After the defeat of a congressional bill to bailout GM and Chrysler and prevent their demise, the Bush administration is now considering a direct loan to automakers.
Today, aboard Air Force One with President Bush on his way to Texas, White House spokesperson Dana Perino made the following statements:
Given the current weakened state of the U.S. economy, we will consider other options if necessary, including use of the TARP program, to prevent a collapse of troubled automakers.
Under normal economic conditions, we would prefer that markets determine the ultimate fate of private firms.
A precipitous collapse of this industry would have a severe impact on our economy and it would be irresponsible to further weaken and destabilize our economy at this time.
While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.
Congress spoke last night. They don’t have the votes to do anything. They didn’t get it over the goal line, and so we have to consider what other options we would take, but I don’t have a time frame on it.
Well maybe George Bush will get us plugged in after all.
Source (Reuters)
[UPDATE 1:30 PM EST - Sources have advised me that high level GM lobbyists are currently in communication with the Bush administration if an effort to receive TARP funding. You can send your messages of support for this funding to comments@whitehouse.gov]
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Dec 12th, 2008 (11:10 am)Losers here still think GM is going to survive?
Wake up!
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Dec 12th, 2008 (11:11 am)In the words of the late, great, Jim Healy, “Comment…………………… No Comment!”
Or, IYCSANJDSAAA
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Dec 12th, 2008 (11:14 am)UAW cut their own throat when they refused to accept cuts till 2010
Can’t blame anyone else, except maybe the BOD & management.
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Dec 12th, 2008 (11:22 am)DrG, #1.
Losers here still think GM is going to survive?
Wake up!
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Thank you for the compliment.
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Dec 12th, 2008 (11:23 am)Ok Ok I’m awake.
I think they will survive inspite of the grumbling and pessimism.
I am not a telephone person but I did email President Bush and my two state senators asking them to help our US auto industry as soon as possible.
I know, the emails probably don’t get read but I’m hoping at least someone in gov. keeps some-kind of score.
Be an optimist it’s better for your health.
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Dec 12th, 2008 (11:28 am)Reposted from #95/last article.
Congressional Republicans force Bush to use TARP funds to save Detriot, something that Congressional Democrats could not get him to agree to. Do Congressional Republicans think that they will get a better deal from Obama and the Democratic Congress in February than Bush brought them yesterday? TARP funds, not green car funds? Pelosi 7, McConnell 0.
http://www.marketwatch.com/news/story/Treasury-stands-ready-assist-auto/story.aspx?guid=%7B081CBE42%2D3D1B%2D4884%2DB83F%2D2790DF2BB542%7D
Swiss banking execs do what Wall Street execs would not: giving back up to $80 million in bonuses for the debacle that occurred on their watch.
UAW doing what Wall Street execs would not: per Politico, UAW willing to take the pay cuts by 2011, just not next month. Anyone here remember that Bush and Congressional Republicans said that cutting golden parachutes for millionaires was a deal-breakter? Apparently not immediately slashing wages for guys making $50K a year was a Republican deal-breaker as well.
UAW willing to do what bond holders were not: take up to 50% off the market value of what GM owes them in exchange for equity. UAW agreed to take 1/2 the retiree health insurance payments, and equity in a worthless company. This is money that Wagoner testified was already set aside and guaranteed, and which would likely have been 100% protected under Bankruptcy law and ERISA. In contrast, Corker stated during the hearings that bond holders were willing to take 30 cents a share, when the market was only offering them 15 cents a share, and when they would likely get 0 cents on the dollar in Bankruptcy. Further, MarketWatch (a Wall Street Journal-owned site) reported GM tried to get creditors (including bond holders) to take equity instead, and found few takers.
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Dec 12th, 2008 (11:33 am)DrG, #1.
Losers here still think GM is going to survive?
Wake up!
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GM will survive. It’s not over yet. The White House still has options and Obama is working behind the scenes. Something is going to happen. Worse case scenario is that our Volt’s will still be made, but it’ll just be stamped with “Made in China” like everything else we buy.
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Dec 12th, 2008 (11:38 am)# 3 BDP
“UAW cut their own throat when they refused to accept cuts till 2010″
According to Fox Business, this morning, Honda and Toyota workers get about $45 / hr. VS. UAW workers who get around $72, if you count everything.
Sen. Corker today said that they had a deal in hand with the bond holders, and other debtors who were willing to relieve GM, etc. of a majority of debt. The only stumbling block was the UAW agreeing to wages competitive with Honda, Toyota, BMW, and Nissan. They refused.
He said the deal would have made them extremely competitive, for many years.
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Dec 12th, 2008 (11:39 am)P.S. I want to say publicly, for the first (and probably last) time in my life, “THANK YOU GEROGE W. BUSH.” Thank you for not allowing hundreds of thousands of workers to lose their jobs. Thank you for not deepening the recession. Thank you for giving Detroit and American manufacturing another chance. Thank you for COMPROMISING by letting TARP funds be used. As crazy as some surely think that I am, the stock market is responding favorably.
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Dec 12th, 2008 (11:48 am)Too much drama over a fairly straightforward problem. Whatever its problems, we can now see that TARP, with its almost complete lack of congressional involvement, is vastly superior than having politicians micromanaging bailouts.
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Dec 12th, 2008 (11:50 am)Paulson, Bernanke, and Gettlefinger: Here It Comes!
Tonight the UAW decided to destroy the United States auto industry, refusing labor cost parity on an immediate basis as the price of a bridge loan for the auto industry.
Labor cost parity should have happened fifteen years ago.
Tonight, it was the last straw, and the game of chicken that the UAW played with the American economy turned into a head‐on collision at 140 mph.
Mr. Gettlefinger, this is your responsibility. GM will file bankruptcy within days if not hours. Your employees will lose their jobs. Ford will survive, but all auto production in the United States will be non‐union within 12 months.
You have proven the age‐old canard that labor unions will literally destroy a company in order to prevent accepting that the labor costs you demand a firm stomach cannot be afforded. At a time of deep economic recession your arrogance and personal decision to destroy the jobs of over a million Americans is breathtaking.
You’re done, the UAW is done, and you both deserve to be done.
The bigger story, however, is how Bernanke and Paulson ruined this nation. How they poisoned the well by lying repeatedly to the American People and Congress, destroying trust between everyone who comes before Congress and Congress.
Congress finally had enough, and the vote went down ‐ this time into the maw of the holiday recess ‐ the last holiday recess.
It’s over.
For that, Mr. Bernanke, Mr. Paulson and Mr. Gettlefinger, you must all share responsibility ‐ for you are all responsible, personally, for what is to come in this country.
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Dec 12th, 2008 (11:51 am)I gotta stop reading the blogs here everyday…my head’s starting to spin! One day GM’s getting bailed out…the next day they’re going Ch11…or worse, Ch7…and the day after that Bush saves the day! What is this world coming to?!
I’ll check back when there’s news about the Volt…this “As The GM Turns” stuff is making me ill… /grin/
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Dec 12th, 2008 (11:51 am)#9 MarkinWI Says: “P.S. I want to say publicly, for the first (and probably last) time in my life, “THANK YOU GEROGE W. BUSH.” Thank you for not allowing hundreds of thousands of workers to lose their jobs.”
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Yes, I feel the same way.
By the way, I heard a collapse of the auto industry would lead to around 3 million lost jobs, and cost taxpayers over $100B in unemployment benefits and lost income tax revenues.
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Dec 12th, 2008 (11:52 am)Aw man, all this is making me need a drink. But it’s too early in the morning….
I’ll get a coffee.
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Dec 12th, 2008 (11:53 am)Through the month long funding debates, the EV and E-REV world hasn’t stopped turning.
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Is President Bush plugging into that hydrogen car, or unplugging?
caption: “Just give it a little tug, hee hee. There you go (smiles)”
Why is Mr. Halliburton smiling?
http://garfwod.250free.com/Photos/1_hydrogen.jpg
=D~
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Dec 12th, 2008 (12:00 pm)Dave G. @13 – Right you are sir!
And, I have to say, I love the Dana Perino quote. Sober, thoughtful, responsible, and non-partisan.
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Dec 12th, 2008 (12:07 pm)hi MarkinWI #16 & Dave G. #13,
“…lost jobs, and cost taxpayers over $100B in unemployment benefits…”
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We all realize this. The question is ‘when’. Before we bailout now or after several bailouts later.
I love America and have worked hard for decades to make America the best it can be. I want America to be a safe place to raise the children of tomorrow. Can we please move away from using OPEC oil? The Big 3 are not EV companies. They are gasoline vehicle companies. Should we spend all available funds to continue to prop up this type of technology. Any other efficient companies wishing to expand, and hire more employees, more deserving?
Am I way off base with this thinking?
=D~
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Dec 12th, 2008 (12:12 pm)I can’t believe you are supporting a bailout of a behemoth like GM just for the Volt. They have great tech labs but never capitalize on it – like killing the EV1. They even had the idea of hybrids in the 1960’s. Now we seem to have followthrough with the Volt. But just look at the Volt. It will be produced in low volume and very expensive. By the time it is affordable who knows what all the other automakers will have. Enter VW twin drive, Prius 3, Insight 2, Tesla S.
I realize the pure electric drive e-flex is more idealistic in the fact that the gas engine never drives the car. But in a way the Volt is carrying around so much dead weight. With all the engineering and maintenance involved having electric and gas engine in the same car – I begin to think a Prius Synergy is better after all. What they should have done was make a smaller lighter Golf sized car that is pure electric and sink all the weight and money in batteries. The engineering would be more simple and there would be an option to subsidize the batteries. In a project better place scenario the power company might pay to allow the car to be on the smart grid at peak hours.
Also, I just think the styling of the Volt is mundane and I would not buy it if it cost 15,000 if it were a gasoline car. It is a shame they did not make it really iconic. This just reinforces the point that GM can’t make really desirable cars – except the new Camaro which is still too bulky and not a hybrid. I bet GM will still delay the Volt and never intended to be serious about it – just marketing against CAFE standards and the coming bankruptcy they knew was coming.
In some ways I feel that Lyle has been used as a pawn.
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Dec 12th, 2008 (12:14 pm)This whole situation is disgusting. Even if they get this money from Tarp, GM wont survive. Unless the government continues to pump in money at regular intervals. Then we will have a taxpayer supported auto industry. Their bloated business and labor models are not possible for a private company to sustain.
No thanks, I’ll go with the growing boycott of GM that is gaining ground everyday. The madness has to stop.
R.I.P. Volt
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Dec 12th, 2008 (12:17 pm)#13 Dave G – “By the way, I heard a collapse of the auto industry would lead to around 3 million lost jobs, and cost taxpayers over $100B in unemployment benefits and lost income tax revenues.”
Probably too big a number by quite a bit. The number probably included things like lost taxes, etc. Put them all together and it’s probably low.
However, it doesn’t even address the credit debt swaps which would have to be probably have to be paid for by institutions which would need more bail out money. That could be very nasty.
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Dec 12th, 2008 (12:23 pm)hi CaptJackSparrow #14,
“Aw man, all this is making me need a drink. But it’s too early in the morning….
I’ll get a coffee.”
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You got that right. When I get to feeling like this it’s off to the gym. See you all later, and thank you for these great talks. God Bless America.
=D~
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Dec 12th, 2008 (12:25 pm)Here’s a black eye for GM. They opted for a more superior and mature affordable product, Toyota Camry, instead of the American GM auto.
#13 Dave G
You are wrong. The total of lost jobs from GM is only a fraction of that 3million. Everyone needs to get this straight, when you quote this massive loss of jobs, you’re quoting the businesses. Take GM for instance, GM lacked the foresite and business “Adaptation” to survive. This makes them non competitive because of the piss poor decision they made and continue to make. Now you want to help them and bail them out for their piss poor decisions. Fine that’s one company.
The massive loss of jobs indirectly affected is the rest of the 3million. These are the businesses that should have been making adjustments a year ago. Look for differen’t products to offer, sell internationally/go global, diversify products/services. The writing has been on the wall for well over a year, they should’ve made their changes to survive. If they go out because GM goes out, then it’s their fault and they deserve to gou as well.
What you are really saying is “Save GM and all the other lame companies that lacked the same foresite and execute the same ill fate business decisions GM made….”
