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Delphi independent directors to be paid in cash
CHICAGO, Dec 9 (Reuters) - Bankrupt auto parts maker Delphi
Corp. said on Friday that payments to nonemployee
directors will be in cash instead of company stock starting with
the next quarterly payment due at the end of 2005.
Delphi said its board compensation committee on Tuesday
canceled provisions requiring nonemployee directors to defer part
of their compensation into company stock, and hold a minimum
amount, to be distributed when they left the board.
The committee made the decision after considering the
bankruptcy filing in October, the delisting of its stock by the
New York Stock Exchange and the need to recruit and retain
directors for the restructuring, Delphi said.
The lead nonemployee director, John Opie, has volunteered to
cut his annual pay to $200,000 from $300,000 effective Jan. 1,
while the compensation for other nonemployee directors remains
unchanged, Delphi said.
Nonemployee directors receive $140,000 per year, while the
compensation committee chair receives $150,000, the audit
committee chair receives $155,000 and the corporate governance
committee chair receives $150,000.
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UAW says no real talks between union, Delphi
CHICAGO, Dec 9 (Reuters) - The United Auto Workers and
bankrupt auto parts maker Delphi Corp. have had no
formal negotiations since the company submitted a modified wage
and benefit cutting plan to the UAW in mid November, a union
spokesman said on Friday.
UAW President Ron Gettelfinger told reporters at a
breakfast in Detroit there are no discussions and Delphi must
withdraw its current proposal and a plan to offer bonuses to
executives to restart talks, spokesman Paul Krell said.
Vice President Richard Shoemaker, a top UAW negotiator,
also reiterated that, under the current circumstances, a strike
appears more likely than not, Krell said.
Delphi spokesman Lindsey Williams said Delphi continues to
focus on reaching agreements with its unions.
The modified proposal is representative of what other large
auto parts makers pay U.S. hourly workers, many of whom are
represented by the same unions, Williams said. It provides a
structure Delphi must have to bid on and win new business, he
said.
A strike could quickly disrupt U.S. operations at Delphi,
the largest U.S. auto parts maker, and within days cripple
production at General Motors Corp. , the company's
largest customer and former parent.
Delphi failed to reach accords with its unions before it
filed the biggest bankruptcy in U.S. automotive history in
October. It has said it must slash wages and benefits of its
U.S. hourly workers and cut some manufacturing operations, to
reorganize in the United States.
Initial proposals in October would have slashed wages to
about $9 or $10 per hour from $27 and make steep cuts in
benefits. The November proposal would cut wages to an average
of about $12.50 per hour.
But the UAW has called the second proposal "a road map for
confrontation." The unions that represent nearly all of
Delphi's 34,750 hourly workers in the United States have formed
a coalition to oppose the cuts.
Delphi has said it will begin the bankruptcy court process
of rejecting the current labor contracts in January if it
cannot reach agreements with its unions by then.
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UPDATE 1-Ross sees auto parts M&A, safety parts sales rising
(Adds Ross comments, detail)
By Joseph A. Giannone
NEW YORK, Dec 7 (Reuters) - Wilbur Ross, a billionaire
investor who plans to snap up distressed auto parts businesses,
on Wednesday told Reuters he sees growing demand for automobile
safety components and increasing pressure on parts suppliers to
consolidate as struggling U.S. auto makers streamline.
Ross, the chairman of private-equity investment firm WL
Ross & Co., earlier this year formed International Auto
Components Group with a $4.5 billion war chest. Over the next
few years, he plans to build three multibillion-dollar parts
supliers focused on safety devices, plastic interiors and metal
parts, picking from the wreckage of a $500 billion industry.
Much of the auto parts industry's woes stem from declining
sales by U.S. carmakers General Motors Corp. and Ford
Motor Co. , which have announced plans to slash tens of
thousands of jobs and shut down factories.
But rather than hurting his efforts, Ross said the
automakers' efforts will help his own acquisition plans.
"We think consolidation is an important part of our
strategy, so to that degree (the auto industry's restructuring)
helps us," Ross said in a brief phone interview.
That's because automakers are expected to concentrate their
purchases from a smaller number of big suppliers to help
streamline costs. Industry analysts have projected that the
roughly 10,000 auto supplies firms in business five years ago
would be winnowed to half that number by 2010.
Declining U.S. automaker sales, rising material costs and
soaring benefits expenses for employees and retirees have
pushed many auto parts companies into bankruptcy -- the ideal
environment for the deep-value investments Ross likes to make.
Ross in the past snapped up assets on the cheap from
distressed textiles companies and steel makers. He strips out
costs and then resells the companies at huge gains when market
conditions improve.
Most recently, Ross parlayed investments in coal mining
companies into International Coal Group Inc. , which
sports a market value of $1.7 billion.
AUTO PARTS
Now Ross wants to create two parts suppliers, each with
about $15 billion in sales, focused on auto plastics and metal
parts.
Ross will build his metal parts efforts starting with the
European assets of Oxford Automotive, a recently liquidated
Troy, Michigan, company.
And in the plastics business, Ross created a joint venture
with Lear Corp. and the Franklin Mutual Advisers LLC
affiliate of giant mutual fund operator Franklin Resources Inc.
to acquire auto plastic businesses.
Ross recently acquired the European operations of Collins &
Aikman Corp. , which filed for bankruptcy in May.
Eventually Ross, who bought up about half of Collins & Aikman's
bank debt, is expected to bid on the company's North American
operations as well.
The October bankruptcy filing of Delphi Corp. ,
the largest auto parts company, will also make a number of
businesses available for sale.
Ross, 58, said he also plans to create a third, smaller
company focused on automobile safety parts.
