John Shiels

If they are not viable GM may have the federal loans recalled. Then they would be forced into bankrupcty which they are not likely to come out of. If they do come out the will be in very sad shape. Does not make me feel good having two Corvettes in the garage.

CHJ In Virginia

There have already been numerous posts on the forum about parts being on "eternal" backorder from the General. Racers, you better buy that spare LS6 crate motor now, it probably will not be available much longer. Does any body know if Bowling Green has reopened ? With some 7000 finished cars on the dealer lots and storage depots, the future of our beloved cars looks bleak.

John Shiels

LS7 blocks are not available now I was told along with many other parts. I personally cannot get a piece of weatherstripping after 9 months for a C5. I did get it from old stock someone bought when GM updated the piece otherwise I would still be waiting.


I am about ready to dump both my cars before they turn to Yugos. If everyone is looking in scrape yards for parts I can't imagine the prices. Some things are vin specific and will not work from a scrap yard I am told.

You street car gets wrapped up what happens with no parts? What does the insurance company do? Some have ask the insurance company already and they said they have no idea.

Aardwolf

There will be more cars parted out if parts go up in price.

John Shiels

Phil Le Nervre (CNBC auto expert) just said if GM does not get the 7 billion from the gov. they will be forced to liquidate as there is not enough private capital available for debtor in possession to get them through a bankruptcy. They next 45 days he said will tell if if Ford and GM will make it through.

Yugo America is coming.

Bet the Chinese make a move for GM if it comes to liquidation.

Independent1

My brother and i have recently ordered parts for our vettes (both C5s) with no problems.

We deal with Gene Culley.

FWIW, auditors are required to issue a "going concern" opinion when there are "substantial doubts" about whether a company can continue in business.

Given that GM got a federal bailout to stay afloat should be sufficient to meet that criteria. Same can be said for any company that needed a federal bailout, which should now include Honda and Toyota since they have requested the Japanese government give them loans.

John Shiels

GM is out of money already by the end of March. If they don't get more they are toast along with our cars. I deal with Gene also and many parts are simply not there Gene cannot make parts only order them like the rest of the dealers. Member here need a rack on a C5 and it is listed as obsolete.

GM had to buy back part of Delphi or they would have no steering assemblies for most or all of their vehicles. Ford had to buy back part of Visteon they spun off. Parts will be dire soon as many as 40% of the parts suppliers are expected to fail this year affecting all cars foreign too getting parts from these suppliers.

I think they are in such dire shape they should can all their racing. They are probably going to losing all their worldwide brands like Opel and others. Saab is bankrupt and probably not survive.

Local tuner needed a LS-7 block and there were none available so now how does his business operate?

0Randy@DRM

We spent over 200k on GM parts last year We have already bought a ton this year, with crate engines and what not.

Randy

John Shiels

Said to be way cheaper to keep them going until things improve than pick up all the associated cost of a GM failure even though the numbers are staggering.



Thursday, March 5, 2009
GM auditors raise doubts on automaker's viability
Robert Snell / The Detroit News
DETROIT -- General Motors Corp. says there is "substantial doubt" about the company's viability and that bankruptcy is possible unless it can implement a broad restructuring plan, according to a regulatory filing today.

An independent audit done by GM's accounting firm found "our recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern," GM wrote in its annual report filed this morning.

The report says GM's ability to survive largely hinges on a rebound in vehicle sales. U.S. vehicle sales have fallen 40 percent from the peak in 2007 and global sales have fallen 23.5 percent since January 2008.

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GM, which reported Tuesday that last month's sales fell 53 percent, expects sales to decline more this year before starting to recover in 2010.

"Sales volumes may decline more severely or take longer to recover than we expect, however, and if they do, our results of operations and financial condition and the success of the viability plan will be materially adversely affected," GM wrote in the filing.

GM shares fell 33 cents, or 15 percent, to $1.87 this morning in early trading on the New York Stock Exchange.