The funny part of this is, I occasionally eat at a Chinese restaurant. Since this crisis, they have added a menu of “American” (mashed potatoes & gravy, corn, fried chicken…..etc.) foods. This is a perfect example of how a business should “Evolve”.
What a joke.
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Dec 12th, 2008 (12:26 pm)Here’s the black eye I mentioned…
http://www.indystar.com/apps/pbcs.dll/article?AID=/20081204/LOCAL18/812040434
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Dec 12th, 2008 (12:32 pm)Wait, Bush is doing something? He’s an oil scum! He probably made the condition that plug-in cars like the Volt to be killed in order to get any loan.
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Dec 12th, 2008 (12:32 pm)Come on G.W, for ONCE do the right thing. THIS will be your legacy, at the end of the most disasterous, humiliating, destructive period in US history, let the history books say George W. Bush saved the US auto industry and the WORLD economy from a calamitous economic depression.
You can do it Mr. President. One last chance. For the sake of the world, American, the troops, the Republican party and what history will say of you. There will be no greater irony then when we read years from now, “In the closing days of his administration, President George W. Bush saved the world.”
You can do it. Please.
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Dec 12th, 2008 (12:34 pm)(Not mine – reprinted from an acquaintance. Lurtz)
(full disclosure — I work for an auto supplier — fortunately, most of our sales are to European OEMs)
The thought process that has evolved is as follows:
1. GM or Chrysler (or both) go under by end of December without a bailout (Merry Christmas!)
2. Failure of one or the other pulls somewhere between 1/3 and 1/2 of the supplier base with them
3. Collapse of the supplier base pulls the other Detroit 3 (including Ford) down with them.
4. This, in turn, causes most of the rest of the supplier base to collapse.
5. This, in turn, pulls down at least several of the weaker transplants, and possibly even a bigger one (Toyota is the one I keep hearing rumors about).
The conversation amongst our higher ups was that if all three of them go under, most of the town is toast.
As an accountant, I suppose I should brush up on liquidation accounting and bankruptcy law…
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Dec 12th, 2008 (12:39 pm)#17 Dave K. =D~ Says: “The Big 3 are not EV companies. They are gasoline vehicle companies. Should we spend all available funds to continue to prop up this type of technology. Any other efficient companies wishing to expand, and hire more employees, more deserving?
Am I way off base with this thinking?”
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I see the the big 3 (soon to be big 2) as car companies. Yes, the vast majority of today’s cars use gasoline, but that’s changing. Ethanol and battery technology is ramping up fast.
Car companies have huge fixed costs, so they take a while to grow. You can’t just start a new company today and expect to build millions of cars next year. The best chance of getting new cars that don’t run on gas in significant quantities are with existing car companies.
But which car company? Ford says they are going to concentrate on improving gas engine efficiency and delay alternative fuel solutions for now. Honda is green washing with CNG and fool sells, both of which will never in quantity. Toyota wants to evolve their current hybrids very slowly. Chrysler wants to get bought by someone else. Their EV and EREV concept cars are probably just for show. What other major car company has announced a production EREV?
GM has said that chapter 11 bankruptcy is not a viable option. People won’t buy cars from a bankrupt manufacturer. If they go bankrupt, it will be chapter 7, and GM will be no more. With GM gone, who exactly will build a car like the Volt?
In any case, expect ethanol to grow in a big way. By 2012, all new cars will be mandated to be Flex Fuel. Once the percentage of E85 capable cars on the road reaches critical mass, things will take off fast. It’s no coincidence that the new energy secretary is a biofuels expert.
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Dec 12th, 2008 (12:39 pm)I just heard Croker of Tenn talking reality about GM debt, etc and it’s perfectly obvious that GM has zero chance of becoming competitive – that loan is as goood as money down the drain. Bush’s plan is incredibly dumb and is motivated by lies – that the US auto industry as it now stands, should be saved. It’s obvious that the Dems are intent on saving this industry (although no others) because of its union memebership and extensive campaign contributions. The Dems are red heerring the issue by claiming its about jobs. Its about jobs that have doomed the US auto industry.
They have already cut the industry down to a fourth of its original size and lost millions of jobs already. The union is clearly responsible for those job losses. But don’t expect the unionized news media to ever recognize this obvious fact. They are shileding the unions by harping on “bad exec decisions” ect. Funny how GM, “who isn’t building cars people want to buy” managed to sell
more of those “unwanted cars” than Toyota did in the US last year. Toyota made a large profit. GM lost a ton of money. Think you can figure out the problem from those numbers?
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Dec 12th, 2008 (12:41 pm)Mercedes is considering doing a Volt rip off, though purportedly with 60 miles of battery. Strange since I’d expect average daily drives in Europe to be less then the U.S., but whatever. Still exciting to see others publicly talking about the concept.
http://www.reghardware.co.uk/2008/12/12/merc_reveals_concepts/
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Dec 12th, 2008 (12:53 pm)“Save the world”?
You guys are far overestimating the importance of GM. Its a car company – thats it. Yes there would be job losses if they fail, but we would get over it, the economy would not collapse.
This over hyping and fear mongering is exactly what people used to push through the TARP plan, which in retrospect was a complete disaster and possibly not even needed.
Don’t fall for it again America.
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Dec 12th, 2008 (12:55 pm)Oh the irony. Republican senators kill it, only to end up with a situation they hate even worse (in theory). Now Pelosi gets here $25,000,000,000 retooling loan, and they don’t get any say on the reorg. But now their name won’t be on the bill so maybe they like that better.
I suppose Bush is working on driving a hard bargain to release the TARP money. I thought I remember reading that it wasn’t legal to use TARP for firms that weren’t financially viable. Does anyone know more about that.
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Dec 12th, 2008 (12:55 pm)To Dave #17. $100 billion is $33,000 per each of the 3 million employees a year (and I find it very likely that the majority of these workers would take that long to find a new job seeings how there are over half a million people a month getting laid off recently without 3 million at a whack from the auto industry).
Another way to look at this is $100 billion/year works out to $2.75 billion a month…so…you either pay for GM employee’s unemployment checks and have no hope of ever getting it back, or you loan GM the same amount of money and hope they can pay you back by turning around the company.
The sad fact is that GM really won’t be profitable until the economy picks up, no matter what the UAW does. If you can’t get a loan, what’s the hardest to to buy….a house…what is the second hardest to buy without credit…a new car. If you’re out of a job, are you very likely to buy your wife a new car for Christmas? If you are trying to save money, are you going to buy a new car or a used car? When the American dollar is going up in value relative to 6 months ago, and the rest and the world at the same time, as a world slips further into recession (China is getting hit like a sack of bricks falling on them), how do you plan on selling cars for a profit?
We need to stop diluting ourselves into thinking things are going to turn around in less than 2 years. As sickening as it is, GM probably needs about $50-$75 billion at least to last until the UAW concessions kick in and the economy picks back up. So what? The fact is that deflation occurs as unemployment goes up. It has very little if anything to do with how much money is out there (within reason). That monetarist theory is a an old ecnomic theory that has been proven wrong again and again (most recently as Bernanke has dumped $2 trillion into the economy while we still see deflation, in my opinion the Fed should digitally fabricate $75 billion (banks do it up to 10x how much money they have in actual liquidity, why not the Fed just do it?) and transfer it to GM, and tell them not to tell anyone because all the morons in the Senate and all the Republican hicks in the midwest will freak out having no understanding of this fact. Until employment starts going up (which is not going to happen for a while) this is the best kept economic secret (sort of like how when people save money instead of just spending every cent they make every paycheck, it actually lowers interest rates because banks have more money to lend…drrr…but hey, I’m Bush, I’ll just tell people to spend and spend and borrow and spend until everyone’s bankrupt).
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Dec 12th, 2008 (12:56 pm)GM needs to start massive layoffs and close more plants ASAP. If they really want to avoid bankruptcy. Taking federal dollars is just delaying bankruptcy if management doesn’t start swinging a ginormous AXE !!
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Dec 12th, 2008 (12:58 pm)Does anyone know anything about HP’s new lithium ion battery. Said to last longer than traditional LION’s. Sounds like similar tech to the volt’s batteries, but I’m not sure if it’s more or less advanced. I’d assume since it’s made by Boston Power that it’s similar technology
Maybe this is a case where tech developed for automotive is helping out the laptops. That’d be cool.
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Dec 12th, 2008 (12:59 pm)What the hell is going ON with the so called “leaders” in America these days? Corruption, greed, fraud and incompetence on Wall Street leading to this VERY nasty recession. A Governor of Illinois who is on a “corruption crime spree” trying to sell off Obama’s vacated Senate seat? A $50 billion “Ponzi scheme” on Wall Street run by a company who’s top guy used to be the Chairman of NASDAQ. WTF?
http://online.wsj.com/article/SB122903010173099377.html
Jeez. Where have the WHITE COLLAR CRIME prosecutors, regulators, investigators, and auditors been for the past 8 years? It seems like there’s been one scandal after another happen in the past 10 years! The WHITE COLLAR cops have been “asleep at the switch”!
They need to change the white collar crime laws and make them a LOT more strict. When the white collar criminals get convicted they get HUGE financial judgments against them and JAILTIME. Throw the corrupt scumbags on Wall Street and the corrupt politicians in jail … for a LONG time. 20+ years maybe.
It’s time for America to get tough on WHITE COLLAR CRIME !!!
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Dec 12th, 2008 (1:01 pm)Here’s the problem with “parity”. If you start with the (unfair) assumption that the American auto workers make $73/hr, and others make $49, then $24 in direct and indirect compensation needs to be cut.
Base wages are $29 and $26 respectively; American workers make “indirect” or hidden wages in the form of benefits like healthcare and retirement.
You can’t cut the employer’s share of payroll taxes. You can’t cut benefits for retirees.
You could cut training expenses. I don’t know why that would make sense, but go right ahead.
You could cut overtime. There is a “vanishing point” at which it’s more cost effective to hire more people and open new facilities, but before that point it’s more effective to pay your current workforce time-and-a-half or whatever. Plus overtime is more flexible than new workers or facilities — you can increase or decrease it as needed.
If you drop all health insurance, training, vacation, sick days, etc. you probably save about $10/hr. You still need to drop another $14. So that’s base wages falling from $29/hr to $15/hr.
See why “parity” is a stupid metric? Toyota and Honda DO NOT have retiree or health expenses. When we buy an American car, we’re supporting the health insurance and retiree obligations. When we buy a Japanese car, that’s not part of the sticker price. Their government takes care of that.
American conservatives just want a Wal*Martization of all American workers. They want American products to compete with that of socialized nations whose social obligations are not reflected in the corporate bottom line, and yet American conservatives don’t want the other half — people whose healthcare and retirement are provided by the government.
And this crisis presents a perfect opportunity. Deamand a 50% paycut from the UAW or the whole deal’s off. They’re playing brinksmanship with the whole American economy just for the chance to screw over one of the last decent fields in which someone can make a decent middle-class living.
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Dec 12th, 2008 (1:01 pm)When GM has managed or rather mismanaged this entire Volt affair in such a way as to turn-off an electric car fan and solar-powered household like mine, you know it’s over…. they’re finished. Nobody I know would ever buy a new car from GM under the current financial condition of the company. Too bad, because the initial Volt design looked good until GM beat it up with their “ugly stick.”
The latest UAW behavior has also turned everyone off… and rightfully so.
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Dec 12th, 2008 (1:04 pm)#30 Honest Abe
Save the World is certainly overstated, but you are underestimating the effect it would have on our economy.
If Ford, a direct competitor, came to the table and said “help GM out, because if they fail so might we” you can rest assured this isn’t as minimal as your projecting here.
Bush, as obstinate as he is, is now even having second thoughts. this from a guy who is still searching for WMD in Iraq.
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Dec 12th, 2008 (1:18 pm)Republicans to Detroit: if only you could figure out a way to pay your executives and not your workers, we might help you.
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Dec 12th, 2008 (1:18 pm)@Cautious Fan 34
Thy’re probabli lithium ion nanophosphate. But they’re not using it for EV or cars yet. They Plan on it though. Boston Power I believe is the company. I saw the package of the cell. Not your standard size either. It’s about 1.2″ inches by 2.5″ and .75″ thick @ 4400Ah with 3.2V. Packs a good Ah punch for a small package.
