Huge GM loss led Big Three to worst year ever

February 15, 1991|By Knight Ridder News Service

DETROIT -- General Motors Corp. and Ford Motor Co. together lost more than $2 billion in the last three months of 1990, releasing the auto industry's biggest gusher of red ink ever, and the immediate future doesn't look much brighter.

The outlook, said David McCammon, Ford's vice president for finance, is for a "substantial loss in the first quarter of 1991" and for no profit-sharing or management bonuses to Ford employees this year based on 1990 performance.

Neither GM nor Chrysler Corp. is expected to pay profit-sharing either.

Together, GM, Ford and Chrysler -- the Big Three -- reported their worst quarter and year on record, eclipsing the huge losses that marked the industry's 1980-1982 recession. Fourth-quarter losses reached $2.11 billion, compared with losses of $1.74 billion in the same period of 1980.

GM had a $2 billion loss for the full year, including a $2.1 billion charge against earnings taken last fall to cover the cost of closing and consolidating up to nine assembly plants over the next three years.

In response, GM plans to eliminate 15,000 salaried jobs through attrition by 1994 and to slash spending on plant and equipment by $500 million in each of the next three years.

With unemployment rising and the Persian Gulf war fueling uncertainty, demand for cars and trucks is weak. Dealers are extremely cautious in ordering them, so automakers have little choice but to continue paring production.

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