The annual report also showed GM cut the total compensation of chairman and CEO Rick Wagoner last year to $5.5 million, down from $14.1 million the previous year. Wagoner, who is taking a $1 salary this year, received a $2.1 million salary last year and was not paid a bonus, according to the filing. President and Chief Operating Officer Fritz Henderson, meanwhile, was paid $1.7 million last year, a 76 percent pay cut.

The auditors' conclusion was not unexpected. GM signaled last week that it would receive a "going concern" opinion from auditing firm Deloitte & Touche LLP, which was paid $38 million to audit GM's annual consolidated financial statements and provide other services.

The public, suppliers and people tied to the auto industry should not overreact, though, because the federal loans, Obama's economic-stimulus package and the automakers' restructuring plans will help salvage the industry, said Kimberly Rodriguez of the restructuring firm Grant Thornton LLP.

GM has assessed and rejected the option of filing Chapter 11 bankruptcy, saying it would further hurt sales. The automaker also said it would need as much as $100 billion in government aid to operate after filing bankruptcy.
The automaker had to secure amendments and waivers from key lenders last year because there was substantial doubt about GM's viability. The waivers kept GM from violating debt agreements, but the company will need additional waivers if auditors come up with a similar conclusion this year.

GM listed a number of risk factors that could affect the company's operations and financial condition.

Those include extracting concessions from the United Auto Workers and bondholders.

GM has until March 31 to make progress on concessions with the UAW and bondholders, two key parties that hold power to help the struggling automaker restructure and become a viable company.

Terms of the $17.4 billion loan package that is keeping GM and Chrysler LLC afloat during a slumping sales market require GM to restructure payments into a UAW-run retiree health care trust and to cut the automaker's unsecured public debt by two-thirds to $9.2 billion.

The Detroit automaker almost ran out of money in December before winning commitments of up to $13.4 billion in federal loans. GM said last week it needs up to $16.6 billion more to survive the weakest sales market since the early 1980s, including $2 billion this month to avoid bankruptcy.

GM ended the year with $14 billion in cash, securities and readily available assets -- about $3 billion more than the minimum amount it needs to pay bills.

The automaker, which has lost about $82 billion in recent years, is implementing a broad cost-cutting plan aimed at becoming a viable company and repaying the federal loans.

GM is eliminating 47,000 jobs this year, shuttering 14 plants by 2012 and selling, shrinking or killing its Saturn, Hummer, Pontiac and Saab brands. Saab filed for reorganization last Friday in the Swedish equivalent of a Chapter 11 bankruptcy.

GM also is forcing most of its U.S. salaried workers to accept temporary pay cuts.

0Randy@DRM

100 Billion dollars That sounds like a Doctor Evil saying

Randy

88Z51

Trust me, the sky isn't falling. For example, GM has not made 69 Camaro bodies for decades, but yet right now you can go out and buy a brand spanking new one made by an aftermarket supplier. Your weatherstrip? It's just a matter of time before an aftermarket manufacture starts to reproduce them. I mean it's not like you can go to your local Chevy dealer and get new door weatherstrips for your 59 Corvette. But place a phone call to any number of rubber companies and in a few days you'll have a brand new one. Just because GM hasn't made parts for many of its older models for decades doesn't mean they have to be scrapped.

John Shiels

was not fun waiting 9 months and it is still not available I lucked out with old stock someone bought on an osolete part. The sky will fall if 40% of the parts suppliers go bankrupt as they say may happen this year. Go to Mid America and see how much weatherstipping is not available for a 05 car.. If they go bankrupt you would have a major problem.

The person making the Camaro body had to get a release from GM also and buy the tooling. I personally don't want to be searching for a patch work of parts suppliers like a restoration guy does. modern cars are not like restoring computer clad cars and dealing with emissions. You need an LS7 block sit and wait or pay big bucks for a aftermarket.

I doubt the gov. can let them go under the cost to the economy would be horrible at this time. The cost to the gov. in lost taxes, wages, pensions, unemployment and health care would be staggering.