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Dec 12th, 2008 (1:19 pm)Want an plug in car??
Buy a tesla! Six times the range and IT ACTUALLY EXISTS!
This so called volt is a PR stunt! When GM knew they were in trouble, they heavily advertised this “revolation”. Since the general public doesnt have a whole lot of faith in GM no one bought into it (at least enough to invest in GM stock) and here we are
WHAT HAPPENED TO “BANKRUPCY IS NOT AN OPTION” from only a few weeks ago???
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Dec 12th, 2008 (1:22 pm)@THOM
“Buy a tesla! Six times the range and IT ACTUALLY EXISTS!”
Dude, it’s over $100K. If we had over $100K we wouldn’t be in this forum.
Get a Clue!
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Dec 12th, 2008 (1:25 pm)Dave K. @ 17 – Fair enough points. I don’t agree with your assumption that GM’s demise is inevitable. I do believe that they can get things fixed. I do believe that universal healthcare is likely, and that part of the deal will be to relieve corporations of things like the legacy costs that are part of GM problem.
I also believe that GM, imperfect as it is, is far more able to mass-market electric vehicles than Tesla or any other small company out there. I believe that switcing GM to alternative fuels is a lower mountain to climb than making Tesla into a mass-market corporation. I do believe that the disruption to the economy at this time from letting GM fail would be too great to handle, whether we are talking about 3 million jobs or 750,000 jobs. It would likely delay the Volt, and other green inititives, for years to come.
Finally, I do believe that average workers should be asked to make sacrifices that are proportionate to sacrifices made by other actors in our economy. As I think post #6 demonstrates (and which no one has disputed), there is a lot of hypocracy going around, not to mention propaganda being passed off as analysis. It is hypocritical to ask something of people making $50K a year that you will not ask of Wall Street workers who average more than double that number. “These 18 Republican Senators voted in favor of the $700 billion bank bailout, but against the $14 billion emergency loan package to keep the auto industry from collapsing:
Bob Bennett, R-UT
Richard Burr, R-NC
Saxby Chambliss, R-GA
Tom Coburn, R-OK
Norm Coleman, R-MN
Bob Corker, R-TN
John Ensign, R-NV
Chuck Grassley, R-IA
Judd Gregg, R-NH
Orrin Hatch, R-UT
Kay Bailey Hutchison, R-TX
Johnny Isakson, R-GA
John Kyl, R-AZ
Mel Martinez, R-FL
John McCain, R-AZ
Mitch McConnell, R-KY
Lisa Murkowski, R-AK
John Thune, R-SD”
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Dec 12th, 2008 (1:25 pm)Is it just me…or is this ’situation’ going to go on forever? It seems like we will be in perpetual negotiations/threats of bankruptcy indefinitely. I’m sure that is not the case in reality…but it sure feels like it.
/I wish we could wave a wand and one of two things would appear–a long term plan -or- bankruptcy…this process is way too drawn out. Are we really destined to talk about this as ‘issue one’ for the next 4 months? Gah…makes me sleepy.
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Other news:
GM cuts another 250,000 units out of Q1 production:
http://www.marketwatch.com/news/story/gm-slash-production-250000-vehicles/story.aspx?guid=%7B53019C85%2DBAE6%2D4340%2D93E9%2DC7BBCE666FFB%7D&siteid=yhoof
The ‘plan’ call for a baseline yearly volume of 22.5% of 12.5 million cars…or 2,800,000 vehicles. My napkin back math says 350,000x 4 quarters = 1,400,000 total capacity (they still have to actually sell them). They are warning December sales have fallen off a cliff…but that is crazy low output for ‘09.
Last year GM produced about 750,000 vehicles…so best case looks like GM to be off 55-60% in December and Q1.
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Dec 12th, 2008 (1:31 pm)I think the volt concept is a beautiful piece of thechnology but I think can not be produced at this time for profit. Think about it. Why do you need a range extender? To treat the range anxiety? There is a good treatment available for it and it is called “The other car” since you are still looking to burn liquid fuel on the trips longer then 100 miles. Make pure EV with 100 mile range, make it 5 seater under 25 K and you have a blockbuster. Make the battery modular and easy replacable. This can be done today with a large scale production based on existing technologies (altair nano, A 123 etc). Volt is an interesting science project but is not very practical.
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Dec 12th, 2008 (1:34 pm)@alex_md
Hmmm…..
You just gave me a thought. Not beer invoked either….
I wonder if GM would be willing to produce only a Battery version that excludes the range extender? It would work for me, I drive 12 miles one way to work. That would definately lower cost for Joe the plumber butt, me.
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Dec 12th, 2008 (1:36 pm)#30 Honest Abe
You don’t know what you are talking about. Do some research before making such a comment. Up to 3 million jobs lost if GM fails.. that will take decades to recover from.
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Dec 12th, 2008 (1:39 pm)Please see update at the end of the main post.
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Dec 12th, 2008 (1:44 pm)GM to shutter North American plants for 30% of first quarter 2009:
http://www.freep.com/article/20081212/BUSINESS01/81212044
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Dec 12th, 2008 (1:57 pm)What a dog and pony show…I just dont get it…
The Senate voting down the emergency $14billion “loan” because they knew it wasnt going to stop there….the whole throwing good money at a bad business…OK, I can understand that
…but at least there was some oversight and conditions involved that seemed to be specific to the auto industry, right?
They had to know that the TARP $$ option was/is still there and that it would be the immediate fail over, right?
…isnt the problem w/ using the TARP $$ that any/all of that auto industry oversight and any conditions are now gone…POOF?
so what sort of sense does this make?
isnt 14 divided by 700 = a paltry 2 percent?
could this have been the plan all along?
is it more about not having your name tied to an inevitable failure?
how can the UAW have so much leverage?
is it possible that our government is disfunctional?
(I could keep listing rhetorical questions…but I’d rather not)
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Dec 12th, 2008 (1:59 pm)#36 Lurtz – “You can’t cut benefits for retirees.”
“Yes we can” applies here. It’ll either happen through bankrupcy or through other means. But ultimately the retirees are going to have to figure out how to live on their social security and their savings just like everybody else. At least they had really good paying jobs to enable them to save ample money for retirement; lots of retired folks didn’t have that.
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Dec 12th, 2008 (2:10 pm)It is absolutely amazing to me how we use George W. Bush as a boogie man for everything that is wrong or going wrong in this country. What or who are we going to use in three or four years if things going wrong. I guess we could continue just blaming poor old George. He is so stupid he will never realize he is not still president and should not be blamed. Let’s see now.. My electric bill was higher last month than it should have been. Must be George W. at work here. My natural gas bill is higher in the winter than it is in the summer. Damn that George W!
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Dec 12th, 2008 (2:23 pm)hi Dave G #27,
“… expect ethanol to grow in a big way.”
_________________
Good point Dave G, Just 15 minutes ago as I returned from the gym I was behind a brand NEW Postal Van. Guess what, the rear was printed, “powered by natural gas”. I had petitioned Governor Arnold and the CAL EPA to go with E-REV. I also emailed Barbara Boxer to vote against bailouts for anyone (and everyone) in the future. Can’t have everything.
And for the few who mentioned how we need to give the gasoline vehicle manufactures one more chance. They had a very good chance when they had $30,000,000,000 of their own SUV profits in the bank.
http://garfwod.250free.com/Photos/volt_early.jpg
=D~
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Dec 12th, 2008 (2:48 pm)#8 George K – “According to Fox Business, this morning, Honda and Toyota workers get about $45 / hr. VS. UAW workers who get around $72, if you count everything.”
Can we cut the crap? That number is a fantasy. The real numbers are as follows: UAW workers make $40/hr in cash benefits and another $15/hr benefits. This compares to $45/hr in cash and benefits earened by workers at the transplants, with most the difference being in benefits. (As for retiree benefits, are you seriously claiming that when looking at what the GM CEO is paid we include in his pay all the money spent on retired CEOs?).
The question then becomes: does this matter? The answer is a straightforward and unequivocal “no”. The cost of line labor makes up 10% of the cost of a car. The “wage gap” is 10%. Do the math and multiply these together and you end up with a 1% difference. For a $30K car that would be $300. We know from past history — Ford’s old pricing strategy of adding $500 to the price of GM’s competing cars being exactly on point — that a difference of this size matters not one whit.
Stop drinking the Fox News koolaid and find an actual news source. Relying on the US equivalent of Pravda or Xin Hua won’t actually help you understand what the deal is.
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Dec 12th, 2008 (2:49 pm)Honest Abe # 30
News flash, the economy has already collapsed, question is what to do…
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Dec 12th, 2008 (2:54 pm)#42 CaptainJackSparrow
“Dude, it’s over $100K. If we had over $100K we wouldn’t be in this forum.
Get a Clue!”
=========================
One word…. PRICELESS!
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Dec 12th, 2008 (2:55 pm)I’m sitting here wondering if the UAWs political activities have hastened their doom.
From what I am reading, most UAW PAC money went to Democratic candidates, whether they won or not. Even though nobody will say it, if you are a Dem who get a lot of campaign contributions from the UAW, you would be inclined to favor them. Likewise, if you are a Republican who has to overcome a UAW funded foe, you are less likely to take them under your wing.
It appears that the numerically superior Democrats with favorable UAW leanings were not sufficiently strong enough to defeat a somewhat rabid anti-UAW GOP contingent.
I wonder if a truly non-partisan UAW would have been more favorably received, by both the congress and the public.
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Dec 12th, 2008 (3:06 pm)Right or wrong, IMO a lot of these senators’ constituents see the face of the big three as the very highly compensated UAW worker. And the notion of using their tax money to stabilize the industry so that UAW worker they picture can continue to make a lot more than them pisses them off. Add that to the political nature of the union, and you get an entity that congress just cannot rally behind. It’s the image that’s unpopular. And the image matters more than reality does when it comes to politics. That’s just the way it works.
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Dec 12th, 2008 (3:08 pm)GM is temporarily closing 20 plants.
http://biz.yahoo.com/ap/081212/gm_cuts.html
With demand levels 30% lower then last year….isn’t it about time?
I wonder how much this really saves them. They’ve still got to pay the employees right (jobs bank)? They’ve still got high fixed costs with all the equipment. This seems like a tough move.
There’s gonna be a large in unemployment applications in January. Welcome to your new home Obama.
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Dec 12th, 2008 (3:21 pm)#54 DonC
$300 / car? The other day you were saying $800 / car, and even that was ignoring retirees costs which push the Big 3’s extra costs over $2,000 / car.
And if don’t want to include the retiree costs, then tell it to the accountants. It’s got to get paid somehow.
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Dec 12th, 2008 (3:21 pm)Well, I think it is a pretty well fact that auto company workers make more money than most other American workers. And, yes, that tends to piss most of the rest of us off when we have to subsidize union jobs just because they will not accept lower wages to keep their jobs.
It is also a fact that union dues are used almost exclusively for democratic candidates. The UAW is 99.9999% in the pocket of the democrats and should be declared part of that party. My personal opinion is that no union should be able to contribute to political parties. Same for businesses. Neither should they or businesses be able to lobby congress or state legislatures.
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Dec 12th, 2008 (3:24 pm)#58 DB Cooper
You work for an auto supplier right? Who’s your customers. Big 3 only or is it more diversified?
Either way, good luck man. I hope you pull through OK. With GM cutting production hard I supposed it’s gonna start rolling down hill.
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Dec 12th, 2008 (3:27 pm)White House and Treasury to Once Again Ignore Congress
Coming on the heels of the auto bailout’s defeat in the Senate, the White House and the Treasury are announcing their intentions to take money from TARP and act anyway.
Key: The fact that legislative checks and balances mean nothing to this administration should be clear to everyone by now. This means that the Constitution and the freedoms secured by it are DEAD!
Where is the public outcry?
Where are the angry mobs?
Where is the militia?
Why are they (WE) not marching on Washington to throw the corrupt in prison and reinstate the Constitution?
If we don’t demand that our gov’t OBEY the supreme law and defend OUR freedoms… NOBODY WILL!!! This means rule of law is also DEAD in America!
