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Mark Fields and the efforts to improve margins at Ford Motor Company. Ford's global operating margins at 6% lagged behind the 9% margins at VW and Hyundai in 2011. Ford is sixth among all automakers in profits earned on each vehicle sold..The difficulties in Europe, and fears of a slowdown in the American market create new pressures at Ford.

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Sluggish sales of GM cars in mature markets like Germany and in markets with exacerbated credit crunch like Spain lead to decliing sales for GM's Opel brand in Western Europe. GM announced that sales in western Europe declined by 11% during the first three quarters of the year. The Opel brand is the higher margin brand for GM and is prominent in western Europe. Its Chevy brand is prominent in Eastern Europe and these sales increased by 43%. In Russia the mood is uncertain as September sales for Chevy declined by 2% and Ford's sales slipped 13%. GM's shares dropped 19% on Thursday October 9 to $5.57.

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GM shares dropped by 31% October 8, 2008 to a postwar low. And Jeff Schuster head of auto forecasting at JD Power says the global market in 2009 may experience an outright collapse. The slowdown will extend to Europe, China, india and Brazil. Previously JD Power estimated sales at 14 million for 2009 now it thinks it will be more like 13.2 million in 2009 and this may come up for revision as the economic downturn deepens with higher unemployment, loss in savings, and collapsing consumption. With access to financing drying up, and sales collapsing GM is rnning low on funds to run day to day operations and is expected to be acutely short by the end of 2009. Ford faces a similar situation. One forecast by Citigroup global markets in the link in Detroit News October 9 points to only abot $1 billion remaining by the end of 2009 and even with asset sales generating some $5 billion being thin ice for GM.

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Did GM miscalculate when after Katrina SUV sales took a dive, in the wake of higher gas prices in the summer of 2005. Instead of gving it thought and thinking about various possible scenarios in the future GM moved up the introduction of a new SUV models program and invested $175 million in updating the the Janesville Wisconsin SUV plant that was turning out 200,000 SUV's a year. And the unions also wanted to hang onto the SUV program and included product guarantees for several of GM's SUV plants, including a new line of SUV's for Janesville to come out in 2012. Each SUV made $10,000 to $15,000 per vehicle whereas passenger cars did not make money. Why? How? Considering that Honda was making profits selling passenger cars and so was Toyota, and Honda stuck to making better cars, and the Germans and the Japanese were not putting all their eggs in one basket. Something strange was going on, kind of a cosy trap for the Detroit automakers.

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Deep labor problems that have plagued Detroit automakers throughout the years since the 1930 labor-management strife. The labor advantages enjoyed by the Japanese and the Germans after postwar compact between labor and management in Japan and Germany, that was continued in plants in the US in locations with no labor history. The higher executive compensation and privileges of management in the American management model that did not exist in the Japanese and German models that created another level of distrust of management. The recovery staged by Chrysler in the 1980's withthe minivan and by Ford with new models. The recovery again in the 1990's by Ford and GM with the sports utility vehicle and pickup trucks. And the collapse Chrysler, GM and Ford face today, facing bankruptcy or government bailout on a large scale as rising oil prices and the need for conservation lead to a collapse of the sports utility and pickup market and shift to fuel efficient passenger cars.

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Prepackaged bankruptcy has to be very carefully and meticulously arranged to work. With this creditors have to agree to retstructure debts before a company seeks court protection. In the case of GM complex union and dealership contracts and a number of creditors means someone in the government has to use governmental powers and authority, and with the leadership of the President, and help from Congress with new legislation, to get the job done in a short period of time. Something that would put the company on recovery track and its customers warranties and other incentives to buy protected.

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The view on the oped pages of WSJ ask why Bush supports the bailout being negotiated between Congress and the White House on December 10 and being put to a House vote on that day followed by a Senate vote. Almost all Republicans oppose the plan with a supposed government appointed czar to run things and other aspects of the bailout.

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GM stock was trading on the New York Stock Exchange at $29.97 on April 18, 2011. It has dropped from the $33 a share IPO in November 2010. To breakeven the U.S. government would have to sell its stake in GM at $53 a share. The government is planning to sell its stake in GM this summer according to informed sources. At the current price this would mean the government would take a loss of $11 billion. The IPO in November reduced the government's stake from 61% to 26.5%. Higher gas prices have reduced sales of trucks and SUV's and the sales incentives in January and February 2011 are expected to reduce earnings.

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Peugeot plans to raise 1 billion euros ($1.34 billion) in a share rights issue. GM plans to take a 7% stake in Peugeot, with an investment of $335 million.