88Z51

At this point, the aftermarket has not started to manufacture some parts simply because the cars are not old enough yet for things like weatherstripping to be needing to be replaced. As the cars age and there is enough demand, the aftermarket to tool up and start reproducing it. For example several years ago there was no aftermarket source for most C4 weatherstrips. As the stuff wears out, the demand increases and eventually justifies the cost of reproduction. Many weatherstrip items are now being made for C4's. With the amount of C5's and C6's made, I would sure expect aftermarket weatherstripping will become available when the market supports it.


Just as with most any aftermarket part, the aftermarket manufacture must pay the tooling costs to reproduce it. The end result is often a higher quality part which usually costs less money than the GM one did. In the case of the Camaro bodies, the aftermarket mfg had to license them with GM's "Equity Management" division and pay a royalty to GM with each one sold. No more GM would eliminate the royalty and would therefore reduce the cost of that (and many other) aftermarket "Licensed by GM" parts.

As for having to scrounge around for parts, I think it is safe to say that once aftermarket weatherstrips for example become available, you will be able to purchase them from Mid America. You don't think every part they sell is made by GM do you? There are MANY emission and computer related components that are available from sources other than the OEM. There are also many companies who rebuild / repair emission and computer components. For example, some of the C4's anti-lock brake parts are no longer available from GM, but yet there are companies who rebuild / repair the various components. Same with the "star wars" dashes on the early models. I guess if you don't want to have to deal with this kind of searching, then it would probably be best to stick with new cars and their warranties.

At least there is an option. Not that many years ago the dealer was the only place you could get a new block. Now you have choices.

I don't want to see GM go under either. But I just don't see the sky falling if they do. Just because you can't buy a part from GM doesn't mean the part is not available elsewhere.

0Randy@DRM

88Z51

I agree with some of your posts. Many aftermarket parts flatout suck and shouldn't be drivin hard. The factory spends more time and money designing and testing the parts then the aftermarket huge corps.

Randy

CodeBlack

John, every chevy dealer that I've called gave me the same answer when I asked for parts for the C6Z06. INVENTORY NOT AVAILABLE. I would not want to get into an accident. How are the body shops going to get OEM replacement parts. GM customer service wouldn't give me an answer

sothpaw2

I couldn't agree more. GM performance parts included, every aftermarket part I've purchased for my GM cars (and there haven't been many, I catch on) has been garbage. Life is rarely so one-sided. Rebuilds of GM parts have been ok, I'm talking new after market ignition modules, alternators, and my beloved GMPP LT4 extreme duty timing set (biggest POS ever made).

As for not wanting to chase parts like a restorer--yes--I will stick to new cars instead. 99% of people will be with me. Nobody has the time for the hassle unless the car is a toy rarely driven. I bought my vette to drive.

ajg1915

I'm with my brother, I have had no problems buying parts for my C5 from GM.

If you get down to it, all the companies being bailed out by the Government should receive a "going concern opinion" as they have insufficient capital and or capital resources to continue without additional funding for a period of 12 months (i.e. one year cycle).

This includes the banks, GSE's Freddie and Fannie, Auto Companies, AIG, etc ...

As for the aftermarket parts, there's alots of good suppliers out there for general parts and quite a few salvage yards for harder to find parts.

Hopefully, things will get back on track and the economy will rebound some later this year.

John Shiels

Tuesday, March 10, 2009
Cracks in auto supply chain spreading
Automakers' drops in demand, unpaid bills put stress on Visteon, Delphi, others mired in crisis.
Alisa Priddle / The Detroit News
The automotive supply chain is at a breaking point with no cash, no credit, no decision on a request for $18.5 billion in federal aid -- and a lot of bills to pay.

The next company to fall could be Van Buren Township-based Visteon Corp., which owes $16 million today on a bond payment and is widely believed to be on the bankruptcy bubble. But hundreds of smaller suppliers could be forced into bankruptcy court, too, as they struggle in the worst auto market in decades.

"With the industry being down, our biggest concern is the health of the suppliers," Ford Motor Co. Chief Executive Alan Mulally said Friday.


