General Motors’ shares have taken a hit this week with the catalyst for the latest downturn being news out of China. Continued weakness in China (including weakening car sales) has led the country to devalue its currency in an attempt to bolster its economy at the expense of its trading partners. This latest news confirms my views that GM’s China gamble puts the company and its shareholders at increased risk. The horrible performance of GM’s stock over the past few months also brings into question the rationale for the much-hyped share buyback that was instigated by ex-Obama Auto Task Force member, Harry Wilson, in photo.
Mr. Wilson was one of the primary architects of the auto bailouts which gave about $30 billion of American taxpayer money (along with approximately $10 billion from Canada) to GM to guide them through their Obama-orchestrated bankruptcy process in 2009. Less than six years later, Wilson … Read More ➡
General Motors recently announced that it will spend $5 billion on a joint venture with Chinese state-owned SAIC Motor to develop vehicles for emerging markets. The announcement came around the same time that GM reported results for 2015 second quarter earnings, which showed cash and cash equivalents decreasing $2.2 billion in the first six months of the year. Marketable securities also declined by $2 billion during that time frame.
The decision by GM to spend another $5 billion of its diminishing so-called “cash hoard” on Chinese ventures is a risky move (particularly given China’s shaky markets recently) reeking of desperation by a management team that can’t seem to maintain the company’s share price above the 2010 IPO price of $33. GM stock has been hovering around the $31 range, which reflects a drop in value of approximately 6% during a roughly five year period when the broader S&P 500 index … Read More ➡
The planet is in a nearly two-decade global warming standstill; an Arctic research expedition to study warm was halted due to too much ice; polar bear habitat is healthy; another quiet hurricane season is expected; and a paper on sea level rise by climate alarmism founder Dr. James Hansen has been dismissed by his fear-mongering colleagues as “flimsy.”
Nonetheless the corporate world has loyally marched to the White House doorstep to pledge fealty to President Obama’s carbon dioxide reduction agenda. On Monday 13 large companies announced they would collectively spend $140 billion on various initiatives to reduce carbon dioxide emissions and expand so-called “clean” energy. The collective action has been dubbed the “American Business Act on Climate Pledge” by the White House, and is intended to enhance the president’s negotiating position at international climate talks in Paris at the end of the year.
“Rising … Read More ➡
It appears – two years after Boeing had fire incidents from installed lithium ion batteries that shut down deliveries of its vaunted Dreamliner 787 – that its “solution” to “vent” heat and flames outside the aircrafts has prevented any catastrophes, so far.
But it hasn’t alleviated concerns about the batteries’ physics and makeup. Last week Boeing issued a warning to its airline customers to not carry bulk shipments of lithium-ions because if they catch fire or overheat, they’re unstoppable. A spokesman told the Associated Press that the manufacturer has advised airlines not to transport the batteries “until safer methods of packaging and transport are established and implemented.” Likewise, the FAA simultaneously stated that its research has found that carriage of lithium ion batteries “presents a risk.”
The alert was industry-wide. At a safety forum held last week in Washington by the Air Line Pilots Association, Boeing’s fire protection system specialist … Read More ➡
It would appear that the insiders at General Motors do not have as rosy a view on the financial outlook for the company as they would have the rest of the public believe. The well-paid executives at GM sold out of another $2.8 million worth of shares in June according to Yahoo Financial statistics. Of course, the sales of shares are pure profits for the higher-ups at GM, considering that the elite group of executives receive millions of dollars’ worth of GM shares for free through stock options.
Heavy insider selling has been ongoing at GM since I wrote about a SIGTARP report in September of 2014 that unveiled excessive pay at GM. The report found that the top nine executives at GM saw income rise from $32,307,500 to $35,335,000 in 2013.
During the 12 month period from March of 2013 to March of 2014 eight GM executives sold … Read More ➡
It’s been six years since electric vehicle manufacturers enjoyed their windfall from U.S. taxpayers via the stimulus, but the thirst for subsidies, and pain from financial losses, have not waned.