The UAW announced this morning that they want the Treasury or the Fed to act “for the good of the country,” yet they refuse to renegotiate their contracts in an attempt to have their cake and eat it too. Their “woe is me” defense in their press conference just doesn’t cut it anymore.
GM and Chrysler refuse to consider the bankruptcy option because they are afraid that consumers won’t buy cars from bankrupt companies. Do they really expect more people to buy cars just because the car companies have been given a loan to prop up the unions and continue their unsound business practices?
Ironically, more customers may stay away out of anger over watching the heads of these companies literally begging at the federal trough for your money.
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Dec 12th, 2008 (3:29 pm)Cautious Fan, it is inappropriate to include retiree costs in per-vehicle labor accounting, as those costs are fixed and must be paid whether GM builds 10 or 10 million cars.
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Dec 12th, 2008 (3:30 pm)The now-failed loan bill, or any direct assistance from the White House, is intended to ‘kick the can down the road’ to a future Congress and Administration. To expect more is unrealistic.
Yes, statik, we should all get ready for our naps: it is going to be a long, drawn out affair. This is only round one.
If the worst happens, other car makers are working on Volt-like vehicles “like the Volt.”
Forgive me, but if we lose the Volt, I say we hold out for something even better, wherever it’s made.
The case for the electric as the first and best answer for getting off oil has become no less compelling than it was before the hearings, and Obama was dedicated to the proposition. I’ve heard that the new Energy secretary is pro nuclear. Can anyone confirm?
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Dec 12th, 2008 (3:31 pm)“According to Fox Business, this morning, Honda and Toyota workers get about $45 / hr. VS. UAW workers who get around $72, if you count everything.”
It would have been more accurate to state that “Labor costs Honda and Toyota about $45 per worker hour VS GM for whom labor costs around $72 per worker hour.”
The Fox business statement does make it sound like someone’s taking home 150k/year in compensation with benefits figured in. And that is not true. But it is very relevant that an hour of work costs GM a lot more than an hour of labor costs the transplants. And shrinking GM will only inflate that $72/hr figure more and more.
Either way, this has to be addressed. It sticks out like a sore thumb to taxpayers, and it does affect the companies’ bottom lines.
Let us not forget that class envy and “spread the wealth around” were a large part of the determining factor in our presidential election just a month ago.
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Dec 12th, 2008 (3:33 pm)Hey statik,
NASDAQ up 1.5% today. What in the world is going on? All kinds of Sony-like companies laying off thousands. Office Depot closing hundreds of stores. Circuit City, CompUSA out of business… ect.
My battery stock went up 7% today. Which way are we going?
=D~
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Dec 12th, 2008 (3:38 pm)Edit timed out.
http://news.cnet.com/8301-10787_3-9888608-60.html?tag=nefd.lede
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Dec 12th, 2008 (3:40 pm)Cautious –
Thanks. Whatever way things work out, I’ll be okay. I am a fan of GM’s products over anyone else’s and I’m pulling for them. But I want to see them make it to a successful business, not just a life support patient. If they go under, my job will probably get dragged under. GM’s not our only customer, but it is a big chunk of our business.
But hey, if I lose my job I’ll brush off the old resume and go find another one; and within a couple years I’ll be back up to where I am now. I don’t make a ton of money; in fact it’s substantially less than the average UAW line worker. But it’s enough to get by comfortably on. That’s why I put the time and effort into getting an engineering degree.
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Dec 12th, 2008 (3:44 pm)#31 Cautious Fan Said, “I suppose Bush is working on driving a hard bargain to release the TARP money. I thought I remember reading that it wasn’t legal to use TARP for firms that weren’t financially viable. Does anyone know more about that.”
__________________________________________________
What I’m reading says that he will probably give GM just enough money to stay out of bankruptcy until Congress reconvenes on January 6th. That way, even without the 7-9 Republican Senators who helped vote down the last Bridge Loan, Bush will still have veto power (until the 20th), if the Democrats go all liberal on his arse.
…and the wheel keeps spinning…
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Dec 12th, 2008 (3:47 pm)hi GLV #70,
Oh, the drama…
=D~
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Dec 12th, 2008 (3:52 pm)BDP Says:@3
December 12th, 2008 at 11:14 am
UAW cut their own throat when they refused to accept cuts till 2010
Can’t blame anyone else, except maybe the BOD & management.
*************************************************************************************
In case you don’t know they have cut their wage in half, gave the pension plan, given up the jobs bank and much reduced health insurance. Do you them to cut their wages in half again. I think not. Working on the assembly line is one of the toughest job around.
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Dec 12th, 2008 (3:54 pm)#31 Cautious Fan: I forgot to answer the second part of your question…
From what I hear, there are so many Credit Default Swaps based on the Auto Industry out there, that if the Big 2.8 failed, it would impact the banking community to the tune of 100’s of Billions…(the same reason they’ve bailed out AIG BTW). Consequently, the Administration and the Treasury Dept. feel this constitutes the necessary justification to use the TARP money…
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Dec 12th, 2008 (3:56 pm)Hi Dave K.#71!
Like I said earlier…this Soap Opera is starting to make me ill… /grin/
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Dec 12th, 2008 (4:06 pm)#72 Joe
Sorry, but they have not given up anything yet. They are going to see reductions in 2011, but that is not now. GM needs the help now, not two or three years from now. The UAW has lived high on the hog for many years as have GM, but only GM is hurting now. The UAW needs to give up some now to help out. The UAW president has already stated that although the new contract going into effect in 2010 or 2011 will see reductions they plan on negotiating higher raises and benefits with the next contract. That is just not acceptable in this climate today. The UAW and GM management must tighten their belts or find themselves out of work permanently.
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Dec 12th, 2008 (4:22 pm)Am I correct in thinking that nearly all who are involved in this big picture are wondering how “not to lose”?
Wouldn’t it be beneficial to talk about a plan to win? Such as government down payment incentives. Or mpg credit for buying an efficient vehicle? Maybe getting the Post Office and Police involved in buying some vehicles? States buying maintenance vehicles?
I know the big cry is, “It’s not fair to Toyota, Nissan, Subaru, ..ect. Not a level playing field”. Well, if this were a friendly game of touch football I would agree. We’re talking major fiscal injury here.
Hey U.S. Government. Anyone present with enough smarts to mention a winning solution?
=D~
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Dec 12th, 2008 (4:22 pm)joe @ 72 said
n case you don’t know they have cut their wage in half, gave the pension plan, given up the jobs bank and much reduced health insurance. Do you them to cut their wages in half again. I think not. Working on the assembly line is one of the toughest job around.
They also agreed to fund their health plan with GM stock in lieu of cash. However a nominal haircut of a buck or two would seem to be in keeping with the times and would put them in much the same boat as everyone else at this point.
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Dec 12th, 2008 (4:36 pm)#54 DonC Says:
The real numbers are as follows: UAW workers make $40/hr in cash and another $15/hr benefits. This compares to $45/hr in cash and benefits earned by workers at the transplants, with most the difference being in benefits…
The question then becomes: does this matter? The answer is a straightforward and unequivocal “no”… For a $30K car that would be $300…
Stop drinking the Fox News koolaid and find an actual news source.”
————————————————————————————–
I agree.
As I understand it, the $72 / hour average includes payments to retired employees. American companies have been around longer, so more of their employees have retired. Once Toyota and Honda are here long enough to build up retirement payments, their average labor costs should rise accordingly.
In addition, the UAW’s new workers are being paid much less, so they tend to lower the average. But when jobs are cut, these new workers are the first to go. GM has to cut jobs to be viable. So even if the UAW takes a pay cut, it’s possible the $72 / hour average would rise because the remaining workforce has more seniority.
But that doesn’t mean the UAW can’t make concessions. In particular, in order to close plants, I believe the UAW requires large employee payouts. The UAW has to find a way for GM to downsize without going bankrupt. In addition, they may also have to accept a pay cut. The problem is that figuring out the best way to do that will take some time. It’s not something that can be worked out in a couple of days.
This is what the UAW said. They are willing to make significant concessions as long as:
1) These concessions are well thought out with realistic metrics
2) Other stakeholders are making similar concessions
3) Concessions from all stakeholders are finalized by March 31, 2009.
4) On March 31, 2009, If the concessions are not considered significant enough by the appointed car czar, the government would call the loan and force bankruptcy, which would probably be the end of GM.
This is what was in the bill that was worked out by the House and the President. This is the bill that was killed in the Senate.
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Dec 12th, 2008 (4:38 pm)Oh Boy
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Dec 12th, 2008 (4:38 pm)http://www.blackvoices.com/blogs/2008/12/12/senate-to-detroit-bailout-these/
Something I found look at news updates.
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Dec 12th, 2008 (4:39 pm)Dumb question #1:
Won’t Ch 11 by GM trigger a huge landslide of ch 11 and ch 7 filings across GM’s entire supply chain? Wouldn’t all that extra work and the resulting huge list of piece-meal bailouts be more expensive than one big one? I thought the answer to both was yes.
Dumb question #2:
Won’t all these Ch 11’s and 7’s damage/destroy the savings of the 100,000’s of GM suppliers and employees who chose to invest in their company’s stock, never assuming it could get this bad? I thought the answer is yes.
Seems like their should be a way to break the UAW without the negatives of Ch 11.
Dumb question #3:
Why couldn’t GM do what Caterpillar did?
When Caterpillar had their showdown with the UAW a few years back, Cat let the UAW strike, then moved their white-collar office work force into the factory to make product. UAW members who wanted to work were also free to do so. Many did. Within a week or two, quality and productivity actually improved above typical UAW levels. The downside was that employees had to drive to work past mobs of angry UAW strikers who would swear at them, spit on their cars, etc. Fortunately, Cat also hired Vance military (mostly hidden and unused) to film (and stop if needed) any incidents that got out of hand. In the end, the UAW lost most of their strike power.
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Dec 12th, 2008 (4:45 pm)#71 Dave K. =D~ Says,
Hey statik,
NASDAQ up 1.5% today. What in the world is going on? All kinds of Sony-like companies laying off thousands. Office Depot closing hundreds of stores. Circuit City, CompUSA out of business… ect.
My battery stock went up 7% today. Which way are we going?
============================
You got me, all I have invested is a couple puts (very small amounts) on some ETFs I got earlier in the week…which are not looking so smart at the moment, lol. The SPYs (S&P) are basically flat, but the Nasdaq is hurting my QQQQ puts.
It just rallies on endless bad news. I keep hearing that it is good the market is ignoring these events, even when numbers are worse than forecasted. I keep hearing it is ‘putting in a bottom’ because the trade is stronger as the news gets weaker. I don’t get it at all, it is not the way I learned to trade…so I’m going to continue to keep the heck away, lol.
I understand some of the thinking behind it…but it is the 500-600K (And increasing) level of unemployment that gets me, coupled with decreasing real estate prices and foreclosures. How do traders justify bidding up the market in that environment? What really is the future outlook here?
And who is dumping money into the market on a day like today? GM’s near brush with death, the largest fraud of all time (50B Ponzi scheme)? GMAC’s ‘deadline to complete a debt swap that would qualify it for federal aid, and avoid what analysts called a potential bankruptcy’?
I don’t understand what is going on. So that is a red flag for me…I’m just going to sit on the sidelines and watch. I don’t have a problem investing when I think we are close to the bottom or I think things could improve in the future…I just can’t make a decent argument for that yet.
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Dec 12th, 2008 (4:49 pm)Thanks for your review statik. I agree, will sit and watch for awhile. Family has a great Christmas planned here. Parties and expensive gifts. I may head out to Vegas for the WPT event in 2009. My wife, son, and I just returned. And both she and I came back small winners. Hope everyone has a Merry Christmas and much improved New Year.
Winter of 2008 will definitely be remembered. See you tomorrow as the world turns.
http://garfwod.250free.com/Captain_CoolHandLuke_FTC.wav
=D~
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Dec 12th, 2008 (5:01 pm)The UAW has made it clear – no concessions. They would rather be unemployed than take a pay cut. So be it! They may get their wish. With that in mind I cannot see GM surviving. There is absolutely no reason to pay workers of a failing industry more money than than their competitors are paying in the same country. Adios GM. How about selling your Volt Technology to Ford before you go.
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Dec 12th, 2008 (5:04 pm)The government will step in. Period.
