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Delphi Chapter 11 -- GM Next? (Vanity Business)
Me | 10/10/2005 | Me

Posted on 10/10/2005 7:25:09 AM PDT by devane617

CNBC stated that Bank of America swithed their position on GM to "SELL". It is being mentioned that GM will follow Delphi into Chapter 11. Although GM has 38 Billion in cash and assets, it may not be enough to cover what is certain to be a huge drop in sales during the next few months. If GM files, that will be extremly bad for our economy.


TOPICS: Business/Economy; Crime/Corruption; Culture/Society; Government; News/Current Events; Your Opinion/Questions
KEYWORDS: bankrupt; bankruptcy; business; delphi; generalmotors; gm
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CNBC stated that Bank of America swithed their position on GM to "SELL". It is being mentioned that GM will follow Delphi into Chapter 11. Although GM has 38 Billion in cash and assets, it may not be enough to cover what is certain to be a huge drop in sales during the next few months. If GM files, that will be extremly bad for our economy.
1 posted on 10/10/2005 7:25:14 AM PDT by devane617
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To: devane617

Agreed. And watch for the name of WILBUR ROSS. He bought the corpse of LTV and turned it into ISG/Mittal Steel. He and Steve Miller of Delphi have worked hand-in-glove.


2 posted on 10/10/2005 7:33:13 AM PDT by GungaLaGunga
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To: devane617

What's good for GM is good for America.


3 posted on 10/10/2005 7:39:42 AM PDT by Paleo Conservative (France is an example of retrograde chordate evolution.)
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To: devane617

I recognize GM's importance to the US economy. For that reason, and the fact that I like cars, I'm slightly bitter about what's been done to the company.

But, it seems the best answer is let them pay for their sins, (as the rest of us are left to clean up the mess). Perhaps when the Japanese buy GM they will economize by not giving 25% bonuses to the CEO when sales slip, or giving golden parachutes to all of their cronies.

Much bashing goes on about the cost of labor and healthcare benefits. However, the Japanese managed to open auto plants without unions here in the US. Quality is good, and everyone wins. GM is a mess, and the upper management is raiding the dying companies' coffers.

Damn them.


4 posted on 10/10/2005 7:40:38 AM PDT by brownsfan (It's not a war on terror... it's a war with islam.)
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To: devane617

Is there any new info about the Delphi execs accused of inflating their(Delphi)accounts receivable from GM?IE,how large was the mis-statement?How many execs involved?Indictments?Our company just purchased Delphi's domestic battery production and accounts,and i would assume the purchase price would be adjusted downward to reflect restatement of AR?Thanx


5 posted on 10/10/2005 7:42:18 AM PDT by Thombo2
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To: devane617
American unions just won't come to grips with the fact that there are millions and millions of foreign workers that are willing and able to do work for $3/hr that their members are getting $30/hr (plus benefits) for.

The days of union retirees getting $40K/yr pensions, totally free health care and a free trip to Disney World every year are over....if American industry is to survive.

6 posted on 10/10/2005 7:44:35 AM PDT by Gay State Conservative
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To: devane617
I think you will see a very dramatic change in General Motors if they do file for Chapter 11 bankruptcy.

Expect GM in the USA to be down to three divisions: Chevrolet (family cars plus Corvette), GMC (light trucks and SUV's), and Cadillac (luxury cars). I expect many car models to be phased out, and don't be surprised if GM will lean a lot on its Opel division in Europe to provide new models in the future (that means we'll see the Meriva and Zafira multi-activity vehicles sold in the USA in the next 24 months, along with possibly the Astra small car to be sold to compete against the Honda Civic and Toyota Corolla lines).

7 posted on 10/10/2005 7:51:11 AM PDT by RayChuang88
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To: devane617

"CNBC stated..."

Stop right there, you'll sleep better...


8 posted on 10/10/2005 7:52:52 AM PDT by dakine
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To: Gay State Conservative
"American unions just won't come to grips with the fact that there are millions and millions of foreign workers that are willing and able to do work for $3/hr that their members are getting $30/hr (plus benefits) for.

The days of union retirees getting $40K/yr pensions, totally free health care and a free trip to Disney World every year are over....if American industry is to survive."

