GM Reports Record Loss, Offers Round of Buyouts
The Detroit-based automaker reported a $38.7 billion loss for 2007 on Tuesday, the largest annual loss ever for an automotive company.
During a conference call with analysts and media, Chief Financial Officer Fritz Henderson said 2008 will be difficult, but the company sees the potential for earnings increases by 2010 or 2011 once it reduces its work force and transfers its retiree health-care costs to a new UAW-run trust.
“We have a substantial amount we can do in terms of transformation of the work force,” Henderson said.
Henderson said GM’s offer is “reasonably attractive,” and the company raised the amount it was offering to match Ford and Chrysler.
UAW President Ron Gettelfinger said he believed the number of buyouts would be fewer than 20,000 and added that GM’s buyout offer was expected as the union and company struck a labor contract last year.
“We didn’t go into the contract blind. We’re proud of our membership. There are certain things we cannot control,” Gettelfinger told a Detroit radio station this morning, according to the Associated Press.
GM was profitable in nearly every region outside North America. GM’s Latin America, Middle East and Africa division reported record-high earnings, while GM’s Asia Pacific division rose and GM Europe fell.
GM’s annual loss of $38.7 billion largely was largely attributed to a third-quarter charge related to unused tax credits. The 2007 loss topped GM’s previous record in 1992, when the company lost $23.4 billion because of a change in health care accounting, according to Standard & Poor’s Compustat.
Excluding the tax charge and other special items, GM lost $23 million, or 40 cents per share, for the year, the AP reported.
GM Chairman and Chief Executive Rick Wagoner said that the company made significant progress in 2007, reducing structural costs in North America, negotiating a historic labor agreement and growing aggressively in Latin America and Asia.
“We’re pleased with the positive improvement trend in our automotive results, especially given the challenging conditions in important markets like the U.S. and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow,” Wagoner said in a statement.
GM, which for more than 80 years was the world’s largest automaker, is now essentially tied with Toyota Motor Corp. for that title. In 2007, GM sold just 3,000 more vehicles than Toyota. In total, GM sold 9,369,524 vehicles worldwide, up 3 percent from 2006.