Suppliers face a money crunch now because March is when they typically get paid for parts they ship in December and January, but automakers all but shut down in those months. With vehicle production ramping up again, they need money to pay for raw materials. But no parts shipped means no income, said Neil De Koker, president of the Original Equipment Suppliers Association, a Troy-based trade group.

Suppliers may see just $2.4 billion in revenue in March, down from $8.4 billion a month at the end of 2008, according to a report to the Treasury Department from Ducker Worldwide LLC, a consulting firm.

Many parts makers began 2009 with losses, plans to further cut costs, little liquidity and forecasts that production would be cut in half for much of the year.

Today, "two-thirds of suppliers are in a negative cash flow situation," said De Koker, who is hopeful the government will decide on aid as early as this week. Members of the White House's auto team were in Detroit on Monday to meet with General Motors Corp. and Chrysler LLC officials before deciding whether to grant their requests for up to $21.6 billion in additional loans; they have already received $17.4 billion.

The troubles of the supplier sector are also critical for Japanese that produce vehicles in the United States.

Jim Lentz, president of Toyota's U.S. sales subsidiary and its top U.S. executive, will raise the automaker's concerns about U.S. suppliers Wednesday when he meets with the White House auto team, company sources said. Toyota has not been hit as hard by the sales downturn as Detroit's automakers, but it relies on many of the same suppliers for its U.S. assembly plants.

Close to half of Toyota's U.S. parts supplies, in revenue terms, are produced by component manufacturers that also supply Detroit's automakers, according to Birmingham consulting firm Planning Perspectives Inc.

Tom Spillane of Foley & Lardner LLP in Detroit, who helped with the suppliers' proposal for aid, said the government knows time is critical as suppliers struggle to ramp up production with no cash and no financing. "Everyone understands it's an emergency."

One in four parts makers surveyed by the supplier association said they would be in severe distress by the end of March and 31 percent by the end of June, De Koker said. The respondents were of all sizes and represented the full spectrum of the supply chain, from stampers to tool vendors.

Visteon's troubles could have a significant effect on Ford, which counts on the supplier for 30 percent of its business. Analysts believe Visteon will hold on to the money it owes for its bond payment to use toward debtor-in-possession financing for bankruptcy. A Visteon spokesman declined to comment.

The supplier was delisted from the New York Stock Exchange last week when its shares closed at 2 cents under low volumes.

Last week, the ailing company paid bonuses to about 2,700 of its 8,700 salaried workers, most of them in the United States. A spokesman said they are part of an annual program to reward quality and a 36 percent improvement in 2008 triggered a payout.

Visteon isn't alone in its troubles. American Axle & Manufacturing Holdings Inc. shares on Monday closed at 29 cents, and a growing list of major suppliers are trading for pennies. Others that have been trading for less than $1 include Lear Corp., ArvinMeritor Inc., Dana Corp., Delphi Corp., Tenneco Inc. and Hayes Lemmerz International.

"Over the next six months it will be a bloodbath in the supply industry," said Charles Chesbrough, chief economist at CSM Worldwide of Northville.

The nature of the supply chain is that the big auto parts makers, or Tier 1 companies, rely on hundreds of lower-tier companies. For example, steel from a Tier 4 supplier is sent to a Tier 3-forging company that cuts it into pieces that are sent to a Tier 2 supplier that machines them into gears. The gears are sold to the Tier 1 transmission maker who supplies the finished gearbox to an automaker. Failure at any of these levels can stop an assembly line. The intertwined relationships rely on the final customer, the automaker, being financially stable and able to pay the bills.

The attrition rate in the supply chain has been 5 percent to 10 percent with about 40 major bankruptcies in 2008, many of them progressing rapidly from Chapter 11 to liquidation, said Dave Andrea, OESA's vice president of industry analysis and economics. That figure could easily double in 2009, he said.

Even with attrition, there are too many suppliers, and failure to shrink the supply base in an orderly fashion means it will occur in a more painful way, said Tony Brown, Ford group vice president of global purchasing.

Suppliers still employ about 700,000 in the U.S., but the number of companies has fallen below 5,000 from 20,000 in 1990, according to the suppliers' association.