Last week he completed the acquisition of Zapata Corp.'s
77 percent stake in Safety Components International
Inc. . Greenville, South Carolina-based Safety
Components is a specialized producer of fabrics and cushions
for air bags.
"We think the safety sector of automotive industry is a
very exciting one," Ross said. "There are other airbag
components companies we could combine with the company, to give
it a little bit more scale."
Airbag demand, he added, will be on the rise as more U.S.
and foreign vehicles feature passenger side and side-impact
bags to increase safety. Likewise, cars in some developing
countries have just one driver airbag or none and will begin to
install them.
"Most American cars have two bags, and we think there will
be a trend toward four, as side panels are added," doubling
consumption, Ross said. "We're very excited about the airbag
space. We think safety, in general will be a differentiating
point in automobiles as we go forward."
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Delphi strike more likely than not-UAW official
CHICAGO, Dec 7 (Reuters) - A top United Auto Workers
official has told union leaders a strike is more likely than
not as U.S. hourly workers oppose steep wage and benefit cuts
proposed by bankrupt auto parts maker Delphi Corp. ,
a UAW spokesman said on Wednesday.
UAW Vice President Richard Shoemaker told UAW leadership at
an annual conference in Detroit on Tuesday: "While we prefer to
reach a negotiated solution, under the current circumstances a
strike appeared more likely than not. That could change and we
hope it does," according to UAW spokesman Paul Krell.
Delphi spokesman Lindsey Williams said the company remains
focused on reaching agreements with all of its unions.
Delphi in October filed for the biggest bankruptcy in U.S.
automotive history and said it needed to slash U.S. hourly
wages and benefits and reduce its manufacturing operations to
reorganize its struggling operations.
The company proposal includes reducing wages to about
$12.50 per hour from $27 per hour and other cuts. Delphi also
proposes to offer executives bonuses to see through the
reorganization.
UAW leaders have called the executive compensation proposal
"disgusting" given the demand for cuts from hourly workers and
last week said withdrawing its latest contract proposal would
be a good place for Delphi to start if it is serious about
negotiating with its unions.
Shoemaker previously said Delphi was proposing cutting its
U.S. hourly workforce to about one-third of its current 34,750
workers. Delphi has said a strike would only increase the
number of U.S. factories that would have to close.
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GM Names Europe Head Henderson As CFO
DETROIT, Dec 07, 2005 (AP Online via COMTEX) -- General Motors Corp., which has announced huge losses this year amid increasing health care costs and falling U.S. market share, has named a longtime executive who has been overseeing a restructuring of its European operations as its new chief financial officer.
The world's biggest automaker announced late Tuesday that Frederick "Fritz" Henderson, 47, will succeed John Devine as CFO on Jan. 1 and also become a vice chairman. Henderson is currently chairman of GM Europe and was president of GM Asia Pacific from 2002 to 2004 and president of GM Latin America, Africa and the Mideast from 2000 to 2002.
Devine, 61, joined GM in 2000 after retiring from Ford Motor Co. Devine has agreed to remain as a vice chairman beyond his five-year contract, which expires this month, GM said. Devine will assist Henderson for four months and then advise GM Chairman and CEO Rick Wagoner on GM's North American turnaround plan.
GM's board approved the moves during a meeting Tuesday in Detroit, the company said in a statement.
GM lost more than $3 billion in the first nine months of this year and recently announced a plan to cut 30,000 jobs and close 12 facilities by 2008.
GM spokesman Tom Kowaleski said the management change wasn't related to a series of financial problems at the automaker. GM said last month that it would restate earnings for 2001 because an accounting error led it to overstate profits by up to $400 million. The Detroit-based automaker said an accounting review revealed it erroneously booked supplier credits in the year they were received rather than to future periods.
The U.S. Securities and Exchange Commission also has been investigating accounting practices at the company.
Wagoner praised Devine's work and said Henderson is the right person to replace him.
"GM is fortunate to have a management team with deep bench strength," Wagoner said in a news release.
Henderson has a master's in business administration from Harvard University and a degree in finance from the University of Michigan. He began his career in the GM treasurer's office in 1984. He has held various management positions at GM's finance arm, GMAC, and GM's former parts unit, which is now Delphi Corp. Delphi filed for bankruptcy protection in October, and GM could be forced to assume some of the company's liabilities for retirees.
Henderson will be replaced in Europe by Carl-Peter Forster as GM group vice president and president of GM Europe.
GM also announced that Guy Briggs, GM's group vice president of North American manufacturing and labor relations, is retiring. Tim Lee, 53, currently vice president of manufacturing in Europe, will replace Briggs, 67, as North American vice president of manufacturing on Jan. 1, but Briggs will stay on through April 1 to aid the transition.
GM named Diana Tremblay, 46, vice president of labor relations for GM in advance of difficult contract talks with the United Auto Workers in 2007. Tremblay is replacing John Buttermore, 54, who has been named vice president of powertrain and manufacturing operations. GM said Buttermore and Tremblay were key negotiators in GM's recent agreement with the UAW to make workers and retirees pay more for their health care.
GM shares closed Tuesday down 26 cents, or 1.2 percent, at $22.39 on the New York Stock Exchange. GM announced the management changes after the market closed. Its shares were up a penny at $22.40 in premarket trading on Wednesday.
---
On the Net:
General Motors Corp.: http://www.gm.com
By DEE-ANN DURBIN AP Auto Writer
Copyright 2005 Associated Press, All rights reserved
**********************************************************************
As of Saturday, 12-03-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 08-08-2005 for F @ $10.42.
As of Saturday, 12-03-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-08-2005 for GM @ $26.35.
