GM's Profit Drops 13% has the breaking news:
"General Motors reported a 13% drop in its third-quarter profit amid widening losses in Europe and higher warranty expenses in North America . . . .The auto maker also said Wednesday it expects its European operations to lose between $1.5 billion and $1.8 billion this year. The unit isn't expected to return to break-even on an operating basis until mid-decade. . . .
The biggest hit came from the European operations where the operating loss widened to $500 million from $300 million a year earlier. Much of the loss was attributed to the auto maker's Opel division in Germany . . . .
GM's North America performance was robust, generating $1.8 billion in operating profit despite pension steps that lowered its income. . . . About 12,000 salaried GM retirees in the U.S. elected to take a pension buyout offered earlier this year as the auto maker moved to reduce its pension costs.
The company said about 30% of the 42,000 retirees offered the buyout in July elected to take the option of receiving a one-time lump sum payment in lieu of ongoing pension benefits.
The lump-sum payments along with annuitizations are now expected to eliminate about $29 billion of GM's U.S. salaried pension liability, an increase over its previous forecast of $26 billion.
GM's $134 billion in global pension obligations have long been a concern of investors and debt-ratings firms. In addition, they are a huge variable since they rise and fall on such factors as interest rates and the life expectancy of pensioners
GM also said Wednesday it expects to reach a deal in November to hand over all assets and obligations of its salaried-retiree pension program and management responsibility to Prudential Financial Inc. through the purchase of a group annuity contract. Prudential is expected to begin making pension payments starting next year.
GM said retirees' payments won't change although the Prudential benefits won't be backed by the Pension Benefit Guaranty Corporation, which has angered retirees.
The auto maker is still on track to eliminate traditional pension plans for all current salaried employees by the end of the year. Newly hired hourly workers already receive a 401(k) although veteran factory workers still get a traditional pension."
Europe is the biggest problem facing GM and will be for several more years.
GM's pension funding seems to be getting resolved over time and that's thanks in large part to the taxpayer bailout which provided the funds to do so. Aren't government bailouts great? Except for taxpayers, that is.
Come to think of it, American taxpayers have also provided the billions of dollars in funding to keep GM's European operations afloat as well.
To repeat, aren't government handouts great? Of course, taxpayers are the ones getting stuck with the bills.
But at least we "saved" GM. Or did we? Certainly not for the long haul. Only customers can do that.
So maybe all the bailout really did was "save" President Obama's re-election chances. Or did it?
We'll soon know as voters in states like Ohio and Michigan reveal their choices next Tuesday.