Hi guys, my professor has assigned me a research homework to find out the major reasons why GM is in financial distress. I have searched all over the internet but cannot seem to grasp it because it's so confusing. Can anyone who watches the news tell me a little about the reasons so I can research it up more? Only facts please don't make up stories. Thx

 

GM owns Ditech, a housing lender.

With ARM (adjustable rate mortgages), etc. and loans to people who really really could not afford a home many people are defaulting on home loans.

GM produces ~51% trucks, SUVs, etc. and the rest autos. Many of their autos do not get excellent fuel mileage, especially when compared to Toyota, Honda, etc..

With $4/gal. gasoline, people aren't buying trucks, SUVs, etc. because the fuel mileage is so poor. The manufacturing of vehicles is a "big giant flywheel" that can't be stopped instantly. By the time gas prices rose the trucks, SUVs, etc. were piling up. The dealers can stop ordering them instantly, but the parts required to produce them are ordered ~12 weeks in advance and production volumes are planned up to 18 months in advance. These can be modified, but not cut by 80%.

GM also pays out $$$$$$$$$$$$$$$$ each month to retired employees. Look up to numbers, it is a huge amount.

The import car companies in the U. S. are not old enough to have many retired employees, so they are not affected as much.

With production volumes down many of GM suppliers are shutting down and GM has to move mold, dies, etc. to new suppliers. This is not a small task and can greatly affect production. Production lines can come to a halt if there are no parts. This can cost thousands of dollars a minute.

 

Thx a lot! Do you have the reference site though?

So far, my major reasons are
1.) Rise in gas price --> Decline of SUV sales
2.) Stock decline after 9/11
3.) Labor strike in Sept, 2007 and perhaps combine the retirement $$ together

Do you think those are good topics I can write a paragraph about?


edit: Ugh I think #1 is too specific.

 

ARe you effing kidding me? Go to your school library and research all this. Maybe you'll learn something. Don't be intellectually lazy.

 

I dont know how much info the library can provide as this has been pretty recent...

 

My college library ten years ago had an online reference where I could pull up tons of recent magazine articles. Yeah, you might not find a book, but learn how to use your library and I guarantee you can find more than enough info on this topic.

 

How about poor business practices. They failed to produce a quality product for.... pretty much the entire time they've been in business.

I got this in an email last year...

A Japanese company ( Toyota ) and an American company (General
Motors) decided to have a canoe race on the Missouri River . Both
teams practiced long and hard to reach their peak performance before
the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate
the reason for the crushing defeat. A management team made up of
senior management was formed to investigate and recommend appropriate
action. Their conclusion was the Japanese had 8 people rowing and 1
person steering, while the American team had 8 people steering and
1 person rowing.

Feeling a deeper study was in order, American
management hired a consulting company and paid them a large amount
of money for a second opinion. They advised, of course, that too many
people were steering the boat, while not enough people were rowing.


Not sure of how to utilize that information, but
wanting to prevent another loss to the Japanese, the
rowing team's management structure was totally
reorganized to 4 steering supervisors, 3 area steering
superintendents and 1 assistant superintendent
steering manager. They also implemented a new
performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team
Quality First Program,' with meetings, dinners and free pens for the
rower. There was discussion of getting new paddles, canoes and other
equipment, extra vacation days for practices and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor
performance, halted development of a new canoe, sold the paddles,
and canceled all capital investments for new equipment. The money saved
was distributed to the Senior Executi ves as bonuses and the next year's racing team was
out-sourced to India.

Sadly, the End.

Sad, but oh so true! Here's something else to think
about: Ford has spent the last thirty years moving all
its factories out of the US, claiming they can't make
money paying American wages. Toyota has spent the last thirty years
building more than a dozen plants inside the US.

 

you need to get magazine articles/newspaper articles from recent publications. even if people in this thread have valid info for you, unless they have actual sources for their information, sources you can cite in your paper, all of this is useless to you. go to a library and ask a librarian for help, that will get you what you need in a lot less time.

 

Three letters. UAW!!!!!!!!!! union

 

Try this.