As of Saturday, 12-03-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-10-2005 for RGM @ $15.44.
(C) 2005 Comtex News Network, Inc. All rights reserved.
-0-
APO Priority=r APO Category=1310 (PROFILE (CO:General Motors Corp; TS:GM; IG:3300;) (CO:Ford Motor Co; TS:F; IG:3300;) (CO:Delphi Corp.; TS:DPHIQ; IG:0000;) (COUNTRY:United States; ISOCOUNTRY3:USA; UNTOP:021; APGROUP:NorthAmerica;) )
KEYWORD: DETROIT
SUBJECT CODE: 1310
AP Photo NY111
Amcast Again Files for Chapter 11
WASHINGTON, Dec 05, 2005 (AP Online via COMTEX) -- Auto-parts maker Amcast Industrial Corp., which emerged from bankruptcy four months ago, has filed for Chapter 11 bankruptcy again, according to court papers.
It's the latest in a series of auto-supplier bankruptcies that have plagued the struggling U.S. automotive industry.
Amcast, a privately held company based in Fremont, Ind., listed assets of $81.6 million and debts of $80.2 million, according to court papers filed Thursday in U.S. Bankruptcy Court in Indianapolis.
The filing was prompted by loss of business from General Motors Corp., which accounts for about 80 percent of the company's revenue, court papers said. Amcast made wheels for the Chevrolet Corvette.
It said its previous reorganization plan was thwarted after GM balked at renegotiating Amcast's contracts and opted not to renew its business with the firm.
Amcast originally filed for Chapter 11 in November 2004 and exited court protection Aug. 3.
GM has said it will cease production at 12 facilities within the next two years and eliminate 30,000 jobs. GM's largest parts supplier, Delphi Corp., filed for Chapter 11 in October.
The downturn in the automotive industry has seen major suppliers Delphi, Collins & Aikman Corp., Meridian Automotive Systems Inc. and Tower Automotive Inc. all filing for Chapter 11 protection this year.
Copyright 2005 Associated Press, All rights reserved
**********************************************************************
As of Thursday, 12-01-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-08-2005 for GM @ $26.35.
(C) 2005 Comtex News Network, Inc. All rights reserved.
-0-
APO Priority=r APO Category=1310 (PROFILE (CO:General Motors Corp; TS:GM; IG:3300;) (CO:Delphi Corp.; TS:DPHIQ; IG:0000;) (COUNTRY:United States; ISOCOUNTRY3:USA; UNTOP:021; APGROUP:NorthAmerica;) )
KEYWORD: WASHINGTON
SUBJECT CODE: 1310
US CREDIT - GMAC widens on sale uncertainty
NEW YORK, Dec 5 (Reuters) - Credit investors on Monday grew
ever more nervous that General Motors Corp. may have
trouble selling a majority stake in its finance arm and
restoring it to investment-grade status.
The credit spreads of GM's General Motors Acceptance Corp.
continued to widen on Monday and have doubled in the last month
even as many analysts advise betting on GMAC.
Credit investors have begun to realize that GM selling a
majority stake in GMAC is going to be more complicated and take
longer to complete than previously thought, said one credit
analyst, who asked not to be named.
Analysts have previously said such a sale could fetch
between $10 billion and $15 billion for the troubled
automaker.
GM hopes a sale would lift GMAC's credit rating back to
investment grade and restore its access to lower-cost
financing.
GMAC has also widened along with GM's spreads on fears
workers at Delphi Corp. , under bankruptcy
protection, may strike and disrupt GM's supply chain, which
would be costly for the world's biggest automaker, the analyst
said.
Nonetheless, the analyst advised betting on GMAC at current
levels by selling protection because he expects GM to complete
the sale of GMAC in early 2006.
Two other credit analysts offered the same advice and made
the same prediction in research notes, published late last
week.
Five-year default protection on GMAC debt was quoted at
about 510 basis points at midday on Monday, from 475 basis
points on Friday. The spread was 257 basis points a month ago.
The credit market is building in more of a premium on GMAC
because there has been more news lately on why a deal is not
getting done, a credit investor at a Midwest firm said.
Earlier on Monday, Wells Fargo & Co. Chief
Executive Richard Kovacevich said during a conference call that
his bank has no interest in buying GMAC.
Last week, Bank of America Corp.'s chief financial
officer Alvaro de Molina said the bank had no interest in
buying GMAC.
Late on Monday, GMAC said it agreed to sell up to $20
billion in U.S. retail automotive assets to Scotia Capital, the
investment banking unit of Bank of Nova Scotia
.
The deal is either neutral to whether GMAC gets sold or a
slight negative, market participants said. GMAC's credit
spreads edged wider after the news.
"The market wants to see a sale and it isn't getting it.
This further complicates matters," said Brad Rubin, senior
credit analyst at BNP Paribas in New York City.
GMAC spokeswoman Joanne Krell said GMAC officials don't
believe the deal with Scotia Capital will hurt GM's chances of
selling a majority stake in its finance arm.
"GM is continuing discussions with potential investors,"
she said. "Today's deal shows GMAC is an innovative company
with a strong balance sheet."
((Reporting by Dean Patterson, editing by James Dalgleish;
Reuters Messaging: dean.patterson.reuters.com@reuters.net;
email: dean.patterson@reuters.com; Tel: 646 223-6121))
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nN05565468
CDV/
Delphi is a world leader in mobile electronics and transportation components and systems technology. Multi-national Delphi conducts its business operations through various subsidiaries and has headquarters in Troy, Mich., USA, Paris, Tokyo and So Paulo, Brazil. Delphi's two business sectors - Dynamics, Propulsion, Thermal & Interior Sector and Electrical, Electronics, & Safety Sector - provide comprehensive product solutions to complex customer needs. Delphi has approximately 185,000 employees and operates 164 wholly owned manufacturing sites, 41 joint ventures, 53 customer centers and sales offices and 33 technical centers in 38 countries.
