GM posts record automotive losses, offers buyouts to US hourly workers

DETROIT – General Motors Corp. reported a $38.7 billion loss for 2007 on Tuesday, the largest annual loss ever for an automotive company, and said it is making a new round of buyout offers to U.S. hourly workers in hopes of replacing some of them with lower-paid help.\nThe earnings report and buyout offer came as GM struggles to turn around its North American business as the economy weakens.\nGM Chairman and Chief Executive Rick Wagoner said the company made significant progress in 2007, reducing structural costs in North America, negotiating a historic labor agreement and growing aggressively in Latin America and Asia.\nDuring a conference call with analysts and media, Chief Financial Officer Fritz Henderson said 2008 will be difficult, but the company sees the potential for significant earnings increases by 2010 or 2011 after it reduces its work force and labor costs and transfers its retiree health-care costs to a new UAW-run trust.\nThe Detroit-based automaker said it was offering a new round of buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers.\nGM won’t 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 $28 per hour.\nFord Motor Co. and Chrysler LLC already have announced similar buyout offers.\nHenderson said GM’s offer is “reasonably attractive,” and the company raised the amount it was offering to match Ford and Chrysler. He said GM wants to implement lower wages as well as lower its overall worker headcount.\n“We have a substantial amount we can do in terms of transformation of the work force,” he said.\nGM shares rose 44 cents to $27.56 in late morning trading.\nGM’s annual loss of $38.7 billion was largely because of a third-quarter charge related to unused tax credits.\nThe 2007 loss topped GM’s previous record in 1992, when the company lost $23.4 billion because of a change in health care accounting, according to Standard & Poor’s Compustat.\nExcluding the tax charge and other special items, GM lost $23 million, or 40 cents per share, for the year, compared with a net income of $2.2 billion in 2006, beating Wall Street’s expectations. Analysts polled by Thomson Financial expected GM to post a full-year loss of 95 cents per share.\nFor the fourth quarter, GM posted a loss of $722 million, or $1.28 per share, compared with a net income of $950 million in the year-ago quarter. Fourth-quarter charges included $622 million to Delphi Corp., GM’s former parts division, for its restructuring efforts, and a gain of $1.6 billion because of tax credits related to GM’s pension liabilities and the sale of GM’s Allison Transmission unit.\nGM reported $181 billion in revenues for the year, down from $206 billion in 2006. Its automotive business saw record automotive revenues of $178 billion in 2007, up $7 billion from a year ago thanks to growth in emerging markets and favorable exchange rates.\nGM was profitable in every region outside North America. GM’s Latin America, Middle East and Africa division reported a record $1.3 billion in earnings, more than double that of 2006. GM’s Asia Pacific division earned $744 million, up from $403 million in 2006, while GM Europe reported a profit of $55 million, down from a profit of $357 million in 2006.\nGM’s North American division continued to struggle, posting a $1.5 billion loss for the year, nearly identical to its $1.6 billion loss in 2006. GM’s North American division also reported a loss of $1.1 billion in the fourth quarter, compared with a loss of $129 million in the year-ago quarter.