I think there are also some CEOs from India or China who will work for $40K/yr. If you want your worker to work for less you shouldn't raise your own.
9 posted on 10/10/2005 7:53:01 AM PDT by MHalblaub (Tell me in four more years (No, I did not vote for Kerry))
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To: devane617
GM will file..it was already hurting, and now must pick up Delphi's pension woes.

Ford will follow soon after...

10 posted on 10/10/2005 7:53:47 AM PDT by ContemptofCourt
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To: Paleo Conservative; All
As GM goes, so goes the rest of the economy. GM has failed to design efficient cars in favor of gas guzzler SUV( this time it is not a slam against SUV drivers :) ). Combine the facts that the unions, GM execs, product line-up, is way out of wack, it does not look good for GM and the economy as a whole.

I wonder is the Feds will prop up GM if a colapse occurs?

11 posted on 10/10/2005 7:55:02 AM PDT by devane617
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To: ContemptofCourt

Look for Ford and GM to merge within next 18 months.


12 posted on 10/10/2005 8:00:21 AM PDT by HuronMan
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To: devane617

I haven't studied the events in great detail, but at
first glance, the Delphi spin-off appears to have been
a way for GM to shed a large number of expensive
union workers.

The unions have yet to figure out that their
competition is not the non-union dude next door,
but teeming masses of laborers in China.

And yes, if GM doesn't get their costs under control,
they could get displaced in the market by Chinese
cars sold with pseudo-American names ... like those
"GMC" tools sold in home improvement stores (hint:
it doesn't stand for General Motors Corp [and I can't
figure out why the real GMC doesn't sue 'em]).


13 posted on 10/10/2005 8:02:06 AM PDT by Boundless
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To: devane617
From Forbes:

"We think GM's biggest supplier's [Delphi (nyse: DPH - news - people )] recent bankruptcy filing should raise GM's retirement liabilities by at least $6 per share," Banc of America said. "This, and our strong belief the UAW will be tougher on GM than Delphi, should get GM to more seriously consider bankruptcy protection."

That's not good at all.

14 posted on 10/10/2005 8:03:27 AM PDT by ContemptofCourt
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To: devane617

I don't claim to be an expert on the auto business. However, I've owned GM products for many years, just purchased a new Yucon XL (by fourth) and it's an excellent vehicle for my purposes.

GM needs to rid itself of the union wages and benefits problem to be competitive IMO. I believe that will now happen. If the company needs help to come through this I would support a Fed loan for restructuring. Just my opinion.


15 posted on 10/10/2005 8:05:08 AM PDT by toddst
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To: ContemptofCourt
ContempCourt, Thanks for the info and research. I suspect we will see this as major news in the next few days. Our entire economy pivots on the auto industry.
16 posted on 10/10/2005 8:06:13 AM PDT by devane617
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To: Gay State Conservative

"American unions just won't come to grips with the fact that there are millions and millions of foreign workers that are willing and able to do work for $3/hr that their members are getting $30/hr (plus benefits) for."

I think it's wise to lay all the blame for this at the feet of the rank and file worker, and the union.

We wouldn't want to follow Henry Ford's model and actually pay people enough so that they could afford to buy what they make. That's silly. What an idiot Ford was, definately not a real conservative.

We all know that the executives at GM have to take those huge salaries without any connection to performance because they can't count on the workers. We also know that the design direction was laid out by the union. The workers wouldn't build Camaro or Firebird anymore, so they had to drop them. Meanwhile Ford is doing quite well with Mustang. (Must be renegades over at Ford). And everyone knows American workers are too stupid and lazy to build a decent car, have you driven a, (Marysville, Ohio), Honda lately?

Yep, let's hope GM just shuts down, and we get rid of all those nasty $40k a year jobs. Those unemployed people won't vote, and even if they do, they surely won't vote Democrat. And even if the Democrats are elected, they won't raise our taxes to pay for benefits they give those who elected them and are now making $4/hr at Arby's versus $40k a year at GM.

God forbid we should actually care about anyone who lives in the US more than anyone else. That's Socialism for cryin' out loud. (Not Nationalism, unless we're talking defense, then Nationalism isn't Socialism.)

Yep. Let's get them all unemployed, it worked for England didn't it?


17 posted on 10/10/2005 8:06:22 AM PDT by brownsfan (It's not a war on terror... it's a war with islam.)
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To: devane617
I've been following GM and Ford for the past few months...really been itching to buy some of their preferred shares, as the yeild on most of them is at or near 10%...a tremendous return.