UPDATE 3-Delphi to delay motion to reject labor contracts
(Adds statement from UAW, analyst's remarks, byline)
By David Bailey
CHICAGO, Nov 28 (Reuters) - Bankrupt auto parts maker
Delphi Corp. on Monday said it would delay by one
month plans to ask a judge to reject its labor contracts,
easing fears of a potential strike that could cripple major
customer General Motors Corp.
Delphi also said it would accelerate discussions with GM
over restructuring efforts after the automaker agreed to
provide interim financial support to Delphi by temporarily
giving up previously agreed-upon price reductions on auto parts
for 2006.
"These constructive actions demonstrate a willingness to
accelerate efforts to achieve consensual resolutions to the
significant challenges facing Delphi," Delphi Chief Executive
Steve Miller said in a statement.
Delphi, which in October filed the biggest bankruptcy in
U.S. automotive history, has said it must slash wages and
benefits for its U.S. hourly workers by two-thirds or more to
compete with other U.S. auto parts suppliers.
The proposals have run into heavy opposition from the
United Auto Workers, the IUE-CWA and other unions representing
workers at the Troy, Michigan-based company. Unions represent
nearly all of Delphi's roughly 34,750 U.S. hourly workers.
UAW President Ron Gettelfinger and Vice President Richard
Shoemaker said in a statement that they viewed the announcement
as a positive sign, but that more action would be needed.
"If Delphi is serious about restarting discussions, taking
that insulting proposal off the table would be a good place to
start," Gettelfinger and Shoemaker said.
The UAW, IUE-CWA and other unions formed a coalition to
oppose the proposed cuts. Delphi estimates that hourly wages,
benefits and legacy costs total about $76.46 per hour.
"It is a definite sign of progress," Fitch Ratings Managing
Director Mark Oline said. "The tone had turned pretty negative
until the announcement today ... It confirms that GM will
remain an integral part in resolving this situation."
GM, the world's largest automaker and Delphi's former
parent, accounted for about 54 percent of Delphi $28.6 billion
of revenue in 2004. A strike at Delphi could quickly cause
production-disrupting components shortages for GM.
GM confirmed it has agreed to temporarily forego previously
agreed-to 2006 price reductions on components supplied by
Delphi, while Delphi is in talks with its unions.
Delphi said it would have no further comment regarding GM's
role in the potential outcome or resolution of the issues.
The UAW, GM and Delphi failed to reach agreements on cost
cuts before Delphi filed for bankruptcy in October. Delphi had
sought wage and benefit concessions from the UAW, and financial
help from GM to avert the Chapter 11 filing.
Delphi spokeswoman Claudia Piccinin declined to provide a
dollar value for GM's actions.
On Monday, Delphi said it would defer filing motions with
the bankruptcy court to reject labor contracts and modify
retiree health care benefits until at least Jan. 20.
Delphi had previously planned to file those motions on Dec.
16 if agreements had not yet been reached and expected talks
with its unions to continue even up to a hearing on Jan. 24.
The deferral of the filing date does not necessarily affect
the timing of benefits to Delphi from reducing wage and benefit
costs by agreement or through the courts, Piccinin said.
(Additional reporting by Poornima Gupta and Jui Chakravorty in
Detroit)
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Nice work on this Board, but take it from me, I used to do the same thing...it get's pretty lonely out there with that bottle.
This link should take you right to the filing:
http://www.pinksheets.com/quote/print_filings.jsp?url=%2Fredirect.asp%3Ffilename%3D0000950124%252D05...
lol,,, I talk and drink by myself all the time.
Hello trade, don't you ever get tired of talking to yourself. LOL
GM CLOSES PLANTS.
8:45am 11/21/05
GM to eliminate 30,000 manufacturing jobs in next 3 years (GM) By Michael Baron
NEW YORK (MarketWatch) -- General Motors (GM) Monday said it now plans to eliminate 30,000 manufacturing positions from 2005 through 2008 as part of an effort to reduce its assembly capacity in North America. It expects the staff reduction to come mostly through attrition and early retirees. The figure represents an increase of 5,000 jobs from its previous plan to cut 25,000 positions in the three-year period. The company expects to reduce capacity by an additional 1 million units by the end of 2008, bringing its target down to 4.2 million units, a level that would represent a 30% decrease from 2002 levels. The Dow component expects to record a "significant" restructuring charge in relation to this effort. GM lifted its target for structural cost reductions to $6 billion by the end of 2006 from a previously indicated level of $5 billion. It also is targeting an additional $1 billion in net material cost savings.
GM prepares to wield job ax but analysts skeptical
By Jui Chakravorty
DETROIT, Nov 18 (Reuters) - As General Motors Corp.
prepares to announce much-awaited job cuts and U.S. assembly
plant closings, analysts wonder if the cuts will be aggressive
enough to convince people of a possible turnaround at the
ailing auto giant.
The world's largest automaker, which has lost nearly $4
billion this year, has said it will provide details by the end
of 2005 about its previously announced plan to cut at least
25,000 manufacturing jobs as part of a broader restructuring
plan.
"Announcing the plan alone will not be enough," Standard &
Poor's equity analyst Efraim Levy said on Friday. "If the plan
is not concrete, not enough, or not realizable, Wall Street
could take it negatively."
Chief Executive Richard Wagoner has committed to a series
of plant closings and the elimination of nearly a quarter of
GM's U.S. factory work force through 2008.
