GM was given 60 days by the White House to solve its financial problems and become viable.
But lets face it, 60 days isn’t a lot of time. GM already had 90 days, since last December to try once and they didn’t make it.
On Tuesday, Rick Wagoner’s replacement as CEO, Fritz Henderson told reporters “We’ll get it done in court or we’ll get it done out of court, but we will get the job done.”
And what job exactly is that? Ridding the company of debt.
Even at sales 50% lower than previous year, GM still brings in a lot of revenue. Not enough though to support a company of its current size, and not enough to pay back the debt it owes, in addition to now more than $16 billion of new government debt. They already owe $27.5 billion to bondholders and $20.4 billion to the union’s health car trust fund (VEBA).
The goal is to reduce all that $48 billion debt down to $9 billion with the rest being exchanged for equity in the company. Mr. Henderson says he believes he can win this concession in the 60 days.
In addition to that he will have to finally remove Saturn, Saab, and Hummer, close more plants and more rapidly downsize operations and workforce that previously planned. And of course sell more cars that people want to buy and make every one profitable not just the trucks sand SUVs. To that end GM introduced the “G.M. Total Confidence” program which pays back any negative equity when buyers trade in their cars and pays up to $500 per month up to 9 months if the buyer loses their job.
All these tasks are quite the very tall order, the time frame very short, and considering the sorry state of the US economy it looks increasingly likely that the job will get done…in court. In fact Obma is said to believe bankruptcy is inevitble.
The bankruptcy is likely to be unique one in which all of GM’s best assets are sold to a new GM which will be in operation immediately. The would include things like Chevrolet (and the Volt), Cadillac, Buick and GMC. The rest of the bad assets would stay in court being hammered out by creditors.
And so it seems by June 1st not will we only have the first Volt under assembly, we will have the first day of the new GM.
This entry was posted on Wednesday, April 1st, 2009 at 5:54 am and is filed under Financial, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Apr 1st, 2009 (6:02 am)I wish them luck. I hope they succeed.
But I do believe they need to to go Chapter 11 and get rid of that darn union.
Apr 1st, 2009 (6:06 am)I am a little bit confused as to how the assets of GM can be formed into a new company, and the liabilities can just be tossed away. I thought that the people that were owed money got in line to get a small percentage of what they were owed.
What am I missing here?
And Rashiid, won’t the workers just say they want to be a union shop again, and demand new contracts? I am confused about that as well…
Apr 1st, 2009 (6:12 am)Do Toyota and Honda plants in the U.S. pay retirement benefits?
Apr 1st, 2009 (6:26 am)Lyle’s post concludes
And so it seems by June 1st not will we only have the first Volt under assembly, we will have the first day of the new GM.
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The main text of the post describes how GM”s glass is 9/10 empty and then concludes (with the sentence above) that GM’s glass is filling up.
It is not logical, but I love the optimism of this site. May it prove to be true.
Apr 1st, 2009 (6:30 am)Is can’t be that simple… throw away the bad pieces an depts and form a new company?
Why doesn’t every company do that? I would do it annually…
That still does’t sound legal to me.
Apr 1st, 2009 (6:32 am)To me, it seems like there is a lot of posturing going on.
Everyone needs to give, and give a great deal, if they are to avoid bankruptcy. The best I can determine from the press I read (and who knows what the real negotiations are) is that neither the UAW nor the bondholders are making adequate concessions.
If GM files Chapter 11, then the concessions will be made for them.
So it appears that the Gubberment is trying to send a message to those involved that more needs to be done, or take what you can get in bankruptcy court. It appears that perhaps the UAW and bondholders prefer to wait for the “continuous government loans” versus getting serious about making concessions.
Apr 1st, 2009 (6:34 am)#2 Jim I says
I am a little bit confused as to how the assets of GM can be formed into a new company, and the liabilities can just be tossed away. I thought that the people that were owed money got in line to get a small percentage of what they were owed.
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You are right of course — all those people owed money are going to be (with their lawyers) lining up to request repayment from the assets of the company. All the assets will be a part of the process, not just good ones or bad ones. The court will have to figure it out. When there’s discussion of a “quick surgical bankruptcy” the thought is that most everything of consequence has been agreed among the parties in advance. How that will work for a company as big and complicated as GM is not at all clear to me.
Also, the bankruptcy court is formally a part of the judiciary, not a part of the executive. That means the court is outside of Obama’s jurisdiction and will take however long it takes to do whatever it does. The judiciary is known for being systematic, but it is not known for speed. May take a while. Of course, everyone knows this, so some of the bankruptcy discussion is itself a negotiating tactic.
Apr 1st, 2009 (6:38 am)Jim I #2 says,
And Rashiid, won’t the workers just say they want to be a union shop again, and demand new contracts?
Ya, that is the rub. But GM can at least start from a different position.
Apr 1st, 2009 (6:39 am)Geez! Just what Michigan and the national economy needs — a rapid downziing, putting tens of thousands more out of work, not only in GM but its dealers and suppliers. And this is outcome is pending regardless of which scenario plays out.
And the hell of it is, there is no reasonable alternative.
Let us all pray for those who will soon be out of work — and looking for jobs when there are already millions of unemployed.
Apr 1st, 2009 (6:45 am)Lyle’s post says
To that end GM introduced the “G.M. Total Confidence” program which pays back any negative equity when buyers trade in their cars and pays up to $500 per month up to 9 months if the buyer loses their job.
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As I understand them, these commitments end if GM enters bankruptcy. The feds “guarantee the warranty”, but how exactly that would work is a mystery. Maybe you take the car to the post office
Apr 1st, 2009 (7:12 am)11.
Guy Incognito Says:
April 1st, 2009 at 7:12 am
This is going to be interesting.
The economic downturn has reduced demand for new vehicles.
Fritz Henderson and his team are aware of this, and they know that GM will have to close plants.
Its going to be interesting to see which plants in which countries will be closed.
I predict the majority of them to be in the US, it only makes sense.
Apr 1st, 2009 (7:20 am)Lots of union bashing here. I don’t think white-collar engineering type folks understand much about unions. I fall into this category, but I’ve actually taken a little time to understand things.
1) The UAW is not GM’s biggest problem. If UAW decided to work for free, GM still wouldn’t be viable. The big problem is the amount of debt to the bondholders. So when you hear politicians and conservative news outlets talking up the UAW as the main issue, just know that they are trying to deceive you.
2) UAW wages are about the same as non-union workers, around $30-$35 per hour. There is a big difference in total compensation, $73 for UAW vs. $54 for non-union. This difference comes from:
a) Payments to retirees (pension & retirement health care)
b) Health care benefits for active workers.
Of these, payments to retirees is, by far, the largest issue.
3) The UAW understands these 2 issues and has already made major concessions to address these. However, these concessions were not supposed to take effect until around 2011. So the main thing the UAW is doing is making these concessions deeper and sooner than they would have otherwise.
4) The UAW has said consistently that they are willing to make these new concessions, but only if the bondholders to their part to make GM viable. Think about it. If GM is still financially troubled, the UAW will continue to be blamed, no matter how many concessions they made.
5) There are a few other structural issues with the UAW, like promotion based on performance rather than seniority, and the size of the packages required for layoffs, but these issues are relatively minor compared with retirement benefits and health care.
Apr 1st, 2009 (7:20 am)Lyle’s post says
And of course sell more cars that people want to buy and make every one profitable …
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Do I detect a tiny note of skepticism in this comment?
For sure, selling “more cars than people want to buy” is a big big challenge, made even harder by uncertainties about the future of GM and its dealers.
I don’t see why a thoughtful person would buy a car from GM in the next 60 days unless there was a very very good price to compensate for the risk. Right now there is a danger of getting entangled in time consuming and frustrating procedures if the car does have any problems later on. Who knows if the selling dealer will even be there to go back to, six months down the road? And if one gets a “very very good price” that defeats Mr Henderson’s goal of “every one profitable”.
Apr 1st, 2009 (7:21 am)GSB seems like the best scenario at this time for GM. The idea is growing on me. I wonder what the likelihood is of Chrysler cutting a deal with Fiat? Anyone want to wager a guess on a scale of 1 – 10?
Apr 1st, 2009 (7:21 am)I can’t help but notice that the brands listed under the “good” GM and the “bad” GM both lack the name Pontiac. So what’s up with Pontiac? What is their fate? They seem a bit redundant to Chevy to me (although I love the look of the G6 coupe, and of course the money-losing Solstice is also pretty sweet).
Apr 1st, 2009 (7:25 am)Welcome America to the brand new – G)overnment M)otors Inc.
If you don’t think the feds have their hands all in this you’re wrong. The prior money given to GM was just to allow them to survive long enough to get into this administration. Rick should have pulled the Ch.11 plug a long time ago. Now GM will be fully under court (government) control for the forseeable future.
Apr 1st, 2009 (7:28 am)Rashiid Amul Says: @1
“I wish them luck. I hope they succeed.
But I do believe they need to to go Chapter 11 and get rid of that darn union.”
Hey, if Ford is doing ok with the UAW, why blame the union. They have the same contract. I guess it’s easier to target the union.The attitude is, why should they get all those benefits when I don’t! Let’s face it, it’s not the union, it’s the management of decades ago!
Apr 1st, 2009 (7:29 am)Do a wiki on Bankruptcy. It is EXACTLY that – with the decision of a special kind of court (and specialist judge, called a bankruptcy court), the judge has the power to tell a bankrupt company whom they may/have to pay and how much.
Creditors can get 10 cents for every dollar that they ar owed, for example.
Apr 1st, 2009 (7:37 am)#16 Todd Says: Welcome America to the brand new – G)overnment M)otors Inc.
If you don’t think the feds have their hands all in this you’re wrong.
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Transcript from Obama’s announcement Monday:
http://www.nytimes.com/2009/03/30/us/politics/30obama-text.html?_r=1&pagewanted=2
“Let me be clear: The United States government has no interest in running GM. We have no intention of running GM. What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company.”
Apr 1st, 2009 (7:39 am)5 months and $32 billion (taxpayer dollars) later, GM is headed for a prepackaged bankruptcy. If government wanted to meddle, they could have done this six months ago and saved a lot of time and trouble — but that would require competence and honesty from our leading politicians.
Frankly, they’re taking advantage of us.
Apr 1st, 2009 (7:40 am)#17 Joe Says: Hey, if Ford is doing ok with the UAW, why blame the union. They have the same contract.
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Good point. And that’s without the existing UAW concessions that are to take effect in 2011.
Apr 1st, 2009 (7:43 am)#18 AutoElectric correctly says about bankruptcy
Creditors can get 10 cents for every dollar that they ar owed, for example.
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Yes, or they can get 90 cents or 1 cent. However, it is not just an arbitrary decision. There is an accounting for all the assets and an ordering of the debtors. There are decisions of detail, but the process is systematic.
In a situation where the company (or a portion of it) is to continue to operate, there has to be an overall judgment that the creditors will get more money over time from the new company than if everything is sold at the moment, and the proceeds distributed. That’s followed by decisions that make continued operation possible, such as giving priority to parts suppliers. (The decision to have a portion continue to operate is made on behalf of the creditors, not on behalf of workers, national pride or social justice.)
Of course, bankruptcy judges are not magicians. They tend to ratify agreements made by the stakeholders and not to impose judgments unless/until pushed to the wall. That cautiousness is likely to be pronounced in a bankruptcy with great public visibility.