The pursuit of government goodies continues apace for Tesla Motors, even more vigorously after the Los Angeles Times reported last month that CEO Elon Musk depends on more than $4.9 billion in corporate welfare for his companies, which also include SolarCity and SpaceX.
Tesla’s quest may more accurately be portrayed as preservation of the golden goose that is California’s zero-emission vehicle (ZEV) credit scheme. The Golden State requires the six largest auto manufacturers to produce a certain percentage of vehicles that are “green” – in other words, electric – or to purchase zero-emission “credits” from companies that do, such as Tesla. According to the Christian Science Monitor, Tesla is the largest seller of ZEV credits, … Read More ➡
General Motors seems intent on becoming the global leader in producing money-losing vehicles that attempt to compete with Tesla. The latest so-called Tesla Killer from GM is the Chevy Bolt and the hype is beginning with media articles such as With Jab at Tesla, GM Amps Up Chevy Bolt Promotion, Testing. GM shareholders need this latest sequel to the Tesla Killer series as much as movie aficionados need another sequel of Police Academy.
OK, I’m sure there are many fans of the b-rated Police Academy series, just as there are fans of the previous GM versions of Tesla Killers. The difference is, b-rated movies are produced with low budgets; not so with GM Tesla Killers. GM (and taxpayers) have spent billions of dollars to produce the initial series of much-hyped electric vehicles which were never a hit with mainstream consumers. That growing list of vehicles includes the Chevy Volt … Read More ➡
Earlier this month, the Wall Street Journal reported that the United Auto Workers union (UAW) was drawing up contingency plans to strike if upcoming negotiations with General Motors, Ford and Fiat Chrysler Automobiles do not satisfy UAW officials. The UAW is leveraging the good timing of the negotiations, which are occurring at the same time as the auto industry’s cyclical top.
Will history repeat itself with GM eventually driven to a second bankruptcy if the UAW is successful in raising labor costs at the automaker? The stage seems to be set for the UAW to further put unionized automakers at a disadvantage to automakers with lower labor costs in a very competitive industry. The current US hourly labor cost at GM is already one of the highest in the industry at $58 per hour. That compares to the US wages at Toyota and Volkswagen of $48 and $38 per hour, … Read More ➡
The monument to former Duke Energy CEO Jim Rogers’s boondogglery – a “clean coal and carbon capture” power plant in Edwardsport, Ind. – has become the rate-busting gift that keeps on giving.
Over the weekend the Indianapolis Star reported that the facility that Duke Energy’s Indiana president called “state-of-the-art” continues to have premature breakdown and decay problems. Repair costs are likely to be passed on to customers, who have already seen their electric bills increase by up to 16 percent because of construction estimate overruns.
“Cracking welds. Eroding pipes. Frozen transmitters. Slag building up. Coal slurry spilling on floors,” the Star reported, citing disclosures to the Indiana Utility Regulatory Commission. “And all that was just in December.”
The plant has been operating for two years and was promoted as one of the “world’s cleanest” with the ability to deliver dependable, low-cost electricity. According to Power … Read More ➡
The Wall Street Journal recently reported that Fiat Chrysler Automobiles CEO, Sergio Marchionne, has been pressing for a merger with General Motors. Marchionne has been appealing to hedge funds and activist investors in a move that seems to verge on desperation. The main takeaways from the appeal are that the government bailouts of GM and Chrysler were not a long-term fix for the industry and that Mr. Marchionne is one of the few experts on the industry who is honest enough to admit it.
Marchionne has had a history of speaking his mind on topics that are not politically palatable to other auto industry executives, such as GM CEO Mary Barra. In 2014 Marchionne asked consumers not to purchase Fiat’s entry into the money-losing electric car segment, the Fiat 500e. Unlike Barra and GM, who refuse to admit to the struggles of electric cars like the Cadillac ELR and Chevy … Read More ➡