"They need to lose a lot more jobs through 2008. The 25,000
number is the natural attrition rate, and they need to go
beyond the ordinary to accomplish any change. They need more, a
lot more," Levy said.
GM has been grappling with high health-care and commodities
costs, loss of U.S. market share to foreign rivals, and
slumping sales of large sport utility vehicles which used to be
its profit center, but have now lost popularity due to high
gasoline prices.
To make matters worse, GM's main parts supplier -- bankrupt
Delphi Corp. -- is battling with its unions and will
ask the court to void its labor contracts if a deal is not
reached by mid-December. A strike at Delphi could shut down
some GM and Delphi plants and could force the automaker to burn
through billions of dollars a week, analysts have said.
A work stoppage could also cripple GM, Delphi's largest
customer, as it prepares to roll out its GMT-900 truck series,
a crucial component of its recovery plan.
PRESSURE MOUNTS
Wagoner in June said the proposed cuts would save the
automaker $2.5 billion a year. But analysts worry about
expenses associated with the cost cuts, and some estimates
predict that early retirement and employee relocation costs
could total up to $2 billion.
As investors await the changes, the Detroit News on Friday
reported GM plans to make the announcement as early as next
week.
"We have said that we will make announcements by the end of
the year and that's what we will be doing," GM spokesman Stefan
Weinmann said. "And we won't provide any more specifics."
Wagoner has said he plans to cut manufacturing capacity to
match demand by 2008. Some experts believe The Lansing Craft
Centre, where GM builds the Chevrolet SSR, will likely be shut
down because the convertible sport pickup has not been selling
very well and GM has idled the plant for several months this
year.
At least two other plants likely to be shut down are the
Doraville, Georgia, plant, which builds GM's minivans, and an
SUV plant in Janesville, Wisconsin, analysts said.
The new plant closings will add to three assembly plants
that GM has already closed or stopped production at this year:
a car plant in Lansing, Michigan, an SUV plant in Linden, New
Jersey, and a van plant in Baltimore.
GM will also have to shed its old habit of keeping
furloughed workers on the payroll and typically cutting factory
jobs only by retiring workers after 30 years of services,
analysts say.
Analysts also worry that GM's proposed sale of a 51-percent
stake in its finance arm will reduce pressure to undergo a
major restructuring, as the sale could bring in as much as $15
billion.
Still, GM shares rose 96 cents, or 4.3 percent, to $23.60
in Friday trade on the New York Stock Exchange.
((Reporting by Jui Chakravorty, editing by Michael Miller;
Reuters Messaging: jui.chakravorty.reuters.com@reuters.net;
jui.chakravorty@reuters.com; +1-313-967-1903))
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nN1861633
Potential strike at Delphi could hit GM hard
(Adds closing stock price, clarifies rating in last
paragraph)
By Jui Chakravorty
DETROIT, Nov 17 (Reuters) - As General Motors Corp.
considers contingency plans in light of a potential strike at
its main auto parts supplier, analysts fear a walkout could
cost the troubled automaker billions of dollars.
Bankrupt Delphi Corp. plans to ask the court to
void labor contracts with its unions if a deal is not reached
by Dec. 16, and analysts worry that a strike could shut down
some GM and Delphi plants.
United Auto Workers leader Ron Gettelfinger on Wednesday
said the union was on a "collision course" with Delphi,
prompting analysts to believe a work stoppage is more likely
than many had previously thought.
"We think a Delphi strike is unlikely, but that the
probability of work stoppages at certain facilities is high and
could still be very damaging to GM," Goldman Sachs analyst
Robert Barry said in a research note on Thursday.
Barry also said that GM may offer incentives to Delphi
employees to avoid a strike, but that would be a "cash drain"
for the world's largest automaker.
"We are looking at contingency plans, but can't really
elaborate on what they are specifically," GM spokesman Stefan
Weinmann said. "And we are not saying that we already have one
in place."
GM shares, which have plummeted about 46 percent this year,
fell to a new 18-year low of $20.65 on Thursday.
GM has lost nearly $4 billion so far this year due to high
health-care and commodities costs, stalling sales of big sport
utility vehicles as high gasoline prices have made those cash
cows less popular, and the loss of U.S. market share to foreign
rivals.
To compound problems, GM, which spun off Delphi in 1999,
could face up to $12 billion in liabilities for the supplier.
GM agreed during the spin-off to pay retirement expenses for
some former GM workers if Delphi stopped payments. The
automaker has said it expects the eventual figure to be about
$6 billion.
Barry said he would not be surprised to see a deal with the
UAW and Delphi raise the needle on the liabilities GM would
have to pay.
TOUGH SPOT
John Henke, president of Planning Perspectives, a
management consulting firm specializing in buyer-supplier
relationships, said the car maker is "stuck between a rock and
a hard place."
"The classic preparation for something like this is to
stockpile inventories of parts," Henke said.
"But the downside to that, especially because GM is trying
to watch its expenses, is that it would incur carrying costs
for the parts that would sit there until they were ready to be
put in a vehicle and be shipped off to a lot."
Delphi did not immediately return calls for comment.
UBS analyst Robert Hinchcliffe has said a strike at one or
two strategic plants would force GM to burn through $19 billion
in cash and liquid assets in about 10 weeks. Deutsche Bank
analyst Rod Lache said GM may burn through $13 billion in cash
if the potential strike were to last a quarter.
BNP Paribas said a strike at Delphi, which it called
"highly likely," would force GM to burn through a "significant
portion" of its cash.
JP Morgan analyst Himanshu Patel on Thursday said a
voluntary bankruptcy at GM is unlikely and would lead to an
abrupt decline in sales.
