GM Fudges Numbers In Advance of IPO – UAW Jobs Continue Exodus To Red China

GM posts $1.33 billion profit, a sign of strength?

General Motors Co. said Thursday it made $1.33 billion in the second quarter, a sign it’s getting healthier as it prepares to sell stock to the public.

It was the second straight quarterly profit for GM, which made $865 million in the first quarter.

CEO Ed Whitacre said last week that the company is eager to sell shares in an initial public offering so it can end its dependence on the government and pay off $43.3 billion in bailout funds that were converted into a majority stake in the company. [The GM finance arm, previously known as GMAC, now rebranded as ALLY Bank, owes $17 billion in bailout funds for a total of $60 billion owed to U.S. taxpayers – the Federal Governments “official” TARP website reports a total of $57.6 billion owed,with the U.S. government investing a total of US$57.6 billion under the Troubled Asset Relief Program]

Whitacre said the company plans to file paperwork in the near future for the IPO. But it’s unclear if the recent record of profits – $2.2 billion for the first half of 2010 – is enough to convince investors. GM lost $88 billion in the five years before it filed for bankruptcy protection last June. [GM lost far more than $88 billion – GM wrote off 100’s of billions in debt in Bankruptcy – at present GM has $40 billion in unfunded pension and medical liabilities] 

GM’s second-quarter revenue totaled $33.2 billion, up 5.3 percent from the first quarter on growing sales in every region except Europe. In the U.S., GM saw strong sales of new and redesigned models like the Chevrolet Equinox wagon and Buick LaCrosse sedan.

GM said it earned $2.55 per share for the quarter. [Per share of what? GM has no stock – this article is about the upcoming IPO – Initial Public Offering – remember – projecting per share value when there are no outstandng shares – the writer should be fired]  GM didn’t report second-quarter results last year because it spent part of the quarter in bankruptcy protection, but on Thursday, GM said it lost $12.9 billion in the second quarter of 2009, or $21.12 per share.

So far, GM’s results are a reversal of fortune from 2009, when it lost $4.3 billion from July 10, the day it exited bankruptcy court, through Dec. 31. Before the first-quarter results, GM hadn’t reported a profit since the second quarter of 2007.

GM said it ended the quarter with $32.5 billion in cash, down from $36 billion in the first quarter.

Read the full article here: http://www.deseretnews.com/article/700056092/GM-posts-133-billion-profit-a-sign-of-strength.html

McAuleys World Commments:

I’ve never read more blatant BS in my life… GM’s entire “alleged” profit came from its increased sales in Communist China… GM sold 1.8 million cars in 2009 in Red China compared to 1.9 million cars in the US. http://www.huffingtonpost.com/2010/01/04/gm-china-sales-up-67-perc_n_410252.html  GM’s sales increase in Red China was nearly an 70% increase. http://www.businessweek.com/news/2010-07-02/gm-s-first-half-china-sales-surge-past-the-u-s-.html

GM hasn’t brought its overdue payments to the UAW Health and Welfare Fund current since bankruptcy … (The UAW Welfare Fund owns 12% of GM)… GM has not kept current with it’s obligations to fund its retiree pensions either – GM’s underfunded pension and medical payments have grown from $20 billion to $40 billion since bankruptcy …. a $20 billion dollar increase in just over 1 year … despite the rapid growth in Red China.

Meanwhile GM is moving operations out of the US.  This from July, 19, 2010, “Reflecting China’s importance to GM, the company has relocated its international headquarters to Shanghai, where it has a joint venture with Chinese automaker SAIC.”  http://news.yahoo.com/s/afp/20100719/bs_afp/chinausautoresearchgm . http://www.manilatimes.net/index.php/motoring/21874-change-china-and-chevrolet

Meanwhile GM also announced the building of a 3rd “Advance Research Facility” in Communist China at an expense of $250 million dollars … this 3rd research facility in Red China will open in 2011. GM has moved Advanced RD to China also. http://www.thetruthaboutcars.com/gm-moves-advanced-rd-to-china/

http://news.yahoo.com/s/afp/20100719/bs_afp/chinausautoresearchgm

The first “Research Facility” was built at a cost of 2.5 billion dollars and resulted in the transfer of at least 2500 high paying RD jobs to Red China. (September 16, 2008 – GM Working on Chinese Tech Center). You remember September 2008 – two months later GM was in Washington with their hand out getting the $60 billion dollar bailout – the first $2.5 billion of the bailout went to build the Red China Tech Center. http://www.chinacartimes.com/2008/09/16/gm-working-on-chinese-tech-center/

While GM received $60 billion from American taxpayers – GM has invested $30 billion in its Red China operations. http://www.chinadaily.com.cn/english/doc/2004-06/08/content_337473.htm , http://www.associatedcontent.com/article/299829/uaw_furious_over_new_gm_plant_in_china.html , http://www.state.gov/e/eeb/ifd/2008/103668.htm ,

The Government of Communist China has also announced a joint venture with GM to build and sell cars in India. (July 2010) – GM’s initial cost $1 billion… http://www.huffingtonpost.com/2010/01/04/gm-china-sales-up-67-perc_n_410252.html , I reference this cite below.