Apr 1st, 2009 (7:43 am)#15 Jim in PA:
Yeah Jim, I thought the same thing in that there is no mention of Pontiac in the either good or bad GM. IMO, Pontiac needs to be removed as well, since it will be just another confusing aspect to a bankruptcy scenario for people to assimilate. People have a difficult time already just understanding the 4 brands scenario of Chevrolet/Cadillac/Buick/GMC. Pontiac is highly redundant to Chevrolet, and won’t “earn its keep” by only offering a few G8′s and “Solstice” models, at a few select dealers.
I speculate also when the task force stated they want GM to go deeper and farther with their restructuring, they may be alluding to a 2 brand company (Chevrolet/Cadillac) to mirror Toyota/Lexus, Honda/Acura, Nissan/Infiniti. If that were the ultimate outcome for GM, they would truly be a lean mean force to be reckoned with, however they would need to eliminate an obscene amount of dealerships.
Apr 1st, 2009 (7:46 am)There is 3…maybe 4 things that need to be accomplished in the next 60 days (some of them immediately), and the ‘tough talk’ needs to start right now. I’d like to call these things the ‘cramdown’
1.) HUMMER – deadline was yesterday to close or sell it. Credibility wanes everyday it remains open and that is all you are really getting by doing this. If anyone was out there to buy to it, they would have. Why would anyone buy it now, when they can get it for $1 in 59 days? Maybe thats the only offer they have now…take the $1 GM. If you don’t even have that, just close it, I know, that means a short term money hit, and a whack of franchise lawsuits/buyouts…but you guys where the genius’ that decided it was a good idea to put a hard deadline out in this environment.
2.) UAW – Fair or not, everyone wants a pound of flesh here. You have to get a actual WAGE CUT! Like as in base dollars per hour for old members…not throwing new hires to the wolves. I don’t know how much…maybe even a token amount. Something like 15% for everyone that is not on the ‘new hire’ program. Nobody believes you (the union) are experiencing real pain (and you really are not…more like lots of papercuts) when what you have negotiated things like paying a extra $30 for medical co-pay or the jobs bank is eliminated.
3.) Bondholders – I don’t know what you can do here. If I was a bondholder I would NOT take this deal. I get maybe as much value holding on right into bankruptcy, let alone the payday if it doesn’t happen…especially because most of the holders I assume got these at a discount. The deal as it stands needs to be sweetened by about 20% (and backed by the gov’t) to get it done, that means about 6 billion more…but hey, this is one case where the gov’t throwing some money at a problem actually does make it go away, so maybe the PTFoA can help you with this one.
4.) VEBA – ok you have some capitulation here, but this is pretty easy, we just move goalposts…it is kinda what GM does and the UAW can sell that to its members
/you also need a mountain of cash to close out Saturn and Saab, buy out Delphi, close out a fafillion dealers, close plants/transplant production and fix all the leaks that have sprung up over the past couple years in your various chains
Apr 1st, 2009 (7:48 am)#21 D’Artagnon Says: 5 months and $32 billion (taxpayer dollars) later, GM is headed for a prepackaged bankruptcy.
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A prepackaged bankruptcy will probably require a much larger amount in new government loans, so let’s hope they can avoid this.
But remember: If GM survives and pays back the bailout loans, the net cost for the taxpayer is zero.
If GM fails, the net cost to the taxpayer is quite large. This is because:
a) millions more unemployed workers means less tax revenue.
b) millions more unemployed workers means more unemployment benefits.
Both of these increase the deficit, which means someone will have to pay more taxes somwhere down the road.
Apr 1st, 2009 (7:52 am)Chapter 11 is the only way for GM to get a new start. Union is the thing in the past. The new GM workers wages and benefits should be as same as Toyota or Honda workers. If the new GM can accomplishrr that, then the new GM future is bright. Good luck.
Apr 1st, 2009 (7:52 am)#24 statik says “HUMMER – deadline was yesterday to close or sell it.”
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If GM wants to be hard line, they just close Hummer (cease production and end support of dealers immediately), do nothing more, and wait for lawsuits. The good part is GM will get an immediately favorable boost of confidence that things are happening. The bad part is that there will be lawsuits, which will complicate the future. But why not?
Apr 1st, 2009 (7:57 am)#25 Dave G says “If GM survives and pays back the bailout loans…”
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From GM’s perspective, one of the good things about bankruptcy is that it can dump the bailout loans too [and it needs them gone]
Apr 1st, 2009 (8:02 am)#24 statik
1) Fritz Henderson said the deal with Hummer will happen in “days or weeks, not months”.
2) UAW wages are about the same as non-union workers. The difference in total compenstaion is mostly payments to retired workers.
3) I believe an equity swap for bondholders would be a better deal than they would get in bankrupcy.
4) VEBA is the big issue for the UAW. They need to exchange exchange previous cash commitments with equity. In the long term, if GM doesn’t survive, it doesn’t really matter anyway. If GM does survive and becomes competitive again, an equity swap could work out OK.
Apr 1st, 2009 (8:04 am)Interested in Bio Fuels..
Check this baby out..
The last line says it all
http://en.autos.sympatico.msn.ca/News/article.aspx?cp-documentid=18888107
Apr 1st, 2009 (8:09 am)#27 RB
I think selling Hummer is GM’s best option, even if they don’t get much for it.
Hummer is a viable car for a niche market. Their off-road performance is unparalleled. For people that really need to travel off-road, Hummer makes sense.
But since most current Hummer customers don’t really use them for off-road, and with gas prices about to rise again, whoever buys Hummer will have to downsize considerably, and this works out better as the division changes owners.
Apr 1st, 2009 (8:12 am)Statik said:
“…you also need a mountain of cash to close out Saturn and Saab, buy out Delphi, close out a fafillion dealers, close plants/transplant production and fix all the leaks that have sprung up over the past couple years in your various chains”
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Is that all? Piece of cake! LOL
Apr 1st, 2009 (8:13 am)#30 mitch Says:
Interested in Bio Fuels… Check this baby out.. The last line says it all
http://en.autos.sympatico.msn.ca/News/article.aspx?cp-documentid=18888107
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“The major breakthrough with the Hercules is its incredible ability to run off organic matter and various bio-fuels. These include frying oil, liquefied banana peels, nutrient-rich vegetable juice, to a compost-water mixture (the latter however, reduces peak performance)…
Sound too good to be true? Of course it is – April Fool’s!
LOL!
Apr 1st, 2009 (8:23 am)#33 Dave G
I will NEVER talk to you about the movies dude..you reveal the ending!!
Lol
Apr 1st, 2009 (8:28 am)Dave G #12
When you show the cost of U A W labor at 10% of the cost of a G M vehicle I think you may be only using the number that work at G M. However most of their suppliers are also union members and many of them also are with the U A W. Combine that with the fact that the U S auto companies Manufacture the more complicated components with U A W labor. Items like motors and transmitions which the foreign builders ship in complete from off shore.
My point is, I think labor amounts to much more than 10% when all factors are considered.
Apr 1st, 2009 (8:36 am)Long live Corvette – Camaro – Silverado !
Three cheers for CTS and STS !
Bravo Tiger Woods ! (Your pension is still intact.)
Go VOLT ! Go Converj !
Listen up America! It’s time to BUY – BUY – BUY !!!
Apr 1st, 2009 (8:39 am)All these things Lyle mentioned have to be worked out, but then you are looking at them still losing money, you just can’t make money right now…nobody can.
In Canada, you can buy a loaded 2009 Grand Caravan for $11,700USD (14,888CAD), a Accent for $7,890 (9,900CAD), City Jetta $11,800 — and they aren’t selling…tell me where is the margin there, how do you compete with that and make money…even if your a monster like Toyota? Is GM going to stop the revenue drop and sell Montana’s for $9,999? Or put the G5 on for $6,500?
GM needs to get so small and so lean it can take much smaller short term losses riding this out, and be in the best position possible to compete when the market does start to expand again (or goes through some serious attrition)
To me, only a GSB can really get them down to their base ‘leanest and meanest’…and thats what they need (regardless of how messy it is).
By dissolving brands/ditching incongruent products and streamlining suppliers and dealers, as well as getting debts and costs inline now through the process, they could potentially expand margins per car by 15%(ish) over what they have today (which would be significant… although still not enough to make money in 2009/10, lol).
Get GM down to a company with a 50 billion revenue stream of decent to good products (probably currently clipping to do 110-115B this year). They would likely ‘only’ lose 10 billion or so more through the rest of this recession (which could be covered by the gov’t spotting them some ‘working capital’ exiting bankruptcy)…and then hopefully GM can make money (and stand on its own) in a stable/expanding market going forward.
Apr 1st, 2009 (8:40 am)Off Topic
With the government standing behind the warranty of the Volt battery, there is no long any need for a 16 kWh battery. If the battery size was shaved to 14 kWh, and the SOC window expanded to 10 kWh, then the Volt’s price could be cut by perhaps $1,500, and it would actually be a PHEV-40. It would still perform at battery end of life assuming a 25% loss in capacity over 10 years. This plan would transfer the risk to the government backed warranty if the battery did not last as expected.
Apr 1st, 2009 (8:46 am)Honda to cut North American operations, workers to take unpaid days off:
http://www.bizjournals.com/cincinnati/stories/2009/03/30/daily36.html
… just so we don’t forget that things are tough all over.
Apr 1st, 2009 (8:49 am)Also outside of huge deal with all involved GM is best off going into Ch11. One, the company gets to figure out how to operate at a profit and move in that direction (UAW, bondholders, whatever get what they get). Second, it keeps non-car politians from telling GM what kind of cars to design. This part is highly frustrating. Word was the government (Obama or congress or both) whated to strip many of the profitable trucks and SUVs from GM’s offerings. Call me a Ford guy at that point because GM will go under.
I do hope the Volt survives and thrives, but we shall see. Go GM! Don’t give in. Give back the government money and file for ch11.
Apr 1st, 2009 (8:54 am)Controlled bankruptcy, they’re calling it controlled bankruptcy now.
Apr 1st, 2009 (8:54 am)Lyle says :
And so it seems by June 1st not will we only have the first Volt under assembly, we will have the first day of the new GM.
And when they emerge from the GSB about one month later free of debt on July 4th we could say that will be GM’s independence day.
/It’s a weak joke I know, just keeping the mood light.
Apr 1st, 2009 (9:06 am)#29 DaveG said:
#24 statik
1) Fritz Henderson said the deal with Hummer will happen in “days or weeks, not months”.
2) UAW wages are about the same as non-union workers. The difference in total compenstaion is mostly payments to retired workers.
3) I believe an equity swap for bondholders would be a better deal than they would get in bankrupcy.
4) VEBA is the big issue for the UAW. They need to exchange exchange previous cash commitments with equity. In the long term, if GM doesn’t survive, it doesn’t really matter anyway. If GM does survive and becomes competitive again, an equity swap could work out OK.
==============================
Ok, I’ll retort…bullet style, hehe.