"Consumers are unlikely to continue to buy $30,000 cars
from bankrupt (automakers) given the priority placed on
quality, warranty, resale value and after-market support," he
said.
BRIEF RESPITE
GM shares closed up $1.34, or 6.3 percent, at $22.63 on the
New York Stock Exchange, after spiraling to a new 18-year low
earlier in the day.
The stock rose as Standard and Poor's upgraded it to "hold"
from "strong sell," saying it was trading near the rating
agency's $22 target price.
S&P also said it does not expect a bankruptcy for at least
12 months, citing enough near-term liquidity and the
unlikelihood of a strike at Delphi.
However, S&P on Thursday warned that it may still cut GM's
credit rating deeper into "junk" territory, pointing to
Delphi's bankruptcy filing, the prospect of supply disruptions
at GM, and other concerns.
Wagoner: GM Won't File for Bankruptcy
DETROIT, Nov 17, 2005 (AP Online via COMTEX) -- General Motors Corp. Chairman and CEO Rick Wagoner told employees Thursday that the world's largest automaker has no plans to file for bankruptcy despite heavy losses in its North American division and the threat of a strike at Delphi Corp., its major supplier. GM shares climbed more than 6 percent, bouncing back from their lowest level in 18 years.
"I'd like to just set the record straight here and now: there is absolutely no plan, strategy or intention for GM to file for bankruptcy," Wagoner said in a letter to employees, which a GM spokesman said was posted on an internal Web site.
Wagoner said GM has a clearly defined turnaround plan and "a robust balance sheet," with $19 billion in cash and $16 billion in assets in a trust fund for retiree health care.
"The large losses at GM North America are unsustainable, for sure, and require a comprehensive strategy to address them ... a strategy that must be implemented promptly and effectively, to get our U.S. business profitable again," Wagoner said.
GM shares rose $1.34, or 6.3 percent, to close at $22.63 on the New York Stock Exchange. They had traded at an 18-year low of $20.90 during Wednesday's session and slipped as low as $20.60 in Thursday's trading before Wagoner's letter to employees was posted.
Standard & Poor's Ratings Services upgraded its opinion of GM's stock Thursday from "strong sell" to "hold," saying it doesn't expect the company to file for bankruptcy in the next 12 months. S&P said it also believes there is a low probability of a costly strike at Delphi, GM's former parts division, even though union members rejected Delphi's latest wage offer earlier this week. Delphi filed for bankruptcy protection last month.
"Although we expect high gas prices to hinder large vehicle sales, we project rebounding sales volume of these vehicles and a return to profitability in 2006," S&P said.
But GM's mounting problems are causing speculation about the future of Wagoner and other top executives. GM's U.S. market share is falling and it lost nearly $4 billion in the first nine months of this year, crippled by high health care and labor costs. It is under investigation by the U.S. Securities and Exchange Commission for accounting errors, and it also could be liable for billions in pension costs for Delphi retirees.
"If the company continues to go south the way GM is doing, it does raise questions about the confidence the board has in these people," said Gerald Meyers, the former chairman of American Motors Corp. who now teaches at the University of Michigan. "I know they are dealing as best they can, but it's just awful."
Among the investors who could call for a change is billionaire Kirk Kerkorian, who owns a 9.9 percent stake in GM. So far, Kerkorian hasn't acquired a seat on GM's board, even though the value of his investment has dropped substantially this year. For example, the 18.9 million GM shares Kerkorian purchased in June are now worth $161 million less than the $585 million he paid for them.
A message was left with a spokeswoman for Kerkorian.
Industry analyst Maryann Keller said Wagoner isn't entirely to blame for the company's woes, which "go back generations of CEOs." But she said shareholders and others will criticize management until GM takes bold actions. For example, Keller said, GM has said it will reduce 25,000 jobs and close several plants by 2008, but the job cuts are due to attrition and the plant closings haven't been announced. The company also continues to pay dividends to shareholders.
James McTevia, a restructuring expert involved in the Delphi bankruptcy proceedings, said GM's board needs to be more active and aggressive.
"I do not think they have been bold or dramatic enough about the direction in which they want take this company," McTevia said. "GM's problems are going to be solved by a lot of people, not just one."
David Cole, who is chairman of the Ann Arbor-based Center for Automotive Research and has close ties to GM, said the company's board has faith in Wagoner. He said Wagoner can't be too bold because decisions like plant closings involve delicate union negotiations. Negotiations with Delphi also are unpredictable, he said.
"Nobody controls all the levers in this one," Cole said.
---
On the Net:
General Motors Corp., http://www.gm.com
By DEE-ANN DURBIN AP Auto Writer
Copyright 2005 Associated Press, All rights reserved
**********************************************************************
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-08-2005 for GM @ $26.35.
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-10-2005 for RGM @ $15.44.
(C) 2005 Comtex News Network, Inc. All rights reserved.
-0-
APO Priority=u APO Category=1310 (PROFILE (CO:General Motors Corp; TS:GM; IG:3300;) (CO:Delphi Corp.; TS:DPHIQ; IG:0000;) (COUNTRY:United States; ISOCOUNTRY3:USA; UNTOP:021; APGROUP:NorthAmerica;) )
KEYWORD: DETROIT
SUBJECT CODE: 1310
AP Photo DT108
Stocks Climb on Upbeat Economic Reports
NEW YORK, Nov 17, 2005 (AP Online via COMTEX) -- Stocks moved moderately higher Thursday after new data soothed inflation concerns, although a downgrade of tobacco and food conglomerate Altria Group Inc. capped gains in the Dow Jones industrial average.
