Canadian auto aid, a drop in the bucket

Douglas McIntyre — Sun, 21 Dec 2008 11:10:00 EST

Filed under: Industry, General Motors (GM), Canada

The Canadians are going to supply Chrysler and General Motors (NYSE: GM) with a little over $3 billion in loans to help them through financial trouble that could put both companies into bankruptcy. The nation faces the same issue as America. If the car companies go bust,, tens of thousands of people will lose their jobs early next year. That would be a huge strain of the Canada tax base and the cost of its social services for the unemployed.

The money being offered to the two American cars companies is barely enough to last them for a couple of weeks based on the rate at which they are burning cash, so decisions by the U.S. Congress and the Obama administration will still be the sole determinant of what happens to the big firms.

According to Reuters, "General Motors of Canada Ltd is eligible for loans of up to $C3 billion and Chrysler Canada Inc for up to C$1 billion." The U.S. aid package is $17.4 billion, so capital coming from north of the border is barely a drop in the bucket.

The Canadians better start lobbying Washington and lobbying successfully. Otherwise their auto industry will go down with the one in the U.S.

Douglas A. McIntyre is an editor at 247wallst.com.

Canadian auto aid, a drop in the bucket originally appeared on BloggingStocks on Sun, 21 Dec 2008 11:10:00 EST. Please see our terms for use of feeds.

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General Motors may find its buyout offer is too popular

Jonathan Berr — Tue, 12 Feb 2008 15:00:00 EST

Filed under: Earnings Reports, Competitive Strategy, Ford Motor (F), General Motors (GM), Employees

General Motors Corp. (NYSE: GM), which today reported an auto industry record loss of $38.7 billion in 2007, is offering its unionized workforce of 74,000 a buyout package. The automaker, along with rivals Ford Motor Co. (NYSE: F) and Chrysler LLC which have offered similar deals, better hope that too many workers don't take it up on its offer.

There is going to be a steep learning curve for even the brightest of newly hired GM employees who under a new UAW contract receive half of the old wage of $28 per hour. Moreover, the last thing that Chief Executive Rick Wagoner wants is for GM's assembly lines to be staffed by inexperienced or overworked employees. The results of that could be disastrous.

Many workers, though, are going to take GM's offer and who can blame them. Workers with 10 or more years service can opt for a one-time payment of $140,000 to leave the company and those with less service could take a $70,000 pay out. These employees may be able to squeeze even more money out of the automaker in the coming months by being hired back as consultants at wages that are much higher than they are getting now.

But I doubt that GM and the rest of the U.S. auto industry can grow its business through cutting costs alone. At a time when global competition is becoming brutal, The Big 3 can't afford to lose too many workers who know how to build cars that people want at prices they can afford.

General Motors may find its buyout offer is too popular originally appeared on BloggingStocks on Tue, 12 Feb 2008 15:00:00 EST. Please see our terms for use of feeds.

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