But who would have thought that buying into GM's or Ford's debt would be such a risky proposition.

18 posted on 10/10/2005 8:09:56 AM PDT by ContemptofCourt
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To: brownsfan
However, the Japanese managed to open auto plants without unions here in the US.

Yes, but the Japanese and Germans have been opening up plants in the US that aren't in non right to work states. Tennessee, South Carolina, Alabama, etc. Michigan is not a right to work state. GM can't get out from under the unions' thumbs. The unions have used their political muscle in Michigan to make it a closed shop state, which makes employers leave. Those that stay cannot be competitive in the long run.

Combine that with long term pensions and you've got yourself a disaster.

19 posted on 10/10/2005 8:09:57 AM PDT by Koblenz (Holland: a very tolerant country. Until someone shoots you on a public street in broad daylight...)
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To: Gay State Conservative
The days of union retirees getting $40K/yr pensions,…

$40K? I’ve known at least two that were receiving $6K month and a 13th “bonus” payment in December (supposedly to handle Christmas-related stuff). That’s closer to $80K.

That was in addition to health benefits you’d kill for. That was also when they were extorting things like 25-and-out at ANY age, so you could easily have a 45 or 46 year old “retiree” drawing it – for literally 35+ years.

Yes, they could very easily be collecting retirement longer than they worked. It’s a good gig if you can get it but you better make DAMNED sure you sell a s-load of expensive-assed cars forever or it won’t work.

I think it’s safe to say those days are O-V-E-R.

20 posted on 10/10/2005 8:10:26 AM PDT by Who dat?
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To: toddst
GM needs to rid itself of the union wages and benefits problem to be competitive IMO. I believe that will now happen. If the company needs help to come through this I would support a Fed loan for restructuring. Just my opinion.

GM will shed it's pension and retiree health care obligations by filing bancruptcy. Then us tax payers get to foot the bill. GM gets to keep running with fewer expenses. The unions did the same thing to the major airlines that declared bankruptcy. Now their pensions and benefits are slashed because of these bankruptcies. Unions are one of several things preventing companies from making changes needed to stay competitive. Then they get worse changes when their employer declares 'game over' and files Chapter 11. I bet it will happen before Oct. 17 when the new laws kick in.

21 posted on 10/10/2005 8:13:16 AM PDT by doc30 (Democrats are to morals what and Etch-A-Sketch is to Art.)
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To: brownsfan
brownsfan, It's called th WalMart effect. People want everything dirt cheap without regard for the source. If I can buy a widget made in china for $0.10 cheaper than a comparable US made product, then that is what we do. Eventually the US companies can not compete with the $0.50 per hour wage and goes out of business.

There is NO easy answer. Everyone will have to understand that US products, even those made by labors making minimum wage, will be more expensive that products made in china. I don't see that happening.

22 posted on 10/10/2005 8:13:40 AM PDT by devane617
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To: brownsfan

I imaginge the bulk of their pension plan is invested in their own stock. If the stock value plummets, then the ability to meet pension obligations evaporates, and then the Federal Pension insurance will have to kick in (i.e. me and you and our kids will pay through the nose in the form of taxes).

A second observation is that in the mid 90's, the Clinton Admin (abetted by the Republican controlled congress) dropped the level by which a company's pension was considered to be 'overfunded'. I don't remember the exact number but it used to be that you needed around %150 percent of your obligations in your pension fund and they dropped that to around %120 percent. During the high-flying 90's, that allowed some large companies to declare as earnings what should have been pension contributions.

Just something to watch out for if self-insured giants, such as GM, become insolvent.


23 posted on 10/10/2005 8:18:17 AM PDT by ChiefJayStrongbow
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To: Who dat?
That was in addition to health benefits you’d kill for. That was also when they were extorting things like 25-and-out at ANY age, so you could easily have a 45 or 46 year old “retiree” drawing it – for literally 35+ years.

After corporate bankruptcy, if you retired before 65, your pension is reduce significantly due to the rules of the government administereed system for such situations. It could possibly even be eliminated. That happened to the retired air line pilots who have mandatory retirement at age 60. The guys that took early retirement are going to get screwed big time. With the new bankruptcy laws, there won't be any way out when their pensions get cut by law. Since GM is such a huge company, this will have resonating effects on the economy. Fortunately, GM doesn't dominate the economy like it once did.