1.) Doesn’t matter, the deadline was yesterday. New CEO or not. He was the number 2 guy the last few months…and the CFO before that. He needs this done yesterday…worst case, today. At the very least, he shouls say, “I’m the new guy, it is going to take me until XX date to get this resolved” (and have XX be 30 days or less) – no more generic ‘soons’
2.) (UAW wages/compensation) Doesn’t matter if they are the same, they are not all building the same thing…like cement blocks. GM needs wages at a DISCOUNT to their peers, the market has spoken (market share drop from 30% to 20% in less than a decade) and rightly or wrongly they can’t go up against their peers based solely on the strength of their product. Besides that, workers at a bankrupt (or bailed out company) shouldn’t be making the same wages as their peers…the goal is to surivival, not price equity. Your right that retirees are a big problem…thats a legacy cost.
3.) Your right here too, the debt for equity swap could very well be a better. They might only get 20 cents on the dollar in bankruptcy. But you have to look at what they might get to hold the line. They might get the government to back the deal with guarantees on the conversion, they might get the government to sweeten it to 50% (which I think is most likely)…or they might get 100%.
The question is risk vs reward…personally, if I had GM bonds, I think I can do better than what is being offered, and I have seen them back down from deadlines/ultimatums twice now. I have no reason to believe them now, just because they extended the deadline by 60 days and said, “we are really, maybe going to do it this time”. What is worst case? I hold and lose another 10% off face value in liquidation…compare that to the mountain of upshot. (Again, most of these people bought this debt knowing full well the risks could be…I think they are thick skinned). Even individuals holding these bonds (like we have here on these boards), do they want to solidify there losses at such a small upshot? TIme will tell.
4.) VEBA – yeah I don’t know. I think we are on the same page here. VEBA is a issue for the UAW. GM is not going to pay the 20 billion from a mystery cash tree…so it is really up to them what they want to do. I think you have to take what you can get. Only way they get cash into VEBA is through liquidation…and that kinda hurts the membership, lol.
Apr 1st, 2009 (9:14 am)Downsize or Rightsize NOW.
Just lock the doors and send union workers home NOW.
Cost savings are immediate. No Wages Paid. No Capital Expenditures.
Keep on profitable items (yes, down to each item) and let ALL other items go. Just Do It NOW.
It really is that simple.
Lawsuits will follow but take years. Ignore these lawsuits.
You can be profitable in 30 days.
It really is that simple.
You do not have to be a rocket scientist to see how easy this is.
Get Busy Fritz.
Apr 1st, 2009 (9:14 am)The film ‘Who killed the electric car’ was on UK tv last night. I enjoyed even more watching it the second time around and as an example of the wider public interest being betrayed by powerful vested interests colluding with government it is a masterpiece. It also showed despite herioic attempts by the public the power of these groups can subvert democracy.
In this dire hour of GM history the films leaves one thinking ‘well you had your chance, you had a fantastic product in the EV1 and you blew it. You deserve all you get’. The public that they betrayed are now having to bail them out. The question is how can we trust them this time not to backslide on EV development and how do we know they are not still under the control of big oil? EVs threaten to massively reduce the value of oil and trillions of dollars worth of the stuff still in the ground. Given all that is at stake can we really expect big oil to give up that easily?
Finally, should the issues raised in the film not be the subject of a full public investigation?
NPNS
Apr 1st, 2009 (9:21 am)Couple of things:
Rashiid, you don’t get rid of the union in a bankruptcy. You can reform the contract but the union is still there. There are also special procedures for doing this which can take a long time unless the union agrees to the changes.
The split between the “Bad GM” and the “Good GM” is based on selling assets. This is really a new process — it hasn’t ever been done for a company which is expected to emerge from bankruptcy — so what obligations stay with the assets and which don’t isn’t understood. For example, the secured obligations would be expected to attach and follow the asset. If not then we’ve completely changed the rules under which financing occurs. That would not be good. Theoretically the union obligations would not follow but this would seem to defeat the other provisions of the bankruptcy code. Again, lots of questions.
No one is talking about the dealers but they seem to be the intractable problem. Unsecured bondholders and the UAW should be able to come to some agreement. This however still leaves the dealers and GM’s obligations to them under state law. I’ve always thought that if bankruptcy was necessary it would because of the need to restructure the dealer network and to revise contracts. Do US taxpayers really want to pay to “cash out” the owners of auto dealerships? Seems like paying to cash out the counter parties to AIG’s credit default swaps.
Lots of moving parts. Very complicated. A questionable legal basis (do you let Section 363 be the exception that kills all other sections of the law?). Bankruptcy is like war. It never turns out like you think — sometimes better sometimes worse — and it never runs smoothly or efficiently. If the Obama folks think it can be “controlled” then their hubris is showing. If it can be avoided that’s a good thing. RB in #7 seems to have the right perspective on it all.
Apr 1st, 2009 (9:25 am)Here is a really great chart which graphically shows why GM is in such trouble. Startling to look at:
http://www.fivethirtyeight.com/2009/03/gms-problems-are-50-years-in-making.html
Apr 1st, 2009 (9:36 am)“The question is how can we trust them this time not to backslide on EV development and how do we know they are not still under the control of big oil? EVs threaten to massively reduce the value of oil and trillions of dollars worth of the stuff still in the ground. Given all that is at stake can we really expect big oil to give up that easily?”
Arthur: I thought Chevron owned the rights to the EV-1 battery system, which killed the EV-1. Who owns the Volt battery system — not big oil this time, right?
Apr 1st, 2009 (9:38 am)The failed bankers and investors, who bailouts make the GM loans look miniscule, are getting off easy, compared to GM.
Apr 1st, 2009 (9:42 am)You always have to observe the law! Even a company as big as GM has to.
Besides that, there should always be an ethical responsibility. But probably GM has crossed that line…
Apr 1st, 2009 (9:43 am)Stright up you have nine days with out the outside interferance use it well .
Apr 1st, 2009 (9:46 am)Mike: I thought Chevron owned the rights to the EV-1 battery system, which killed the EV-1. Who owns the Volt battery system — not big oil this time, right?
Put youself in big oil’s shoes. What would you do? Last time they killed EVs by limiting battery development and overturning the mandate. Suckering GM was the easy part. We just have to be extremely vigilant to a repeat of the dirty tricks of the past. I am sure if Tesla IPO they will try and buy all the stock to clip its wings. They will use GMs financial trouble to delay the Volt.
The one beast they cannot control is China. However, they will probably use the protectionist lobby to stop Chinese EVs being imported.
Apr 1st, 2009 (9:47 am)#45 Arthur Says: The question is how can we trust them this time not to backslide on EV development and how do we know they are not still under the control of big oil? EVs threaten to massively reduce the value of oil and trillions of dollars worth of the stuff still in the ground. Given all that is at stake can we really expect big oil to give up that easily?
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Well, the alliance between big oil and GM is now broken. There are 5 things that caused this:
1) The green movement. This includes Chris Paine’s first movie and Al Gore’s “An Inconvient Truth”, both of which came out in 2006. This happened right as the Toyota Prius was becoming popular. So in late 2006, GM realized that, if nothing else, they needed a green car to make them look better.
2) Peak oil. Around 2006 or 2007, everyone started talking about it. GM took note, and quietly assigned some bean counters to see if there was any truth in it. The been counters came back and said that by 2020-2025, there wouldn’t be enough oil to support the world buying cars at today’s rate. So it became clear that something had to change if GM wanted to stay in business.
3) Tesla. They showed that an electric car can be powerful and sexy. I don’t think GM ever really thought that before.
4) $4 a gallon gas in the U.S.. This changed things more than people realize. The Volt, which had really been a greenwashing exercise up to that point, now became a real product opportunity, and all the top GM execs got fully on board with the Volt program in 2008.
5) New Lithium battery chemistries. This were just coming out of the lab 3 years ago. Now they have been productized, tested, and are exceeding expectations. What’s more, prices for these batteries are expected to be 1/4 to 1/2 of what they are now in the next 5-10 years, depending on how well plug-ins do in the marketplace.
So a lot has changed in the last 3 years. This was most poignant when GM’s CEO advocated a $4 per gallon minimum price floor tax on gasoline.
Apr 1st, 2009 (9:52 am)#52 Arthur Says: I thought Chevron owned the rights to the EV-1 battery system, which killed the EV-1. Who owns the Volt battery system — not big oil this time, right?
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Big oil has tried to come up with some Lithium patents that would let them control EVs, but they haven’t been successful in doing that.
Besides, there is too much momentum for big oil to stop it now. I credit Tesla with starting that momentum.
Apr 1st, 2009 (9:53 am)On a side note, which would be the better April fools for Lyle to perpetrate: Volt integration vehicle fast-tracked, will be available next week! or Volt program cancelled amidst weeping and gnashing of teeth?
Apr 1st, 2009 (10:02 am)#55 Neil
EESTOR!
Apr 1st, 2009 (10:04 am)Unfortunately, any “new” will still be burdened by the “old” UAW, a
walking advertisement for poor quality, exorbitant salaries and a million (sorry, now half a million) constraints on the company. During the past few weeks we’ve heard silly nonsense like the claim that UAW labor rates are “in line” with those of American workers employed by foreign automakers.” That became a lie (if it ever had any truth to it) the other day when Honda and Toyota announced wage cuts for their American plants and layoffs. Notice that they can remove uneeded workers when their sales drop – GM and Chrysler, on the other hand, had to pay their “workers” 95% of their salary
while they idled plants to reduce inventory. Then there’s the massive fringe benefits that never show up in those bogus “labor rate” figures. We see that just for health car for retired workers (don’t those workers EVER remove their meathooks from GM?)
GM is due billions and billions. What ever happeneded to Medicare? Are those miserable workers who destroyed the American auto industry too good for that? Fritz Henderson seems just as spineless as Wagoner when it comes to standing up for the company and it shareholders and bondholders. And exactly how is GM planning on ever getting anyone to buy their worthless bonds in the future?
I wouldn’t touch one of those toxic investments. This should be good : a company trying to do business without any source of capital. General Motors deserves better than the crud that’s
running things these days. Fritz couldn’t lead people to the water cooler.
Apr 1st, 2009 (10:04 am)#46 DonC Says: No one is talking about the dealers but they seem to be the intractable problem… This however still leaves the dealers and GM’s obligations to them under state law.
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I don’t believe state law mandates that the dealer’s customers have access to GMAC financing, so I would think there are levers the U.S. government can use here.
Apr 1st, 2009 (10:06 am)Even without a chapter 11 with a “new” GM coming out of it, I hope we have a “new” GM created out of the old GM that is dedicated to producing the finest vehicles on this planet. And I hope they insure that each model produced makes a profit for the corporation. We don’t need a money losing vehicle line. I know initially a new model will not be profitable because of development cost, but in a short time frame it should become profitable.
All of you who are saying to “get rid of the union” just don’t realize that GM does not really want to get rid of the union. It is too much a part of the operational structure of the company to not have a union. There will be union representation by the UAW in any GM of the future. Maybe it will have to accept lower wages and benefits for its members, but it will be there just the same. And, if GM does not change its ways and continues to bargain with the union in a weak position, it will find itself saddled with much of what it has tried to shed during this process. The union is not going to stop demanding new benefits and higher wages. So, watch out GM or you will be in the same boat later on.
Good luck GM. It doesn’t matter to me which GM in operation on June 1, 2009 as long as you are able to move forward into a bright future.
Apr 1st, 2009 (10:06 am)#57 kent beuchert,
If the UAW worked for free, GM would still be in trouble.
The UAW is part of the problem, but not the main part.
