August 19, 2010
Online at www.uawlocal2250.com
From Automotive News: General Motors Co., moving to unwind itself from government control, yesterday filed plans to go public and begin selling common shares as early as this fall. The filing -- anticipated for weeks -- came just 13 months after GM was restructured in bankruptcy with $50 billion in direct aid from the U.S. government. GM said the amount of securities offered will be determined by market conditions and other factors at the time of the offering. The number of shares to be sold and the price range for the offering have not been determined, the automaker added. GM hopes to raise $12 billion to $16 billion with the stock sale, Bloomberg News reported, making it among the biggest initial public offerings ever. To make the offering appeal to a wider group of investors, including hedge funds, GM said it may also issue preferred shares. In a bid to preserve cash, the automaker said it does not plan to pay a dividend on the common shares after the initial offering. In the filing, GM said weak sales, underfunded pensions and the success of its restructuring efforts in Europe pose risks for the automaker. While the auto industry has recovered this year, GM said "there is no assurance that this recovery in vehicle sales will continue or spread across all our markets." Still, the automaker said it expects its global market share to rise to 12.4 percent by 2014 from 11.9 percent this year.
Q. When will these shares actually go on sale?
A: The IPO dealmay not be completed for two or three months.
Q: Who are the likely buyers of most of the shares?
A: The big kids on the block -- major institutional investors -- buy up most of these initial public offerings. Jay R. Ritter, Cordell professor of finance the University of Florida in Gainesville, said buyers for a GM IPO would likely include mutual funds and hedge funds representing their limited partners. But there will also be a retail piece of this pie, perhaps up to 30%. Talk to your broker or financial adviser. People who do not have brokerage accounts won't be able to get in on it.
Q: I never sold my shares in the old GM. Will that entitle me to any special chance to buy shares in the new GM?
A: No
Q: Is there another way to get a piece of the GM action?
A: Yes. Some investors might consider buying into a few mutual funds, such as the Direxion Long/Short IPO Fund, that invest in stocks that are part of various offerings.
Q: I buy and sell stocks online. Will I have a chance to buy shares of the new GM?
A: This is a huge offering, so it's possible that Charles Schwab and other discount brokers could have some shares to allocate to account-holders.
Q: Will GM shares again be part of the major stock indices?
A: GM was removed from the 30-stock Dow Jones IndustrialAverage in June 2009 when it filed for Chapter 11 bankruptcy. It's unlikely to be added back in the foreseeable future. The company has a better chance of eventually being added to the far larger S&P 500. Being part of one of the major indices is important because there are thousands of index funds that must buy a certain number of shares in each company that is part of that index.
From the UAW Website – Bob King letter (edited to fit page):
Dear Mr. Dornbrook:
Thank you for covering the signing of the Missouri Automotive Manufacturing Jobs Act. It’s an important measure for the overall health of American automotive manufacturing and for workers who depend on good jobs at auto plants, their suppliers and other businesses dependent on these plants and the revenue and tax dollars they generate. We are sorry you were inconvenienced and had to worry about where your car was parked while you covered the signing. The UAW member you encountered in the UAW Local 249 parking lot meant no personal disrespect to you. Accommodating vehicles not made by UAW brothers and sisters is a passionate subject for our members. Here are some facts you may want to consider about the domestic auto industry:
• The U.S.-based automakers directly employ nearly 300,000 employees – about two-thirds of all American auto workers.
• Nearly three million U.S. workers are directly or indirectly dependent on the U.S.-based automakers in jobs in the automotive parts industry, automotive research, design and engineering, and in jobs created by money spent on goods and services from the automotive industry and its workers.
•Ford, GM and Chrysler sell less than half the cars bought in the United States, but they buy about two-thirds of the parts made in the United States.
• U.S.-based automakers buy much of the steel, rubber and semiconductors made in the United States; conduct more R&D than any other industry and have invested more than $230 billion in new plants and infrastructure over the past 25 years.
• Investment in R&D has a big impact on whether tomorrow’s best jobs remain in the United States. In 2009, U.S.-based automakers spent $17.5 billion on R&D and 80 cents of every dollar was spent in the United States. U.S.-based automakers do the bulk of their research, design and engineering in the United States, unlike the foreign automakers.
• From 2001 to 2005, the U.S.-based automakers invested more in U.S. plants and infrastructure than all the foreign automakers together invested over the past 25 years. Eighty-six cents of every dollar automakers invested in America came from Ford, GM or Chrysler; the remaining 14 cents came from all the foreign automakers combined.
• Unionization of the U.S.-based automakers by the UAW was a major factor in the creation of the post-war middle class in the United States. Unionization gave workers the right to bargain for fair wages and benefits, giving them the means to buy a house, send their children to college and have a secure retirement. Workers need a voice on the job and a place at the table with employers. Union representation provides that and gives workers a ladder to economic stability. The foreign-owned automakers in the United States are mostly nonunion and resist attempts by workers to organize.
• And quite honestly, all workers’ (union and non-union, manufacturing and service, professional and non-professional) wages and benefits rose when union manufacturing workers raised their wages and benefits through collective bargaining. Health care benefits, pensions, vacations, holidays, and many other benefits and improvements in working conditions were first won in union contracts that later became standard benefits for all workers. And you may have noticed as union workers have been losing some or a portion of these benefits, so have all workers. It is no coincidence.
• Chrysler, Ford and GM manufacture vehicles with more domestic content across their fleets than the foreign brands. As an example, averaged across fleets, Chrysler’s domestic content is 76 percent; Ford, 64 percent; GM, 64 percent; Honda, 63 percent; Toyota 46 percent and Nissan, 31 percent. If the U.S.-based automakers’ domestic content shrank to the same level as the foreign automakers, it would mean $49 billion less spent in the United States, costing more than 1 million U.S. jobs.
• U.S.-based automakers have consistently been ranked high, if not the highest, in several quality categories in the esteemed, annual J.D. Power vehicle quality studies. In fact, in the 2010 J.D. Power Quality study results, U.S.-based automakers' cars ranked in the top three of 12 categories and ranked first over foreign-company brands in six of the 12 categories. Buying a U.S./UAW vehicle does make a difference.
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