange for GM's remaining 49% stake in GMAC.
Cerberus would keep Chrysler's financing arm - and probably would combine it with GMAC.

As I'm fond of saying about airline mergers: great, after they merge they can plunge into bankruptcy together. Now there's a synergy for you!

I suppose we ought not to be surprised that it didn't take Cerberus long to decide that the carmaking business wasn't what they hoped for, and to seek an exit back to straight finance, which I expect they have a clearer understanding of.

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GM sinks still further

Yet another reusable headline, along the lines of "Bomb goes off in Iraq," or "Oil rises on supply fears," or the ever popular "Disney starlet does something sleazy" is the ever applicable "US carmaker giant posts quarterly loss."

Yahoo!: GM posts $15.5 billion loss as sales sputter

Chief Financial Officer Ray Young said GM's second-quarter cash position was slightly better than the automaker had forecast and said GM was on track with a plan to free up $15 billion in liquidity through 2009 with a combination of cost-cutting, asset sales and new borrowing.
Charges for a planned reduction of about 15 percent of GM's salaried work force in the United States and Canada will hit third-quarter results, Young said.
"From my perspective, we are going to get the second quarter behind us and just move ahead with our restructuring and liquidity plans that we announced over the last 60 days," Young told reporters.

Good for them for working on change, however late, but it doesn't look like the hurting's going to stop for some time.

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GM loses $38 Billion

CNN: GM posts biggest annual US auto loss

DETROIT (AP) - General Motors Corp. (NYSE:GM) reported a $38.7 billion loss for 2007 on Tuesday, the largest annual loss ever for an automotive company, and said it is making a new round of buyout offers to U.S. hourly workers in hopes of replacing some of them with lower-paid help.The earnings report and buyout offer came as GM struggles to turn around its North American business (OOTC:ARBU) as the economy weakens

I have nothing constructive to say about this. I just really wanted to use that graphic.

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General Motors apparently hires people who suck at math

From Dealbreaker's Opening Bell

GM admits accounting gaffes (Detroit Free Press)Oh, and it looked like GM was starting to do so well. Guess not. The company, which recently booked a "profit" is now telling shareholders that they probably shouldn't trust a damn thing they read in the company's financial statements. It says that it's founds its accounting practices and controls to be ineffective. Part of the blame goes to poorly-trained staff, said the company. In related news, GM is asking the union for concessions, which isn't really news since it really isn't new, but yeah, so much for being out of the woods.

Contrary to what self-interested parties like ex-GE CEO Jack Welch would have you believe, the companies at the top of the heap, such as the top 10 in the Fortune 500 aren't there because of their excellence. They emerge as the top companies because their failures didn't bankrupt them or embarass them as much as their competitor's failures did. The corporation that can afford to absorb the cost of its own blunders until they manage to actually knock one out of the park are the ones who win.

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More idle rumors about Daimler-Chrysler and General Motors

Reported on Dealbreaker's Opening Bell

Daimler mulls GM stake to pay for Chrysler unit (Reuters)There continues to be a lot of chatter about the fate of Chrysler, although it doesn't sound like anything is even close to certain. Apparently, the idea that it might go to GM in some way is still on the table, and that GM might pay for the unit by giving Daimler an equity stake in itself. Again, this is all just rumor (this particular one originated at the Financial Times). So, in other words, GM would like Chrysler, but not if it means actually paying money for it. Giving up an equity stake is much more palatable.

Dealbreaker's Joe Wiesenthal was abnormally unsarcastic about this news item. Personally, I'm not entirely clear how trading Chrysler in exchange for equity in GM would be a win for Daimler.

It would be a win for the lawyers and the bankers, to be sure, but wouldn't Daimler be clearing one lame duck off their books, only to be saddled with a new one?

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GM and Chrysler: anybody?

Dealbreaker has reported on gossip that Daimler-Chrysler may spin off Chrysler to General Motors. In addition to John Carney's speculative ramblings, the input in the comments section from (aparently) well-connected detroit analysts is well worth reading.

I only really follow the auto industry tangentially. Heck, I didn't even blog about Ford's US12.7 billion dollar loss for 2006.

Regardless, when Daimler-Chrysler merged, it was hailed as a "marriage of equals." Well, like the pigs in Animal Farm noticed, some animals are more equal than others, and Daimler has decided that they are tired of being the one putting all the work into this marriage and are allegedgly "looking around."

So, if mutually cash-hemmoraging GM and Chrysler end up together, will it be billed as a "marriage of losers"?

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