Republicans cannot afford to allow 1.5 million blue collar jobs to be lost after giving 700 billion to save white collar industries.
Democrats cannot afford to allow 1.5 million blue collar jobs to be lost after they helped get Obama elected.
Even if GM stops operations for a few weeks or a month until Jan 20, GM will survive, at least in the short term.
If GM can make a long term success out of itself is another story.
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Dec 12th, 2008 (5:12 pm)N Riley @61 – You and I do agree on at least one thing – unions and businesses should not be permitted to donate money to the political parties or lobby. I would add that they should not be able to air “issue ads.” Unfortunately, the US Supreme Court has deemed otherwise. It considers organizations to be the same as people. It considers spending money on ads, etc., to be a form of free speech. Changing this would require an amendment to the US Constitution.
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Dec 12th, 2008 (5:14 pm)#78 Dve G -
“As I understand it, the $72 / hour average includes payments to retired employees. American companies have been around longer, so more of their employees have retired. Once Toyota and Honda are here long enough to build up retirement payments, their average labor costs should rise”
Actually they won’t. The transplants do what most other employers do. They pay the workers a pretty nice wage with a 401k plan and pretty good benefits. But once the worker retires, he lives on his 401k money, social security, and savings just like everyone else. They aren’t on the hook for additional costs after someone leaves or retires. Thus they won’t have these legacy cost problems no matter how long they operate here. That’s the biggest advantage of setting up shop in the right-to-work states.
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Dec 12th, 2008 (5:22 pm)Sometimes it is great to be in a different timezone.
Last night I went to bed the Senate had just voted NO.
Toyota was off 11% and Honda off 14% in early trading.
…..
This morning, I wake up, and its all on again. I swear I couldn’t write a believable soap opera with all the plot twists going on here.
#29 Cautious Fan: Mercedes is considering doing a Volt rip off, though purportedly with 60 miles of battery. Strange since I’d expect average daily drives in Europe to be less then the U.S., but whatever. Still exciting to see others publicly talking about the concept Great photos, probably out of my price bracket unfortunately.
As Dave K says:See you tomorrow as the world turns.
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Dec 12th, 2008 (5:26 pm)Without any real changes I’m affraid they will be in the same situation in a few months. Let them go chapter 11. Then they can dump the unions and CEO’s that have bleed them dry!
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Dec 12th, 2008 (5:41 pm)#82 Statik – “I don’t have a problem investing when I think we are close to the bottom or I think things could improve in the future…I just can’t make a decent argument for that yet.”
Unless you’re Cassandra, you can only tell a bottom when it’s over. On the other hand, there is no real practical difference between buying on the way down or buying on the way up. The real problem is that you can wait too long.
I start buying when everyone starts bailing. So far that has worked, though as many short sellers can tell you it’s also true that you can go broke before the market becomes rational. If you’re long, the real question is where you think the economy will be in ten or fifteen years. Questions other than this call for for predictions similar to those you’ve made about what team will cover the spread. LOL
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Dec 12th, 2008 (5:49 pm)“GM cuts another 250,000 units out of Q1 production:”
Shouldn’t they have done that 8 months ago?
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Dec 12th, 2008 (5:51 pm)Statik – It just rallies on endless bad news.
It is the hedge funds. They control the market. I am beginning to think if you just go opposite of what you usually would – that is the direction the hedge funds get maximum profit.
If GM could only get into Chapt 11 things would improve for them.
You can’t discount the costs of pensions. The hondas and toyotas are not providing pensions, just like my company – you get a 401k and that is it.
I have an engineering degree and would like to make what the lug nut putter oners make. Mindless assembly is no where as difficult as having to actually invent on schedule.
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Dec 12th, 2008 (6:02 pm)#64 Cautious Fan – “$300 / car? The other day you were saying $800 / car, and even that was ignoring retirees costs which push the Big 3’s extra costs over $2,000 / car. ”
Good point. My bad and my bad math. The difference between UAW and non-union workers is 20% not 10% ($55 vs. $45), so the difference is 2% rather than 1%, and the difference is $600 not $300. Same conclusion though. Not enough money to make a difference.
The article did use the $800/vehicle number, but contrary to what you’re saying it did use some retiree costs just to show how, even using highly questionable accounting, labor costs are not GM’s main problem.
On why it’s an accounting error to attribute retiree costs to current workers, it’s just basic accounting principles. Those costs are accrued in earlier periods. I keep asking questions like: when you look at how much we pay our military men and women in Iraq should we include the costs of all retired military personnel? If we did then we’d have some very overpaid military folk. Or like I asked you yesterday, when we calculate whether the pay of the current AIG CEO meets Treasury regulations on executive pay, do we include in his pay the severance paid to his predecessor? Or should we include Social Security payments your family gets when we calculate your pay? (Maybe you should pay tax on that, eh?) The answer to these questions is “of course not”. So why do you want to treat auto workers differently, other than the fact they don’t carry a gun or a briefcase.
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Dec 12th, 2008 (6:10 pm)#29 Cautious Fan – “Mercedes is considering doing a Volt rip off, though purportedly with 60 miles of battery. Strange since I’d expect average daily drives in Europe to be less then the U.S., but whatever.”
There is no such thing as a range per se. There is only a range given a driving style. Drive like a German and the Volt will go perhaps 25 miles on a charge. In fact, Germans are always complaining that the mileage of a Prius is a complete fiction. At 160 kph that’s about right! LOL
Mercedes is a luxury brand so it’s going to have to have a car that can go vroom vroom.
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Dec 12th, 2008 (6:22 pm)____________________________________________________
The UAW Conundrum:
Many American’s are wondering why the UAW would be willing to force GM off the cliff by not agreeing to a short timetable employee wage parity as a condition of the bailout. The answer is that the UAW organization is fighting to the bitter end to remain relevant (have a purpose). The UAW knows it has little relevancy if they are not able to deliver above market benefits to their customers.
Prior to the inception of the UAW, American auto workers had very few guaranteed employee rights/benefits beyond the base salary that was offered to them by their employer. The leverage power of collective bargaining allowed the UAW to negotiate, on behalf of workers, guaranteed employee rights such as workplace safety standards, vacation time, overtime, sick leave, maternity leave, and other employee rights. The UAW became an influential independent entity that was and continues to be funded by auto workers union dues.
To the UAW’s credit, many of today’s legislated guaranteed employee rights are derived from past UAW activism. A significant portion of worker rights that were originally exclusive to union workers are today available in similar form to non-union workers.
Since many employee rights are today guaranteed by law, what benefit is there for union autoworkers to pay a union dues tax on their salary? Answer: A guarantee that a union worker’s total monetary benefits package will be higher than what that employee would receive from a non-unionized car company. The UAW has no forward value (will go out of business) if it is not able to deliver on that proposition.
The automotive business, like most mature businesses, has become a hyper competitive environment of which competitive state benefits consumers in the form of lower prices and better cars. Employee cost is one of the highest cost ingredients of manufacturing cars. A car company that inherently has a materially higher cost ingredient (i.e. employee costs) than another company that puts out a similar class/quality product will eventually either go out of business or require a method to finance negative earnings.
Although the UAW issue is not the sole cause of GM’s problems, the UAW issue is a very large component and at some point would have required address. The current economic environment has accelerated that day of address. There is no escaping that one of three things will happen: 1) UAW agrees to wage parity, 2) UAW & GM goes out of business, or 3) Someone (i.e. taxpayers) finances negative earnings to support continued non wage parity.
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The below text is taken from the UAW web site.
Your union dues are the wisest investment you can make. Only through representation by a strong and democratic union and collective action can better working conditions, higher pay and dignity on the job be achieved. That’s the dividend for the two hours’ pay you invest in the UAW each month.
Your local union is there when you need it to:
• Defend you in grievances.
• Support you in arbitration.
• Monitor workplace safety.
• Protect your rights as a UAW-represented worker.
• Negotiate and enforce your contract.
• Help organize competing nonunion workplaces to strengthen worker power everywhere.
• Provide services for retired members.
• Sponsor recreation and education programs.
• Inform you through local publications.
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Dec 12th, 2008 (6:22 pm)Relax. We gotta wait two years for the VOLT anyway.
All GM has to do is close all existing plants that have humans building cars. Retool with TARP funds and open the plants in the USA with 100% robot assembly lines.
Robot workers. No coffee breaks, no lunch breaks, no strikes, no unions, 24/7 production lines and no health care or pensions. The best part, higher quality cars, 100% defect free because the computer robots don’t miss any quality assurance steps.
And just where are these robots controlled from? The highly skilled and lower wage programmers from India. The USA VOLT design team can continue working on creating the designs that will turn GM into the number one E-REV auto manufacturer in the world.
Now that’s a revolution GM needs to consider!
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Dec 12th, 2008 (6:24 pm)Heard a lot of people calling into talk radio today saying that they were going to boycott GM. I guess if our elected reps/white house won’t listen to us, the only power we have left is to do that.
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Dec 12th, 2008 (7:04 pm)#92 Len Says: “If GM could only get into Chapt 11 things would improve for them.”
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If GM goes bankrupt, it’ll be Chapter 7.
Numerous studies have shown many people won’t buy a car from a bankrupt company. GM has said repeatedly there is no bankruptcy scenario in which they will survive as a company.
The the dominoes will fall, first the suppliers, then Ford, 3 million more unemployed, the Dow below 4000, … God knows where it will stop.
GM bankruptcy = USA Depression
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Dec 12th, 2008 (7:22 pm)#29 Cautious Fan Says: “Mercedes is considering doing a Volt rip off, though purportedly with 60 miles of battery. Strange since I’d expect average daily drives in Europe to be less then the U.S., but whatever. Still exciting to see others publicly talking about the concept.
http://www.reghardware.co.uk/2008/12/12/merc_reveals_concepts/
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Great! The more cars like the Volt the better. Hopefullly all car companies will be making EREVs (a.k.a. REEVs or serial hybrids). Thanks for the link!
By the way, with a standard 110v outdoor extension cord, you can only charge about 40 miles of range overnight. In Europe, they use 220v, so that would allow them to charge up to around 80 miles overnight with a standard cable from any power outlet in Europe. Maybe that’s why they have more range.
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Dec 12th, 2008 (7:26 pm)General Motors Vice Chairman Bob Lutz said in an interview this week that GM doubts the benefits of hybrids, but must build them to improve its public image. “Hybrids are technologically of doubtful benefit, and expensive, but necessary from a political and public relations point of view,” Lutz told Just-Auto. “Toyota has said, economically, hybrids make no sense. The reduction in fuel [consumption] does not pay for the technological content and cost of the vehicle so therefore economically it remains fairly nonsensical, so that’s the left-brain analytical argument.”
“The right brain is it’s the popular thing to do, many people believe that if we all drove hybrids the world would suddenly get cooler again and then it’s the patriotic thing to do because if you drive a hybrid you will no longer be funding the Arab terrorists, and so forth.”
“So, with all those beliefs out there, you have to do a hybrid for public policy reasons.”
“I don’t care how much money you get out but when you’ve got two drivetrains, the sophisticated electronics and a big lithium-ion battery, you’ve got cost.”
Lutz says diesels are also problematic. “The modern diesel is becoming more and more expensive as we have to have to gear up to meet Euro 5, which is very difficult.”
“Let’s not forget, a diesel engine is always going to be more expensive than a conventional petrol engine, that’s the laws of physics.”
In March, Lutz said GM is most enthusiastic about ethanol. “We think running the nation on E85 makes more sense than all the hybrids in the world,” he said.
7-21-2006 http://www.leftlanenews.com/lutz-gm-building-hybrids-for-good-press.html
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Dec 12th, 2008 (7:35 pm)Folks, do not be naive.
If GM gets no money, then it will be forced to merge with someone. Very likely we could see Chrysler, GM and Ford creating the “AM”;American Motors Co.
That is probably a good thing.
Your efforts to make GM survive given the Volt, is simply insane. The Prius plug-in would destroy the Volt very quickly.
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Dec 12th, 2008 (7:49 pm)To Lurtz
I hear your argument that Japanese auto makers wages like Honda’s and Toyota’s workers can’t be directly compared to Americans, but don’t Americans working for Toyota get health insurance? I would think it would be just as expensive to build a car with socialized health care because the government would have to tax the corporation to pay for the health care. Maybe I’m wrong.