24 posted on 10/10/2005 8:18:51 AM PDT by doc30 (Democrats are to morals what and Etch-A-Sketch is to Art.)
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To: Koblenz

"The unions have used their political muscle in Michigan to make it a closed shop state, which makes employers leave. Those that stay cannot be competitive in the long run.

Combine that with long term pensions and you've got yourself a disaster"

And GM opened a plant in Tennesee, (Saturn). If those guys at the top were doing anything other than figuring out how much they can get from the company, and planning bankruptcy, they could have worked a solution.

Unions are weakened, and although they tend to be stupid, they are human. Is it possible if management made it crystal clear that Saturn was the first of many, they'd strengthen their barganing position? GM management has the ear of politicians. They could lobby for fundamental changes, and if not given concessions, move to an American state that's more business friendly. Clearly there must be an advantage to manufacturing in the US or the Germans and Japanese wouldn't even try.

Of course, those are the things that a real management would do. I would say GM doesn't have a real management.


25 posted on 10/10/2005 8:19:45 AM PDT by brownsfan (It's not a war on terror... it's a war with islam.)
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To: doc30
And I was told "There is no free lunch"

That was in addition to health benefits you’d kill for. That was also when they were extorting things like 25-and-out at ANY age, so you could easily have a 45 or 46 year old “retiree” drawing it – for literally 35+ years.

Hey, I'm sure the ones working now will "sacrifice" for their union brothers....who have "gone fishin" for these last many years...

26 posted on 10/10/2005 8:27:24 AM PDT by litehaus
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To: devane617

"There is NO easy answer. Everyone will have to understand that US products, even those made by labors making minimum wage, will be more expensive that products made in china. I don't see that happening."

Most of the posts I read here would tell you the WalMart effect is a good thing. The mere invocation of the name WalMart will generate posts.

I would agree, there are no easy, and few good answers. The cost of energy could be a blessing in disguise. The cost of those widgets goes up when it costs twice as much to ship them from China to here.
Unfortunately, we have too many liberals here who haven't lost their jobs yet. Until they do, they won't tolerate relaxing some of the stupid regulations of the workplace and over the top EPA stuff.
I guess we're going to have to take the pain, and see if we have the guts to grow. Otherwise, look at England, that will be our future.


27 posted on 10/10/2005 8:29:28 AM PDT by brownsfan (It's not a war on terror... it's a war with islam.)
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To: devane617; All

I have a few questions.

Why on this board, when something like this comes up, the focus of the attacks is on the union? (And by proxy the rank and file worker).

American CEO's make salaries out of line with the rest of the world. (2 to 3 times more than Japanese or German, forget Chinese). Why is it, that is rarely mentioned? However, the comparision of Chinese to American workers is seen as a good thing.

There is much gnashing of teeth over lazy workers making too much for doing too little. Why is it no one complains that the GM CEO got a 25% bonus last year when stock prices fell? And that's not an uncommon practice, rewarding incompent executives. Carly Fiorina, (HP), got a $22 million buyout after presiding over a 50% drop in HP's value.

I know unions are problematic, but what of the other problems? They don't count?

Many rail here about how the left is anti-American. Trying to export the job of an American who works 40 hours and comes home, goes to church, raises kids, coaches sports, pays taxes... that's as un-American as you can get.


28 posted on 10/10/2005 8:40:25 AM PDT by brownsfan (It's not a war on terror... it's a war with islam.)
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To: devane617
Delphi in Europe, Asia, and China is doing quite well, thank you. Delphi in the US is run like the state of Louisiana, with the UAW+management acting like NO cops commanded by Ray Nagin.

If GM declares, so will Ford. Illinois, Wisconsin, and especially Michigan will take tax hits you won't believe.

Chinese-badged cars should be at the Chicago 2006 Auto Show. This could be interesting.

That said, I just sold a Sable with 200k on it, I just loved it. I replaced it with a used Century with 45K of about 5 grand. It's a nice car, like it a lot better than any Toyota. If the Chevys had the same soundproofing, ride control, and goodies as the Century, GM wouldn't have these problems.

