For Detroit automaker General Motors (NYSE: GM) the tough times are being felt outside of the United States as sales declines in Europe are forcing the troubled manufacturer to suspend production at some European factories.As the financial crisis that is being felt in America continues to spread, demand for autos outside of the country are also feeling the pressure, and in August, sales in Europe fell by 16%. As a result, General Motors has decided that it needs to reduce its 2008 production by about 40,000 vehicles by the end of the year.
To accomplish this production shift, the company is going to be shutting down several factories for a few weeks. Starting next week, GM's factory in Eisenach, Germany, where the company produces its Opel brand, is going to start a three-week shut down period. This news comes as another of the company's factories, one in Bochum, Germany is completing a current two-week shut down period to help reduce the company's inventories. Other temporary shut downs are taking place in England and Spain.
While the production halts are probably in the best interest of the company, its labor parties are not too happy with the decision, to say the least. Labor representatives voiced their disappointment that they were not consulted before the decision was reached.
Making his feelings known, the head of the division's works council, Klaus Franz, stated that if the two sides could not come together and reach some sort of agreement, that he would be forced to take matters into his own hands and try to get a court order to put a stop to the production halts.
Times are definitely tough for General Motors, which has been struggling to stay competitive as consumers have moved away from heavy gasoline guzzlers and into fuel efficient cars. Another move that the company is considering in order to bring a much need cash infusion is the sale of its headquarters in Detroit.
GM stated, though, that it has every intention of staying in the building. It had been leasing the building since 1999, and recently purchased the property earlier this year.
GM stock has been taking a beating lately, hitting another new 52-week low today, trading as low as $8.06. Currently, the stock is sitting at that low price.
What is it going to take to bring back the glory days for General Motors? Your guess is as good as mine!
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
Will Rich Ross really have a positive impact on Disney's movie operations?
Consumers sick of recession, may spend extra on holidays
Corrections, seasonality and Santa Claus
Reader Comments (Page 1 of 1)
10-07-2008 @ 1:01PM
Bruno Unger said...
Mastercard is over priced. PE of 60, 5 times sales, dividend of 0.4%. Too rich for me.
Bruno Unger, in Kansas
10-07-2008 @ 1:13PM
Ed Doan said...
I'm not sure about the variation in the rules corporations must follow in other countries, but I found it curious that labor in Germany seems to think they can go to court and force GM to not lower production numbers. It might actually be legal to force them into that position in Germany, but that neither makes it right, nor sensible. It does seem that labor on both sides of the Atlantic have similar self-imposed problems.
At one time in history, labor got abused and the unionization of labor was born. It was necessary at the time, and the fault of bussiness that allowed/forced it to happen. The unionization has flipped the problem around today. Business now pays too much for too little. It is extremely obvious in the auto industry. If people's pay and benefits were truely comenserate to their contribution, auto sales would be in less trouble. I can imagine the resume of a laid off worker. "I tighten 12 bolts on transmission supports. Previously, I installed the right front seat with four bolts before my paid leave for carpel tunnel syndrome. Minimum salary required, $28 and hour" I'm probably low on salary requirment.
Maybe the economic crisis will finally pay ceos AND union labor what they are really worth. I'm sure this comment won't sit well with the unionized sector, but they really shouldn't be upset at someone pointing out the obvious.
10-07-2008 @ 1:13PM
M Morris said...
Good for GM. They have too many factories in Euroland as it is and they should just shut half of them down. My view for a long time now has been that GM and Ford need to recalibrate their business into a more streamlined entity which concentrates on its home market which is huge all by itself. Time to start beating the Japanese and german car makers in GM/Fords own backyard. Only once they can show they have regained their compeitive streak should they look at foreign markets.
10-07-2008 @ 1:18PM
M Morris said...
Ed,
I agree 100%. The unions and stupid CEOs have ruined the US car industry single-handedly. One good thing about the upcoming recession is that the gravy train days are over for both non-performing CEOs and non-performing fatcat unions.
Personally i think unions should be outlawed and instead there should be solid federal or state employment laws which apply to everyone equally. I'm not advocating exploiting a workforce but while there was once a good reason for unions to exist i really dont see the case for it today in a Western democratic nation with the rule of law.
10-07-2008 @ 1:41PM
jackie said...
This is exactly why I hate labor unions. Yes, the workers need to be protected, but the company cannot make decisions that may keep the company afloat without a threat of a lawsuit from the union leaders. The entire company could go under, which would be 100 times more catastrophic for workers worldwide, but because a few hundred have to pout... Don't the union leaders understand that it's their bloated benefits that are driving the company into the ground? Even as the company weathers the hard times, it still has the obligation to pay pensions, health care, etc. to a generation of yesterday, who have been retired for longer than they worked for the company. CEO salaries clearly don't help either. This whole system digusts me. Unions and CEO pay are killing businesses. I HATE UNIONS.
10-07-2008 @ 9:39PM
Andrew said...
I think your anti union comments smack of being anti American. Workers don't run the company. The decisions that have pounded GM into ground our on the shoulders of R.Wagoner/and several before him. Unionized workers are workers no different than the TOYOTA workers whom by the way are at wage parody with GM. Go smoke a frozen rope you anti American chunks of shit!
10-08-2008 @ 12:23AM
bishopthirteen said...
I remember when they opened the Eisenach plant, there was a video walk through and it really is an amazing factory. This is the second time GM has stopped production there which I am aware of. What ever your nationality or labor right beliefs ya gotta admit that forced unpaid leave sucks. http://media.gm.com/intl/opel/en/photos/f_production/index.html#
10-30-2008 @ 10:16AM
bob joes said...
If you ever worked on an assembly line you would know why unions are a necessary evil.
12-02-2008 @ 9:50PM
auggie said...
Hmm how about this we close some plants outside the U S. We make engines.transmissions. parts. cars here in the U S and export them to other country's for A change!! American workers have jobs they buy more cars and they pay taxes,and spend more money here in America. sounds pretty simple to me just dont try to tell that to an auto executive or A politician to simple it could never work