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Dec 12th, 2008 (7:55 pm)@laura
Funny you mention American Motors. Consider their demise, Did the world go into collapse? Did the suppliers die out and then cause GM or Ford or others to fail?
Nope. The remaining auto mfgrs picked up the slack.
We had a Gremlin. It was a heavy tank.
Now build my Volt! Dangit!
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Dec 12th, 2008 (8:00 pm)#83 Dave K
Thanks for your review statik. I agree, will sit and watch for awhile. Family has a great Christmas planned here. Parties and expensive gifts. I may head out to Vegas for the WPT event in 2009. My wife, son, and I just returned. And both she and I came back small winners. Hope everyone has a Merry Christmas and much improved New Year.
Winter of 2008 will definitely be remembered. See you tomorrow as the world turns.
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Thats good to hear you are doing well., not a lot of people can say that.
I was going to go into the WPT event up here (in Niagara Falls-Fallsview Casino), but I had a family ‘event’ conflict…which meant no fun for me. I did get a ‘trade up’ vacation from the wife and have tentatively penciled in Vegas in July for the WSOP. Which should be fun.
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Dec 12th, 2008 (8:01 pm)John1701 #100
Lutz is a moron. There is no way the US or the world for that matter will ever be able to produce the massive amounts of ethanol needed to fuel our civilization. Besides the fact that it takes 1.3 gallons of gas/diesel for every gallon of ethanol produced, ethanol has about 25% of the energy density of gas and produces more CO2 per kilojoule than octane, so you’re not even getting an environmental silver lining. Does Lutz honestly think it’s possible for the US to produce hundreds of millions of gallon of ethanol every 24 hours? We would have to increase ethanol production by a factor of 20. This is the problem with Lutz and Bush and all the executives at GM and even Toyota, they don’t understand that oil is not only dirty but non renewable…NON renewable…say it with me guys. Another word people like to use is NON sustainable. This means eventually we need to figure something else out…and if last summer was any indication as no matter how high the price went, the US’s oil reserves kept falling (due to overconsumption and underproduction), we’d better figure it out soon.
When Lutz went on The Colbert Report, he told Colbert he was planning on the Volt being popular with hippies etc., obviously it’s a comedy central show, but Lutz isn’t that comically gifted that he’d just make that up to be funny.
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Dec 12th, 2008 (8:17 pm)#90 DonC said,
82 Statik – “I don’t have a problem investing when I think we are close to the bottom or I think things could improve in the future…I just can’t make a decent argument for that yet.”
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Unless you’re Cassandra, you can only tell a bottom when it’s over. On the other hand, there is no real practical difference between buying on the way down or buying on the way up. The real problem is that you can wait too long.
I start buying when everyone starts bailing. So far that has worked, though as many short sellers can tell you it’s also true that you can go broke before the market becomes rational. If you’re long, the real question is where you think the economy will be in ten or fifteen years. Questions other than this call for for predictions similar to those you’ve made about what team will cover the spread. LOL
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Your right if your long 10+ years, this could have been the spot to hop in.
I’m not too worried about missing the true bottom or waiting too long because I have the luxury of where I got out of the market and housing.
I started getting out last fall, and as I mentioned here at the time, I was completely liquid of equities by January (when the DOW was well north of 13K and the S&P was at 1,500)…and into secured assets (that had what I thought was pretty sucky returns @5%…but I’m pretty ok with that now, lol). Got my house on the market in July and sold shortly after (which might have been the peak here in Canada, we just started recording our down months in October/November).
With inflation at virtually nothing and making 5%, I don’t think I am falling behind the curve by not getting into this market the last 3 weeks. I think (for me at least) the risk is not worth the reward.
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Dec 12th, 2008 (8:25 pm)#101 laura Says: “Your efforts to make GM survive given the Volt, is simply insane. The Prius plug-in would destroy the Volt very quickly.”
————————————————————————————–
Using a typical yearly driving pattern of:
• 30 days at 8 miles per day
• 50 days at 16 miles per day
• 240 days at 30 miles per day
• 30 days at 60 miles per day
• 3 days at 450 miles per day
The Plug-in Prius averages 68 MPG, while the Volt averages 311 MPG. Details here:
http://mysite.verizon.net/vzenu6hr/ebay_pictures/Plugin_mileage.xls
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Dec 12th, 2008 (8:37 pm)#100 john1701a,
Most of what Lutz says here I agree with. The advantage of current hybrids is marginal compared with plug-ins and E85.
By the way, Obama’s pick for energy secretary is big into cellulosic ethanol R&D. He makes the case that, due to overproduction of food, there is currently enough unused farmland to replace gasoline with ethanol, using genetically engineered energy crops.
Also, Obama is on record supporting a federal mandate that all new cars in the U.S. are Flex Fuel by 2012. So E85 will become a big deal.
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Dec 12th, 2008 (8:41 pm)105 omnimoeish: Besides the fact that it takes 1.3 gallons of gas/diesel for every gallon of ethanol produced, ethanol has about 25% of the energy density of gas
If you believe all that, also feel free to believe that UAW members take home $75 per hour.
Yes, ethanol is not a perfect fuel. Rather than wasting corn to produce ethanol, there are other methods in the works. Mind you, with crude and gas becoming so cheap, it may not be financially feasible to produce ethanol anyways.
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Dec 12th, 2008 (8:49 pm)Tell the UAW to go JUMP……. I have always bought GM products but this latest stunt makes me SICK…… Attacking Corker because these morons want the taxpapers to pay the Union Bosses salaries… I am a member of the IAFF and the UAW is even more worthless than my Union, which is pretty worthless….. The Union bosses only think about patting their wallet….
After many GM cars and truck I think I have bought my last…..
Toyota I will be coming to see you in Jan…….
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Dec 12th, 2008 (8:55 pm)#54 DonC
“#8 George K – “According to Fox Business, this morning, Honda and Toyota workers get about $45 / hr. VS. UAW workers who get around $72, if you count everything.”
Can we cut the crap? That number is a fantasy. The real numbers are as follows: …
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Opinions about Volt stuff are interesting to read. Lyle provides the facts, and we state our opinions.
However, your personal opinion on how much a UAW worker earns is meaningless.
By the way, Fox Business is not Fox News. They compete with CNBC, the other major business network.
I don’t appreciate your rude comments.
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Dec 12th, 2008 (9:14 pm)I received this email today:
Most hard working folks can figure out the solution to the Big 3 Automakers in about 3 seconds – Chapter 11 and tell the UAW to go pound sand in an appropriate place! There is only one answer – Chapter 11 and tell everyone there out of work.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
According to Forbes: Labor cost per hour, wages and benefits for hourly workers.
Ford: $70.51 ($141,020 per year)
GM: $73.26 ($146,520 per year)
Chrysler: $75.86 ($151,720 per year)
Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
According to AAUP and IES, the average annual compensation for a college professor in 2006 was $92,973 (average salary nationally of $73,207 + 27% benefits).
Bottom Line: The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D., and 52.6% more than the average worker at Toyota, Honda or Nissan.
Many industry analysts say the Detroit Three, must be on par with Toyota and Honda to survive. This year’s contract, they say, must be “transformational” in reducing pension and health care costs.
What would “transformational” mean? One way to think about “transformational” would mean that UAW workers, most with a high school diploma, would have to accept compensation equal to that of
the average university professor with a PhD.
Then there’s the “Job Bank”
When a D3 (Detroit 3 carmaker) lays an employee off, that employee continues to receive all benefits – medical, retirement, etc., etc.,PLUS an hourly wage of $31/hour.
Here’s a typical story….
Ken Pool is making good money. On weekdays, he shows up at 7 a.m. at Ford Motor Co.’s Michigan Truck Plant in Wayne, signs in, and then starts working — on a crossword puzzle. Pool hates the
monotony, but the pay is good: more than $31 an hour, plus benefits. “We just go in and play crossword puzzles, watch videos that someone brings in or read the newspaper,” he says. “Otherwise, I just sit.”
Pool is one of more than 12,000 American autoworkers who, instead of installing windshields or bending sheet metal, spend their days counting the hours in a jobs bank set up by Detroit automakers as
demanded by the United Auto Workers Union – UAW – as part of an extraordinary job security agreement.
Now the D3 wants Joe Taxpayer to pick up this tab in a $25 Billion bailout package – soon to be increased to $45 Billion if Nancy Pelosi and Hillary Clinton have their way.
The “Big 3″ want this money – not to build better autos. No. They want it to pay the tab for Medical and Retirement benefits for RETIRED auto workers. Not ONE PENNY would be used to make them
more competitive, or to improve the quality of their cars.
We ALL have problems paying for our Medical Insurance – but the Democrat leaders in Congress now want us to pay the Medical Insurance premiums of folks who have RETIRED from Ford, GM and
Chrysler.
Not a good deal for us.
How about Chapter 11 – and getting rid of these ridiculous union contracts?
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Dec 12th, 2008 (9:19 pm)“BOO FRICKETY HOO” !! Has anyone taken up a collection to buy and send Ricky Wagoner a set of rear view mirrors to pull his head out of his butt. The big 3 and banks all need to go through bankruptcy and reorganize. Why the hell should we bail them out and yet let the health care industry go in the toilet because of low reimbursements. Our country is losing many rural hospitals daily and I do not see any money coming their way. SCREW EM!!!!
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Dec 12th, 2008 (9:20 pm)Well Stated Storm!
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Dec 12th, 2008 (9:47 pm)The UAW needs to go. I know lots peoply who work for Toyota in San Antonio. They are all pretty happy with their benefits and “Low Pay”. When they had a shutdown they kept everyone on payroll and did crosstraining. Well ran company. Good luck GM Your going to need it.
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Dec 12th, 2008 (10:02 pm)I can’t believe the loan is riding on these selfish-greedy UAW bastards.
$48/hr is excellent money on anyone’s standards. $70+/hr is just ridiculous!
Boeing sells PLANES (much more room to add extra mark-ups) and their typical labor cost (as far as I know) often doesn’t exceed $30-40/hr.
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Dec 12th, 2008 (10:22 pm)Everyone says nobody will buy a car from a company that declares bankruptcy. I think just as many people won’t buy a car from a bailed out company either, myself included. There is so much public backlash over this GM has cooked its goose no matter what happens.
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Dec 12th, 2008 (10:31 pm)#111 George K – “However, your personal opinion on how much a UAW worker earns is meaningless.”
This is very funny. You think your number is a fact and my numbers are opinion. Let’s see how your “facts” stand up to even the most cursory scrutiny:
To begin the sanity check, let’s just add up your numbers and see where that takes us. We have $73/hr. times 40 hours in a week times 52 weeks in a year. Let’s see, so you say the “average” GM worker makes over $150,000 a year.
WOW. Those guys must all live in million dollar mansions. They can afford it with the low interest rates and all. I mean you are claiming that the average UAW worker is twice as wealthy as the average white collar worker ($29.36/hr.) and, even more interestingly, twice as wealthy as the average professional in the Detroit area ($34.76). Yeah, that’s why all those doctors and lawyers are quitting their jobs and signing up to work on the assembly line. I’m surprised there hasn’t been an exodus of Wall Street Bankers quitting their jobs and making a beeline for Detroit.
I’m actually sorry if I offended you, but the $73/hr number is a crock. Full stop. And the most amazing thing is how so many gullible people just keep repeating it ad nauseum.
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Dec 12th, 2008 (10:37 pm)#112 Storm Says: “According to Forbes: Labor cost per hour, wages and benefits for hourly workers.
Ford: $70.51 ($141,020 per year)
GM: $73.26 ($146,520 per year)
Chrysler: $75.86 ($151,720 per year)
Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
According to AAUP and IES, the average annual compensation for a college professor in 2006 was $92,973 (average salary nationally of $73,207 + 27% benefits).”
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You’re comparing apples and oranges.The average hourly labor rate for auto workers includes payments to retired employees. Retired employees work 0 (zero) hours, so that changes the average hourly labor rate considerably.
Toyota and Honda haven’t been building cars in the U.S. nearly as long, so they have far fewer retired employees. That’s the main reason their average hourly rate is much less. Once Toyota and Honda have been here a long time and have many retired employees, their average labor costs will rise similarly.