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With Whitacre in charge at GM there is a change of style and substance that just flows from who the man is. He is a no-nonsense guy, who once told a colleague from his days at Southwestern Bell, that God gave us two eyes and one mouth for the right reason so we should use it in that proportion. He is quite matter of fact about approaching the probems at GM right from the beginning. From those early meetings at the Westin airport hotel in Detroit, where he would tell GM executives and Henderson that if things did not happen the way they should and quickly he would find the right people. After there was a lot of soul searching about Henderson's decision to sell Opel- and three directors with private equity background decided it was bad for GM, that GM needed Opel for its compact and midsize car engineering and sales volume- Henderson was replaced as CEO. The decision was reversed. Within 3 months of Henderson's departure four other executives were let go, 20 more were reassigned and seven outsiders were brought in to fill top jobs. Lutz was marginalized. Reuss in his forties was placed in charge of N. America. The metrics were simplified from Wagoner's days to six: market share, revenue, operating profit, cash flow, quality, and customer satisfaction. His approach to get managers who make decisions fast and correct mistakes speedily. Vice chairman and CFO, Christopher Liddell, is from Microsoft and joined in January. Liddell points out that 12 of the 13 person GM executive committee are either new to the auto industry or outsiders. And the seniormost Whitacre and Liddell, are new to the auto industry and outsiders, so Whitacre can point out that GM has run the business in a more complicated way than it needs to be. The big changes are cultural. And making these changes for a company the size of GM and with the trauma that happened at GM with the speedy decline, required someone with the experience Whitacre gained in tackling the problems he faced at Southwesten Bell and the new AT&T, with its changing culture. The tough down-to-earth nature of the guy, with no affectations or layers to his personality whatsoever, proved an asset at the new AT&T and now at GM. Other decisions he has made at GM, are some strategic ones like bringing down incentives to sell cars, the latest being letting market share drop in March in the face of Toyota's heavy use of incentives to recover from the recall crisis, but sticking to reducing the incentive dollars by $1200 to $3500 per car. This made it possible to achieve sales goals. And some tactical but of great significance, from a common sense approach to GM advertising with his remark "I'm sick of Howie Long." Pitchman Long was a football player, and what Whitacre insisted on was showing off GM's best models and features to blow the competition, like the "May the Best Car Win," campaign. That many of GM's ads didn't focus on the cars and didn't make any sense, like little Cadillacs flying out of a birdhouse, makes this truly incredible to an outsider. Other things Whitacre brings are a change in his expectations, and his overall demeanor. This impatience may be a good thing for GM especially with the capital investment in new models, plant investment and better decisionmaking, and commonsense approach, to back it up. In the car industry it can't hurt for the top guy to look at the car clay models and ask why they can't be brought to market in 12 months. It gets people thinking differently. Asking a Cadillac dealer he knows in San Antonio why they should'nt be selling twice as many Cadillacs if the marketing was better. It helps when the top guy can visit a plant and have "diagonal slice meetigs" with plant staff, workers and UAW people, to talk about things in sweat shirt and jeans with no airs about yourself whatsoever, and to follow this up with a repeat meeting some months later and announce a $136 million investment, as he did with the Fairfax plant in Kansas....

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The new GM-UAW four year contract will provide $5000 signing bonuses to workers in place of cost of living wage increases. GM makes a committment to reopen the Spring Hill, Tennessee manufacturing plant which was idled. Entry level workers earning $14 an hour will receive increases of $2 to $3 per hour. The contract also provides for the hiring back of laid off workers as market conditions improve and for bringing back manufacturing and jobs to the U.S. In that sense it is a forward looking agreement for UAW, GM, and the U.S.

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GM says that 19,000 employees have taken buyout or early retirement offers and most of them will leave the payroll by July 1, 2008. This will cut GM's workforce by 24%. GM is considering idling at least one plant and discontinuing some product lines as SUV's and truks go into deep sales decline. Most significant is the fact that is incredible but true that with this round of buyouts and retirements about 53,000 workers or roughly half of its workforce has agreed to leave the company since the beginning of 2006. It shows how the bubble in automobiles (see the link to a recent WSJ article on this) has resulted in such severe impact, and moved to create a structural shift in the USA market for automobiles, making them smaller in size and the total number sold in a maturing market smaller also. This is something already ocurring gradually in Japan and Germany from their peak years in auto sales and a shift to overseas slaes as is happening with GM and Ford also as they shift focus to overseas markets. Sales in Brazil were cited by GM CEO Wagoner recently as helping improve GM's otherwise poor results....