Apr 1st, 2009 (10:13 am)#3 Dave G
“Do Toyota and Honda plants in the U.S. pay retirement benefits?”
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Of course they do. They just don’t have as many retired workers as GM, Ford and Chrysler. Plus, the retired workers don’t have the level of coverage the UAW blackmailed the companies for. I use the word blackmailed because what do you call it when the union says if you don’t give us what we want, we will shut your operations down for as long as it takes.
Apr 1st, 2009 (10:18 am)I just want GM to be a company that America can be proud of again. I want new owners of GM vehicles to go around and brag to people about their purchase. I want GM to build “best in class” vehicles. Not just “good enough”. I want JD Power awards for a LOT of their vehicles. Consistently high Consumer Reports ratings. Rave reviews from the auto magazines like Motor Trend, Car & Driver, and Road & Track, etc.
GM needs to take on the top auto manufacturers in the world and WIN. Right now, that appears to be Toyota and Honda. I want GM dealerships to be the FIRST place people think about when it comes time to get a new vehicle. GM needs to look closely at what is selling in each auto segment and match or EXCEED these vehicles … in every small detail down to the stitching of the car seats and the 2 cent clamps used in the engine bay. Everything matters. Fritz Henderson said he wants to get the job done. Let’s hope so. It’s time for more ACTION and less TALKING about getting things done.
Like “Larry the Cable Guy” would say …. “get ‘er done” !!
Apr 1st, 2009 (10:22 am)#43 statik Says: I have no reason to believe [the administration] now, just because they extended the deadline by 60 days and said, “we are really, maybe going to do it this time”.
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We are mostly on the same page, except for this point.
Most people think of Obama as an extreme liberal from Chicago, but he was raised by his grandparents, who came from Wichita Kansas, and many of his values come from there.
Obama has consistently surprised people on the left. This dates all the way back to his days as president of the Harvard Law Review. Many liberals felt betrayed when 4 out of 5 of the top editors appointed were conservatives.
So when Obama say 60 days, midnight, Eastern Time, I think he means it. In fact, I believe Obama has basically already pulled the trigger on a bankruptcy, but his team needed 60 days to work out the details, so he figured he’d give the bondholders an opportunity to change their mind during that time.
Apr 1st, 2009 (10:26 am)#43 statik Says: 2.) (UAW wages/compensation) Doesn’t matter if they are the same, they are not all building the same thing…like cement blocks. GM needs wages at a DISCOUNT to their peers, the market has spoken (market share drop from 30% to 20% in less than a decade) and rightly or wrongly they can’t go up against their peers based solely on the strength of their product.
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You have a good point here. Of course, union die-hards will blame management for this, but I think there is enough blame to go all around. Everyone should get a small pay cut.
In fact, they should all take a small pay cut in return for profit sharing. I really believe profit sharing is the best model for total compensation. It’s basically capitalism.
Apr 1st, 2009 (10:31 am)#47 DonC said:
Here is a really great chart which graphically shows why GM is in such trouble. Startling to look at:
http://www.fivethirtyeight.com/2009/03/gms-problems-are-50-years-in-making.html
==============================
Thanks, good find. I’ve never see it graphically laid out like that.
But that is basically the issue in a nutshell, diminished margins caused by various monkeys on their back…and also very importantly, increased competition.
/time for a reset (imo)
Apr 1st, 2009 (10:32 am)10,000 iMievs heading for France next year, couple to Califa this year. 100 mile range.( Add a Honda generator, make it 2 hundred.) “… Japanese government offers incentives of almost $16,000 off the retail price.”
http://www.hybridcars.com/electric-cars/miitsubishi-all-electric-car-2010-imiev.html
http://www.tidyco.co.uk/store/honda/generators/honda_handy_generators.asp
Apr 1st, 2009 (10:33 am)#43 statik Says: 2.) (UAW wages/compensation) Doesn’t matter if they are the same, they are not all building the same thing…like cement blocks. GM needs wages at a DISCOUNT to their peers, the market has spoken (market share drop from 30% to 20% in less than a decade) and rightly or wrongly they can’t go up against their peers based solely on the strength of their product.
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#64 DaveG said:
You have a good point here. Of course, union die-hards will blame management for this, but I think there is enough blame to go all aorund. Everyone should get a small pay cut.
In fact, they should all take a small pay cut in return for profit sharing. I really believe profit sharing is the best model for total compensation. It’s basically capitolism.
=================================
Good thought, I love profit sharing, it is a good incentive…lets everyone profit from success.
Apr 1st, 2009 (10:34 am)#58 Dave G says “I don’t believe state law mandates that the dealer’s customers have access to GMAC financing, so I would think there are levers the U.S. government can use here.”
Except the US government isn’t providing the financing. GMAC is. Without even looking at the agreements, you can be fairly certain that selectively withholding financing from some dealers and not others would violate either the franchise agreements themselves or the good faith provision of those agreements. The law doesn’t ever let you be too cute, which is why I wonder about the Section 363 plan.
In any event, here is a sample legal memo which outlines just how onerous the legal issues can be. It’s a nightmare:
http://www.watda.org/legal/Franchise/Franchise%20Guide%20Problem%20Areas%20sec%201.PDF
To me GM’s big problem is it’s reputation for poor quality vehicles. Legacy costs and of course a large debt burden are also problems. But these can be dealt with outside bankruptcy because in effect you have a single point of contact. The auto dealers are an entirely different animal, if for no other reason than some you want to retain and some you don’t. Makes it difficult to deal with them as a group.
Apr 1st, 2009 (10:59 am)#43 statik says “(UAW wages/compensation) Doesn’t matter if they are the same, they are not all building the same thing…like cement blocks. GM needs wages at a DISCOUNT to their peers”
This is fundamentally misguided. The UAW wage rates are definitely NOT the reason for GM’s sagging market share and declining margins. At some point you have to understand that: “It’s the cars, stupid!”
There is no empirical evidence that wages drive market share or profitability and quite a bit to suggest they don’t. Ford has gotten big market share gains in Europe. Is this because they’ve cut wages? Hardly. It introduced the Fiesta which has been a huge hit. Viola, more market share, higher margins, and more profit. Ditto for its success in Brazil. Compare that to how Toyota and Honda are doing in Japan. Horrible beyond belief. Is this because they’re paying people more? Hardly? It’s that young people in Japan aren’t interested in buying the cars.
Thinking that wage rates are critical reminds me of Roger Smith and his idea that using robotics to replace workers would fix GM. Think design and reliability. Wages are well down on the list of issues, substantially less important than the inefficient and impossible to manage dealer network.
Apr 1st, 2009 (11:00 am)LMAO @ #16
Government Motors
It is sad though. I hope GM (whoever they become known as) does prosper again.
Apr 1st, 2009 (11:14 am)#60 Dave G:
I agree. If someone could wave a magic wand and make the UAW disappear tomorrow, and GM continued with its current business model, it would still go BK. Bad product decisions and generally inept (too generous?) management are the underlying problems. In many ways the UAW is a scapegoat/smokescreen for the above, not to mention the focus of many people’s political agendas and intense hatred of unions in general. In case you hadn’t noticed!
#63 Dave G:
Your theory would appear to be supported buy the NY Times article cited on the Yahoo news page this morning.
#43 statik & # 64 Dave G:
Alas, too true.
Apr 1st, 2009 (11:16 am)I wonder if we will still see Volt integration vehicle production by June 1st…
Apr 1st, 2009 (11:27 am)If any lawyers read this site, here’s a legal question:
I thought that a corporation’s board had a legal obligation to file for bankrupcy when they determine that the company in insolvent. Further that they may not strip assets prior to filing, as this is in effect defrauding the debt holders. So if GM sells its good parts to “good GM”, leaving “bad GM” to be liquidated, BEFORE filing bankruptcy aren’t they in effect asset stripping and defrauding debt holders. Under the law isn’t it up to a bankruptcy judge to do these things?
If a bankruptcy judge does this, then doesn’t that require the administration to tell the judge what to do, which is an obvious break in separation of powers.
Anyway, I would like to know if there are legal issues with separating GM into “good GM” and “bad GM”?
Apr 1st, 2009 (11:31 am)#43 statik says “(UAW wages/compensation) Doesn’t matter if they are the same, they are not all building the same thing…like cement blocks. GM needs wages at a DISCOUNT to their peers”
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#69 DonC said
This is fundamentally misguided. The UAW wage rates are definitely NOT the reason for GM’s sagging market share and declining margins. At some point you have to understand that: “It’s the cars, stupid!”
There is no empirical evidence that wages drive market share or profitability and quite a bit to suggest they don’t. Ford has gotten big market share gains in Europe. Is this because they’ve cut wages? Hardly. It introduced the Fiesta which has been a huge hit. Viola, more market share, higher margins, and more profit. Ditto for its success in Brazil. Compare that to how Toyota and Honda are doing in Japan. Horrible beyond belief. Is this because they’re paying people more? Hardly? It’s that young people in Japan aren’t interested in buying the cars.
Thinking that wage rates are critical reminds me of Roger Smith and his idea that using robotics to replace workers would fix GM. Think design and reliability. Wages are well down on the list of issues, substantially less important than the inefficient and impossible to manage dealer network.
====================
It is not fundamentally misguided at all.
I never represented that the UAW are the sole cause of GM’s downfall, or even that they are the major factor…but they are a factor to some degree nonetheless. Despite how many times you point out we need not be concerned about the UAW in relation to all of other GM’s problems, attention still needs to be paid. They don’t get a free pass.
“There is no empirical evidence that wages drive market share or profitability and quite a bit to suggest they don’t.” – clearly that is why nothing is build today in China or other 3rd world countries…wages are no factor at all. The auto sector is not immune from this pull, and wages (and all the benefits that a union worker expects to go along with them) is a big factor in this exodus. The US auto manufacturing sector is shrinking, and fast….jobs have been lost to Canada, Mexico, SA, India and now from all those places (and the US itself) to China.
I assume the bulk of the reason the gov’t wants to help GM, is so they continue to employee people and companies inside the US, not to bail them out just to see them make cars everywhere but at home, so the wage issue has to be settled…and the best place and time to do it is now, when everyone is on their heels.
BTW, Ford and their success with the Fiesta is a terrible example. Not only is Ford a dog and losing money at almost the same rate as GM…but the Fiesta is not build by a American worker, it is build by just about everybody but. Sure some of the production is built in Europe (don’t know how that corresponds to a UAW worker) but is also being built (or to be built) in Venezuela, China, Brazil, Mexico, Argentina, South Africa and India.
I could say the Impala has been a great money maker for GM, it has lived long past its expiry date, has a great margin, and still sells much greater than expectations and is build in Canada…but what does that have to do with the price of cheese? What does a one-off success story like that do for you?
All American auto companies, without exception are money losers. Big money losers…and not just in this ‘recession’ but for the better part of the last decade (or longer). Something is broken, can it be fixed? Maybe-maybe not…but the UAW (just like all the other parts) has a been a factor, and they have played a role, and they will continue to be, they can’t jsut be ignored.
/ok…that was way too long, and I think we are just going to have to agree to disagree
Apr 1st, 2009 (11:35 am)#12 Dave G
“1) The UAW is not GM’s biggest problem. If UAW decided to work for free, GM still wouldn’t be viable. The big problem is the amount of debt to the bondholders. So when you hear politicians and conservative news outlets talking up the UAW as the main issue, just know that they are trying to deceive you.”