29 posted on 10/10/2005 8:44:34 AM PDT by spudsmaki
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To: Gay State Conservative
The days of union retirees getting $40K/yr pensions, totally free health care and a free trip to Disney World every year are over....if American industry is to survive

Surely you jest! My husband is a Delphi/GM retiree and he sure doesn't get $40K/yr pension. Try more like $12oo per mo.Health care is NOT totally free either. We pay 50% or our medical thank you...And I've never been sent to Disney World for free...Did you just leave the sarcasm button off?

30 posted on 10/10/2005 8:51:39 AM PDT by queenkathy (I'm not a complete idiot. Some parts are missing.)
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To: brownsfan

I agree with your assessment but we should go further with what is under our control.

We need to rigourously inspect all cargo coming into the country, for security purposes. This would not only provide better port security ... it would increase lead times and, thus, cost, for anything manufactured overseas. And the cost of the additional inspectors should be borne by the exporter/importer and NOT paid for by you and me.

This wouldn't be overtly protectionist but it would have a similar effect and maybe, just maybe, we'd make a few more things here.


31 posted on 10/10/2005 8:58:55 AM PDT by ChiefJayStrongbow
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To: brownsfan
Let's get them all unemployed, it worked for England didn't it?

Actually it did. A lot of heavily unionised, unprofitable industries were destroyed under Margaret Thatcher. Did us the world of good :0)

32 posted on 10/10/2005 8:59:45 AM PDT by agere_contra
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To: brownsfan

"upper management is raiding the dying companies' coffers."

Is that so? How do you know that?


33 posted on 10/10/2005 9:01:56 AM PDT by RoadTest (We need our borders, language and culture secured.)
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To: HuronMan
Look for Ford and GM to merge within next 18 months.

Look for a European consortium(subsidized by the gov.)to buy GM then a merger with German owned Diamler Chrysler with the new conglomerate to be named "Globalist Motors"

34 posted on 10/10/2005 9:02:18 AM PDT by RckyRaCoCo ("When you have to shoot, shoot, don't talk!")
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To: devane617

"GM has failed to design efficient cars in favor of gas guzzler SUV( this time it is not a slam against SUV drivers"

Well now how do you suppose that could happen? How could GM sell SUVs without any buyers? That's like sayting you support the troops but not the war.


35 posted on 10/10/2005 9:05:36 AM PDT by RoadTest (We need our borders, language and culture secured.)
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To: devane617

"GM has failed to design efficient cars in favor of gas guzzler SUV( this time it is not a slam against SUV drivers"

Well now how do you suppose that could happen? How could GM sell SUVs without any buyers? That's like sayting you support the troops but not the war.


36 posted on 10/10/2005 9:05:36 AM PDT by RoadTest (We need our borders, language and culture secured.)
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To: RoadTest

"Is that so? How do you know that?"

25% bonus for poor performance. Large and rising salaries for a company contemplating bankruptcy. What would you call that?


37 posted on 10/10/2005 9:09:30 AM PDT by brownsfan (It's not a war on terror... it's a war with islam.)
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To: toddst

" I've owned GM products for many years, just purchased a new Yucon XL (by fourth) and it's an excellent vehicle for my purposes. "

That's the irony; GM has gotten their quality way up there, too late. The competition is fierce, even without China's input. GM's weakness is design, which Bob Lutz is slowly fixing. And union, medical and retiree liabilities.

I'm a non-union retiree. :-)


38 posted on 10/10/2005 9:15:35 AM PDT by RoadTest (We need our borders, language and culture secured.)
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To: HuronMan
Look for Ford and GM to merge within next 18 months.

That won't happen. More likely will be more interaction with foreign partners. There is still a lot of room for consolidation in the automobile business. Two Japanese Majors, two German majors, two American majors, and two French majors equals about 4 or 5 too many players on the field.

39 posted on 10/10/2005 9:16:36 AM PDT by PAR35
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To: devane617

The "jobs bank" is a major stickler with Delphi. They say they are paying 4000 employees not to work (never a good idea) and this cost them 400 million a year. The word is that after acouple of months the court will order the reduction of wages and elimination of the jobs bank, which effectively voids the union contract.

The main stickler is the pension, which is why they are trying to get GM back in the picture. A report I read is that Delphi has 30,000 U.S. hourly employees and 12,000 hourly retiriees. That 12,000 has to represent the number of retiriees since the spin off, because that number seems low for a company thats been in business since 1906.