When you remove retired employees from the equation, UAW workers make around around 10% more than non-union workers, and most of that difference is in benefits. The actual hourly pay rate is about the same. Still, the extra benefits is something that needs to be addressed as concessions by the union.
Do your average salary figures on college professors include pension and health care benefits for retired professors?
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Dec 12th, 2008 (10:53 pm)#112 Storm – “The average UAW worker with a high school degree earns 57.6% more compensation than the average university professor with a Ph.D., and 52.6% more than the average worker at Toyota, Honda or Nissan.”
My laugh-o-meter has broken. I’m not sure if you’re lying for a purpose or just don’t understand the numbers.
Short course in analysis: when you compare things you need to compare apples to apples.
1. The hourly wage rate you cite for UAW workers includes salary, benefits, and benefits for retired workers (so the current worker doesn’t actually receive that money).
2. The hourly wage rate for Toyota workers includes salary and benefits but not benefits for retired workers (because there aren’t any yet).
3. The annual salary for professors is by definition not an hourly salary. However, we can compute that. Most likely the average professor teaches one three hour course a semester, with each semester lasting eleven weeks. Total number of hours worked a year: 66. Hourly compensation: $1408.68.
Contrary to what you’re saying, the average worker at GM makes about $10 more per hour than the average Toyota worker and hundreds less per hour than the average professor, which if you know any, make more per hour than just about anyone else on an hourly basis.
FWIW the wage gap between UAW and Toyota workers, all $10 of it, is an insignificant amount, making up about 2% of the car price. Since this small dollar amount isn’t going to influence any buying decisions, getting rid of the UAW is not going to save GM. GM needs to make better vehicles, hopefully starting with the Volt.
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Dec 12th, 2008 (10:55 pm)#119 Dave G
A*M*E*N Brother.
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Dec 12th, 2008 (11:02 pm)Dave 107:
Sure. How much the Prius plug-in would cost? How much the Volt is expected to cost?
$22K vs. $37K?
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Dec 12th, 2008 (11:02 pm)Using a typical yearly driving pattern of:
_____________________________________
SOURCE PLEASE !!!
You keep ignoring requests to explain where those numbers came from. They seem quite arbitrary and are extremely misleading, since efficiency influencing factors (like temperature) are missing.
SOURCE PLEASE !!!
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Dec 12th, 2008 (11:10 pm)In other Volt related news today ….
Wouldn’t it be AWESOME if Intel got into the car battery business? Man, I hope Andy Grove can urge Intel to do this. Andy Grove loves the new electric drivetrain technologies. He’s one of the “founding fathers of Silicon Valley”. He’s the kind of guy that can make things happen. No doubt.
http://news.cnet.com/8301-11128_3-10121940-54.html
http://www.greentechmedia.com/articles/will-intel-get-into-batteries-5358.html
If any American company could design and manufacture high tech car batteries relatively inexpensively … it’s Intel. They are probably one of the best managed, strongest companies in the whole world. AMD is pretty damn good though too … their main competitor.
I bet GM could sell MILLIONS AND MILLIONS of Volts and other E-REVs if customers knew they had “Intel batteries inside”. People have a lot of confidence in Intel. No doubt about it. They have some seriously hardcore genius people working at Intel. They could definitely revolutionize the auto industry if they started making batteries like they do their microprocessors. Intel is a world class manufacturing company. Their batteries would be rock solid …. BETTER than anything that some Japanese company could make.
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Dec 12th, 2008 (11:17 pm)So…. Has *anyone* asked the legion of car company executives and upper management to accept pay “parity” with their Japanese counterparts?
Anyone? …Anyone?
(Especially when you include the Golden Parachutes of past executives in the current executives’ compensation?)
/”drill baby drill” has been replaced with “bust the UAW”
/how does it feel being manipulated
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Dec 12th, 2008 (11:24 pm)#118 DonC
“This is very funny. You think your number is a fact and my numbers are opinion.”
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WSJ 11-20-08
“The Big Three paid UAW members about $75 an hour in wages, compared with $45 an hour or less for non-U.S. auto makers.”
http://online.wsj.com/article/SB122723654355647077.html?mod=googlenews_wsj
I think my numbers are facts because I’m quoting credible outside sources. I think yours are opinions, because you are getting information from yourself.
Show me with a credible outside source like I did, Don. You may indeed be correct. But your opinion just doesn’t do it.
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Dec 12th, 2008 (11:34 pm)George K: The WSJ is owned by Rupert Murdoch, who runs news organizations like the media arm of the Republican Party. (And I even subscribe)
THE FACT IS, the $73 (or $75 or $80 or why not a nice round number like $100?), is COMPLETE FICTION. You have a head on your shoulders, use it. HAS ANYONE EVER FOUND THIS $150,000/yr ASSEMBLY LINE EMPLOYEE? If $73/hr is an average, at least half of them would! Really – FIND ONE.
Get off your blinkered, FoxNews parroting, middle-class hating hobby horse.
You and the other 23%ers, the George Bush dead-enders, are history. You are all just trying to do as much damage to America, loot as much as you can, and in general screw up as hard as possible just to make America a toxic wasteland just so you can spend the next eight years crying into your upmarket Scotch and Viagra while shouting “Dittoes, Rush!”
I just pray you idiots don’t douse the country in kerosene and toss a lit match into it as the door bumps you in the collective ass on your way out.
Too much to hope for, I know…
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Dec 12th, 2008 (11:38 pm)I don’t understand the autoworkers union grumbling about concessions. If they concede enough, GM will make better cars and make some money and they will gradually get some concessions back.
Their other option is to play hardball until Chrysler, Ford and GM close the doors and then they can apply at 7-ll, Mcdonalds and Walmart for minimum wage jobs.
These are not highly skilled jobs that most of them do. They’ve been trained how to assemble a part or two very well, but beyond that I don’t believe they know much else about cars.
They can’t hold the car makers to ransom anymore, it just won’t work for them. This I believe holds true for many jobs in society not just the autoworkers.
And for all that think Chapter 11 is the best way out, after chapter 11 comes the likelihood of Chapter 7, the auctioning off of plants and equipment.
The time to stop this runaway train is now.
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Dec 12th, 2008 (11:42 pm)“We have a little more than a month to go of this madness. As I sit here in Michigan today, tens of thousands of hard working, honest, decent Americans do not believe they can make it to January 20th. The malaise here is astounding. Why must they suffer because of the mistakes of every CEO from Roger Smith to Rick Wagoner? Make management and the boards of directors and the shareholders pay for this.
Of course that is heresy to the 31 Republicans who decided to blame the poor, miserable autoworkers for this mess. And our wonderful media complied with their spin on the morning news shows: “UAW Refuses to Give Concessions Killing Auto Bailout Bill.” In fact the UAW has given concession after concession, reduced their benefits, agreed to get rid of the Jobs Bank and agreed to make it harder for their retirees to live from week to week. Yes! That’s what we need to do! It’s the Jobs Bank and the old people who have led the nation to economic ruin!
But even doing all that wasn’t enough to satisfy the bastard Republicans. These Senate vampires wanted blood. Blue collar blood. You see, they weren’t opposed to the bailout because they believed in the free market or capitalism. No, they were opposed to the bailout because they’re opposed to workers making a decent wage. In their rage, they were driven to destroy the backbone of this country, not because the UAW hadn’t given back enough, but because the UAW hadn’t given up.”
I know you hate Michael Moore because he’s fat which makes him wrong. Not like good old American Rush Limbaugh fat. But hate is your default state, apparently. That and getting bamboozled by every Republican talking point and manufactured hissy fit.
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Dec 12th, 2008 (11:47 pm)Lurtz #127
You need to calm down and take your meds. If you have a point to make try logic instead of raw emotion because I’m having trouble following your point.
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Dec 13th, 2008 (12:29 am)For the doubting Thomas’, these are UAW’s own stats for auto workers annual costs and their spouses (if the auto worker has passed on).
Employer Active members Retired members Surviving spouse
Chrysler $48,927 $55,183 $23,252
Ford $58,300 $94,824 $28,183
General Motors $73,454 $269,614 $69,288
That retired GM package must be very juicy. We should all be so lucky.
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Dec 13th, 2008 (12:39 am)Mark Z #96
While Robots don’t take coffee breaks or sleep, they do require a full army of humans to keep them functioning and at top efficiency and there’s always some work they can’t do.
There’s always humans behind each robot, whether making parts or doing assembly.
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Dec 13th, 2008 (12:39 am)119 Dave thank you!
I always thought that 73 dollar per hour or whatever number was a little odd. Where people can spin endlessly.
So much misinfomation is pretty sad. Its too easy to spot toyota fans in here. The more I hear, the more pro union I’m becoming. Free market is great but so Is free trade true free trade. We need to export cars to Japan or korean in big numbers lol like they would allow that.
I also I’m not a fan of somebodies Grandma or Grandpa losing their retirement benefits Because Corker or Shelby think they have all the answers. I bet they read Motor Trend every month lol.
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Dec 13th, 2008 (1:35 am)I am simply amazed at the extremest positions being tossed around here, and the need to blame one side or the other…..
The simple facts are that everyone is wrong is some small part, and that outside forces brought the issue to a boiling point.
Management errors:
Upper management salaries should be based on the financial condition of the company. A small fixed base income, nothing more than five times the highest paid assembly worker. All other income is tied directly to the profits. No golden parachtes of any kind. And if the board of directors allows anything else, they should be fired as well, as they are not representing the best interests of the company. Finally, think through the contracts you sign with labor, and make sure you can pay for what you are promising in the contracts. Most of the anger here is that you made an agreement, and now want to back out of it, when those agreements should never have been signed in the first place. Anyone with a calculator could figure out in a few hours that the benefit packages you agreed to would be impossible to pay for over the long term.
Labor errors:
Expecting the company to pay almost a full salary, when you are not working, and to pay retirement and insurance benefits for life is totally unrealistic. Eventually those costs will bankrupt the company. Smaller companies pay all or part of health insurance costs and have a matching benefit IRA or 401K while you are working. But those end when you retire, which seems logical, don’t you think? What happened to taking responsibility for your own actions and planning for your retirement?
Government errors:
Allowing states to pass laws mandating different mileage standards, when the auto manufacturing business is national in scope does nothing but cause mass confusion and wildly increases costs. Then it becomes a legal mess, and huge amounts of money that should be spent on developing new models and updating facilities are spent on lawyers. State governments which are also going broke also put money they do not have into litigating these laws, which is simply a ploy to get themselves re-elected by making the car companies appear to be the bad guys. It is completely ridiculous. As far as the loans, since the credit mess was caused in large part by government meddling, and your “fix” has done nothing to loosen up the credit availability, then you should loan the money, as long as there are realistic safeguard in place to get it paid back.
Consumer errors:
We say we want to be “green”, but what we want is a three ton SUV that gets 50 MPG, and costs $18K. Time to open our eyes and learn the laws of physics. Petrolium based transportation can not be sustained in its present form. The current state of the art in technology seems to be a BEV, Hybrid, or E-REV. Those will require us to scale back into smaller vehicles, and yes, the first models will be expensive, until economies of scale and competition ramp up and make the costs more affordable. After all, how many of us really need off road capability, seating for eight, and towing capacity of 30,000 pounds to get back and forth to work???
Outside forces:
Oil prices were at their highest only six months ago. Right now they are very low. Do we really expect them to stay at $45.00 per barrel for the long term? Of course not, so we have to plan now for the future, which is reduced availability of oil and higher prices. It really is that simple.
What it boils down to is that everyone is going to have to open their eyes and decide to work together to fix this problem. If it continues to be a “blame game” then this industry is finished, and that would truly be the worst ending of all.
As I have said many times here, I am just one guy in Youngstown, Ohio. But if I can figure this out, why is it so hard for the people that are supposed to be doing these jobs???
Sorry for the long winded rant………..
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Dec 13th, 2008 (2:14 am)Jim I #144
Jim, its always easy to figure things out when you don’t have all the facts. I’m not being critical of you but none of us really understand a lot of whats going on.
