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.
It appears that General Motors is trying to remedy one of the latest criticisms against them. That criticism is that the company has way too large a “cash hoard” and most recently came from former Obama Auto Task Force member turned shareholder activist, Harry Wilson. Well Harry, be at ease; GM has managed to reduce that so-called hoard by over $3 billion in just three months as first quarter earnings flopped on Wall Street.
The death toll for General Motors' faulty ignition switch victims continues to rise with the last reported number being 42. There has been speculation that the death count is significantly higher, as safety advocate Clarence Ditlow has written to GM to request an expansion of efforts to uncover victims of accidents resulting from defective GM vehicles.
General Motors' CEO, Mary Barra, testified this week at government hearings on the deadly recall delay that contributed to at least 13 deaths of motorists driving GM vehicles with defective ignition switches. During that testimony Ms. Barra discussed one of GM's ridiculous early "solutions" for problems with ignitions turning to the off position as vehicles were being driven. GM engineers designed an insert to be placed in the keys' holes in an attempt to limit how much key chains dangled. This "fix" saved the company a few dollars in labor costs that would have been charged if they recalled the vehicles to replace the defective ignitions.
Merriam-Webster.com defines compassion as, "a feeling of wanting to help someone who is sick, hungry, in trouble, etc." A Google search teaming the name Mary Barra with "compassionate" pulls up a host of articles fawning over General Motors' new CEO's handling of the company's botched recalls which seem to have cost at least 12 American lives. Contrary to the media's belief that GM is a compassionate entity working in the best interests of accident victims, the facts show that the response to defects in GM vehicles and subsequent recall delays has been anything BUT compassionate.
It appears that General Motors and the National Highway Traffic Safety Administration (NHTSA) have still not done everything they can to assure the safety of American motorists regarding GM vehicles that have a history of dangerous defects.
The latest defect that I have uncovered relates to a loss of power steering in Saturn Ions for the model years 2004 to 2007. The same vehicles were recalled for a separate, unrelated ignition switch problem, along with the Chevrolet Cobalt and the Pontiac G5. The delay in the ignition switch recall has been blamed for the deaths of at least 12 Americans. Unfortunately, GM is equally slow in addressing the steering loss problem.
General Motors announced disappointing earnings results today and issued a warning that first quarter results will underwhelm as well. The reasons behind the earnings' miss are surely going to be explained away by pundits and proponents of the company still known as Government Motors to many. Sorting through the smoke and mirrors can lead to some important and simple explanations as to what is going on at GM.
General Motors is now approaching its fifth year of existence since emerging as a new entity as a result of the 2009 auto bailouts which saw taxpayers fund a bankruptcy process to the tune of $50 billion. Much has been debated about the "success" of GM since the controversial government-orchestrated restructuring. While GM management recently announced a dividend in an attempt to ensure investors of financial stability, a more telling indicator of the likelihood of future profitability may be found through an analysis of how competitive the company's vehicles are.
The internet was ablaze Tuesday evening with stories presenting a perceived positive move by General Motors' outgoing government-appointed management. All hail! "General Motors to pay first dividend since 2008," trumpeted the headlines. GM shares immediately spiked up in after-hours trading with shares rising about $1.60 or 4% on the news. Unfortunately for those duped by the proclamation, GM followed the story hours later with a profit warning. For the time being, the bad news outweighed the good with GM shares reversing course and ending the day Wednesday with a loss of over one and a half percent on a day that the market rallied.
One of the major architects of the General Motors bankruptcy process, Harry Wilson, recently gave a very optimistic outlook for GM future share price. Mr. Wilson was a member of President Obama's Auto Task Force, and was an instrumental player in seeing that UAW interests were put ahead of other creditors, like old GM bondholders.