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I agree with your first part of the point, but not the last part. I don’t think politicians or the “conservative” news outlets are trying to deceive anyone. It may be possible they don’t understand that the union’s excess benefits are only about 10% of GM’s problems. A lot of people don’t understand the mix of the difficult problems GM faces.
Apr 1st, 2009 (11:35 am)#69 DonC Says: The UAW wage rates are definitely NOT the reason for GM’s sagging market share and declining margins. At some point you have to understand that: “It’s the cars, stupid!”
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I’m not sure about this.
If you have a lower wage rate, then you may be able to source higher quality parts and sell the car for the same price.
But then again, if you have a lower wage rate, your worker quality may be lower.
So I’m just not sure.
One thing I am sure about – profit sharing would help. If someone on the assembly line thinks part of the design is stupid and wastes money, but they’re being payed hourly, they probably won’t say anything. But if 10% of their average pay was from profit sharing, they would probably speak up. Profit sharing almost always builds better team-work.
Also, Nate Silver’s article over on 538.com notes that GM’s problems started in the past when they exchanged lower wages in exchange for higher retirement payments later, which hurt the company in the long-term. But if they exchanged lower wages now in exchange for profit sharing, that would never hurt the company, since profit sharing only pays when the company is profitable.
Apr 1st, 2009 (11:36 am)Jim I @ 2,
You aren’t missing anything. This is confusing, even to the bankruptcy attorney down the hall. Our best bet is that there is a settlement, so that law suits don’t start
Apr 1st, 2009 (11:41 am)I will not buy a car from a government run company.
The best thing Fritz can do is declare bankruptcy, pay back the gov, and kick the “automotive task force” off GM property with security escort.
Apr 1st, 2009 (11:44 am)#20 D’Artagnon
“Frankly, they’re taking advantage of us.”
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Did you just now wake up or crawl out of the hole you have been living in all you life. Of course they are taking advantage of us. They always have. Now tell us something we don’t already know. Welcome to the light, friend.
Apr 1st, 2009 (11:45 am)Man, GM has been put (/put itself) in an impossible situation. I am flummoxed as to what they can do when nobody will buy cars. I can’t believe the discounts, yet people still aren’t buying anything. Unreal.*
*And annoying since I bought a small car during the $4.30 fuel period and paid way more than I would have now! grrrrrrr….
Apr 1st, 2009 (11:45 am)#75 N Riley Says: I don’t think politicians or the “conservative” news outlets are trying to deceive anyone. It may be possible they don’t understand that the union’s excess benefits are only about 10% of GM’s problems. A lot of people don’t understand the mix of the difficult problems GM faces.
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I’ve faced this dilemma in the past more than once: “Are they really uninformed or are they trying to deceive me”. In the end, it really doesn’t matter. They are paid to be informed, so it’s just as bad either way.
Apr 1st, 2009 (11:47 am)#80 ccombs Says: *And annoying since I bought a small car during the $4.30 fuel period and paid way more than I would have now! grrrrrrr….
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Don’t worry, gas prices will go up this summer…
Apr 1st, 2009 (11:48 am)#17 Joe Says: Hey, if Ford is doing ok with the UAW, why blame the union. They have the same contract.
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Not the same exact contract. Each of the big three have different contracts because of negotiations between the company and the UAW. Each company has different negotiating skills and different situations that are taking into consideration by the union negotiators. GM has the worst contract and have nearly always done the worst job of getting concessions from the union. Ford probably has the best contract of the three. I seem to remember a news analysis that made these points some years back.
Apr 1st, 2009 (11:49 am)Dude, you are going to bankruptcy. That is the only way you’ll be able to extract enough concessions. Get used to it. The die is cast.
Apr 1st, 2009 (11:51 am)#78 Leon Says: I will not buy a car from a government run company.
The best thing Fritz can do is declare bankruptcy, pay back the gov, and kick the “automotive task force” off GM property with security escort.
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Totally naive statement.
Any chapter 11 bankruptcy scenario would involve much more government loans, which means the automotive task force will be involved.
A chapter 7 bankruptcy would allow the government to be paid off immediately, but then there would be no GM property, and no GM security guards, because there would be no GM.
Apr 1st, 2009 (11:51 am)#8
“Jim I #2 says,
And Rashiid, won’t the workers just say they want to be a union shop again, and demand new contracts?
- – - – - -
Why would you want to work really hard to lose 100 lbs, and then just gain it back again?
Another thing besides the legacy and other union related costs, is the union rules and the attitude (us vs. them) created by the union influence.
Many who have worked around a union environment, have plenty of stories re union as counter productive to the company. The last one was a friend of mine had a light bulb go out in his area, and therefore, wasn’t allowed to work. He wanted to replace it himself, but had to wait,til 2 union electricians came to change it.
There are many of these stories. My last one was when I was auditing the books of one of our Minn. divisions. Flew in, got my Hotel (Holiday Inn), and drove to the plant the next morning. A strike had started, and there was an “issue” about crossing the line.
I told them that I’m from corp. and I just want to audit the books for year end closing of our fortune 500 parent.
“Don’t go in”.
“What will happen if I just go in and stay in the accounting area? “.
“The best you can hope for is, your car will have no air in the tires when you come out.”
I went back to the H I.
There is this, counter productive anti corp., us vs them attitude, that Honda, Toyota, etc. don’t have. In fact, I believe it is just the opposite. Thats what I want to see in GM.
=D~~~~
Apr 1st, 2009 (11:58 am)As I mention before….
GM need to seperate VOLT from the old GM….
This is the only way to make VOLT survive….
I hope Obama can do these steps to Wall Street too…..
Corporate America need to restructure…..not just car industry, stop being arrogant….we are just part of the World
Apr 1st, 2009 (12:00 pm)#23 Schmeltz
“I speculate also when the task force stated they want GM to go deeper and farther with their restructuring, they may be alluding to a 2 brand company (Chevrolet/Cadillac) to mirror Toyota/Lexus, Honda/Acura, Nissan/Infiniti. If that were the ultimate outcome for GM, they would truly be a lean mean force to be reckoned with, however they would need to eliminate an obscene amount of dealerships.:
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Good points about the two brand company. I think it would be the best outcome as much as I know people like the Buick brand. Buick is a brand that is positioned over Chevrolet, but under Cadillac. There is no reason for a full division to be situated like that. Only a couple of Buick’s models are superior to Chevrolet’s top models. Just re-brand them as Chevrolet models and you are there. Drop all the other Buick models.
As far as GMC is concerned, there really is not any difference between a Chevrolet truck and a GMC truck anymore. It used to be that the GMC brand was a “deluxe” version and offered a little more plush interior, etc. That is not the case anymore. Drop the brand and use the Chevy brand. Plus, Ford has used the line that they have the best selling pickup truck in America. Maybe so, but they count Chevy and GMC as separate brands and don’t combine the totals for the two to compare against their trucks. I don’t know who would be on top if the Chevy and GMC trucks were combined. Maybe Ford still. Someone here probably knows. But I would bet that the line would be broken every now and then by GM being the best for a year or two. I know I see a lot of trucks with the three logos on them. They all three sell a lot of trucks.
Apr 1st, 2009 (12:09 pm)#23 Schmeltz
#88 N Riley
Toyota/Lexus/Scion – 3 brand company.
Apr 1st, 2009 (12:17 pm)This past decade, and especially the past year, will provide amazing fodder for business and law school case studies. Amazing stuff in a democratic, capitalist society.
Can you imagine a period when this blog might have been almost exclusively devoted to the technical / marketing aspects of a vehicle?
Will say this much – thanks to all of you. Has been quite the learning experience. Lyle – hats off on a great forum. Has it all – passion, respectful (most of the time) argument, the highs and lows, “characters”, great fun – from a car blog.
Rock on all.
Apr 1st, 2009 (12:17 pm)#88 N Riley Says: As far as GMC is concerned, there really is not any difference between a Chevrolet truck and a GMC truck anymore.
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I agree, and will go one further.
The general reason to have a different brand is to go after a different demographic. The dealer location, dealer staff, methods of financing, advertising, are all targeted to very different groups of consumers.
I’m not that familiar with GMC, but I would think the demographics of GMC trucks and Chevy trucks are fairly similar.
Apr 1st, 2009 (12:18 pm)#74 statik:
It looks to me like you guys agree more than you don’t. A reasoned analysis like yours makes it clear that there is more than enough blame to go around for everybody. All I’m saying is that making the UAW the scapegoat just obfuscates the rest of the problems. I’m not a UAW member, and don’t have a dime in any union. I’m just saying keep it real. Which you are doing.
#88 N Riley:
There I have to agree with you. They could call the Buick a Buick and sell it through the Cadillac or the Chevy dealers, just as they do now with Buick and Pontiac, and used to with Oldsmobile, RIP. Or rebadge it. Whatever. As to GMC, amen.
BTW, I saw a bit on CNN last night which I thought showed the Hummer H2 plant shut down. Did I dream that, or do they just have to give it the final coup de grace? Maybe the brand’s still alive, but they just don’t make them anymore, LOL.
The Hummer lot in our town now sells Smarts. Talk about culture shock. I saw a brand new Smart on the local main drag yesterday and another one today.
Apr 1st, 2009 (12:19 pm)#90 StevePA Says: Can you imagine a period when this blog might have been almost exclusively devoted to the technical / marketing aspects of a vehicle?
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Yeah, LOL.
Apr 1st, 2009 (12:20 pm)$78 Leon said:
I will not buy a car from a government run company.
The best thing Fritz can do is declare bankruptcy, pay back the gov, and kick the “automotive task force” off GM property with security escort.
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I don’t really understand this at all…there is no front lawn to kick the gov’t off of if they didn’t/don’t sign on. GM would have died last december without the gov’t. Love them or hate them….good decision or bad to get involved-it is hard to say…but only Ford would remain if they didn’t get invovled (which may or may be better…I have a opinion but, that is a whole other can of worms)
===================================
===================================
#89 Dave G
#23 Schmeltz
#88 N Riley
Toyota/Lexus/Scion – 3 brand company.
—————-
Hehe…can’t say why, but I find this amusing.
Apr 1st, 2009 (12:27 pm)FRITZ READ THIS PLEASE!!!!!.
It should be mandated for all that are involved in any capacity to help turn around GM.
I too wish them the very best and truly want to see it a great come back.
http://money.cnn.com/2008/11/21/magazines/fortune/taylor_generalmotors.fortune/index.htm
Let go GM. Get it done Men!
Apr 1st, 2009 (12:29 pm)#90 Steve PA
And before the edit ran out (work does occasionally intrude), great insights on aspects of engineering, manufacturing, finance, politics and cocktail preparation!
Apr 1st, 2009 (12:30 pm)Just imagine how much taxpayer money we would have been saving if they had just done the bankruptcy back in November, when they actually went bankrupt. Now it will happen anyways and we are out $40 billion dollars just because no one had the balls to do it then.
Apr 1st, 2009 (12:33 pm)#72 Eliezer Says: I wonder if we will still see Volt integration vehicle production by June 1st…
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I think so. Most of the parts have probably been ordered, and there’s not that many integration vehicles being built, so its not a big-ticket item.
The real issues will be building the assembly line, setting up the battery manufacturing plant, and committing to buy the LG battery cells in volume. These are the big-ticket items.