The figures I quoted on GM costs for an,
active worker $73,454, retired worker $269,614 and surviving spouse $69,288 are right from the horses mouth, the UAW. Sure GM was at fault for not taking issue with an extorting union and Union leaders need to give their heads a shake over such demands (but that’s their job, to extort as much as they can or the workers will fire them).
What needs to happen now is for the Union leaders to get realistic and tell the workers the facts. Either they take pay cuts or they try and find work elsewhere.
Mike #133
Dave @#119 is way off the mark. The retired workers are not calculated in the annual costs for active workers otherwise the annual costs would be way higher. Even the guy who sweeps the floor and cleans the toilet at GM costs $73000 a year while these same jobs are close to minimum wage in the free market world.
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Dec 13th, 2008 (2:58 am)sorry Ed.135 It can’t be that bad how did I get a new 2005 ford focus with 0 miles for 10k if the janitor is making 73k a year. Please how me your source.
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Dec 13th, 2008 (3:34 am)The main problem here besides GM’s empty bank account is that the product isn’t selling. If everyone at GM earned $50,000 a year. And the tooth fairy dropped $20,000,000,000 on them. This still wouldn’t fix the problem of modest revenue from weak sales. Sales must pick up before GM can move forward.
Much energy is being spent on the fine tuning issues of a successful company. These being wage limits, benefit tweaks, model changes … ect.
There is no chance of success without a positive cash flow.
The three main pillars for sustained sales are quality, price, and availability. This is what needs to be addressed first. The rest will hinge on this first condition.
1>Quality ~ Reports show this is improved. This must be publicized in a big way. The public must hear this and believe it.
2>Price ~ This is where the government (TARP) can do the most good. Incentives, rebates, gas guzzler trade in bonuses .. ect.
3>Availability ~ Give the people what they want. First discontinue what people don’t want. Then produce the cars that are in demand. A short list are: The Volt, the plug-in Vue, the Cruze sedan and truck, and the two Camaro offerings. These will leave the dealer lot almost instantly.
This plan needs to be followed to the letter for any sort of future for GM as it currently exists.
=D~
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Dec 13th, 2008 (7:00 am)The states would not have to create higher standards if the federal govt had adequite standards, but we all know the country has been run for the last eight years by the guy who approves of throwing strip mining waste in streams and reducing the value of a life to avoid reducing airborne mercury standards for his big business buddies.
States have the right to regulate air quality standards, if the car company doesn’t want to sell there, fine. California has a real problem and the rest of the country cannot force them to choke to death to save themselves a buck. I live on the other coast in a place that doesn’t have a problem like that, but I sympathize with their plight. I also don’t believe that we should force Nevada to accept the neuclear waste of the rest of the country. How would YOU feel if you lived in Nevada. Remember all the scientists that told us 40 years ago that the odds of a reactor accident were so small as to be non existant. I was in college at the time studying probibality and statistics and remember saying – “hey you can’t say that unless you know all the possible outcomes, and for a complex system like that you can’t know that.” Shortly after that we had Three Mile Island and then Cherynoble.
I do believe that the new generation fast breeder reactors should be part of our plan to get off foreign oil. Along with solar and anything else that could help. Some of the new reactors are closed cycle and don’t produce waste.
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Dec 13th, 2008 (7:27 am)138 Len:
Then Nevada should pay back the US Government for the money they took to build Yucca Mountain. I am not against the environment nor am I totally pro business. However, the US taxpayers paid good money to dig that hole in the ground with the expectation that it would be used to solve a problem.
Chernobyl: perhaps you should revisit the site and read up on Chernobyl…it is now one of the most protected nature preserves with an amazing amount of biodiversity compared to the surrounding area.
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Dec 13th, 2008 (7:31 am)I really find it hard to blame the union. There are valid points but that is not what brought GM down. GM’s biggest issue is image. Seriously who are you going to blame in a few months when Toyota and Honda are getting a bailout from Japan. It is inevitable in this economic climate. If GM’s sales were much lower than the others then it would be clear they should fail. This is not the case. There is no doubt that shortterm thinking management is to blame for the cash flow problem now. Everyone will be having this issue soon and most nations will help their auto industry.
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Dec 13th, 2008 (7:38 am)#122 laura Says: “Sure. How much the Prius plug-in would cost? How much the Volt is expected to cost?
$22K vs. $37K?”
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The Prius plug-in is going to cost significantly more than the current Prius, I would guess around $4K more.
Also, Toyota base prices represent fairly stripped down models. I’d estimate a reasonably equipped Prius will cost around $25K. Add $4K for the plug-in option and you’re at $29K.
Now look at the rebates. For the Volt, it’s $7500. For the Prius plug-in, I believe its $4000.
So apples-to-apples, I would guess the typical price after rebates will be:
Prius Plug-In, $25K
Volt, $30K
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Dec 13th, 2008 (8:05 am)Toyota has dropped its profit by about 6.35 Billion per month this quarter. Or from an estimated 18 Billion profit to a estimated 1.1 Billion LOSS this quarter.
As GM is similar in size I would think their loss would be about the same, about 6 Billion per month. This would roughly fit with the worst case scenario. So if GM gets 10 Billion under TARP they should just make it to January 20ish.
http://www.greencarcongress.com/2008/12/report-toyota-l.html?PHPSESSID=291c4c35c437cb7d637e4686350f54f1
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Dec 13th, 2008 (8:09 am)#123 john1701a Says: “SOURCE PLEASE !!!”
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There is no source. Mass market plug-ins are so new that nobody has presented this particular type of data, but this is critical to figuring out how much gas people will save with plug-ins, so I took my best guess at a typical yearly driving pattern. Note that the total adds up to 11,390 miles a year, which is close to the 12,000 / year used as typical metrics by Consumer Reports and the DoE.
But if you disagree and think these numbers aren’t typical, then make up your own numbers that total around 12K miles per year, put them in a spreadsheet, and see how different plug-ins compare. Here’s a spreadsheet you can build on:
http://mysite.verizon.net/vzenu6hr/ebay_pictures/Plugin_mileage.xls
Look, I’m not trying to argue some point or another here. I’m really interested in how the various plug-ins will stack up in real world scenarios. If you can show where my numbers are off base, I would welcome it.
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Dec 13th, 2008 (8:40 am)#137 Dave K. =D~ Says: “The main problem here besides GM’s empty bank account is that the product isn’t selling.
…
The three main pillars for sustained sales are quality, price, and availability. ”
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The main problem is that there is no available credit for financing. For example, if you want to lease a car, I don’t think they’ll let you. The banks won’t finance a lease. That’s 20% of sales right there. Car loans are also a problem. That’s why sales are down about 40% for all car makers.
But GM is in worse shape due to their mistakes. Too many brands, too many big SUVs, etc.. And when I look at quality, reliability is my biggest issue. GM’s reliability is poor. Only Volkswagen and Hyundai are worse. Toyota and Honda have the best reliability. See here for details:
http://mysite.verizon.net/vzenu6hr/ebay_pictures/tt.jpg
But Toyota and Honda don’t seem interested in making an extended range EV, so that’s why I’m here.
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Dec 13th, 2008 (8:46 am)#134 Jim I Says: “I am simply amazed at the extremest positions being tossed around here, and the need to blame one side or the other…..
The simple facts are that everyone is wrong is some small part, and that outside forces brought the issue to a boiling point.”
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Yes. All of your points in post #134 make a lot of sense.
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Dec 13th, 2008 (9:17 am)#128 Ed M Says: “I don’t understand the autoworkers union grumbling about concessions.”
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I’m not particularly pro-union, but I think I understand their grumbling. It stems from:
1) The UAW being asked to approve concessions with complicated implications in a matter of hours or days. Not enough time to evaluate all the issues.
2) All other stakeholders not being asked to approve concessions until March 31, 2009.
3) A perception that Republican senators from states with foreign auto plants would like to destroy the UAW.
4) The knowledge that labor costs are only 10% of GM’s expenses, so even if UAW employees worked for free, GM would still be in trouble.
In general, I don’t like unions. They tend to promote seniority rather than performance. Non-union workers’ raises tend to based more on employee performance.
But in this case, I think the UAW is getting a really raw deal from the media and senate. Their wages are being totally misrepresented. They are willing to make significant concessions, but they need to make sure they’re not getting screwed.
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Dec 13th, 2008 (9:24 am)#140 brad Says: “I really find it hard to blame the union. …Who are you going to blame in a few months when Toyota and Honda are getting a bailout from Japan. …Everyone will be having this issue soon and most nations will help their auto industry.
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Yes, well said.
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Dec 13th, 2008 (10:13 am)There is no source. Mass market plug-ins are so new that nobody has presented this particular type of data, but this is critical to figuring out how much gas people will save with plug-ins, so I took my best guess at a typical yearly driving pattern.
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Why didn’t you include Temperature? Speed? Fuel type? A/C use? Accleration rate?
Those are significant MPG factors that weren’t included. The EPA recently had to revise their numbers, since they hadn’t either. Those cannot be disregarded calculations. External loads (like a bike)… Driving in heavy commute traffic… Getting stuck by an accident or construction delay… The spreadsheet only serves to mislead with so much missing.
93.5 MPG is the average from the Google plug-in report, which is real-world data from their converted Prius mini-fleet for over a year. And it’s quite realistic to expect even greater efficiency from the new model. Yet, your numbers don’t reflect any of that either.
Look at how neither Price nor Battery-Capacity was taken into account either. That excuse of “so new” only works if those are included too. But they weren’t. Stop misrepresenting both Prius and Volt.
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Dec 13th, 2008 (1:25 pm)to: 95. CDAVIS –
The UAW may just deliver a new entitlement to its members: THE RIGHT TO BE UNEMPLOYED WITHOUT COMPENSATION. Let’s see how that affects their ability to grow and survive.
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Dec 13th, 2008 (1:31 pm)Everything here boils down to a simple fact.
US is the only industrialized country in the world without universal healthcare.
Auto industries are giving healthcare instead of the government / tax payers.
BTW, if anyone thinks the effect of Big 3 failing is less than the $100B or so it will take to bail them out – they are in lala land. BTW, we have already paid $200B of our tax payer money to AIG and they continue to party, give bonuses etc.
We are looking at a loss of over 5 million jobs if the big 3 fail – and then the ripple effects of towns and cities going bankrupt. Depression is assured with something like 15% unemployment or more (double of what it is now).
I can’t even believe republican sothern senators think they can get away with this. They want to kill the American manufacturers to help the foreign manufacturers who have plants in their states.
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Dec 14th, 2008 (5:12 am)Ask yourself “Are you waging war on old people?”
A re-print from MSNBC website. Regarding Northern and Southern Auto Workers.
Not much difference in pay
For all the divisions between the two camps, there isn’t much difference in their pay. The GM workers average about $28 an hour, though new workers receive far less. The Nissan workers make about $25 an hour, the company said.
“The overall compensation for a worker is not that different whether it’s a foreign or domestic automaker in the U.S. — they’re all in the same ballpark,” said Kristin Dziczek, assistant director of research at the Center for Automotive Research at the University of Michigan in Ann Arbor. “They have to be. Good wages and benefits avoid unionization.”
The biggest difference in the labor costs is that the foreign automakers don’t have to pay for legions of retirees — their workers are younger and haven’t received benefits that are as generous, Dziczek said.
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Dec 14th, 2008 (6:41 am)Just a few things not mentioned (or didn’t notice)
1)GMAC also owns Ditech ,you know the company with the bad comercials offering home loans.So they are asking for TARP money because they are bleeding on this end also.
2) #36 Retirees benefits aren’t safe,Just ask the Delta pilots.Here are people who had the lives of many in their hands and their expected retirements are lessened.
http://news.delta.com/article_display.cfm?article_id=10352
3)DB Cooper you seem to be thinking social security will be around for some time. This might not be true either,the government can pull that rug out anytime they wish.Hopefully you’re not counting on that money like the elderly automaker retirees currently are!!”THIS IS WHAT THEY WERE PROMISED DURING THEIR LOYAL SERVICE”
4)As I see it ,most benefits in the private sector are based on gov benes’. Holidays vacation,personal days are given by companies at a slightly lesser rate.A rate at which they can get away with,without upsettting the government..
Dont begrudge another,Get an application.
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Dec 14th, 2008 (10:29 am)Instead of lowering wages the government should ask for a freeze in wages for three to five years. Just my thought.
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