GM tests the limits of financial engineering

A top-notch pension scheme and subsidized healthcare ensure employees love working for General Motors. But the costs place a huge strain on the finances of one of the world's biggest bond issuers. Smart financial engineering has eased investors' fears over these liabilities. But GM must now address weak profitability in the car business. Its financing arm can't bail it out for ever. Kathryn Tully reports.

Jonn Devine, GM’s CFO, is described as a visionary thinker and a risk-adverse manager.

IT IS ONE of the world’s top three bond issuers. In terms of assets, it’s among America’s largest banks and makes most of its money from mortgages. It has 340,000 employees worldwide and vast purchasing power. It is second to only the government as the largest purchaser of Viagra in the US and is the world’s biggest buyer of golf balls. Yet neither banking, executive sports or performance-enhancing pharmaceuticals are its main line of business and it isn’t a conglomerate.

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