Apr 1st, 2009 (12:40 pm)#73 Martin Bartosik — The sale of assets would occur after the bankruptcy petition was filed. The government would be the DIP financier so it would call the shots. In a bankruptcy the federal government can be a party. In fact the IRS, which is the Treasury Department and hence part of the Executive Branch, is almost always a party. No serious argument has ever been advanced that this violates the separation of powers doctrine.
In fact Congress could make a special bankruptcy proceeding for GM. I’ve thought this might be a good idea.
Apr 1st, 2009 (12:42 pm)#97 TRex Says: Just imagine how much taxpayer money we would have been saving if they had just done the bankruptcy back in November, when they actually went bankrupt. Now it will happen anyways and we are out $40 billion dollars just because no one had the balls to do it then.
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A prepackaged bankruptcy will probably require a much larger amount in new government loans, so let’s hope they can avoid this.
But remember: If GM survives and pays back the bailout loans, the net cost for the taxpayer is zero.
If GM fails, the net cost to the taxpayer is quite large. This is because:
a) millions more unemployed workers means less tax revenue.
b) millions more unemployed workers means more unemployment benefits.
Both of these increase the deficit, which means someone will have to pay more taxes somewhere down the road.
By the way, $40 billion dollars works out to $133 per person (man, woman, and child). This gives a better sense of how much we are talking about.
Apr 1st, 2009 (12:42 pm)#88 N. Riley:
Thanks for the response. Actually you and I had discussion of brand scenarios in previous threads months ago. I think at that time we both thought a tri-brand scenario of Chevrolet/Cadillac/Saturn was the most logical. But then in subsequent weeks, GM announced that Saturn would be dropped (eventually), and the quad brand Chevrolet/Cadillac/Buick/GMC was to be pursued. I see GM’s reasoning for the quad brands. First, GMC holds 12%-15% of total GM sales, even though its vehicles are redundant of Chevys. Buicks, all 3 or 4 of them, hold roughly 4%-5% of total GM sales. Therefore, GMC and Buick added together account for roughly 20%ish of total GM sales, AND they tend to be higher margin sales, especially the Buicks. Design costs for Buicks and GMC’s are less since they share many of their platforms and mechanicals with their Chevy brethren—they’re just a slightly different spin on the same things. Also, GM would be able to save quite a few dealers in the quad-brand scenario. These are valid reasons for keeping Buick and GMC.
Pontiac, and Saturn are dogs for GM since they are both redundant to Chevy AND have lower margins. Hummer and Saab are dogs because of extremely low volume, and in Hummer’s case, bad publicity to boot. No real mystery why these divisions need to go away.
If the Auto task force wants to really get GM slim and trim, they may need/require GM to strongly consider the two-brand scenario of Chevy/Cadillac. Here’s more speculation on my behalf…if Chrysler were to be liquidated and they were forced to merge it’s best assets into “The New GM”, they may need the added room on the sign for Jeep, i.e. Chevy/Cadillac/Jeep, with say the minivans surviving on as a “Chevy Caravan” or something, and maybe Dodge Ram Pick-ups being sold to Nissan, or maybe just dieing off entirily. I know some of these ideas are way out there, but the shake down really can go a whole myriad of different ways when you stop to think about it. What are your thoughts?
Apr 1st, 2009 (12:43 pm)I would consolidate down to 3 types of vehicles with the Voltec platform under one brand, the Volt, a mid-sized pickup, a mini-van, and a 2 seater sportster for urban use. Then I would get a guarantee from the White House to provide the Health Care. We can then start a new partnership with all Americans on a sustainable business model with health costs out of the equation for all businesses.
Apr 1st, 2009 (12:44 pm)#92 noel park said:(in response to #74 statik)
It looks to me like you guys agree more than you don’t. A reasoned analysis like yours makes it clear that there is more than enough blame to go around for everybody. All I’m saying is that making the UAW the scapegoat just obfuscates the rest of the problems. I’m not a UAW member, and don’t have a dime in any union. I’m just saying keep it real. Which you are doing.
————–
That is a good point, and maybe I come off that way sometimes….but I really don’t want to villanize the UAW (that hurts real bad, I know…looking at you Volt team, lol)…or make them a scapegoat.
What I would like to see (and a fair chunk of the public probably would too) is a actual hit the bottom line hourly wage for all (including entrenched) UAW workers (as well as a corresponding reduction in benefits). Nothing that is going to throw them out of there houses or make life unlivable either.
In my mind (and support by DonC’s link to margins) is something like a 15% hit. I think that is the magic number GM needs to be profitable, they need to eke out 15% right across the board. For most UAW workers, that is $4-$5 bucks a hour and a crappier medical plan with a fractional worse retirment package.
Then with GM’s union taking a 15%, they can turn to all other parts of their business and suppliers and expect a similar concession. As was mentioned earlier, there is a trickle down effect from their workers pay, it relates to other union shops at their suppliers.
GM’s direct labor cost ($300-$600 per vehicle) is not the whole labor story…not even close. There is also a labor component build into the thousands of parts that those people build and generally a much greater portion than assembly. From brake hoses from Harco Manufacturing in Ohio, to catalysts at Umicor to all the stamping done at Magna to Delphi…all these 3rd party shops have wage structures based off of them paying a proportionally lower wage than their principal buyer of their product pays. If GM’s cost to build or assemble things comes down by 15%, they have to fall inline as well…or risk losing that business.
Apr 1st, 2009 (12:56 pm)Taking Government money? No NASCAR for you:
http://tinyurl.com/csfyub
Remember, the government isn’t in the automobile business; the President said so.
Apr 1st, 2009 (12:57 pm)Taking government money? No NASCAR for you:
http://tinyurl.com/csfyub
Remember, the government doesn’t want to be in the automobile business, the President said so.
Apr 1st, 2009 (12:58 pm)OK, someone needs to explain this to me….
“The automatic transmission shifts all by itself, obviating the need to manipulate a gear-change lever and clutch pedal. ”
http://blogs.consumerreports.org/cars/2009/04/chevrolet-volt-first-drive.html
I thought there was no transmisiion in the sense of not shifting in “Drive”.
And why didn’t Lyle get a drive?
Apr 1st, 2009 (1:10 pm)In a report which could be an April Fools joke, Obama has declared that Chrysler and GM must pull out of NASCAR racing by the end of this year if they hope to get more government funding.
I included a tinyurl link in an earlier comment, which landed it in moderation. It was pretty easy to find on Google, though (story I saw was from Car and Driver)
Apr 1st, 2009 (1:13 pm)It’s the cars, stupid!”
________________________
Product diversity is an important business rule that management disregarded and is now paying the consequences for.
Focusing heavily on massive Pickups & SUVS while letting market share slip from compact, midsize, and efficiency vehicles was an obvious mistake.
“Get the job done” must include a more balanced approach.
(Volt is an extreme, by the way. The current configuration most definitely does not target the mainstream consumer.)
Apr 1st, 2009 (1:16 pm)Ok, the thread is getting kind of long, but it is time again for the month tallies on March Carapocalypse:
Ford, as always out first: -41%
The Dearborn-based automaker said Wednesday it sold 131,102 cars and light trucks last month, compared with 221,642 in March 2008.
The average incentive on vehicles sold last month was $3,169, up 30 percent from a year earlier, according to edmunds
http://finance.yahoo.com/news/Fords-US-sales-drop-41-apf-14815714.html;_ylt=AudV_8cgUzzTYNGX8w_rMXe7YWsA?sec=topStories&pos=1&asset=TBD&ccode=TBD
Apr 1st, 2009 (1:17 pm)Oop, it is past 2pm, GM is out too:
-44.7%
“GM reported a 44.7% drop in March U.S. light vehicle sales to 155,334 cars and trucks from 280,713 a year ago. The car side fell 41.3% to 68,877 while trucks plunged 47.1% to 86,457. GM produced 372,000 cars and trucks in the first quarter, down about 58% from a year ago. GM reiterated its 2009 second-quarter production forecast of 550,000 vehicles.”
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bE964871F-76A0-4CF0-93B2-4DB3010CF3C4%7d&siteid=yhoof2
Apr 1st, 2009 (1:19 pm)#104 AptJackSparrow:
You do realize that the link to the blog you referenced was an April Fool’s Day joke right? Just checking.
Apr 1st, 2009 (1:19 pm)I’m in moderation jail (I basically just want to see if this attempt ‘takes’)
Probably an April Fools story anyway.
Apr 1st, 2009 (1:22 pm)Other random companies:
Chrysler – 39%
Toyota – 36.6%
Honda – 36.3%
Subaru continues to be the monster and defy gravity and logic, posting a 1.3% gain.
…AWD FTW
Apr 1st, 2009 (1:23 pm)#94 Statik
I think Noel is being too kind with respect to your analysis of wage rates and their impact on GM. The numbers are simply too powerful an argument that wage rates are not an important factor.
Right now GM has to sell its cars at a $2500 discount relative to Honda and Toyota. This discount reflects that GM cars are not as popular, either because of design or reliability or resale (which is largely related to reliability).
Wages make up 10% of the cost of a car, which means about $2000 for a $20K vehicle. Of that $2000, only 10%, or $200 represents the wage differential between the work force of the Detroit automakers and the transplants.
OK. So we know that GM has a $2500 bogey per vehicle and that, in addition to this $2500 bogey, GM pays $200 more to have the car produced. While this means that GM’s margin on a vehicle is $2700 less than Toyota or Honda. Of this negative relative margin, roughly 7% of the bogey is due to wages. It likewise means that 93% of the bogey is due to design and engineering factors.
The reason why I keep saying your analysis is fundamentally misguided is that you keep spending all your time on the 7% of the problem and keep ignoring the 93%. For example, in #43, you list three financial issues. Of the three, one relates to debt burden and two relate to wages. Not one mentions quality or design.
My point would be that what GM, or any company for that matte, needs to do is to concentrate on the 93% first. At some point yes, you will need to address the 7%. But focusing on the 7% before addressing the 93% is a recipe for failure.
This is by the way why you and I disagree about Lutz. As far as I could tell Lutz understood these priorities and fought to have GM focus on the major issues first. I might not have ever bought what he developed (present car excepted of course), but getting GM to focus on quality and design was not only critical, it is the one and only factor which will dictate whether GM survives or not. Simply stated, all the financial engineering in the world will not help a car company that makes cars people don’t want to buy, and whether people want a car or not is wholly determined by its engineering and design, not by how much someone gets paid when making it.
Apr 1st, 2009 (1:26 pm)#104 AptJackSparrow,
The CR blog is an April Fools joke.
The Volt has no transmission. There is a stationary reduction gear, but there is no clutch, and no switching of gears. There has been some talk of different software drivetrain settings controllable by the shift lever.
Apr 1st, 2009 (1:30 pm)I’m going to get a beer…..
Sheeesh….
Apr 1st, 2009 (1:30 pm)If you want to readGM’s monthly report broken down by brand/vehicle etc., you can find it here:
http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=3&docid=53412
They also have lots of glass half full statements there like:
“Sales for GM and the industry showed signs of life at the end of the month compared with January and February. In April, we’re stepping up to the plate to get a rally underway with ‘GM Total Confidence,’ our unprecedented customer protection package,” said Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing.
