GM records its highest profit ever: $7.6 billion

[Shadrach]

By TOM KRISHER | Associated Press – 46 mins ago

DETROIT (AP) — General Motors earned its largest profit ever in 2011, two years after it nearly collapsed into financial ruin.

Strong sales in the U.S. and China helped the 103-year-old carmaker turn a profit of $7.6 billion, beating its old record of $6.7 billion in 1997 during the pickup truck and SUV boom.

GM is a vastly different company than it was back then. It's smaller and has less debt, and its contract with the United Auto Workers is less costly. But it took a government bailout and a trip through bankruptcy protection in 2009 to cut its bloated costs. The company made record money last year, even though U.S. auto sales were near historic lows at 12.8 million cars and trucks.

But problems surfaced in its latest results. GM lost $700 million before taxes in Europe, and its South American operations lost $100 million. Sales growth slowed in the U.S. in the fourth quarter, even as more Americans bought cars and trucks.

GM's stock price fell 43 cents, or 1.7 percent, to $24.50 in pre-market trading.

The U.S. government still owns 26.5 percent of the company and is waiting for the share price to rise before selling in an effort to recoup the bailout money.

Last year, GM made the bulk of its income in North America, where its pretax profit totaled $7.2 billion. International Operations, which includes Asia, made $1.9 billion before taxes, but that was down.

During the year, GM's global sales rose 7.6 percent to 9.03 million vehicles to help it reclaim the title of world's largest automaker from Toyota Motor Corp.

"We will build on these results as we bring more new cars, crossovers and trucks to market," CEO Daniel Akerson said.

The company wants to keep expenses down by freezing its underfunded U.S. pension plan, and it hinted at factory and job cuts to restore profitability in Europe.

The 2011 profit of $4.58 per share was 62 percent higher than a year earlier. Full-year revenue rose 11 percent to $150 billion.

But GM's fourth-quarter profit fell 8 percent to $468 million, or 28 cents per share. Revenue rose 3 percent to $38 billion. Before one-time items that totaled 21 cents, GM earned 40 cents per share.

Analysts expected earnings of 42 cents on revenue of $37.9 billion.

GM also said Thursday that its 47,500 blue-collar workers in the U.S. will get $7,000 profit-sharing checks in March. The checks are based on North American performance and are a record for the company.

The company has placed Vice Chairman Steve Girsky in charge of the European management board and is adding executives in preparation for restructuring. Factory closures and layoffs are likely but could provoke a fight with powerful labor unions.

Girsky has said GM intends to fix the European unit, made up of the Opel and Vauxhall brands, and keep it in the company. GM came close to selling the unit in 2009.

http://news.yahoo.com/gm-records-highest-profit-ever-7-6-billion-12...

[RNhunter]

There has been some success in the main company. But since I was in small business, I saw the devastation that many people missed. While GM was too big to fail, that was not deemed true of the many Mom and Pop distributorships that GM. Chrysler and Obama killed. Since I was in small business at the time I just cringed when I saw all of those Middle Class families destroyed while the rich were too big to fail and Obama the magnificent did whatever he wanted to. Some of those small businesses were highly invested and might have been in the families for generations. But not being rich, they were not judged too big to fail. Too bad, middle class. Next time give more to the Obama campaign.

Later continuing on in the age of Obama, I lost my small business - one that had been making a profit under the hated Bush. And I know many small business people, most often retail stores now out of business or operating at a loss. One had a sign up that said "closed forever" - that made me quite sad. The media calls all of this operating at a loss and going out of business "windfall profits". Lately this has caused me to have a new opinion. My investigation of dollars noted in the Department of Commerce tell me that 20% of the US economy has been destroyed under Obama. Many people say how can that be? GM is still here? The Stock Market is okay? What I see took the hit was the Middle Class - the American Dream - the little people beginning to start their own business after working for others. They are getting killed by Obama economics. While Obama saves those too big to fail since they contribute to him, he seems to be killing the American Dream. That does two things. It kills unemployment since we are told that small business hires 70% of the people. And the second is that Obama complains like crazy that the rich have gotten richer. Really Obama? Maybe that is because you just killed a huge chunk of the middle class. And yet the TV set screams that Obama is for the middle class and not the rich. You cannot tell that to me or the other people who lost or are losing their small businesses. We are witnessing the death of the American Dream - that of the small person beginning their own business.

[Jerseygal]

Hello Shad! Thank you for joining our cyber family! And thanks for posting this one!