GM is projecting that it will manufacture and sell more cars in Red China (over 2 million) than it will manufacture and sell in the US in 2010. http://www.thedetroitbureau.com/2010/07/gm-china-sales-surpass-u-s-for-first-time/

UPDATE: Yesterday I posted a comment on the net and stated that GM is a failed business model and that “fudging” the US numbers can’t hide that fact. In the post I mistakenly credited GM with having 70,000 American employees and 180,000 American retirees to support with the 70,000 active employees. As it turns out, GM doesn’t have 70K US employees – not 60K, not 50K, GM now employs approximately 48,000 US employees and must support 180,000 retirees on the production of 48,000 US workers. 3.75 US retirees for every active US worker…

GM hasn’t paid a penny of its bailout debt back yet…

However, in January 2010, GM borrowed an additional $13.5 billion to build 3 new assembly plants in Thailand … http://www.bangkokpost.com/breakingnews/166905/thai-gm-signs-b13-5bn-loan-deal 

The Obama Administration has “run” GM for 2 years now and under the Obama Administration GM’s investment and the transfer of assets and production capabilities to Red China has escalated …

The UAW membership had better wake up and smell the coffee – the Membership needs new leadership – NOW!

See this article by liberal Clinton Administration Advisor and former Secretary of Labor Robert Reich, where he claims that GM now employs 52,000 American Workers and 39,000 in Red China. (My sources indicate 48,000 in the US and  46,000 in China – which means the Chinese would be “more productive” than their Americans counterparts as they are making more vehilces with fewer workers – if the American work force is more productive than the Chinese then GM must be employing more workers in China as they manufacture and sell more vehicles in Red China than in the US.  If Reich’s numbers are correct, GM’s Chinese workers are making 30% more autos with a 25% smaller work force. For those who are interested, GM employed, roughly 470,000 U.S. workers in 1970. http://www.laprogressive.com/economic-equality/decoupling-corporate-profits/ 

Reich specifically addressed the bogus claim frequently made by the “deniers” that US Taxpayer money was being spent on Chinese expansion when he noted the following, “You and I and other American taxpayers still own over 60 percent of GM. We bought GM to save GM jobs, remember? GM officials say no American taxpayer money is being used to expand in China. But money is fungible. Because of our generosity, GM can now use the dollars it doesn’t have to spend in the United States meeting its American payrolls and repaying its creditors, for new investments in China.” Reich went on to note, “So with all this money and profit, they’ll start hiring again, right? Wrong … First, lots of their profits are coming from their overseas operations. So that’s where they’re investing and expanding production…” http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/07/31/INV91EKOIV.DTL#ixzz0wQeWBPHP

“First-quarter global vehicle sales rose 23 percent to nearly 2 million units, led by China where sales doubled. U.S. sales were up 17 percent from a year earlier.” http://www.reuters.com/article/idUSTRE64G3LA20100517
Remember when Ed Whitacre said this on January 11, 2010, “GM CEO says taxpayers will profit, as China becomes world’s largest auto market”. Specifically Whitacre said, “GM Chairman and CEO Ed Whitacre made a bold statement today, telling reporters at the Detroit auto show that he expected American taxpayers to profit from the $6.7 billion emergency Treasury loans.” http://business2press.com/2010/01/11/gm-ceo-says-taxpayers-will-profit-china-becomes-worlds-largest-auto-market/
Good ole Ed, never did acknowledge the second and third loans or the full $60 billion dollar debt GM owed to the U.S. Taxpayer. Strange thing though, it the China business was such a good deal for the Taxpayer, why did Ed give up control of GM China to the Communist Chinese Government two months later? He actually paid $985 miilion dollars of U.S. Taxpayer cash to have the Red Chinese take over majority control  of GM’s top money maker… what a negotiator … (until that day GM China was a 50/50 joint venture)    
 
March 08, 2010
“The year of 2009 was very successful for GM in the China market. We forecast further growth in 2010 as we are confident in the Chinese government’s active moves to support the local economy in such a global slowdown,” said Tim Lee, president of Shanghai-based GM International Operations, which directs GM’s operations in all markets outside North America.
He continued: “GM will continue to invest business here, not only bringing more products but also adding capacity for every joint venture.”

In addition to expanding its capacity through adding production shifts and developing its existing assembly lines to meet robust market demand, Lee said that GM was still considering building a new plant in China in the near future to accommodate strong growth in the world’s largest auto market.

“We have enough capacity to build the cars we need to sell this year and we need to continue to look for ways of increasing our capacity. That will mean we will have to add a new plant some time in the near future,” said Kevin Wale, president and managing director of GM China.

For the first two months of 2010, GM’s sales in China rose 73.6 percent from a year earlier to a record 393,498 units.

