General Motors Corp. for 77 years, the largest car manufacturer and an icon of American industry has shown that a financial point Friday, that the company was on the verge of bankruptcy.
Ford Motor Co. has its own dark - but not as immediately harmful, that the position of GM.
Bleeding and cash equivalents of sales declined in 25 years as follows last month, the automotive manufacturer in Detroit has announced the financial results show that each of them will be burned by more than $ 2 million per month, to. GM has pointed out that the cash reserves fall below the minimum necessary operation to an end, it is less of the Federal Republic or you can use other resources.
GM Chairman and CEO Rick Wagoner said the company, all options to avoid bankruptcy - GM, which emphasizes that no option - as the manufacturer tries to survive the tightening of funds in the global sales of vehicles.
“We are convinced that the consequences of failure would be a disaster,” said Wagoner. “We must find a way to move from there, and it is really our goal.”
GM, Ford and Chrysler LLC are on the lookout for the loan from the federal government for overcoming the financial crisis and the progress made in refocusing their activities.
GM showed a net loss of 2.5 billion U.S. dollars in the third quarter and said that he burned down by 6.9 million U.S. dollars in cash at the end of September with 16.2 million U.S. dollars in cash. It is hardly over 11 billion U.S. dollars to 14 billion U.S. dollars of GM said he needed to work and do not burn your money in cash from October.
The losses prompted by GM assembly to announce:
• It talks of merger with Chrysler LLC held.
• 3600 hours will be reduced and workers to eliminate about 2,000 jobs, more employees.
• The cost will be around 5 million U.S. dollars, in addition to his plan for July 10 billion U.S. dollars cut costs and increase a further 5 billion U.S. dollars through new debt and the sale of assets.
Do you need an immediate
“Even if the GM project for the leadership of measures taken in their control, GM believes that the liquidity for the rest of the year 2008, the minimum amount for the operation of their company,” chief financial Ray Young said in a telephone conference with analysts.
No later than next June, the car manufacturer said that it would be far below the amount that is required in order to function.
GM would not say how much money it in your hand at the end of the month of October, but analysts believe, say the manufacturers of automotive operating near their minimum and is expected to benefit from a substantial state to avoid bankruptcy. GM shares on Friday closed 44 cents, or 9.2% to 4.36 U.S. dollars per share.
Leaders GM, Ford and Chrysler and the UAW president in conversation with the leaders of Congress on Thursday in a discussion reported 50 billion U.S. dollars of loans for enterprises in addressing the weakness of the economy and pay for future needs. The money is in more than 25 billion U.S. dollars of loans to the Congress in September has contributed to pull the car in the factory to build vehicles with lower fuel consumption.
GM and other auto manufacturers in the United States needs this kind of assistance or the national automobile industry will be reduced by providing them with nearly 3 million jobs and the demolition of the pension fund for the people in the country, said analysts. For each job to an assembly plant, there are 7.5 points with suppliers, auto and other companies.
The bankruptcy is not the work of a GM, said Jim Hall, director of the analyze of 2953Analytics.
“My plan is that they need a loan from the government,” he said. “Once you declare bankruptcy, the buyer of the dry mass. His suppliers dry. Once the decline in sales, will be dismantled.”
The idea of a shortage of cash may soon become a reality in a company like GM. At the end of the year, GM of the external auditors have to say, if there is doubt about the actual ability of companies to be in business jargon, a constant concern. If the listener to make such a statement, GM against a number of agreements ready, including at least 6 billion U.S. dollars ready - that the banks can immediately. The car manufacturers, either an exemption from its creditors or the securing of loans.
Plan of liquidity
At the same time, GM has said that he had everything done in their power to the severe damage to species, without the product of the plans as an essential element for the generation of future earnings.
In view of the acquisition of the credit markets and the sharp decline of sales in the U.S. in recent months, GM said that the plan announced in July to hold and raise 15 million U.S. dollars in cash and will not be enough to the automobile manufacturers to survive until 2009.
The manufacturer has said he is or has the bulk of the 10 billion U.S. dollars in the reduction of costs in July announced but the company stated that it will not be able to just 2 billion U.S. dollars 3 billion U.S. dollars intends he, too, and can not borrow more to increase by $ 2 to 4 billion U.S. dollars through the sale of assets.
The manufacturer is looking for buyers for its Hummer brand seen ACDelco the Department of components and a plant for manufacturing in Strasbourg, France.
Multiple fractures, the
The manufacturer has announced that 5 billion U.S. dollars in additional costs for measures to reduce Friday and said that for now her business plan is much smaller in the United States, sales expectations for what He has his first on July 15 Restructuring plan.
At that time, GM has his plans for the United States on the basis of sales of light trucks by at least 14 million U.S. dollars, the then conservative seems to most analysts. 2007, United States, consumers bought 16.2 million vehicles. Until now, this year, however, the automotive industry in the United States is on the way to sell only 13.8 million light vehicles.
Therefore, GM presented its business plan is for the United States sales of light trucks from 11.7 million in 2009 and 12.7 million in 2010.
Based on these new projects and the reduction of reserves of the finance department, the car manufacturer said in July its reduction in the cost of 5 million U.S. dollars more than fractures. It is particularly in order:
• Cut another 500 million U.S. dollar cost for the employees of a complete elimination of more than 7000 in the United States and Canada, and employ contract staff, including nearly 5000 promulgated on 15 July.
• reduction of expenditure for tangible assets in 2009 in the U.S. 4.8 billion U.S. dollars in a project of $ 7.2 billion cost of the program.
• reduce structural costs by 1.5 billion U.S. dollars more than the 2.5 million U.S. dollars in July through a reduction in cases, such as the reduction of expenditure in the network of dealers and engineering costs.
• Reduce the cost of an operating capital of 500 million U.S. dollars.
As part of the production cuts, GM, Wednesday, including plans for an indefinite period of 3600 to dismiss workers Timetable 10 plants beginning early next year, because it slows the pace of production to plants in the answer to reducing the demand of consumers for new vehicles.
However, in the absence of a dramatic and unexpected changes in the global economy and the automotive industry, GM wrote he must help on the outside of the weather on the crisis of the credit.
“The problems in the automotive industry are the direct result of the credit crisis,” said Wagoner. “The United States Government measures to help stabilize the credit markets and enable the provision is an essential first step for the economy and the automotive industry for the restoration, but energetic measures