Wall Street embraced a report saying the manufacturing sector expanded at a slower pace in November. The report, from the Federal Reserve Bank of Philadelphia, showed that prices in the region's manufacturing sector were steady or falling.
Earlier, industrial output data cheered investors. Output from manufacturing, mines and utilities rose a healthy 0.9 percent last month as refineries and oil and natural gas platforms began production again after widespread shutdowns caused by hurricanes Katrina and Rita. The data quelled concerns that the hurricanes had done lasting damage to the economy.
Falling oil prices also boosted stocks. A barrel of light crude was quoted at $56.33, down $1.55 on the New York Mercantile Exchange.
In afternoon trading, the Dow rose 25.29, or 0.24 percent, to 10,700.05.
Broader stock indicators were higher. The Standard & Poor's 500 index rose 7.76, or 0.63 percent, to 1,238.97, and the Nasdaq composite index rose 21.60, or 0.99 percent, to 2,209.53.
Bonds rose, with the yield on the 10-year Treasury note falling to 4.46 percent, down from 4.47 percent late Wednesday. The U.S. dollar fell against other major currencies in European trading. Gold prices were higher.
In other economic news, closely watched housing data was less upbeat. Home construction in October plunged by the largest amount in seven months and building permits posted their biggest drop in six years, providing evidence that rising mortgage rates are beginning to dampen the housing boom.
The home construction decline was double what analysts expected and indicated that rising mortgage rates, which hit a two-year high last week, are beginning to take a toll on housing. Analysts fear a sudden burst of the housing bubble could hurt consumer spending in the best case scenario and push the country into a recession in the worst case scenario.
The housing market index "suggests a sharp slowing in housing, far sharper than has been evident in direct measures of activity such as starts, permits and new home sales," UBS Securities said in a Thursday research note.
"Most people are relieved that housing is beginning to show some sort of response to interest rates," said Michael Strauss, chief economist at Commonfund. Still, he said, "if you were in the housing industry five years ago, you would have loved to have seen numbers within 15 to 20 percent of today's reading. The level of housing activity is still very strong by historical standards. We are not at normal levels."
In company news, Altria fell $2.13, or 2.9 percent, to $71.76, after Goldman Sachs Group Inc. downgraded the stock, saying the company's planned break-up may come much late than expected.
Applied Materials Inc. fell 48 cents to $17.30 after the company, the world's largest maker of semiconductor gear, said its profit fell 46 percent in its fiscal fourth-quarter.
General Motors Corp. rose $1.25 to $22.54 after hitting an 18-year low Wednesday. News reports that GM's CEO posted a letter on the company's internal Web site assuring employees that GM's finances are sound lifted the stock, which has been falling on worries that the United Auto Workers could strike at Delphi Corp., GM's largest supplier.
Google Inc. crossed $400 a share for the first time, rose $4.65 to $402.80 after a bullish report from Piper Jaffray's well-respected Internet analyst said a new service, called Google Base, could "create massive advertising inventory for Google."
Barnes & Noble Inc., the nation's leading bookseller, rose $1.53 to $39.98 after it said it had a slim profit in the third quarter, down sharply from a year ago but beating analysts' expectations, and boosted its profit outlook for the full year.
The Russell 2000 index of smaller companies rose 10.06, or 1.54 percent, to 664.70.
Advancing issues led decliners by more than 2 to 1 on the New York Stock Exchange where volume was 1.02 billion shares, up from 979.52 million at the same time Wednesday.
Overseas, Japan's Nikkei stock average rallied to 4 1/2-year highs, rising 1.70 percent. A weaker yen versus the dollar stokes demand for Japanese exports to the U.S., helping auto makers and electronics companies.
Britain's FTSE 100 rose 0.55 percent, Germany's DAX index rose 0.36 percent, and France's CAC-40 rose 0.24 percent.
---
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
By ELLEN SIMON AP Business Writer
Copyright 2005 Associated Press, All rights reserved
**********************************************************************
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated an UPTREND on 11-10-2005 for AMAT @ $17.75.
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated an UPTREND on 11-03-2005 for BKS @ $37.68.
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-08-2005 for GM @ $26.35.
(C) 2005 Comtex News Network, Inc. All rights reserved.
-0-
APO Priority=u APO Category=1320 (PROFILE (CO:Altria Group Inc; TS:MO; IG:3700;) (CO:Goldman Sachs Group Inc; TS:GSPB; IG:8700;) (CO:Applied Materials Inc; TS:AMAT; IG:9500;) (CO:General Motors Corp; TS:GM; IG:3300;) (CO:Delphi Corp.; TS:DPHIQ; IG:0000;) (CO:Google Inc; TS:GOOG; IG:9500;) (CO:Barnes & Noble Inc; TS:BKS; IG:5300;) (COUNTRY:France; ISOCOUNTRY3:FRA; UNTOP:150; UN2ND:155; APGROUP:Europe;) (COUNTRY:Germany; ISOCOUNTRY3:DEU; UNTOP:150; UN2ND:155; APGROUP:Europe;) (COUNTRY:Japan; ISOCOUNTRY3:JPN; UNTOP:142; UN2ND:030; APGROUP:Asia;) (COUNTRY:United Kingdom; ISOCOUNTRY3:GBR; UNTOP:150; UN2ND:154; APGROUP:Europe;) (COUNTRY:United States; ISOCOUNTRY3:USA; UNTOP:021; APGROUP:NorthAmerica;) )
KEYWORD: NEW YORK
SUBJECT CODE: 1320
AP Photo NYKW105
GM's Slump Drops Market Capitalization
SAN FRANCISCO, Nov 17, 2005 (AP Online via COMTEX) -- General Motors Corp. shares weakened further on Thursday, whittling down the market capitalization of the world's biggest carmaker to less than $12 billion.