Amazing that now the GM workers getting that $7k profit-sharing check will just have to vote for Obama. But wait a minute.. wasn't it Bush who did the initial bailout? Yes, but Obama gave more money to the unions, so they will vote for the Dem. Do I have that right? The original GM investors lost their shirts and more!

God bless,

JG

[Shadrach]

Thanks JG, RN, Homer and Tom :-) it's good to be here! Yes JG, $7,000 profit sharing checks and a lot of Middle Class folks out of work and out of unemployment checks AND not being counted as unemployed anymore, while B.O.&Co. tout a drop in the unemployment rate!! That's just a slap in the face to those who have worked hard for years, just to lose everything!! And I believe we are just seeing the tip of the proverbial Iceberg!! Massive inflation is going to hurt everyone, from top to bottom!! B.O. Says he wants to tax the rich!! Well, who are the Rich?? Most own businesses, who hire middle class people that keep the economy going (RN, you would know more about this that I would) The Walton family, Bill Gates, et al. They all started out in small business, they didn't open 5000 stores all at once!! Don't encourage the people that can afford to build more businesses to leave the country and go do the same thing in China!!!

[D.A.]

Sure Shad, The rich have money, but there are few of them. The middle class have a few bucks, BUT THERE ARE MILLIONS OF THEM! That's where there BIG money is! Destroy the Middle class? O&Co. is working on that.

[Jodi180]

Also posted this in today's tids:

UAW Freezes Pay Of Non-Union GM Workers

General Motors Co. is freezing the pay of its 26,000 U.S. salaried employees and will eliminate its traditional pension contribution for those salaried workers who still receive them in moves to reduce financial risks and cut costs.

The Detroit company also will shrink the 2011 bonus for all salaried U.S. workers because it failed to meet its financial goals last year, people familiar with the matter said.

It’s funny how even the Wall Street Journal dares not mention that "salaried employees" actually means non-union workers. I guess even the Wall Street Journal is afraid of union goons. And, after all, they are unionized, too.

http://sweetness-light.com/archive/uaw-freezes-pay-of-non-union-gm-...

[Shadrach]

Union employees pay comes first!! And if this economy continues to sink, which I believe it will, and austerity measures are taken(some kind of change will have to take place) and union benefits are put on the chopping block?? There will be civil unrest!! States are growing tired of unions, look at this article from Wikipedia:

http://en.wikipedia.org/wiki/2011_United_States_public_employee_pro...

Indiania just became a "Right to work" state. This, in of itself, will cut into union money. New employees will be pressured to become members, if they don't become members, that's union dues not going into the coffers!! Union employes retiring at 50-55 and drawing full benefits, and cuts take place that threaten that?? I don't know how many millions of union members there are, but I'm sure it's a lot!!

[tom dodd]

"I don't know how many millions of union members there are, but I'm sure it's a lot!!"

...JUST looked it up... nationwide, 11.8% of the workforce is union... THAT includes the 37% of "public" workers ~ fed, state, city, county.

[Jodi180]

What I found interesting in the above article is the freeze in pay and elimination of pension contributions are being done to reduce financial risks and cut costs.

Yet...there is this news from Feb. 14th:

GM Union Workers’ Profit-Sharing Checks to Top $4,000

General Motors Co., the largest U.S. automaker, said it expects to give unionized U.S. hourly employees profit-sharing checks averaging at least $4,000 as it prepares to negotiate a labor contract this year.

The payout is more than double the previous record for bonuses paid to GM’s hourly workers, the Detroit-based company said today in an e-mailed statement. GM said the previous record for its hourly workers’ checks was an average $1,775 in 1999.

GM, Ford Motor Co. and Chrysler Group LLC are preparing for contract talks this year with the United Auto Workers as the union seeks a share of the industry’s prosperity. GM, which earned $4.77 billion in the first three quarters of last year, wants to avoid “lockstep” annual raises to all employees and instead pay bonuses tied to profitability, said Logan Robinson, a law professor at the University of Detroit Mercy.

“A nice fat check will make the workers sympathetic to a plan like that,” Robinson, a former general counsel at auto-parts maker Delphi Corp., a GM spinoff, said in an interview.

http://www.bloomberg.com/news/2011-02-14/gm-union-workers-profit-sh...

Doesn't Barry tell us time and time again that we need a "fair" society where everyone plays by the same rules?

The hypocrisy is so thick, it's choking.