General Motors made losses of $8.6 billion in 2005
General Motors has had little to show to their investors with their performance in the year 2005. The year was a disaster for the company as they suffered losses of around USD 8.6 Billion in the year. This makes last year THE first unprofitable year in more than a decade. GM suffered heavily in their domestic market of United States and also struggled with their main component suppliers Delphi going bankrupt.
The company has also disclosed that they are obligated to pay at least $3.6 billion in benefit guarantees for some former GM U.S. hourly workers who transferred to Delphi. This figure can go as high as $12 billion. Companyâ€™s CFO Fritz Henderson said in a statement: â€œIt was not appropriate nor reasonable for us to assume that the low end of the range was still zero.â€
The company made losses of around $7.6 billion in its North American automotive operations in 2005. This included the costs of decision to close down as many as 12 North American plants and cut 30,000 jobs by the end of 2008. GM had to make these big restructuring announcements to cut costs and return to profitability as soon as possible.
GM Chairman and Chief Executive Rick Wagoner said in a statement: â€œ2005 was one of the most difficult years in GMâ€™s history, driven by poor performance in North America. It was a year in which two significant fundamental weaknesses in our North American operations were fully exposed â€“ our legacy cost burden and our inability to adjust structural costs in line with falling revenue.â€