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Originally Posted by FenwickHockey65
Do you have any idea what's going on at GM right now? Future product programs have been pushed up, programs that had been shelved previously are back on track, GM's R&D budget is huge now, incentives are down across the board...
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How huge is GM's R&D budget is at this point? Just a few weeks ago, General Motors Pensions were underfunded by $17B.
http://www.nytimes.com/2010/04/07/business/07cars.html
April 6, 2010
DETROIT — The pension plans at General Motors and Chrysler are underfunded by a total of $17 billion and could fail if the automakers do not return to profitability, according to a government report released Tuesday.
GM and Chrysler need to make large payments into the plans within the next five years — $12.3 billion by G.M. and $2.6 billion by Chrysler in order to reach minimum funding levels, according to the report, prepared by the Government Accountability Office. Whether the companies will be able to make the payments is uncertain, the report concluded, though Treasury officials expect the automakers will become profitable enough to do so.
If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees. The effect on the government’s pension insurer, the Pension Benefit Guaranty Corporation, would be “unprecedented,” the report said. The agency manages plans with assets totaling $68.7 billion, less than the $84.5 billion in G.M.’s plan alone…
The Treasury Department owns 61 percent of G.M. and 10 percent of Chrysler as a result of the emergency loans the carmakers received last year. The government spent $81 billion bailing out the companies and others in the auto industry.
The report issued Tuesday said Treasury officials were confident that G.M. and Chrysler would earn enough to allow the government to gradually sell its stakes. But the report warned that the government could push the companies out of business, consequently terminating their pension plans, if their recovery efforts failed.
“In the event that the companies do not return to profitability in a reasonable time frame, Treasury officials said that they will consider all commercial options for disposing of Treasury’s equity, including forcing the companies into liquidation,” the report said…
G.M. is scheduled to release its financial results for 2009 on Wednesday. Chrysler plans to provide an update on April 21.
Saving the UAW’s pension fund was part of the reason for the automakers bailout in the first place.
Furthermore the healthcare reform legislation includes a discreet injection of $10 billion into the UAW’s pension fund.
Also based on Government decisions by past and current administrations, they drove these car companies into bankruptcy in my opinion. However that is debatable I know.