40 posted on 10/10/2005 9:32:11 AM PDT by Who dat?
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To: RckyRaCoCo
RckyRaCoCo wrote: Look for a European consortium(subsidized by the gov.)to buy GM then a merger with German owned Diamler Chrysler with the new conglomerate to be named "Globalist Motors"

If not that, then look for one of the Japanese players to try to grab up GM. Probably Nissan or Honda as I see competition issues by the SEC with a merger or acquisition by Toyota. If Nissan or Honda does gobble up GM, look for Toyota to consolidate with Ford either through a takeover or merger soon thereafter. I don't think the Europeans have liked the results of the Daimler-Benz/Chrysler consolidation and will be wary of other joint ventures/financial entanglements with American auto companies at this time.

41 posted on 10/10/2005 9:51:17 AM PDT by Surtur (Free Trade is NOT Fair Trade unless both economies are equivalent.)
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To: MHalblaub

Well said!


42 posted on 10/10/2005 9:54:02 AM PDT by N3WBI3 (If SCO wants to go fishing they should buy a permit and find a lake like the rest of us..)
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To: Who dat?
$40K? I’ve known at least two that were receiving $6K month and a 13th “bonus” payment in December (supposedly to handle Christmas-related stuff). That’s closer to $80K.

While we are throwing anecdotes around I can talk about my father who makes less than 40K a year... Let face it there are many problems at GM and many caused by the union, however GM refusing to get into hybrids five years ago to establish themselves, especially after what the Japanese did in the 70's/80's has to be the all time bone head example of not learning from history..

43 posted on 10/10/2005 9:59:43 AM PDT by N3WBI3 (If SCO wants to go fishing they should buy a permit and find a lake like the rest of us..)
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To: RoadTest
"GM has failed to design efficient cars in favor of gas guzzler SUV( this time it is not a slam against SUV drivers" Well now how do you suppose that could happen? How could GM sell SUVs without any buyers? That's like sayting you support the troops but not the war.

Why are Toyota, Honda, Nissan, consistantly the leading seller in the US? They make well built efficent cars. GM, FORD, etc have had the SUV market cornered. However, they never planned for a tightening gas supply. That was stupid on their part.

44 posted on 10/10/2005 10:05:44 AM PDT by devane617
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To: RoadTest
Gm refusing to diversify its offerings led to the current lack of sales. If GM had a line of hybrids they could expand they might have some hope in the coming years but they are starting from ground zero... The short sightedness of the execs is epic in its scale and scary in its repetitiveness , late 70's anyone?
45 posted on 10/10/2005 10:07:07 AM PDT by N3WBI3 (If SCO wants to go fishing they should buy a permit and find a lake like the rest of us..)
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To: devane617
..."People want everything dirt cheap "


Actually, American cars are significantly cheaper than the Japanese models I buy. However, American reliability is awful and downright dangerous. It only took a few times stranded in the middle of nowhere for me to drop GM and Ford cars for good.

Their component quality is terrible because it has been tied into their union negotiations. I also find American electronic technology (like Delphi) to be dreadfully dated.
46 posted on 10/10/2005 10:16:49 AM PDT by Wiseghy (Discontent is the want of self-reliance: it is infirmity of will. Ralph Waldo Emerson)
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To: Gay State Conservative

Delphi offered their workers 12.00 per hour for unskilled (line workers) and 19.00 for unskilled-these people have families and bills too. My husband works for GM...we hope management improves believe me.


47 posted on 10/10/2005 10:47:05 AM PDT by nyconse (a)
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To: nyconse

that is 19.00 for skilled. Sorry.


48 posted on 10/10/2005 10:47:47 AM PDT by nyconse (a)
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To: Who dat?

My husband (GM ) says GM has to cover those pension because of the bankruptcy. Also, Delphi workers have the right to return to GM proper. This could put GM into bankruptcy as well.


49 posted on 10/10/2005 10:50:02 AM PDT by nyconse (a)
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To: brownsfan

It is a myth that unions are causing the demise of big corps...global trading is responsible. The trade policy penalizes American companies and rewards foreign comptetitors. Business is out break the American worker-not just the Union worker.


50 posted on 10/10/2005 10:52:28 AM PDT by nyconse (a)
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