Archive for the ‘Unions’ Category

Fat Cats


Fed Purchases Up 36%, Dealers Jammed With Inventory To Make Obama Look Good

From the National League & Policy Center:

GM’s Government Fleet Sales and Truck Inventory Rise

Submitted by Mark Modica on Thu, 07/05/2012 – 17:50
Printer-friendlyPrinter-friendlyEmail to friendEmail to friendIt looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the “success” of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June.

The discovery of the pick-up in government fleet purchases at the taxpayers’ expense comes just weeks before GM announces its second quarter earnings. Overall fleet sales (which are typically less profitable than retail sales) at Government Motors rose a full 36% for the month, helping to drive decent sales improvements year over year.

GM claimed that sales increases did not rely on incentive spending, which appeared to remain in check, but one analyst during GM’s sales conference call questioned whether the company’s “stair step” incentive spending was accurately depicted. This incentive spending kicks in after dealerships report final sales figures for the month and may be yet another deceptive way for GM to fudge its numbers. Not mentioned was GM card rewards programs that do not get counted as incentive spending.

The government’s increased spending on GM vehicle purchases presents yet another conflict of interest as Treasury refuses to sell taxpayers’ stake in GM and Obama campaigns on the auto bailouts. It does not appear that any members of Congress (from either party) are questioning the increased spending. Also ignored was the Department of Energy’s gifting of $2.7 million of taxpayer money to GM to reduce energy consumption in its door manufacturing process by 50%. The DOE seems to be one of the main conduits to funnel taxpayer funds to cronies of the Administration. The $2.7 million contribution to GM comes after additional millions of dollars were spent by the DOE on advisory fees paid to legal firms that helped smooth the way for the GM bankruptcy process (as reported here); another move that went unquestioned.

The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how “successful” GM is. One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. According to a Bloomberg report, “GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.” 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.

The article goes on to quote Kelley Blue Book’s Alec Gutierrez who stated “They’re (GM) likely going to have a relatively high days supply of trucks moving forward and they’re already placing some pretty aggressive cash incentives on the hood. It’s going to eat into their profit margins…”

GM’s earnings announcement comes on August 2nd. The main headwinds will be weak European operations and growing pension liabilities. The headline number for earnings should be viewed skeptically and an eye kept on the share price reaction after the conference call. Expect Government Motors to put a positive spin on its financial health as the stakes are now at their highest. The long-term health of GM remains in question and the true financial picture may not surface until well after voters decide who will be running our country. Eventually we will see just how successful GM really is.

Mark Modica is an NLPC Associate Fellow.

Update: GM sales spokesman, Jim Cain, points out that total government sales for GM in June were still below 5% of total sales and majority of government sales increases were attributed to state and local governments.


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It seems Right To Work states enjoy a ‘growth advantage.’  The U.S. Commerce Department just released its estimates for 2011 state personal income.  It seems there’s a strong correlaion btween compulsory unionism and economic growth…or the lack thereof.  From 2001 to 2011 twenty-two states had Right To Work laws, prohibiting forced union dues. Last month Indiana became the 23rd Right To Work state.  During that ten year period real compensation in Right To Work states grew at 12.5% while union states grew at only 3.1%; and employment grew at 2.4% as opposed to a loss of 3.4% in union states.

Time changes all things, and it’s become join a union and make the union bosses fat and filthy rich, rather than join a union and get better working conditions.  State and Federal laws have replaced unions in protecting the work place and workers.  Unions are out of date, and like spoiled milk, should go down the drain.  Among the worst things ever to happen to America was John Kennedy allowing public unions, and among their many other sins, they are breaking the country with excess perks and retirement.

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