Cafe Ruling

[YENKO DEUCE REGISTRY]

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generally when costs exceed revenue - you tend to go out of business!

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I didn't think that was true in the auto industry. Seems like the big boys are always reporting losses!

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Very true. The current day net losses are booked to an account generally known as 'Retained Earnings'. That account is also where all the net profits have gone from prior years. So, if people ever wonder why GM has not gone under after the last several years, it's bec/ they have 'retained the earnings' from prior years to offset the current years of losses. Obviously, they can't continue at this pace, which is why companies in this situation have management shakeups, stock price volatility, debt reorg's, union contract 'discussions', executive compensation investigations, etc..... This is not an Enron situation, it's just a tough business to be in! My loyalties are still with the American auto makers though.

[COPO 70 RS/Z28]

I had read that GM's losses were mainly attributed to the US Market and that there overseas market share was increasing dramatically.

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[ANDY M]

GM has offered a buyout to all 74,000 hourly workers. The current cost of union personnel is killing GM. I am NOT anti-union, but the UAW has been overpaid for years. When unskilled labor can make more money and get better benefits than most non-union skilled labor, something has to give. The money it takes to support all of the retired UAW people is killing the Big 3, not to mention the non-union workers.
GM hopes to replace the workers they buy out with lower paid new workers. The issue is money, not productivity.
Walter Reuther was quoted once back in the 60s as saying that the American auto industry was the only industry in the world that had to raise it's prices to stay competitive.