By Andrew White
Spare a thought for General Motors head Rick Wagoner, whose automotive empire is currently hurtling towards a brick wall.
Nobody likes losing money, so spare a thought for Rick Wagoner, whose automotive empire is currently hurtling towards a brick wall.
Last week, General Motors (GM) reported a US$38.7bn loss for 2007, the largest annual loss ever for an automotive company.
The loss was due largely to a third-quarter charge related to unused tax credits, but it comfortably topped GM's previous record in 1992, when the company lost US$23.4bn because of a change in health care accounting.
Of course, the irony is that GM was profitable in every region outside North America.
Its Latin America, Middle East and Africa division reported a record US$1.3bn in earnings, up 140% from 2006.
GM's Asia Pacific division earned US$744m, up from US$403m in 2006, while GM Europe reported a profit of US$355m, down from a profit of US$357m the previous year.
It's back home that things aren't looking so rosy - for consumers, that ‘Made in America' sticker has become less and less of a priority as the shadow of recession looms large.
As a result, GM's North American division continues to struggle, posting a US$1.5bn loss for the year. Wagoner is still putting on a brave face, but as the Detroit-based automaker disintegrates, it is beginning to look more like a death mask.
Yet he still insists that the company made significant progress in 2007, reducing structural costs in North America, negotiating a historic labour 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 US and Germany, but we have more work to do to achieve acceptable profitability and positive cash flow," Wagoner mumbled last week.
His plan? To make a whole new round of buyback offers to US hourly workers in the hope of replacing some of them with lower-paid employees.
They're not the first US automaker to do so either - the Ford Motor Co and Chrysler LLC already have announced similar buyout offers.
GM is offering a new round of buyouts to all 74,000 of its US hourly workers who are represented by the United Auto Workers (UAW).
GM will not say how many workers it hopes to shed, but under its new contract with the UAW, it will be able to replace up to 16,000 workers doing non-assembly jobs with new employees who will be paid half the old wage of US$28 per hour.
Yet for all GM's maneuvering, things aren't about to get any easier.
The most recent earnings report and buyback offers come as the US economy is sinking slowly to its knees, and whatever Wagoner says, the uncertain climate at home will continue to stymie GM's attempts to turn itself around.
More so than ever, Wagoner will be hoping that Middle East motorists can't get enough of two-tonne Hummers and twin-turbo Chevvys.
Andrew White, Deputy EditorFor all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.