At Thursday's open, GM's market cap, or the aggregate value of its stock, stood at $11.9 billion, compared with Google Inc.'s almost $112.5 billion and less than longtime rival Ford Motor Co. at $13.6 billion.
GM's shares slipped 8 cents, or 0.4 percent, to $21.21 in late-morning trading on the New York Stock Exchange.
The Detroit-based auto maker's stock fell to an 18-year low of $20.90 during the prior session on concerns about GM's financial hurdles and a showdown between the United Auto Workers and management at bankrupt Delphi Corp., a key parts supplier and former GM division.
An alliance of Delphi's union workers, including the UAW, is girding for a battle against the company's aggressive cost-cutting plans. On Wednesday, they said the company's latest contract proposal is "not a framework for an agreement but a road map for confrontation."
Ford's shares rose 1 cent, or 0.1 percent, to $7.66 on the NYSE.
Copyright 2005 Associated Press, All rights reserved
**********************************************************************
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 08-08-2005 for F @ $10.42.
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-08-2005 for GM @ $26.35.
As of Sunday, 11-13-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-10-2005 for RGM @ $15.44.
(C) 2005 Comtex News Network, Inc. All rights reserved.
-0-
APO Priority=r APO Category=1310 (PROFILE (CO:General Motors Corp; TS:GM; IG:3300;) (CO:Google Inc; TS:GOOG; IG:9500;) (CO:Ford Motor Co; TS:F; IG:3300;) (CO:Delphi Corp.; TS:DPHIQ; IG:0000;) (COUNTRY:United States; ISOCOUNTRY3:USA; UNTOP:021; APGROUP:NorthAmerica;) )
KEYWORD: SAN FRANCISCO
SUBJECT CODE: 1310
Unions: Latest Delphi Offer 'Ridiculous'
DETROIT, Nov 16, 2005 (AP Online via COMTEX) -- Delphi Corp., the huge auto parts supplier that filed for bankruptcy protection last month, has made another proposal to its unions in an effort to win wage and benefit concessions, but union leaders on Wednesday called the offer "ridiculous."
The impasse has led to speculation that there could be a strike at Dephi that would cripple the auto industry and especially General Motors Corp., which spun off Delphi in 1999 and relies on the supplier for billions of dollars in parts.
In afternoon trading, shares of GM stock dropped $1.33, or 5.9 percent, to $21.28, their lowest level since December 1991.
United Auto Workers President Ron Gettelfinger would not reveal specifics of the new Delphi proposal, but said it still has workers who now make $27 an hour taking drastic pay cuts.
"It's ridiculous. They know it's ridiculous," Gettelfinger said at a news conference in Detroit.
Delphi said its proposal is competitive with other union-represented suppliers and is based on market wages. Delphi said it would pay workers base wages of between $10 and $12.50 an hour, more than it offered in its first proposal to the unions last month.
"This proposal results in a wage and benefit package cost of more than $21 per hour, placing Delphi in a competitive base pay and benefit range with its U.S. unionized and non-unionized competitors," Delphi said in a statement. "We believe that the focus of the discussions should move toward a solution, given that the transformation needs facing Delphi have been well defined."
Gettelfinger said the union does not believe Delphi wants to make a deal and said the company would have to raise its offer considerably "before there's any chance of us reaching an agreement."
Gettelfinger would not comment when asked about the likelihood of a strike, saying he preferred to negotiate.
The offer was first presented last week to some of the seven unions representing Delphi's more than 33,000 hourly workers, union officials said. The UAW received it on Tuesday.
Leaders of the unions met jointly Wednesday to plan strategy in negotiations with Delphi.
UAW Vice President Richard Shoemaker said there have been two bargaining sessions with the company, but neither has resulted in anything substantial.
Troy-based Delphi, the largest U.S. auto supplier, filed for bankruptcy protection last month, citing high labor costs. The company has said it will ask a bankruptcy court judge to void its union contracts in mid-December if it has failed to reach an agreement with its unions.
Gettelfinger called bargaining with Delphi "more like a dictatorship," and he accused the company of trampling on its workers.
At the news conference, Gettelfinger and officials of other unions criticized Delphi and Chairman and CEO Robert S. "Steve" Miller. Many said the looming union showdown with Delphi is about preserving good pay and benefits for all U.S. workers.
"Delphi rushed into bankruptcy with the primary purpose of having legal cover to break the promises it made to its workers and retirees," said Henry Reichard, an official of the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America in Dayton, Ohio.
Union officials said Delphi plans to cut two-thirds of its production work force, reducing it to 10,000 people over roughly three years.
---
On the Net:
Delphi Corp.: http://www.delphi.com
United Auto Workers: http://www.uaw.org
By TOM KRISHER Associated Press Writer
Copyright 2005 Associated Press, All rights reserved
**********************************************************************
As of Saturday, 11-12-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 09-01-2005 for DPH @ $5.03.
As of Saturday, 11-12-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-08-2005 for GM @ $26.35.
As of Saturday, 11-12-2005 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 11-10-2005 for RGM @ $15.44.
(C) 2005 Comtex News Network, Inc. All rights reserved.
-0-
APO Priority=u APO Category=1310 (PROFILE (CO:Delphi Corp.; TS:DPHIQ; IG:0000;) (CO:General Motors Corp; TS:GM; IG:3300;) (COUNTRY:United States; ISOCOUNTRY3:USA; UNTOP:021; APGROUP:NorthAmerica;) )
KEYWORD: DETROIT
SUBJECT CODE: 1310
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