In December, GM announced a plan to cede control of its key Chinese joint venture Shanghai GM Corp to local partner SAIC. In return for the move, GM will partner SAIC to push into India and other emerging markets. [Cede control to the Chinese Communist Government – and also pony up $1 billion in cash – GM had to kick in $1 billion into the joint venture in India – I’ve cited an article above in the Huffington Post for confirmation]

According to the plan, SAIC would pay about $85 million for the added 1 percent share, boosting its total stake in Shanghai GM to 51 percent, enabling it to consolidate the venture’s accounts on to its balance sheet. [Note: this is the first time in the history of the world that any Company ceded control of its largest money maker for the purpose of letting someone else do the books – as the US taxpayer owned 61% of GM why did the Obama Administration allow this to happen? GM actually paid the Chinese Communist Government to take over majority control of GM’s top money maker – do the math – GM received $85 million (85,000.000) for the 1%  but had to pony up $1 billion ($1,000,000,000) for the joint venture, a net payout by GM of $915 million dollars (915,000,000)] 

G.M. Uses Taxpayer Bailout Funds To Build New Mexican Auto Plant

GM to Build New Vehicle at Plant in Mexico

Will invest $500 million at plant in Ramos Arispe

General Motors will invest $500 million to produce a new vehicle and eight-cylinder engines in a plant in northeastern Mexico, a company spokesman said on August 4.

The decision was announced at a meeting on August 3 between GM management and Mexican officials, the spokesman said, without giving details of the new vehicle.

The investment in the GM plant in Ramos Arispe, Coahuila state, would generate 390 jobs, he added.

General Motors has been present in Mexico since 1935, where it has some 11,000 workers, four factories, an engineering center and a test circuit.

Copyright Agence France-Presse, 2010

http://www.industryweek.com/articles/gm_to_build_new_vehicle__at_plant_in_mexico_22462.aspx

GM’s investments in Mexico have been dwarfed by GM’s investment in Red China … GM has redirected “GM Bailout cash” into expanding production and facilities in Red China – rather then refurbishing American auto plants – GM Prepares IPO While UAW Jobs Continue Exodus To Red China

General Motors & Obama Administration – Misleads Press & Public – Loans Repaid With New Bailout Money

As it turns out the Obama Adminstration’s hand pick CEO for GM, Ed Whitacre, was talking out of both sides of his mouth when he proclaimed, “GM has turned the corner” while the Obama Adminstration trumpted the alleged repayment of one of GM’s  ”bailout” loans.

What are the facts?

GM SIMPLY USED OTHER BAILOUT FUNDS TO REPAY A BAILOUT LOAN.

Yep, taking cash out of one pocket and putting it in another – all of the cash is taxpayer cash – not GM earnings.

GM has at least three outstanding “loans’ made at taxpayer expense. A $60 Billion plus loan that the Government has accepted ”securites for”, an $8 billion dollar “cash loan” that GM allegedly repaid and an open ended “escrow account” that provides GM “operating cash” provided by the Obama Adminstration at taxpayer expense.

What did GM do? GM took cash ourt of the “escrow account” funded by the taxpayers to “payback” the $8 billion dollar cash loan.

Did this “slight of hand” reduce the amount of money GM owes the US taxpayer or reduce GM’s total debt? Heck NO! The “transaction” just changed which account the money was owed to. Just like when people use one credit card to pay another credit card …. a sure sign of financial recovery.  

How dishonest of GM, President Obama, VP Biden and the News Media. Shame on all of them!

Grassley Slams GM, Administration Over Loans Repaid With Bailout Money 

…… the struggling auto giant was only able to repay its bailout money by dipping into a separate pot of bailout money…… accused the Obama administration of misleading taxpayers about General Motors’ loan repayment, saying the struggling auto giant was only able to repay its bailout money by dipping into a separate pot of bailout money…… the charge was backed up by the inspector general for the bailout — also known as the Trouble Asset Relief Program, or TARP….. Watchdog Neil Barofsky told the Senate Finance Committee, that General Motors used bailout money to pay back the federal government …… ”It appears to be nothing more than an elaborate TARP money shuffle,” Senator Grassley said in a letter Thursday to Treasury Secretary Timothy Geithner …. Grassley called on Geithner to provide more information about why the company was allowed to use bailout money to repay bailout money, and how much of the remaining escrow money GM would be allowed to keep…… “The bottom line seems to be that the TARP loans were ‘repaid’ with other TARP funds in a Treasury escrow account. The TARP loans were not repaid from money GM is earning selling cars, as GM and the administration have claimed in their speeches, press releases and television commercials,” he wrote….. Barofsky said, “I think the one thing that a lot of people overlook with this is where they got the money to pay back the loan. And it isn’t from earnings. … It’s actually from another pool of TARP money that they’ve already received,” he said Wednesday. “I don’t think we should exaggerate it too much. Remember that the source of this money is just other TARP money.” 

Barofsky told the Senate Finance Committee the same thing Tuesday, and said the main way for the federal government to earn money out of GM would be through “a liquidation of its ownership interest.” 

Grassley criticized this scenario in his letter. 

“The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government’s ability to sell GM stock in the future. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. A debt-for-equity swap is not a repayment,” he wrote, refering to the $60+ billion dollar loan which the Obama Administartion allowed GM to convert to an “unsecured”, ”security”.

http://www.foxnews.com/politics/2010/04/22/grassley-slams-gm-administration-loans-repaid-bailout-money/

%d bloggers like this: