Author Topic: GM - General Motors  (Read 568718 times)

Viking

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Re: GM - General Motors
« Reply #1630 on: November 26, 2018, 09:21:36 AM »
‘Demand problem on cars’? Can’t be good for economic growth moving forward. Another headwind as we enter 2019. Especially if competitors take the same action (cut production versus offering bigger rebates) in response to slowing demand.

https://www.cnbc.com/2018/11/26/gm-unallocating-several-plants-in-2019-to-take-3-billion-to-3point8-billion-charge-in-future-quarters.html

Former GM Vice Chairman Bob Lutz said the automaker historically would have raised sales incentives to try to to sell more cars before resorting to plant closures.

"Nowadays GM looks at the hard reality, says we've got a demand problem on cars, what are we going to do about it. We have to shut some facilities and move production to truck plants," Lutz said on CNBC's "Halftime Report." "So I think what we are seeing is a fast acting and reality oriented GM management."


vince

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Re: GM - General Motors
« Reply #1631 on: November 26, 2018, 02:08:16 PM »
‘Demand problem on cars’? Can’t be good for economic growth moving forward. Another headwind as we enter 2019. Especially if competitors take the same action (cut production versus offering bigger rebates) in response to slowing demand.

https://www.cnbc.com/2018/11/26/gm-unallocating-several-plants-in-2019-to-take-3-billion-to-3point8-billion-charge-in-future-quarters.html

Former GM Vice Chairman Bob Lutz said the automaker historically would have raised sales incentives to try to to sell more cars before resorting to plant closures.

"Nowadays GM looks at the hard reality, says we've got a demand problem on cars, what are we going to do about it. We have to shut some facilities and move production to truck plants," Lutz said on CNBC's "Halftime Report." "So I think what we are seeing is a fast acting and reality oriented GM management."

I dont want to spend too much time looking through the release but can anyone confirm that these actions will increase fcf by 6 billion on a run rate basis....in addition to the original 6 billion of savings announced a few years ago?  Is she honestly claiming that they just created 60 billion of value overnight?  And if anyone believes that shouldnt she be tortured for not acting sooner?

rb

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Re: GM - General Motors
« Reply #1632 on: November 26, 2018, 02:22:25 PM »
I doubt that they'll get 6 billion extra fcf. That would translate to 400k per employee. Doesn't seem realistic.

Edit: If you back out the 1.5 Bn of capex reduction because of this move as GM stated. Then you're left with labour cost saving of 300k per employee. So no they're not gonna get an extra 6bn of fcf.
« Last Edit: November 26, 2018, 02:25:13 PM by rb »

vince

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Re: GM - General Motors
« Reply #1633 on: November 26, 2018, 08:09:39 PM »
I doubt that they'll get 6 billion extra fcf. That would translate to 400k per employee. Doesn't seem realistic.

Edit: If you back out the 1.5 Bn of capex reduction because of this move as GM stated. Then you're left with labour cost saving of 300k per employee. So no they're not gonna get an extra 6bn of fcf.

Thanks for the reply, and I don't think so either......but is that what she is really claiming?  I find that cost saving explanations coming out of many executives are not clear in terms of cumulative vs run rate etc.  I read the release quickly but it sure sounded like that's what she was saying.

DTEJD1997

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Re: GM - General Motors
« Reply #1634 on: November 27, 2018, 09:32:36 AM »
Hey all:

It was announced the other day that GM is closing the Poletown plant here in Detroit.

I remember when that plant was planned and built in the very early 80's.

GM demanded that a section of Hamtramck be demolished for the factory.  Of all the places they could have built it, they selected one of the rare areas that was holding it's own.  So all the residents & churches & businesses had to go. 

It was just so incredibly stupid.  All the vacant and abandoned land in Detroit, and GM selects a spot where people are actually living.

The city also gave MASSIVE tax incentives to get the plant built.  The factory never produced the number of jobs or vehicles initially projected.

The other crazy thing is that the factory is one of GM's newer factories?

What a waste!

LowIQinvestor

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Re: GM - General Motors
« Reply #1635 on: November 27, 2018, 12:34:05 PM »
Sounds like a Tesla move!

What Trump is proposing in terms of eliminating GM EV subsidies is not going to happen. Is it even legal?

Given the recent announcement of an increase in annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis
it looks like GM could do $10B in FCF in 2020.

GM is cheap here:
6 PE

Highly recommend buying today

ander

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Re: GM - General Motors
« Reply #1636 on: November 27, 2018, 04:13:19 PM »
The EV subsidies are open to any auto manufacturer. Close to impossible he can target GM only - much more likely he’s just tweeting without substance and knowledge. Maybe he could exclude GM from future government purchases but I’d imagine that wouldn’t work.

Gregmal

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Re: GM - General Motors
« Reply #1637 on: November 28, 2018, 08:39:29 AM »
While generally speaking, I applaud this move by Barra, once again you can't help but wonder why they are so tone deaf to things that do have an impact on their shareholders. Would these layoffs not have been better perceived if they were spread out? You had to have imagined Trump would now put GM in his cross hairs. Collateral damage will now also be that any future capital allocation move, such as a dividend increase or buyback will be a huge PR disaster...

This is a classic Barra move. Short term stupid, long term, justifiable. Unfortunately the long term never really gets realized because of all the short term noise.

Spekulatius

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Re: GM - General Motors
« Reply #1638 on: November 28, 2018, 09:07:53 AM »
^ Trump is just making Noise. There is nothing he can do about it and Barra knows this. Slow restructurings are ugly too and more expensive. Its now the time to do it when the economy is strong and jobs are plentiful.
To be a realist, one has to believe in miracles.

Gregmal

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Re: GM - General Motors
« Reply #1639 on: November 28, 2018, 09:13:34 AM »
^ Trump is just making Noise. There is nothing he can do about it and Barra knows this. Slow restructurings are ugly too and more expensive. Its now the time to do it when the economy is strong and jobs are plentiful.

I do agree, and that is why overall I am favorable to this move, but please, you can't tell me that this company is not now handcuffed, at least temporarily. Can you imagine the headlines if they raise the dividend or do a buyback?