===========================
Also, I should mention VW did pretty well, only off 19.7%…of course none of that matters to much to them, now being under control of Porsche-which is really a wicked awesome hedge fund that makes some fast cars for fun…no one does options like the Germans apparently. They are still pulling in 11 (ELEVEN) digit profits.
Apr 1st, 2009 (1:37 pm)#114 statik,
You have to take a lesson in corporate-speak! Translated, that statement reads:
“Sales in January, Feburary, and most of March were totally horrible. The end of March wasn’t totally horrible – but it was pretty bad. We have no idea what else to do in the short term, so we’ll try beefing up the warranty.”
After translation, I read this as glass 95% empty.
Apr 1st, 2009 (1:39 pm)TOTAL ASIDE
Is it me or do Fritz’s ears look vulcan in that picture…
Ok back to our regularly scheduled armchair reorganization of the North American auto industry…
Apr 1st, 2009 (1:46 pm)#116 mitch Says: Is it me or do Fritz’s ears look vulcan in that picture…
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http://mysite.verizon.net/vzenu6hr/ebay_pictures/Fritz.jpg
Apr 1st, 2009 (1:49 pm)1. Rashiid Amul Says:
April 1st, 2009 at 6:02 am
I wish them luck. I hope they succeed.
But I do believe they need to to go Chapter 11 and get rid of that darn union.
=======================================================
You people need to realize that the union does not control the company. The UAW negotiated benefits that GM agreed to. Then the UAW agreed to take the biggest cost benefit off GM’s hands, which GM can’t pay the amount they agreed to. The UAW did not force GM to make cars that are “gas guzzlers” or design “cars that people don’t want”. The UAW did not pay CEOs millions of dollars as the company lost billions. The UAW did not get into a bad deal with Fiat that cost GM billions to back out of.
GM nor the UAW have any control over the economy. They do not control all the companies that lay off their employees and no longer can afford to make their house payments. They did not have any control over the banks making bad loans to get people into houses they are not able to afford. They do not force American citizens to go to the hospital for a cold and run up unneeded hospital bills that in turn make the cost of health care go up for everyone.
____________________________________________________
2. Jim I Says:
April 1st, 2009 at 6:06 am
And Rashiid, won’t the workers just say they want to be a union shop again, and demand new contracts?
==================================================
Yes, we will.
Apr 1st, 2009 (1:50 pm)The US auto biz will STILL be a crummy place for capital. Way too much worldwide supply for the demand, morass of overt and/or covert governmental subsidies for the competition (these manufacturing mkts are anything but free), lower-cost competition (not just the grunts but the engineers, accountants, executives, etc.), inability to control the distribution, etc., etc., etc.
If you had, say $100 billion to invest, would you invest it in auto manufacturing? That’s a rhetorical question. Of course not. Much better places for investors to invest.
Now, if the world’s governments were to agree on how to slice the auto manufacturing pie, then maybe things would become positive enough to invest.
Apr 1st, 2009 (1:51 pm)#111 DonC
I know where you are heading, and I understand…but you can’t force creativity, you can’t litigate for quality, so I’m only touching on the things the gov’t can do in the next 60 days…not what they can’t do.
You can’t give GM more money, and say “go build better…have better ideas” anymore than I can go take a IQ test, then you say, “I’ll give you a thousand dollars to score 50 points higher”. You might as well have the government start a car company from scratch if that is the main metric you are trying to achieve.
By all rights, your standards or mine, GM should be gone. They can’t do it, they have not done it…nor are they likely too. They have no right to exist, other than gov’t intervention and taxpayers dollars…and neither of those things help you sell a car going forward.
As for your statement:
“Right now GM has to sell its cars at a $2500 discount relative to Honda and Toyota. This discount reflects that GM cars are not as popular, either because of design or reliability or resale (which is largely related to reliability).”
–That is not the definition of a discount, that is called pricing your vehicle correctly…at fair market value. A discount is a reduction of a price from its nominal value, it implies something being sold undervalued to get a increase in sales/market share or to clear some away that is not to be replaced. That “$2,500″ you quote as a loss or ‘bogey’ per vehicle was never there, so you can’t lose it…it cannot be factored into the math.
Besides, even if you could argue it into the math…that “$2,500″ number itself is totally random and unquantifiable. How can anyone argue against it, or your position…it is like fighting the wind.
/we are in a endless vicious circle Don…but I still love ya, I will let you have the last retort, and I’ll catch this debate again with you on another thread I’m sure
(=
Apr 1st, 2009 (2:19 pm)J Man Says:
“You people need to realize that the union does not control the company. The UAW negotiated benefits that GM agreed to.”
The UAW threatens to strike and cause “Problems in operations” if their DEMANDS are not met. Doesn’t this sound like extortion or bullying? “Give us your money or else…”, yeah, that sure is a healthy relationship. Get a clue!
“Then the UAW agreed to take the biggest cost benefit off GM’s hands, which GM can’t pay the amount they agreed to.”
Gee, I wonder why. How much does the UAW execs get?
“The UAW did not force GM to make cars that are “gas guzzlers” or design “cars that people don’t want”.”
Of course they didn’t The UAW doesn’t give a rats as$ what is built as long as the UAW gets money. How stupid are you to even think that anyone thinks the UAW can engineer or design.
“The UAW did not pay CEOs millions of dollars as the company lost billions.”
Well, can you let us know what the UAW execs are getting and for what? Do they manufacture or build or design or engineer or….just leach?
“The UAW did not get into a bad deal with Fiat that cost GM billions to back out of.”
I lack knowledge in this aspect therefore no comment….
And Rashiid, won’t the workers just say they want to be a union shop again, and demand new contracts?
==================================================
Yes, we will.
——————————————————————————–
Well of course you will. Look who the UAW as backed financially during his campaign.
The rest of your rant in undeniably rubbish.
Like I have said before, GM needs to copletely fold and respawn as a new company MINUS the UAW. This will guarantee the UAW will not be there. For those who did lose their jobs, the new company can pick them up with a more lean pay and benefits. Sounds like sh1t right? Look at all the other small companies and you’ll see that there are people that can work for less and survive because they most likely know they are lucky to at least have a job. The UAW doesn’t seem to understand that a business’s viability and capacity is directly proportional to the market they are in. In this case there is no market. Most production facilities shut down and if foresight is there they adjust the work force. The UAW doesn’t do that till it’s too late and their “Host” is sucked dry. Sound familiar?
Look at the concessions and tell me if they should have conceded these 1.5 years ago.
Apr 1st, 2009 (2:26 pm)#124 WarrenPeace Says: Like I have said before, GM needs to completely fold and re-spawn as a new company MINUS the UAW.
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GM will never get rid of the UAW, so why bang your head against the wall?
The only reason politicans rant about unions is to divert your attention from other issues.
Apr 1st, 2009 (2:37 pm)I bet no one on this forum voted for “Obma” …LOL
Apr 1st, 2009 (2:41 pm)#95 Vincent:
Thanks for the excellent lonk.
#103 statik:
When I talked about scapegoating the UAW I wasn’t referring to you. I think that your comments have always been thoughtful and on point. I was referring to certain other comments (screeds?) sometimes seen here. Sorry if I was too obtuse for my own good.
I can get as exercised about “executive compensation” as some of these guys do about the UAW. Again, there’s plenty of blame to go around.
Apr 1st, 2009 (2:42 pm)Dave G Says:
The only reason politicans rant about unions is to divert your attention from other issues.
That’s true. Although I rant on my position on the UAW, it IS NOT entirely their fault. It’s 65% UAW and the rest goes to management business practices/decisions. I hated how they exported “parts” manufacturing.
Apr 1st, 2009 (2:45 pm)Declare Bankruptcy already. Just get it over with. Why is GM so determined to prolong the agony. They must shrink to a size that matches their sales. Lets face it, GM will never ever be the number one auto company again. Dump the Bondholders, Shed all retirement benefits, Eliminate all current health benefits (make the employee pay it in full if they want some), Shutdown all unprofitable model lines, reduce the hours of remaining workers,Contract out (at fixed cost) all new work. Just get it done.
After GM emerges from this “government managed” bankruptcy they might be number four in the world if they are lucky. Better to be smaller and profitable than larger and failing miserably.
Apr 1st, 2009 (3:01 pm)FIRST TEST DRIVE: CONSUMER REPORTS
http://blogs.consumerreports.org/cars/2009/04/chevrolet-volt-first-drive.html
Apr 1st, 2009 (3:02 pm)@Dave B 130
LOL….
You need a beer too man….
Apr 1st, 2009 (3:07 pm)#130 Dave B said:
FIRST TEST DRIVE: CONSUMER REPORTS
http://blogs.consumerreports.org/cars/2009/04/chevrolet-volt-first-drive.html
===================
I like these parts:
…the front and rear doors provide access to the interior
…a majority of controls and displays are located in the dashboard area
…rear-seat passengers are positioned immediately behind the driver and front-seat passenger
…Driving with kids: Basically a nuisance, and should be avoided where possible.
/good find
Apr 1st, 2009 (3:10 pm)My head hurts.
How long until the Volt comes out?
Apr 1st, 2009 (3:11 pm)@statik 132
From the link…
“Driving with kids: Basically a nuisance, and should be avoided where possible.”
Lol…..lol….
Aw man, they should have said “A ‘Volt’ shock stick was provided to enhance the calm of small children while driving….”
Ahhhhaaaaahhhaaaaa…..
I kill myself…..
Apr 1st, 2009 (3:32 pm)Is that ALL for today?
Well, I guess it’s enough, yes?
My head hurts too.
I’m still waiting for my Volt (Blue?) w/ the shock stick (hehe, not really).
Apr 1st, 2009 (3:36 pm)CaptJackSparrow @ 131:
Need a beer? I’m at work…what else would I be doing…? Kidding, long day and I quit early.
Apr 1st, 2009 (3:44 pm)I’m a UAW retiree. I do not think it wise to restructure, by bankruptcy, GM in the middle of a depression … er … recession. Seems the public opinion is leaning toward killing the middle class.
Here’s an idea … lets apply the same Bankruptcy scenario to the US Postal System. Yeah .. I know a stamp on the envelope is a contract to deliver but look at the money they could save if they just threw away mail 1 day a week. That would be a 20% savings and should put them back on the road to profitability.
I’m kidding, but if I had known that investing over 30 years in GM and their promise to me would have been such a bone of contention I would have left early in my career. But alas, I’m much older now … I do expect GM to live up to their promise to me.
Our nation’s move to break trust and contracts on so many fronts at this time in our business cycle sends a terrible signal.
I read today that there are 775,000 of folks like me retired from GM.
What do you think? Lots of families and friends represented by this soon to be disenfranchised group of legacy folks.
Apr 1st, 2009 (3:45 pm)@Dave B 136
Need a beer?
I posted the same thing….
See 106, 111, 115
A beer sounds good right now anyway…
Apr 1st, 2009 (4:37 pm)#103 statik:
Edit to #127 – “oblique”.
#135 David K (CT):
Naaahhh – we’re just gettin’ started. Although my computer does want to quit. It’s just about to freeze.
Apr 1st, 2009 (4:39 pm)#101 Schmeltz
Good points. And I do remember the previous discussion of having the three consisting of Cadillac/Chevrolet/Saturn. I still think it would be a good mix if Saturn was performing better. I see a lot of Saturns on the road, but I don’t know why it is not doing better.
