GM Posts $15.5 Billion Loss in Q2 2008

General Motors today announced its financial results for the second quarter of 2008, which saw the largest U.S. automaker report a loss of $15.5 billion mainly due to plunging sales in its core North American market and the dramatic shift in consumer tastes from the very profitable large pick-up trucks and SUV segments to smaller and less lucrative passenger cars.

The massive second-quarter loss, which compares with an $891m net income in Q2 2007, includes $9.1 billion in special items, such as $3.3 billion relating to the GM’s North American hourly special attrition program, $2.8 billion adjustment to the Delphi reserve and $1.1 billion in restructuring and capacity related costs. Although GM posted a profit of $400 million for its automotive operations outside North America, a $4.4 billion loss in its problematic home turf resulted to an adjusted loss of $4.0 billion on automotive operations. -Continued

GM recorded $9.1 billion of special items, predominantly non-cash in nature for the current quarter or near-term periods, which include:

$3.3 billion relating to the 2008 GMNA hourly special attrition program

$2.8 billion adjustment to the Delphi reserve

$1.1 billion GMNA restructuring and capacity related costs

$1.3 billion impairment of GM’s equity interest in GMAC

$340 million Canadian Auto Workers contract-related accounting charges

$197 million related to settlement of the strike at American Axle

Ford Cuts Dozens of Design & Engineering Jobs from its U.S. Operations

Ford’s drastic transformation plan that includes the reduction of salaried-related costs by 15% until August 1, 2008, has claimed dozens of design and engineering positions at its U.S. facilities. According to a report from Wall Street Journal, the scene at the company’s product development center in Dearborn, Michigan on Thursday, July 31, was described as dramatic by observers with at least one engineer had to be escorted out of the building by security guards. -Continued

The reports states that the involuntary layoffs took their toll in Ford’s U.S. design operations which saw half of the company's 50 design modellers and three-quarters of its scanners (specialists that scan clay models and turn them into digital information) lose their jobs. Amongst others, Ford reportedly laid off Richard Gresens, the designer of the new Flex seven-passenger crossover.

Apparently, the layoffs in the design and engineering sectors also have to do with Ford’s recent decision to infuse its line-up with more Euro-models, meaning that its European operations will most probably get the upper hand in the company’s creative departments.

Via: WSJ