General Motors still losing money
The forecast is bleak for General Motors after a poor second quarter earnings report.
GM has reported a $286 million loss this past quarter, the third consecutive quarter which it is has lost money. GM's deficit is largely due to its poor showing in
North America, which reported a loss of $1.2 billion compared to its $355 million profit one year ago.
Among those most adversely affected by GM's market loss is the
US steel industry, which provides almost 98 percent of the steel used in GM auto
production.
General Motors' North American market share was actually slightly up in the last quarter, as a result of GM's June promotion, which offered all customers so-called GM Employee Discounts. However, neither this slight boost in North American sales, nor modest profits in
China,
Europe, and Latin America, were enough to lift GM out of its financial doldrums.
As a result, two of the three major credit agencies have reduced GM's stock to junk bond status.
Major factors for this market loss include: exorbitant steel, commodities, and employee health care costs; as well as a weaker demand for SUVs due to high fuel prices.
To offset their loss, GM expects to cut 25'000 jobs from payroll by 2008 and to make serious health care concessions as well. It will also close North American plants, reducing vehicle output by 500'000 vehicles per year.