As far as Jeep is concerned, it would be a great addition to GM. Much better than Hummer. It would give GM a good “off-road” brand that is well respected. Jeep has some pretty cool looking vehicles. Other than that, I haven’t thought too much more about it. It hurts my brain to exercise it that much. Thinking through the solutions to GM’s problems would take a real high powered main-frame computer. All the possibilities are nearly endless with the chance of success about equal to the chance of failure.
Apr 1st, 2009 (4:43 pm)It is 5:00 somewhere…
Time to go.
Apr 1st, 2009 (5:41 pm)WarrenPeace Says:
The UAW threatens to strike and cause “Problems in operations” if their DEMANDS are not met. Doesn’t this sound like extortion or bullying? “Give us your money or else…”, yeah, that sure is a healthy relationship. Get a clue!
Not all strikes are about money. We have not seen a raise in years and anytime we do get a little extra it is called a bonus and usually we end up giving that back to cover out health insurance. The contract we are working on now there was a 2 day strike for it and it was not about us getting more money. It was actually about how the union wanted to take over the health care for the retirees and the company did not want to give it up. The only raise I have received in the last 7 years was when I moved to a state with lower taxes after the decided to close that last plant I was at.
____________________________________________________
Gee, I wonder why. How much does the UAW execs get?
I don’t have the web site saved on this computer but the info is out there to be found.
____________________________________________________
Of course they didn’t The UAW doesn’t give a rats as$ what is built as long as the UAW gets money. How stupid are you to even think that anyone thinks the UAW can engineer or design.
You are right the union does not care what cars are being built but they do care to keep the workers they represent working in a safe manner so they can go home to their families. They also care that the employees they represent make a good wage to pay for their homes, pay for their kids college education, be able to retire with a good pension and have health insurance.
____________________________________________________
Well, can you let us know what the UAW execs are getting and for what?
see above
___________________________________________________
Do they manufacture or build or design or engineer or….just leach?
We the UAW represented employees manufacture many parts of the vehicle and build the vehicles themselves with the various components.
The engineers get paid more money than the UAW represented employees to do their jobs. You will not hear a single UAW employee complain that they make too much.
The only ones I see leaching are the executives. Wagoner is getting around $22 million in retirement benefits for killing the company. I am sure Lutz will get a large amount as well.
_____________________________________________________
I lack knowledge in this aspect therefore no comment….
Where is your knowledge on these other aspects? Personal, stuff you have heard in the media? Do you believe we still make $70 an hour?
Notice that I, the UAW represented worker was able to make all my comments without using curse words. I was able to respond to your comments without a rude response. With the UAW being the scum in your mind, what do you do for a living that makes you better? I do know that the union is not perfect and have commented many times in the past to this fact. The union in cases has wasted money but no where near as much as the company has. But the union has done a lot of good for the employees they represent. Do you think it is bad that teachers have unions? School districts have gone bankrupt. Are you against the F.O.P.? The government pays their salaries are having money issues and some near bankrupt. Would you be mad if the person ringing you up and bagging your groceries was a member of a union?
Apr 1st, 2009 (5:57 pm)BTW GM does not pay the wages of top UAW officials. I do as a member of the UAW. That is part of what my dues pay for.
Apr 1st, 2009 (6:03 pm)21 days & counting……
“We Will Get the Job Done!” Well sure you will, you’re a vulcan for COL!
GO EV !
Apr 1st, 2009 (6:25 pm)J Man Says:
“Not all strikes are about money.” & “The contract we are working on now there was a 2 day strike for it ”
Like I said before “strike and cause “Problems in operations”” all to get what the UAW wants, regardless of what it is. Right?!
Nuff said.
“Where is your knowledge on these other aspects? Personal, stuff you have heard in the media? Do you believe we still make $70 an hour?”
14years in manufacturing in an undisclosed US Auto company. Started as a UAW floor monkey worked up to management all no thanks to the UAW. I have NEVER said UAW employees made $70/hr. I was one of the first to argue this in many previous posts. I knew what they made.
My distaste of the UAW is that from a management standpoint I thought it is a waste of money for people to make the amount they did for mindless work like staging fasteners, unpacking gaskets, refilling grease guns, screwing in bolts/nuts. The UAW has always fought off the “Pay per performance”. They think for some reason just because you have screwed in enough bolts or tires or clipped in door panels or mounted seats for a year or two, you deserved a raise every year or a “Step”. This goes for no matter how insubordinate an employee is/was. After a year or two of doing this you are still doing the same thing in the same time and to top it off, there were some folks there with a college education and they were still making just as much. One of my biggest issues was the fact that most UAW’rs had a popular phrase…”That’s not within my job scope…” and for those who did it anyway was frowned upon and ostercized. Can you say gang mentality?
“Do you think it is bad that…”
Not ALL Unions are the same. However, their method of “Getting attention” = “Problems in operations”. Again, not a good relationship.
As far as profanity, well, that’s just the nature of a “Free Forum”
P but for your listening ears, I abstained.
I only pray that whatever happens that ALL retired UAW workers will not lose what they have worked so hard for. You folks have my prayers.
“Would you be mad if the person ringing you up and bagging your groceries was a member of a union?”
The question is…
Should bagging groceries and fetching carts and cleaning the heads deserving of $18+/hr? Or should one get an education and Degree for a higher paying Career? It get’s difficult to convince students to seek higher education when they can say they can find a Union job.
Apr 1st, 2009 (6:31 pm)J Man Says:
BTW GM does not pay the wages of top UAW officials. I do as a member of the UAW. That is part of what my dues pay for.
Correct. YOU pay your dues so the UAW can negotiate your wages so you can make enough to pay your dues so they have the money to negotiate your pay so you can afford to pay your dues but all the time you are still doing the same work day in and out.
Pay per performance. Not a UAW methodology for quantifying or qualitatively justifying rates.
Apr 1st, 2009 (6:33 pm)Well. I’m done for a while. I think I’ve divulged more than I needed to and I don’t want to get identified….lol
Apr 1st, 2009 (6:38 pm)unions, screwnions. those bozos should get no more or less than the world market price for their work. they no longer make any sense existing in today’s hyper-competitive world
$50 or whatever per hr for fastening in seats and such? you gotta be kidding. huge mistakes of the past need to be wiped out.
Apr 1st, 2009 (6:56 pm)WarrenPeace Says
14 years in manufacturing in an undisclosed US Auto company. Started as a UAW floor monkey worked up to management
My distaste of the UAW is that from a management standpoint I thought it is a waste of money for people to make the amount they did for mindless work like staging fasteners, unpacking gaskets, refilling grease guns, screwing in bolts/nuts.
Did your pay go up when you watched everyone do this rather than doing it yourself?
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Should bagging groceries and fetching carts and cleaning the heads deserving of $18+/hr? Or should one get an education and Degree for a higher paying Career?
I did get an education and my UAW auto worker job pays better than what I went to school for. I could go back to school and further my education and my auto worker job would still pay more.
Apr 1st, 2009 (7:21 pm)#148 Eloh Gnub Says: unions, screwnions. those bozos should get no more or less than the world market price for their work.
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What line of work are you in? What’s the going rate for your profession in India?
Apr 1st, 2009 (7:25 pm)#103 statik:
See what I mean?
Apr 1st, 2009 (7:27 pm)Yeeeehaaaw!!
I are on the waiting list for the Th!nk.
http://electricaid.ning.com/page/get-me-a-thnk
Position number not known thoug. But it’s astart.
Apr 1st, 2009 (8:00 pm)WarrenPeace
http://www.unionfacts.com/unions/unionOfficers.cfm?id=149&year=2006
Here is that link for UAW leadership pay, no where near Wagoner, Lutz or Fritzy
Apr 1st, 2009 (9:44 pm)#149 J Man Says: I did get an education and my UAW auto worker job pays better than what I went to school for. I could go back to school and further my education and my auto worker job would still pay more.
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That doesn’t make a good argument for unions…
Apr 1st, 2009 (9:52 pm)What it says is that I picked the wrong career to go to school for and I got very luck when i got my job that I can get paid more as a auto worker. I also says that there other jobs out there that need to be paid more than what they are.
I could have always went to Harvard Business School and then took over a large corporation and drove it to bankruptcy!!!
Apr 2nd, 2009 (7:13 am)Dave G (85),
All right smarty pants. Had they gone into bankruptcy in the first place they never would have gotten any government money. And even if they had, certainly no politicians would be running the company.
In any case, I’m not buying a car from the government. Ford has some very nice cars.
Apr 2nd, 2009 (8:31 am)The process of separating the survivable GM from the non survivable is part of the process of credit holders standing in line to get a protion of their value back. The non survivable part will be sold off for salvage value, this includes equipment, land, buildings, brands, Oldsmobile and Saturn can be sold to a new entity.
Honda and other off shore makers do not have the numbers of retired or laid off workers that domestic makers have. It is this number, also seen in the passenger rail system, that is a burden to operation of a smaller survivable entity. If Amtrak could have shed it’s pention and health care costs for all the passenger lines the rail industry had and stopped running then Amtrak would have been profitable.
Start ups always have a jump on lower structural costs, pensions and retiree benifits. They do not have the people and facilities to get to the work of producing what we need. This is Why GM, Ford and Chrysler are important. They are ready to produce now. Particularly GM in the case of the Volt. The development is done and the plant is being tooled up for making these cars.
I want the smaller Gen2 model. I am #8 on the list.
Apr 2nd, 2009 (10:05 am)#156 Leon Says: In any case, I’m not buying a car from the government. Ford has some very nice cars.
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If it weren’t for the Volt, I wouldn’t even consider buying an American car.
Apr 2nd, 2009 (10:12 am)#157 Jonathan Cassidy
A while back, a worker for a Toyota plant in the U.S. posted here. He said they didn’t have any pension at all, just the standard 401K stuff. Do you know any specific details about this?
Also, I’m not sure there will be a Gen2 Volt as such. They’ll probably just make continuous improvements every year.
Apr 2nd, 2009 (11:57 am)159 Dave G
A while back, a worker for a Toyota plant in the U.S. posted here. He said they didn’t have any pension at all, just the standard 401K stuff. Do you know any specific details about this?
I have heard they also loose their health care when they retire. So if you are luck enough to retire at 52 with 30 years of service you would have to go get another job till you get medicare. Or you will just have to keep working with Toyota till you get to medicare age (or die getting there). I have heard this for Honda as well.
There are 2 unionized Toyota plants in CA if I remember right, not sure how they differ.
Apr 3rd, 2009 (2:13 am)It won’t matter what you do with the UAW if you don’t take away operational control (where they manufacture, labor levels needed for that production, what technology used for manufacturing, etc.). If you don’t get that, GM will not be able to compete. Period. End of discussion. All the other stuff is fluff. Debt can be wiped clean in one day with government help. If the remaining business still has their hands tied then it’s game over before it starts. I hope the decision makers realize this. Operational control needs to be returned to the same people that are responsible for increasing the wealth of the shareholders.
If not, the non-union auto manufactures are going to eventually win out. How could it happen any other way, especially with the very determined and competent competition? Oh, did I mention that electric cars are going to have even smaller margins and can be made so reliable (except for the battery) that they may need only minor maintenance (no oil changes, no filters, no mufflers, no breaks – regen takes much of the stress away, less parts to replace, etc.). How are the dealers going to survive? It’s going to be tough.